Continental Foods Inc., which for decades has trucked ricotta and marinara, fettuccine and pepperoni to Baltimore's trattorie, said yesterday it will be bought and absorbed by a Los Angeles-based competitor.
The Baltimore-based company has stretched beyond its Italian roots in recent years to become a $100 million, full-service supplier to restaurants from Delaware to West Virginia.
Its sale to Rykoff-Sexton Inc., scheduled to close later this month, is part of a trend of consolidation among restaurant wholesalers. The price wasn't disclosed.
Continental employs about 250 at its headquarters and distribution center in Cross Roads Industrial Center. Managers expect those jobs to be retained.
"Our company is growing so rapidly that we anticipate the need for additional employees," said Joseph Abramson, Continental's president.
Rykoff-Sexton's Landover warehouse, which handles about $28 million in annual business, will shut down after the purchase. Landover-based accounts will be moved to Baltimore, and many of the Landover workers are expected to follow, Mr. Abramson said.
"There are very few overlapping customers," said Mark Van Stekelenburg, Rykoff-Sexton's president and chief executive officer.
Rykoff-Sexton sold $1.52 billion in supplies to restaurants, prisons, schools, hospitals and other institutions for the year that ended April 30, 1994. That's far less than, say, industry leader Sysco Corp.'s $10.94 billion in annual food service sales.
But Rykoff-Sexton, which has 26 warehouses across the country, is growing, mainly by finding companies such as Continental among the country's 3,000-odd restaurant suppliers.
"We're seeing a lot of consolidation," said Jack Russo, a financial analyst who follows Rykoff-Sexton for A. G. Edwards & Sons in St. Louis. "From Rykoff's standpoint it's a very good transaction. . . . You're merging one good company with another."
Ten years ago, Continental operated from a small warehouse in Baltimore's Little Italy and generated just $18 million in sales, mostly to pizzerias and Italian restaurants, Mr. Abramson said. It was founded in 1932 as a retail grocery store by Pete and Mary Guerriero.
In 1985, the company started seeking new customers and offering broader lines of frozen, fresh and dry foods, janitorial supplies, paper goods and other supplies. Its growth spurted, helped by consumers' increasing fondness for eating out.
Its present warehouse, which it owns and is part of the sale, is in southwest Baltimore and has 230,000 square feet of space. Sales will hit $106 million for the fiscal year that ends next April 30, Mr. Abramson said.
Pizzerias and Italian eateries still account for about 40 percent of revenue.
Continued growth for Continental would have required heavy spending to reach beyond its range of 150 miles around Baltimore, Mr. Abramson said. The company chose the merger instead.
"It was a strategic time to sell the company that has been on a strong growth curve," Mr. Abramson said. John Guerriero, son of the founders and present owner, Mr. Abramson and Vice President Rick Pannoni will continue to work in Baltimore once Rykoff-Sexton takes over.