11: Ricos CEO Tony Liberto on Inventions, Innovations and Achieving the Impossible

Ricos Products CEO and Vistage Lifetime Achievement Award Winner Tony Liberto joins the podcast and shares the amazing story of the invention of the ballpark nacho and how smart diversification strategies have helped his family business thrive through four generations. Tony also talks to Vistage CEO Sam Reese about how his investments in marketing and company culture have fueled the next wave of business growth.

Discover how Tony:

• Leveraged key relationships to withstand supply chain challenges
• Retains his people
• Approaches challenges that seem insurmountable

Transcript

Sam Reese: Welcome everyone to another episode of A Life of Climb podcast. I’m your host, Sam Reese. Joining me today is Tony Liberto, president and CEO of Ricos Products Company. Tony, thanks so much for joining us.

Tony Liberto: Thanks for having me, Sam.

Sam Reese: I know, when I think about your family business story, it’s four generations. Take me back to four generations to the founding, and what was the original vision for the company?

Tony Liberto: Well, my great-grandfather, Rosario Liberto, at the young age of 14 years old, left Cefalù, Sicily, got on a boat and went into New Orleans area. Discovering the American Dream, back in the day, right? He started in Shreveport. He was there shortly though because malaria broke out, from what I understand very quickly after he opened his business in Shreveport. Then he moved to Beaumont, Texas, and that’s where he had a little family grocery store, [where] he was importing olive oils and spices from Italy, as well as the coffee.

And he saw the circuses coming through San Antonio and he thought, “Wow, these circuses are coming right here through San Antonio.” And someone told him and gave him the idea, “Hey, why don’t you roast some peanuts in your coffee roaster, and sell them to the circus?” And so my great-grandfather did that. He started roasting peanuts in his coffee roaster, and selling them to the circus when they came through town, and he started making some good money selling roasted peanuts.

And that was our first venture into what we call the concession industry, which is selling food and beverage to people who didn’t come to your facility to buy food and beverage. They came to watch the circus, or watch the movie, or watch the ballgame, or some other event that you’re the byproduct of the event while they’re there.

Inventing the ballpark nacho

Sam Reese: On this podcast, we talk a lot about ideas and innovation. And I mean, when you think about your business, inventing the ballpark nacho. That’s pretty incredible. You got to tell us how that happened because that is such an incredible legacy. How was the ballpark nacho invented?

Tony Liberto: So fast-forward to 1976 when my dad — we were basically a theater distribution company at that time, and stadiums and arenas  we’d sell anything behind that concession stand. We were a distributor for it. From the soft goods, the paper products, the candies, the popcorn, the peanuts, of course. Even the carbonated beverages. We were a full-line stadium and arena, and/or theater, concession distributor.

And you saw these people coming to these stadiums and arenas, and by the way, he went to a Mexican restaurant in the late ’70s —’75, ’76 — and he had this order of nachos presented to him. He said, “These nachos, this is great. It’s a melted cheese over chips, and jalapenos.” And my dad thought, “If I could figure out a way to sell nachos in a concession environment, I’d probably make some darn good money.” But I mean, when you go to the restaurant, you can’t serve people in two or three seconds. Transaction time is very important in the concession environment because people want to get back to watch the movie. They want to get back to watch the ballgame.

And so the way that they serve them traditionally in restaurants, you can’t sell them that way in a stadium or theater. So he thought, “If I could figure out a fast way that I could serve these with fast transaction time, I think we’d make some money.” And he found a company that was doing cheese sauce up in Dixon, Illinois. It was Dean Foods company, they were selling a big “number 10” can of cheese sauce.

Sam Reese: Still a big company.

Tony Liberto: Still a big company. And he found a tortilla chip manufacturer down here in Texas, and he found a jalapeno grower down in Mexico, and he put it all together. We already had the distribution business at Arlington Stadium, where the Rangers were playing. And he said, “Hey, can I put this new product in your stadium? It’s called nachos.” And the stadium operator said, “No, I don’t really want to put it in my concession stand, because you’re going to take away from my sales of popcorn and hotdogs. I make a lot of money on those.” He says, “I’ll tell you what, if you make a freestanding nacho cart, I’ll let you put it in the foyer of the stands here. And you can sell it and see how it goes. I just don’t want it in my concession stand.”

And so Dad made about six or seven of these nacho carts. We were in the mezzanine of the stadium, and he started selling nachos during the ballgame. And he actually took a video of people standing in line at this nacho cart. And you’d hear the crack of the bat and there’d be 10, 12, 15 people in line waiting for the nachos. And they’d sit there, they’d hear the crack of the bat, but they wouldn’t get out of line. The stadium would start roaring, they wouldn’t get out of line. And all of a sudden people realized, “Hey, this is going to be an item that’s going to stay.”

