Business Press

The Business Press
October 4, 1999
By Adam Eventov

COMPANY PROFILE

A Temecula company has scooped out a huge niche delivering cold and frozen food products to ice cream shops, smoothie bars and coffeehouses. In so doing, Southwest Traders, Inc. has grown from one man selling juices door-to-door to a $70 million operation with 30 refrigerated trucks and 140 employees.

The company's growth can be attributed to company founder and 1999 Ernst & Young LLP Entrepreneur of the Year finalist Ken Smith - and his dedication not only to the company and its customers, but to his clients' customers.

Southwest Traders tries to free its customers from supply headaches so they can spend their time marketing their businesses and serving their customers, Smith said. "If a shop owner or manager is worrying about the back door, they're not focused on the front door," he said.

Southwest Traders Inc. is a one-stop shop, Smith said, supplying not only frozen products but cups, cones, and syrups. Its clients include ice cream chains such as Baskin-Robbins and Swensen's, general retailers such as Costco and beverage chains such as Starbucks Corp. and Jamba Juice Inc.

FROM NEWSPAPERS TO ICE CREAM

Smith says he's been in the distribution business since age 6, when he had a newspaper route in the northwest suburbs of Chicago. "My kids hate it when I tell them how I had to get up before dark to deliver papers when it was 50 degrees below zero," Smith chuckled.

Southwest Traders, however, was started as a summer job, a break from Louisiana State University. After his sophomore year, Smith came west from Baton Rouge in 1976 to work for his brother, who owned a food and juice company, Cheesecake Unlimited, in Escondido. That company is now called Nemo's Fine Bakery. The job offered a new opportunity for Smith, who during the school year saw his chances of becoming a champion collegiate wrestler shatter along with his right arm during a match. Smith never went back to college. With a converted Ford van and a list of 50 customers, he applied the work ethic that had gotten him to the top ranks of student athletics to the juice delivery business.

"I'm a blue-collar, workhorse guy," said Smith. "Once I get involved in something, I get absorbed in it." Basing Southwest Traders in Leucadia, the son of a Chicago schoolteacher knocked on doors 18 hours a day, six days a week for the first 10 years. "It was trench warfare," he recalled. As he added clients, Smith added products and employees.

By the mid - 1980s, he had leased a 7,900-square-foot warehouse in Escondido and was serving not only north San Diego County, but all of Southern California.

In 1988, he moved the business to Temecula to be more centrally located to Los Angeles and San Diego.

A decade later, he has two warehouses in Temecula totaling 87,000 square feet and a 25,000-square-foot distribution center in Sacramento. The company serves customers as far north as Redding, as well as in Nevada and Arizona.

Southwest Traders' local cold storage warehouse may be one of the coolest places to work in southwest Riverside County. The warehouse features two refrigerated storage sections - a 5,000-square-foot icebox for chilled items and a 15,000-square-foot freezer to store frozen treats at minus-10 degrees.

The chilled storage enables the company to supply its customers with a wide variety of products, Smith said. "It's a challenge to offer so many products because each product line requires (different marketing techniques). But he does a good job with each line," and Richard Lenzo, CO-owner of The Sweet bean, an independent coffee and ice cream shop in Temecula that gets 65% of its supplies from Southwest Traders. Smith's ability to keep up on trends in the beverage business also impresses Lenzo.

"He doesn't let grass grow under his feet," said Lenzo, who exchanges ideas and observations about the food service industry with Smith to make both their businesses more competitive.

BETTER, NOT BIGGER

Smith is also heavily involved in youth and adult sports. Southwest Traders donates $60,000 a year in soccer team sponsorships, Smith said. As for the company softball team, it has won 19 local recreational softball titles.
"I love sports," he said. "It teaches us lessons such as working hard, self-discipline and teamwork."

Even with the growth Southwest Traders has seen in the last decade, Smith regards his company as marginally successful. He said he is striving to be the owner of a world-class company – and that doesn't necessarily translate to a bigger company.