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 Rathl 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 Rathl .
As 2006 dragged on, Rathl 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 Rathl 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 Rathl should contact the Louisiana insurance commissioner for help. What's Happened Since In December 2006, Rathl sold his equipment, trademarks, and recipes to a company called Pig on Catering for less than $1 million.
Another food broker bought the building for an undisclosed amount. Rathl says he came out "okay" and is proud that "the legacy I created in 1990 will endure." Rathl is working as a consultant for Pig on until the purchase price is fully paid.
Pig on 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 Rathl 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 Rathl , 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 Rathl . "We'll be the first ones out.
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