Mind you, the stadium operator saw his beverage sales increase. He saw hotdog sales increase, and he saw popcorn sales increase, once the nachos were introduced, because of one little ingredient. The jalapeno pepper. The jalapeno pepper is considered what you call an appetizer, once you finish the order of nachos, you have that spice growing in your mouth. You’re like, “You know what? I’m going to go get another beverage,” or, “I’m going to go get some more popcorn. I’m going to go get some hot dogs.” So all the per caps on all the items that were in the stadium already, they all increased.

So that’s when the guys said, “Hey, you know what? Put this in all my stadium concessions,” and that’s where we got our birth of stadium nachos.

Sam Reese: That’s great. And you’ve been with the business since you were right in high school, right?

Tony Liberto: Well, you can go back to when I was in grade school. My dad had me working at stadiums and arenas as a little kid, in the stands. Once I got into high school, I was working for the family business here during the summers, and then went to college, of course. And then graduated from [Texas] A&M in 1986, and came straight to work for the family business.

Three legs of the business provide flexibility, fuel success

Sam Reese: I saw you were an Aggie. There’s a lot of great Aggies out there. Tell us a little bit about the business model right now, and why it’s been so successful.

Tony Liberto: Well, we’ve got three legs to the business model right now. The stadiums and theater concessions, stadiums and arenas, that was the side of the business that my dad really developed and got it to the point where we were distributing movie theaters in all 50 states. And at one point, we were able to say that we were in at least 70 to 75% of the screens, movie theater screens, in the United States. Selling our product.

Sam Reese: Incredible.

Tony Liberto: Yeah.

Sam Reese: Incredible.

Tony Liberto: So yeah, you fast-forward a few years after we introduced nachos, our expansion into the international market, it kind of came as a default. Because the movie theaters business came to us after the stadiums, of course, because the stadiums were — we were at Rangers stadium, then we went to Cowboys stadium, and a theater chain in Dallas called United Artist Theaters. They called my dad and said, “Hey, we want to put nachos in our theaters.” And my dad immediately said, “No, no, this is a stadium item. It’s a messy item. You’re going to drop cheese and crumbs, and all of these things. And y’all have velvet seats, and y’all have carpeting.” And he goes, “No, I don’t think this is going to work.”

And they insisted and they said, “Frank, we want to put nachos in.” And Dad said, “Okay, I’ll do a 10-theater test here in Dallas.” And so Dad did 10 theater tests for 30 days, and the gentleman at United Artists called my dad and said, “Frank, you owe me a lot of money.” And dad said, “I told you. Sure, send me the cleaning bill, I’ll pay for the cleaning bill, just send it my way.” And the gentleman said, “No, Frank, I wanted to put this nationwide and you only gave me 10 theaters for the last 30 days. Do you know how much money you cost me in the last 30 days, if I would’ve gone nationwide?” He said, “Get this nationally for me, please, right away.”

Sam Reese: Wow.

Tony Liberto: So we found, there’s a distribution network that’s selling to all these theaters across the United States, and we started selling to all their distributors. And so that’s what got us out. Before that, all we were doing was theater distribution of all the items except nachos, but nachos is what really grew our business. United Artists bought a theater chain in Germany, and they asked my dad, “Can you get your nachos into Germany?”

And Dad said, “I’ll find a way.”

And he flew to Germany and found a distributor in Germany, and said, “Hey, can you get this product? There’s this new chain coming to town called United Artist Theaters. They’re going to buy this, it’s guaranteed.” And they said, “Sure, we’ll take it.” And so that’s what got us into the international market.

So now, we had the theaters and stadiums and arenas, and we had international, we had two different markets. And that’s what really helped expand our business to where we are today. And in the meantime, a gentleman that was a broker for Sam’s Club came to my Dad and said, “Hey, I see this new item. I think we could sell this at Sam’s. You’ve heard of Sam’s Club, right, Frank?” And my dad says —

Sam Reese: “Oh yeah, I’ve heard of that.”

Tony Liberto: But my dad said, “I’ve never heard of Sam’s Club,” at the time. He goes, “What is this?” “Oh, it’s a wholesale club kind of a thing.” Dad said, “Sure.” So we started selling to Sam’s Club. So we got three legs of the company, the theater, stadiums and arenas, the international market, and the retail market now. And those three legs really help us drive the [company’s] success because at any given year, one leg could be stronger than the other leg. And it kind of fluctuates, between year over year, which one’s really helping drive the business.

