Biz Buzz October 2017

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INSIDE 6

Taking charge at a local company in the face of a family tragedy

After suddenly being thrust into a leadership role upon her parents’ deaths, Katelyn Kaney found the strength to take Cattaneo Bros. to the next level. — BY JULIE LYNEM

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How some local ‘mom & pop’ stores thrive in today’s business world

From hamburgers to clothing and accessories and home appliances, these small companies have found secrets to success in our communities. — BY REBECCA JURETIC

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Two local hospitals change culture, improve results

In 2014, Sierra Vista and Twin Cities hospitals began ‘Lean Daily Management,’ which engages employees to help solve problems, saving the hospitals time and improving results. — BY REBECCA JURETIC

BIZ SNAPSHOT Iconic Eskimo Pie sign gets a makeover.

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Biz Buzz Extra | FRIDAY OCTOBER 27 2017 3


WELCOME . ....................................................................................................................................................

The Tribune, San Luis Obispo A October, 2017 Publisher....................................................................................Tom Cullinan Executive Editor....................................................................... Sandra Duerr Art Director............................................................................ Kristi Marinelly Contributing Photographers......................Laura Dickinson, Joe Johnston, David Middlecamp Contributing Writers...................................... Rebecca Juretic, Julie Lynem

For information on advertising, call 805-781-7818 Vice President, Advertising..........................................................Valerie Vaz Media Managers......................... Lori Haynes, Sergio Holguin, Brad Koyak Media Specialists.........................................Cecilia Dominguez, Gina Grieb, Patti Leos, Laura Lupini, Ray Riordan ...............................................................................................................................................

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About the cover Cattaneo Bros. owner and president, Katelyn Kaney at The Mercantile in Downtown San Luis Obispo. PHOTO BY JOE JOHNSTON ..............................................................................

Running a family business is difficult under any circumstances. But when Katelyn Kaney took over as CEO at Cattaneo Bros., it was far tougher. She was just 24 when both of her parents died in 2008, leaving the children to find their own way. Suddenly, she was responsible for 20 employees and the growth and profitability of the company — as well as a “family home full of memories to clean out and pack up.” Executive Director, As she recalled to freeSandra Duerr lancer Julie Lynem for our cover story, “I have to use all this pain to find a greater . ....................................................... good.” By all accounts, Kaney has Story ideas? accomplished just that. Under her leadership, Cattaneo Bros. If you think there’s an issue, has shown steady growth, ex- individual or business that panding product lines to meet merits attention, please let customer demand for healthy us know. Email your options. comments to Beyond this informative and bizbuzz@thetribune inspiring story, you’ll find two news.com, or me at other insightful articles in this sduerr@thetribune issue of Biz Buzz EXTRA, the news.com, or c/o The region’s leading quarterly busi- Tribune, P.O. Box 112, San ness magazine: Luis Obispo, CA 93406. A How some local small busi........................................................ nesses are flourishing in San Luis Obispo County, despite fierce competition from online retailers and chain stores A How a program called Lean Daily Management at Sierra Vista Regional Medical Center and Twin Cities Community Hospital has changed their culture — involving employees in solving problems, increasing employee engagement and patient satisfaction, and improving performance As always, we hope you enjoy this issue — and share it with your work colleagues and friends.

Sandra Duerr Executive Editor, The Tribune and sanluisobispo.com

Biz Buzz Extra is an editorial supplement published by The Tribune, P.O. Box 112, San Luis Obispo, CA 93408 ALL RIGHTS RESERVED. MATERIAL HEREIN MAY NOT BE REPRINTED WITHOUT THE EXPRESS WRITTEN CONSENT OF THE PUBLISHER.

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PHOTOS BY JOE JOHNSTON jjohnston@thetribunenews.com

The Mercantile at 950 Chorro Street in downtown San Luis Obispo sells specialty food items, home décor and gifts.

CARRYING ON A LEGACY

BY JULIE LYNEM

Special to The Tribune

Cattaneo Bros. thrives a decade after the owners’ death left their daughter in charge at 24 Under Katelyn Kaney’s leadership, the company has shown steady growth and expanded with new product lines that meet customers’ demands for healthy options.

