Despite the pandemic, the Tarrytown-based and family-owned manufacturer Kari-Out moves forward in growth mode.
Food-packaging/condiment/towelettes company Kari-Out got its start in 1964, when founder Howard Epstein, after leaving his father’s tea bag business and running a couple of small packaging businesses, purchased a tiny company that sold popcorn to movie theaters.
After a salesman who worked with his father suggested Epstein try selling soy sauce to the same restaurants his dad served, Epstein began experimenting with putting condiments, including duck sauce and hot sauce, in tiny packages, operating from the same space as the popcorn business. Fortunately, he had become familiar with freezer-pop packaging, which his dad made, and reckoned that if he came up with similar packages made a little smaller, he could put the sauce in them.
Although it was hard to break into the industry, Epstein, through sheer persistence, managed to win deals to supply soy sauce to airline customers and eventually many Chinese restaurants. The sauce venture worked out so well that he sold the popcorn business in the early 1970s. Today, the family-owned company employs nearly 500 people at its facilities, including the Tarrytown headquarters; manufacturing facilities, in Scotia, NY, and Totowa and Rockaway, NJ; and its distribution center, in Santa Fe Springs, CA. The firm is now run by Howard’s son, president/CEO Paul Epstein, while Howard — who was once crowned “the ambassador of packaged American soy sauce” by The Atlantic — is now chairman.
Collectively, the company has one million square feet of production and distribution space. Although the closely held firm doesn’t disclose its annual revenue, it does sell millions of dollars’ worth of sauces every year, according to Kimberly Cassar, Kari-Out’s marketing director.
“If you’re consuming soy sauce or duck sauce at your local restaurant, they probably come from Kari-Out,” says Cassar. The company also makes takeout food packaging and bags, from glassine egg-roll sleeves to recyclable paper shopping bags.
Kari-Out has been in growth mode of late. Thanks to accelerating demand for takeout food and the company’s summer 2020 acquisition of Virginia-based manufacturer Sanfacon’s U.S. towelette business — a move that allows Kari-Out to sell alcohol towelettes to many companies needing PPE — the company had its best month ever in March, according to Cassar.
The company expects the towelettes, made in an FDA-inspected facility in New Jersey and tested in an independent lab, to become an important product line for the future. “We believe the high demand for sanitizing products is here to stay, even after the coronavirus is long gone,” noted Paul at the time. “By purchasing Sanfacon’s production facility in Virginia, we’re able to expand our footprint in the PPE industry and consistently provide our customers with safe sanitization products.”
Staying in growth mode has also required a substantial investment in state-of-the-art machinery for its manufacturing facilities. “Our vision has always been to provide our customers with the very best products and service,” says Paul Epstein. “As we plan for the future, we are focused on developing more eco-friendly and sustainable product offerings that deliver on our high standards for functionality and quality. We’ve invested in our teams, our manufacturing facilities, and our innovation. With all these important components in place, we are looking forward to doing some great things as a company.”
However, keeping the nearly 60-year-old company on the move has meant navigating some steep challenges that are facing many manufacturers right now. Labor is a major one, with many working parents still coping with lingering childcare issues due to the pandemic’s impact on schools. Also, in this environment, many workers who are receiving unemployment benefits aren’t ready to return to their jobs yet, and some workers who might have opted for manufacturing jobs are instead turning to more flexible sources of income, such as driving for Amazon or Grubhub. “Getting enough trained people on our manufacturing lines has been challenging,” says Cassar. “The pool of available team members has been very limited.”
“We’ve invested in our teams, our manufacturing facilities, and our innovation.. We are looking forward to doing some great things as a company.”
—Paul Epstein CEO, Kari-Out
This has meant Kari-Out must recruit on an ongoing basis. “We’re dedicated to finding the right people for our facilities,” says Cassar. “We’ve got great jobs and a great company.”
It has also meant devoting a lot of attention to retention of the existing team. Under the direction of Howard’s son Adam, Kari-Out’s “chief people officer,” the company makes an ongoing effort to keep its culture as employee-friendly as possible. “Every week at our leadership team meeting, the question is ‘How is the staff doing? How can we support them more?’” says Cassar. “Paul is hyper-focused on making sure we are communicating.”
When the pandemic began, supporting Kari-Out’s employees meant allowing the whole staff of its headquarters to work remotely and investing heavily in the safety of its manufacturing team. As the country transitioned out of pandemic crisis mode, “We want to protect our front-line staff,” says Cassar. “We want to make sure they stay healthy.” To that end, the company made a big investment in PPE, and supported helping employees who wished to receive vaccinations. However, says Cassar, “We’re not forcing anyone to get the vaccine.”
As Kari-Out has been managing concerns about employee safety, its operations team has confronted another challenge: rising transportation, materials, and freight costs associated with the pandemic. “Freight costs across the company have been growing exponentially,” explains Cassar. This has forced the company to keep an eagle eye on overhead. “Managing those costs is challenging, along with the lack of drivers, lack of trucks, and lack of containers,” she says. “Our goal is about offering the best quality product at the right price. Managing our costs is a big part of that.”
The company has also had to make sure it can keep up with high demand, sparked by the shift to takeout dining during the pandemic, continually making sure its supply chain is strong. “A lot of companies ran out of materials,” says Cassar, but, she adds, “by and large, we’ve been able to support our customers.”
In Kari-Out’s favor, says Paul Epstein, is the fact it is a family business. “I really believe the advantage of running a family business today is our ability to move quickly and harness an entrepreneurial spirit and passion that drives our organization forward,” he says. “As a family business, we care deeply about our associates, and I believe this mindset sets us apart from many other companies.”
To tackle its specific challenges, Kari-Out has expanded its already substantial operations team. Kari-Out plans to continue to add management staff in the coming months, in both Tarrytown and Scotia, Cassar says.
As the company looks toward the future, it has embraced environmental sustainability in its operations and its product offerings, with Howard’s son David heading up strategic projects in this area. Kari-Out has already installed solar technology at its New Jersey plants and is examining its other facilities for opportunities to introduce additional ecofriendly processes. “We’re looking at finding new technologies and ways to reduce waste in our manufacturing processes,” says Cassar.
It has rolled out a growing array of green products, as well. In February, the company introduced the patent-pending “Two-Compartment Eco Box,” a paper carry-out box that keeps food separated into two compartments, part of a series of Eco Boxes. Kari-Out’s sustainable packaging also includes TerraSmart clamshell-type containers and microwave-safe Eco Earth cardboard containers. It also supplies customers with 100% recyclable Kraft paper shopping bags.
It’s all part of Kari-Out’s efforts to fuel growth in 2021. “As long as we stay the course, fingers crossed, we will have a prosperous 2021,” Cassar says.
Freelance writer Elaine Pofeldt is a frequent contributor to 914INC.