How relationships with key partners helped withstand supply chain challenges

Sam Reese: I was thinking about your business, here. We all had a really difficult time when we pivoted during COVID, but just thinking about your business. When you talk about how some of them are up, some of them are down. I know that gave you some versatility, but when COVID hit, it disrupted everything. Just take me back to what you did there to keep everything rolling here when you … I mean, I think about a company like [yours] with a sophisticated supply chain, all sorts of challenges. How did you keep things rolling, and what was the key to that?

Tony Liberto: COVID hit during spring break of 2020, I was down in Port Aransas, spring break with my family, and I remember waking up in the morning and turning on SportsCenter, and there was [a] replay of the games on ESPN. They showed how they shut down that basketball game, prior to the game getting started, and they sent people home. And I’m watching this replay, and I just sat there mesmerized and frozen in my chair for a good hour.

And I immediately thought, “That’s two-thirds of my business. That’s stadiums, that’s arenas, that’s movie theaters. And my international business has a strong presence of stadiums, arenas, and movie theaters.” And that was, two-thirds of my business just went to zero in one fell swoop, they started shutting everything down. And my anxiety level hit the roof, I’m sitting there and, you ask my wife, I was just watching TV as soon as I got out of bed, to when it’s time to go to bed. And just watching all of this unfold and I’m thinking, “Oh my God, what are we going to do?” Talking to my leadership team, “Guys, we’ve got to figure this all out. This is going to be difficult. Times are going to get tough.”

And so, through the course of that, we managed to … Obviously, weren’t getting any orders for stadiums and arenas and theaters. We’re thinking about whether or not we were going to have to lay people off. We’d go from one month to the next month, and kind of see what our sales in retail were still holding strong. And then all of a sudden we started seeing sales in retail growing. And then we started seeing retail sales really growing. And at one point, I think we were 35 to 40% up, year over year, on retail sales. So retail sales and people wanting to go out and find a comfort food, a snack food that reminded them of maybe being at the ballpark, or the movie theater.

And our product, we’re in retail outlets in all 50 states throughout the course of Walmart, Sam’s, H-E-B, Kroger’s, Albertsons. We’re in all 50 states and a lot of different umbrellas. And our product was just one that was obviously affordable, it was a feel-good product. And so when I saw retail sales starting to increase and make up, not a hundred percent, but make up a large portion of that business that was down to zero, in theaters and stadiums and international business, I could come up for air. Thank God, they started finding the opportunity to go and buy our product at the retail level, getting the cheese, getting the chips, getting the peppers. And we assume, taking it home and streaming some Netflix stuff, and enjoying our products at home. Because that’s really what saved us, was our retail sales through those two years.

Sam Reese: So retail is strong. What else did you have to do to pivot during that time? I’m just imagining all sorts of different jobs, and supply chain logistics. There had to be all sorts of complications there.

Tony Liberto: The retail business kept growing, and like I said, up 35%, almost 40% year over year. That’s a lot of volume that came out of our plants that now is going into these retail segments. So as the theater business started coming back up, and they started opening up theaters and stadiums again, our bigger challenge was being able to supply them. We didn’t have the supply, because we had that supply already tied up in 35% more, 40% more of our retail business. And so we had to find ways to really take a limited supply of products and juggle and say, “Okay, who’s getting this product, when?”

We would short some of the major retailers, we’d short some of our theater business, we’d short some of our international business. And the biggest thing that saved us through all of that, Sam, is our relationships. My dad was a very, very strong relationship person with his distributors. He says, “Build a strong relationship with your distributors, and they’ll never forget you.” And so when we had distributors across the United States selling to our theaters, back in the day, we’d have some people come and try to buy from us direct. And Dad said, “No, I’m never, I’m not going to step on the toes of my distributors. They’re the ones that helped me build this business.”

And so those relationships, and that philosophy, has transcended down to my leadership style and the relationships we have in the movie theaters, and the relationships we have in the stadiums and arenas. Those people stuck with us.

Marketing fuels new growth

Sam Reese: You’ve also made this big investment in marketing, and even social media. Tell us a little bit about what sort of sparked that, and how that’s working for you.

Tony Liberto: Well, when we got into the retail business, it was by default, like I said. They came to us, and we started selling to Sam’s Club. Sam’s Club, of course, [filtered] into Walmart pretty quick, and then other retailers. But we end up selling some more product to the retail business.

And so then I get some people saying, “Hey, you need marketing.” And it’s right when this social media thing came up, and the internet.

And I remember the first meeting I had with a marketing agency, they go, “Well, we have this ability to work through what’s called influencers.” And I’m looking around, and I go —

Sam Reese: “What’s that?”