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or as long as she can remember, Katelyn Kaney was part of Cattaneo Bros., the family business. She grew up working at the factory in San Luis Obispo, alongside her siblings and parents, Michael and Jayne. The Christmas holiday season was always the busiest, and she recalls how they would all pitch in to label packages, answer phones, string beef jerky and prepare gift baskets for shipping to customers. “It was a fun time,” she said. “Sometimes, my mom would just get a tree three days before Christmas, but we didn’t know any different.” While it was an integral part of her life as a child, and later, as a young adult, she never thought she would one day take the reins. Yet, since 2008, she’s been the company’s president and chief executive

F

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Katelyn Kaney is president and CEO of Cattaneo Bros. in San Luis Obispo.

officer, retaining the legacy that her parents built and making her own mark. Under her leadership, Cattaneo Bros. has shown steady growth and a willingness to expand with new product lines — including Range 100 percent grass-fed beef jerky — that meet customer demand for healthy options. The company’s products are now available in more than 600 stores, most in California but across the country as well, and Cattaneo Bros. Please see next page

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jerky are official snacks for several athletic departments such as UCLA, Cal Poly, Arizona State University, the Utah Jazz and San Francisco Giants. “I was prepared,” she said, thinking back on those early years. “And I didn’t even know it.” FAMILY LEGACY Long before the Kaney family took over the local beef jerky and sausage business, Cattaneo Bros. was a fixture in San Luis Obispo. Its rich history began in 1947 when William Cattaneo Sr., originally from Italy, his wife Mary, and William’s cousin, Pino, started a meat processing business here. In 1970, Cattaneo Bros. built the facility on Caudill Street, where the factory stands today. In the late 1980s, Kaney’s parents, Cal Poly graduates, decided to buy Cattaneo Bros. after a friend of the Cattaneo family contacted Michael Kaney and asked him if he would be interested in purchasing it, Kaney said. Her father already thought highly of the product because he sold the sausage through his food service company. With a background in his own family meat-processing business, Michael Kaney started Kaney Foods in San Luis Obispo in 1971, an idea based on his Cal Poly senior project. One of his first clients was Alex Madonna. “My dad always loved taking care of people; in this case, he specialized in finding out what a restaurant needed that he couldn’t get, like a customized cut of meat, and he got it to them,” Kaney said, noting that he ran Kaney Foods with her uncle, Jim, until 1985. At that time, they separated from their family’s division in Southern California and reincorporated as AMK Food Service. After the Kaneys bought Cattaneo Bros., the company developed some of its own sausage recipes and made substantial investments in new machinery to improve production and packaging. However, the Cattaneo name never changed, and for years, some customers assumed Michael Kaney was a Cattaneo, but that never bothered him, Kaney said. “For him, it didn’t matter,” she said. “He didn’t boast about who he was.” Kaney also described her father as a storyteller. “He would have conversations with people he didn’t even know, and he

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PHOTOS BY JOE JOHNSTON jjohnston@thetribunenews.com

Thomas Rodrigues empties boxes of top round cuts of beef as part of the jerky-making process at Cattaneo Bros. in San Luis Obispo.

Santos Barrera cuts beef into strips with a bandsaw as he prepares to make jerky.

also loved to teach.” It was the lessons that she and her three siblings learned from their parents that made a difference when faced with challenging times. Everyone in the Kaney household was expected to work in some aspect of the business. “The biggest lesson is just hard work and that you’re going to get out of something what you put into it,” said Kim Frederick, Katelyn’s older sister. FINDING HER WAY In the summer of 2006, after living and working in the Central Valley on new sales accounts she had created for Cattaneo Bros., Katelyn Kaney returned to San Luis Obispo. Her mother, Jayne, had a seizure, and doctors discovered that her

Luis Rios carefully hangs jerky on a cart that will be rolled into one of the ovens behind him to start the drying process.

cancer (originally diagnosed as melanoma in 2001) had recurred in her brain. Then, about a year and a half later, doctors diagnosed her father with leukemia, and Kaney had to step in to take the lead running the day-to-day business. “It all happened so fast,” she recalled. “Michael (brother) was running the Please see page 10

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PHOTOS BY JOE JOHNSTON jjohnston@thetribunenews.com

Extra-thin cut beef jerky is ready for packaging at Cattaneo Bros.

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sales distribution division, and Kim went with my dad to Stanford Medical Center for four weeks of intense treatment,” Kaney recalled. Their father’s illness came as a shock to the family, said Frederick, who from 1997 to 2002 worked for the company as its sales and marketing manager. Frederick, responsible for launching the website and working with Jayne Kaney on expanding gourmet food offerings and gift packs, eventually stepped down to get married and help her husband, Zach Frederick, with his export management business. “We didn’t fully deal with it” (the fact that their father was now ill as well), Frederick acknowledged. “But you can’t stop running a business. You have employees who are dependent upon you. And it was our mother’s income. She was still alive at that time.” After their father’s death, Jayne Kaney owned the business, but because she was extremely ill, Katelyn Kaney took over, with Frederick providing guidance and support. In 2008, both parents died in their late 50s, leaving the Kaney children to find their own way. “I think it was just the strength instilled in me from my parents,” Kaney said. “They had a huge amount of faith in me.

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Maria Loeza weighs and inspects pieces of jerky before placing them onto the packaging machine.

