When Capitol City Produce Co. expanded its O’Neal Lane distribution facility earlier this year to 90,000 square feet, more than doubling its size, it did so with the intention of growing the 70-year-old company.
A deal announced late Wednesday that Capitol City Produce will acquire the distribution business of Table Fresh Foods, a subsidiary of Associated Grocers, is the first example of that growth strategy in action.
“Additional growth was always part of our plan,” says Capitol City Produce CEO Paul Ferachi. “Some is going to come from customer penetration but some is going to come from acquisitions like this.”
Neither company will disclose the financial terms of the deal, which is expected to close at the end of the month. But the acquisition will give Capitol City Produce, which distributes produce and specialty food items to hundreds of customers from the Texas-Louisiana border to Mobile, Alabama, a more diversified product offering that includes food items like imported cheeses and oils.
The biggest segment of Capitol City Produce’s customers are restaurants, though the company’s clientele also includes institutions like hospitals, schools and universities as well as offshore caterers.
The deal, which will include five delivery trucks, does not include Table Fresh’s commissary division. Table Fresh will continue to grow its line of prepared foods, which it sells to independent supermarkets that are part of the AG network as well as to restaurants. Capitol City Produce will now handle the distribution of those prepared foods to Table Fresh’s restaurant customers.
AG President and CEO Emile Breaux says Table Fresh sees growth opportunities in the value-added prepared foods business and wants to concentrate its efforts there.
“We want to grow the food production and prepared food side of the business and this is the opportunity we have to do this,” Breaux says. “The distribution side of the business was fundamentally different.”
AG has owned the Table Fresh business since May 2014, when it acquired L&A Quality Foods, then an eight-year-old local wholesale distribution company with 200 restaurant clients. In early 2015, it rebranded the company as part of a growth strategy.
AG is the area’s eighth-largest private company, according to Business Report’s listing of the Top 100 private companies, with reported revenues in 2016 of some $645 million. Capitol City Produce is ranked No. 66, with revenues last year of $77.5 million.
—Stephanie Riegel