Tony Liberto: … “What do they mean by an influencer, what’s that mean?” And then there was that one shampoo commercial, but they used that analogy. They said, “You remember when you saw that commercial,” they said, “they use it, and then you tell somebody, and they tell somebody. And so on, and so on, and so on.” And they showed the faces just get bigger and bigger and bigger on the screen. And I said, “Yeah, I remember that commercial.” They said, “That’s what influencers do. Influencers take and build your product by spreading the message with other people, through the internet.”

And so I finally got to the understanding of what influencers do, and I figured, “Okay, yeah, let’s go ahead and start some social media.” By the way, we didn’t even have a marketing department. We had a retail department. We didn’t have a marketing department. And so I said, “Well, okay, I guess we need to hire somebody that knows marketing.” So we hired a marketing person, and actually gave them a VP title. Then we hired — where we really took off is when we hired an outside agency. We have an agency of record that we’ve been using for the past five years now. And that’s what they do for a living. And they’ve got some big-name people that they’re representing, and we’re a small business, compared to some of the businesses that they’re representing.

But the message started running in pretty clear when I saw what they could do, what they’ve done for others. And then when you just see the retail numbers start increasing, you’re like, “Okay, that last campaign we did. Look at the retail.” Is there a way to directly weigh that every dollar you spend in marketing is going to have X return? No, you’re not going to be able to get that perfect science. But I can say this, over the last five years we’ve grown our marketing department, we’ve increased our marketing budget, and I’ve seen our retail sales really start expanding in markets that we were never in, as well as growing here in our heartland.

The key to keeping good people

Sam Reese: You do have a lot of long-term employees there, and that’s something I know you’re really proud of. What is it about working at Ricos that have people wanting to build their careers there? What do you feel has been sort of the secret sauce internally, for people that have these long careers?

Tony Liberto: I tell the people when they come in the door, I say, “Look, I know you’re interviewing me as much as I’m interviewing you. You don’t have to work here. You have choices. And it’s my job to create an environment and a culture that makes you wake up in the morning, walk out the door and say, ‘Hey, I’m going to work today,’ versus [waking] up in the morning and get all upset. And, ‘Oh my God, I got to go to work.’”

It’s my job to put that mindset that they want to come work here. And I think that’s something that I’ve, like you say, the tenure of most of my employees, especially some of my executives, it speaks for themselves. And I think that tells me that I’m doing a job of creating the culture around here that makes them want to come to work. I don’t feel like any of these people are people that can’t leave tomorrow morning and go get a job somewhere else. And I want to make them not want to go look for another job. And that’s what I think we’ve done around here pretty well.
And the fact that you, I’ve said listening, and making them feel like they’re part of the decision, part of this whole business, part of the success. I think that’s what keeps people wanting to come to work.

How to tackle seemingly insurmountable challenges

Sam Reese: I got to ask you for a piece of advice, it’ll be my last question, but I know when people have a chance to listen to this, when they hear leaders like you, they want to get a little advice. So here’s what I was going to ask you, advice-wise. Any advice for leaders that are really dealing with what feels like an impossible or difficult, almost insurmountable, challenge? How do you think about that? If I came to you as another business owner and said, “This looks impossible,” any advice on how you have me think about that and attack it?

Tony Liberto: Well, my dad used to say, “There’s no such thing as can’t.” The word can’t, he wouldn’t accept that. He said, “You know what? There’s no such thing as can’t. The impossible just takes a little bit longer.”

Sam Reese: That is good.

Tony Liberto: And I mean, you think it’s impossible, but once you really sit back and you take a breath, and you take a step back and you look at this situation that you’re dealing with, that you’re overwhelmed with. Kind of like what I dealt with [during] COVID, when COVID faced me, I mean, I was floored. But I took a step back, I took a breath, and just be patient. And again, if you surround yourself with good people, and you’ve got a culture that people are going to say, “Let’s do this together, let’s all get up and let’s figure this out, let’s do this together. We’re going to win.”

So that team environment, and that positive attitude, and the culture. And just don’t let can’t enter your mind. The impossible just takes a little bit longer.

Sam Reese: Tony, thanks again for your time today. It was just a terrific honor to listen to you, and how fun and exciting the business still is to you.

Tony Liberto: Sam, thank you so much for having me. I’ve really enjoyed it. And like I said, it’s a fun time to be here at Ricos. Really enjoyed it.

Sam Reese: Thanks for joining us for this edition of A Life of Climb podcast. Friendly reminder to please subscribe or follow the podcast to get all the latest episodes. And please visit vistage.com/podcast for more resources to support you on your leadership journey.

0 views