A year after Hurricane Katrina, Raymond Rathlé considered selling his battered processed-food business.
The Problem In a word, Katrina. The hurricane nearly destroyed Carnival Brands' manufacturing facility in Jefferson Parish, New Orleans. Since 1990, Carnival had been making frozen Cajun and Creole food there; by 2005, the company sold about 30 products and had revenue approaching $1 million. But the storm changed everything. By the time Rathlé finally received his insurance check in January 2006, all 10 of his employees had left for good. He couldn't find new workers because wages in the food industry had jumped to as high as $37 an hour. He didn't have the resources to move out of New Orleans and retrofit a new facility to meet stringent regulatory standards. Then his insurer dumped him. "I knew Carnival Brands had diminishing value for every month it sat idle," says Rathlé. As 2006 dragged on, Rathlé started to consider selling the business.
What the Experts Said Kenneth Marks, managing director of High Rock Partners (formerly Marks & Co.), a strategic development firm in Raleigh, North Carolina, suggested Rathlé focus on items with larger margins and try to get some prepaid contracts as a way of raising cash. Richard Russakoff, president of Richmond, Virginia-based Bottom Line Consultants, said reopening would be "throwing good money after bad." Robert Klein, director of insurance research at Georgia State University, said Rathlé should contact the Louisiana insurance commissioner for help.
What's Happened Since In December 2006, Rathlé sold his equipment, trademarks, and recipes to a company called Pigéon Catering for less than $1 million. Another food broker bought the building for an undisclosed amount. Rathlé says he came out "okay" and is proud that "the legacy I created in 1990 will endure." Rathlé is working as a consultant for Pigéon until the purchase price is fully paid. Pigéon is starting with just a few of the best-selling menu items, like stuffed chicken breasts, crab cakes, and "damn good balls" (i.e., meatballs).
What's Next Rathlé says he has a "passion for architecture that's even stronger than for food." He has invested in a 50-unit building at a high point along the bank of the Mississippi River. He says construction should be under way by the end of 2007 or early 2008. But family comes first for Rathlé, whose wife and two children were evacuated during the hurricane. "If we have another severe storm in New Orleans in the next three to five years, you can forget about this region," says Rathlé. "We'll be the first ones out."