For Sale: A 100-Year-Old Salad Company Doing $10.5M in Sales

This week, we took a look at a salad manufacturing company in Los Angeles County that's been around since 1937. They’re asking $4.6M for it, with a cash flow of about $836K and gross revenue around $10.5M. They’ve got a unique product line – we’re not talking about leafy greens here. It’s more like potato salad, macaroni salad, and coleslaw. The business has a stable team and solid growth history, but we found plenty of quirks that are worth considering.

At A Glance

• Asking Price: $4.6M
• Cash Flow: $836K
• Revenue: $10.5M
• Product Line: Potato salad, macaroni salad, coleslaw, jellos, and salsas
• Location: Los Angeles County
• Established: 1937
• Certifications: SQF, kosher, and military approvals
• Facility Size: 25,000 sq. ft. with parking

What We Thought

Surprising Product Line

Michael was initially drawn to the deal because of its peculiar product mix. The word “salad” here doesn’t mean what you think—this is all about potato and pasta salads, salsas, and even jello. It’s not your average fresh green salad operation, which made it both funny and interesting. Bill joked about how it reminded him of a "How I Met Your Mother" episode featuring a mayonnaise-heavy salad, a callback to the outdated style of these dishes.

Impressive Growth, But Why So Small?

Bill pointed out the impressive growth from $6M in 2020 to $10.5M in 2024, but also wondered why a 100-year-old company was still relatively small. Why hadn’t it grown bigger sooner? The company had scaled recently, but Bill's concern was whether the company could expand further without a big capital investment.

Food Safety Compliance and Distribution

The fact that the company holds military approval and other certifications suggests they know their compliance and have solid operations. However, Heather raised a good point about customer concentration—what if a big military or grocery chain contract is what's driving this recent growth? If that’s the case, a loss of one big contract could hurt them.

Product Diversification Is Key

Chelsea brought up a key challenge: consumer tastes are changing. The younger generation isn’t into mayonnaise-heavy salads like they used to be, so expanding the product line might be necessary to keep this business relevant. Introducing healthier, more modern options like quinoa salads could be a potential growth area.

Red Flags

• Real Estate Risk: They’re renting the 25,000 sq. ft. facility, and the lease terms could change, potentially raising costs.
• Narrow Product Focus: The old-school salad offerings may not align with current consumer trends.
• Customer Concentration: A few big contracts could represent a large portion of revenue, which adds risk if any of them are lost.
• Potential Deferred CapEx: A business this old might have some deferred maintenance costs that haven’t been addressed yet.

Green Flags

• Strong Growth: The company has nearly doubled its revenue in four years, going from $6M to $10.5M.
• Established Reputation: This business has been around since 1937, which speaks to its reliability and long-term customer relationships.
• Operational Stability: The current owners have built a solid operational foundation, including a long-serving and dedicated team.
• Food Safety Approvals: SQF, kosher, and military approvals make it a trusted player in the industry.

The Verdict

Overall, opinions were mixed. Michael sees the potential but expects to uncover some hidden flaw, especially given the real estate situation and the possibility of below-market rent. Heather and Bill were cautious, feeling the business might be overpriced given the uncertainties, while Chelsea and Mills were more optimistic, believing there’s value if the right buyer with food industry experience comes along. Chelsea even had a specific buyer in mind from her network.

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