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Sunday, Oct 2, 2022

Family-Owned Business Winners Adapt, Expand

The Business Journal is scheduled to present the annual Family-Owned Business Awards on Aug. 26 at the Irvine Marriott.

It’s our first such live and in-person event since the pandemic began in March last year.

This week’s Business Journal features dozens of nominees for the event’s annual awards; the company listings begin on page 39.

What follows are updates from the 2020 winners, when our annual event was held virtually:

Back to Work Means More Work

A year ago, John Clark had just taken over the CEO role at Prudential Overall Supply, which his grandfather John D. Clark had begun in 1932, when the pandemic struck, causing a decline in sales.

“We’re doing well,” Clark told the Business Journal last week.

“We’re doing our best to reengage customers who had to shut down or reduce demand for our products and services.

“We’re trying to take advantage of the positive swing in the economy. We’re seeing a very healthy rebound in the Orange County economy.”

Clark, who took the top executive position from his father Dan Clark, said his employee count has remained steady at around 1,900 with annual revenue about $200 million. Because of that endurance, Prudential Overall Supply last year won the Business Journal’s annual award for longevity.

Prudential provides over 28,000 customers with uniform rental services and related supplies through a network of 35 operating locations throughout the United States. About 200 of its employees work in its Irvine facilities. The Prudential roster includes more than 300 customers that have utilized the company’s services for more than 35 years.

It’s kept on growing, in March announcing it’s acquired the customer accounts of Stevenson Uniform Service Inc. of Norfolk, Va.

“We are always interested in looking at acquisition opportunities and organic growth,” he said. “We absolutely have been hiring. We’ve found the market challenging, but we are persistent.”

In July, Prudential ranked No. 4 on the Selling Power 50 Best Companies to Sell for 2021 List. Selling Power, a magazine for sales managers, says the companies on the list “have truly world-class sales organizations.”

Prudential said it has been certified as a Green Business by the City of Irvine’s Green Business Program. In June, it began partnering with Ambercycle to recycle uniforms.

Said Clark: “We’re proud to be a part of the Orange County community and hope that Orange County companies would like to partner with a fellow Orange County business for uniforms and laundry and rentals.”

Drive-Thrus Boost Margins

Roland Spongberg, founder and CEO of WKS Restaurant Group, said working through the effects of the pandemic at his restaurant chains “was not easy.”

“The most difficult part is we had some people get sick, and two passed away,” he said.

The Cypress-based restaurant franchisee owns more than 300 franchised restaurants, including 127 units of Denny’s Corp. (Nasdaq: DENN), where it’s the biggest franchisee owner.

“Denny’s was a challenge” because of its sit-down nature, he said.

“The drive-thrus performed really well. Our sales in the drive-thrus are at all-times highs.”

WKS is also the largest franchisee of The Wendy’s Company (Nasdaq: WEN) in the state with 55 locations. This year, it expanded by snapping up 31 Wendy’s locations in Indiana and Kentucky.

“We stayed very active,” he said.

It acquired two more restaurants of the Costa Mesa-based El Pollo Loco Holdings Inc. (Nasdaq: LOCO), to add to the 70 he already owns, making him the largest franchisee of the chain that has 470 restaurants.

“We continue to look for acquisitions if they meet our criteria,” he said. “There are a lot of overvalued stores, which we try to stay away from and not get ahead of our skis.”

An interesting investing point was that because restaurants only had drive-thrus, their profit margins expanded during this period.

“The margins will come back to normal—we’re seeing that,” he said.

“We’re hiring. We need people. People are a problem. They’re not working because of unemployment benefits,” he said.

“Things are going back to normal. California seemed liked it was the last one to open.”

EV Pivot Finds Buyers

Apex Golf Carts ranked No. 9 among the fastest-growing small private companies on the Business Journal’s annual list last year with $2.7 million in annual sales, a 57% spurt over a two-year period.

Founder Caius Griu is switching his fleet to lithium batteries, which he says are “safer for the environment and performance is better as well.”

“We were one of the first companies to bring them to Orange County, and they’re flying off the shelf.”

While last year, his golf carts cost up to $10,000, this year he’s selling the Evolution Street legal Carrier 6 golf Cart starting at $11,500.

Security Focus, Societal Gains

Martha Daniel, founder of tech firm Cytellix and its parent IMRI, saw revenue at her Aliso Viejo-based tech security-related service companies fall about $6 million to around $10 million in 2020. Thanks in part to a new contract, she’s bullish that it can rebound to $18.5 million this year.

She’s been raising capital for the Cytellix division, where business has been growing due to increased threats to computer networks.

“Right now, we are excited about the growth of Cytellix,” she said.

Daniel’s tech career started in 1970 with computer science studies in junior college, followed by a Bachelor of Science degree in computer information systems from California State Polytechnic University, Pomona, and an MBA from the University of La Verne.

She also served as a cryptologist in the U.S. Navy, and later counted a successful corporate career, including roles as chief information officer at FDIC/Resolution Trust Corp. and senior systems engineer at IBM.

In March, Daniel discussed the challenges of being a Black woman in the male-dominated world of technology.

“Being a Black female, coupled with the doubts when I walked into the room, I was challenged many times,” Daniel told the Business Journal.

“But I was never intimidated because my military background prepared me for that level, because women were always in the minority there.”

“I was told that I would not be able to be successful in Orange County as an African-American business, a Black-owned business,” she said. “Obviously that was not a true statement.”

Looking ahead, she is optimistic as she sees more Black-owned businesses opening up locally.

“We will see the next generation of Blacks and African Americans venturing more into entrepreneurship,” she said. “I even hear some of my grandkids saying ‘I want to have my own business.’ To me, even just hearing that being said is nice.”

Family Survives, Company Expands

Josh Kornoff, who along with his wife, Elena, in 2017 started Surf City Still Works, a Huntington Beach distillery, was understated when he said it’s been “a really interesting year.”

“Where do I even start? We’re still a family—that’s a great thing,” he quipped.

The company didn’t slow down its expansion plans during the pandemic. It has completed the buildout of its new distillery that is now fully operational, becoming the second largest in Southern California.

It has also expanded its reach to more than 400 retail stores, more than double the amount from a year ago. It’s now in supermarkets like Ralphs, Pavilions and Albertsons. Surf City Still Works is planning to distribute its products in other states beginning next year after it goes through a lengthy licensing process.

“We continue to rapidly expand our footprint,” Kornoff said.

Earlier this year, the company launched its newest product line, hard seltzers, where it took a novel approach with cocktail-inspired flavors such as Soda and Lime, Mai Tai, Moscow Mule and Margarita to differentiate its products from competitors such as White Claw and Truly brands.

Kornoff said product sales are “going very well” and that Target is helping distribute it statewide in 150 stores.

Also on tap for the distillery is nearing completion of a major expansion including a full-service kitchen and tasting room. It was supposed to open by July 4th, but has been delayed due to permitting process that took longer than expected; the opening is now set for this fall.

“Everyone’s excited about that restaurant,” he said. “The timing is in our favor. It looks like a lot of pent-up demand.”

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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