I just thought there has to be a greater purpose. I have to use all this pain to find a greater good.” At the age of 24, Kaney found herself diving into her new position. “You are responsible for the jobs of 20 people, you have expenses to manage on a P&L and then you also have a family home full of memories to clean out and pack up,” she recalled. “You really don’t even have time to step back and evaluate each decision. Forget the fact that the emotional gravity of each one might swallow some people whole.” Office manager Becky Tiedmann, who has known Kaney since she was a toddler and whose husband worked for Kaney’s father, said Katelyn overcame those initial hurdles. “She stepped in her dad’s shoes from the get-go at such a young age,” she said. “She does a great job, and I’m amazed at how much it’s grown.” As an employee for 27 years, Kenny Castro, production manager, also watched Kaney and her siblings grow up. The family atmosphere is the main reason why Castro said he’s remained fully committed to Cattaneo Bros. and the Kaney children. Kaney exhibits the same qualities as her parents, who gave Castro strength during his own fight with cancer. “Some of the traits I would use to describe Katelyn would be strong, faithful,

family-oriented, hardworking, passionate, compassionate, vision-oriented, goaldriven, respectful and generous,” Castro said. “All these traits I have mentioned are like a carbon copy of her parents. I’m often reminded by her actions, traits, or a statement that’ll make me reminisce about her parents, like déjà vu.” A DELICATE BALANCE Despite the longstanding traditions established by her family, Kaney has, over time, become more comfortable in her role. “I had this mindset of doing everything the way Mom and Dad would want it,” she said. “But I needed to infuse the business with my ideas and my own strengths. I had to get over that I felt like I was changing what they had worked on for so long.” Kaney acknowledges that she may have missed some opportunities along the way, perhaps by “being too conservative.” However, she is proud that she’s been patient enough to “learn the details of the business and build a strong foundation.” The wisdom of her parents will never fade, no matter how the company evolves. “My dad taught me to always focus on what I’m doing,” she said. “He said if you focus on what the competition is doing, then you’re not focused on what you’re doing.”

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It’s a delicate balance, she said, between maintaining the original vision and pushing in a new direction. In recent years, Kaney said she has focused on three key initiatives for the company: improving its ingredients and brand offerings, expanding sales territory, and building new marketing materials to promote its products. The company has added hundreds of new accounts in SLO, Santa Barbara, Ventura, Kern and Bakersfield counties. In addition, its mail-order program reaches more than 20,000 customers annually. Cattaneo Bros. has a new event marketing program, which includes touring all spring and summer to events like CrossFit Games and Sunset Magazine’s Celebration weekend. This year, it will launch its booth at national food exhibitions such as the Fancy Food Show in San Francisco. Increasingly, Kaney has been motivated by changes in customer appetites for Containers of finished Cattaneo Bros. beef jerky are ready to be boxed up.

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Katelyn Kaney Title: President and chief executive officer, Cattaneo Bros. Age: 34 Residence: San Luis Obispo Education: A 2005 Cal Poly graduate, Kaney earned her bachelor’s degree in agricultural business with an emphasis in marketing. She was a Tribune Top 20 under 40 winner in 2011.

PHOTOS BY JOE JOHNSTON jjohnston@thetribunenews.com

Above and below, The Mercantile at 950 Chorro Street in downtown San Luis Obispo sells specialty food items, home décor and gifts.

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clean, nutritious snacks, and she touts the company’s high-protein, no-sugar meat snacks, and the fact that it’s continuing to develop products made without nitrates. She’d like to introduce a healthy snack line for children one day, too. “You can read our label and understand all the ingredients,” she said. “We have a lot of exciting new products in development, but we can’t share any specifics until we are closer to launch on new items.” Rekindling a passion of her mother, who once operated a home décor and gift boutique in downtown San Luis Obispo called The Backdoor (and later renamed A Bushel and A Peck), Kaney in 2013 opened The Mercantile on Chorro Street, in the same building where Jayne Kaney’s store stood. Kaney’s grandparents (Jayne’s parents) had bought the building where her mother’s store operated and still own it. “We have been organically growing in our downtown location, and the past year has seen tremendous growth in particular,” said Kaney, noting that she learned so much from her mother about display and design. “People know where we are and what great items we feature like local food products and gifts. Plus, all the new development downtown is changing the traffic pattern and new people are discovering us.” Frederick, Kaney’s sister, said she’s “done a phenomenal job moving the

Family: Twin boys Brody and Hudson, 2½, and two Corgis, Bella and Finny. Two sisters, Kimberly Frederick of Littleton, Colo., and Kourtney Kaney of San Luis Obispo County, and a brother, Michael Kaney of San Francisco. Of her boys, Kaney says, “They are my inspiration. I may have lost two parents, but I gained two angels on Earth.” Hobbies: She enjoys spending time with family and friends, and being outdoors with her boys. It’s their tradition to go to Farmers Market on Saturday mornings in SLO with her aunt and uncle. ...................................................................................... . .....................................................................................

Cattaneo Bros. Inc. The company has two businesses: Cattaneo Bros., established in 1947 and located at 769 Caudill St. in San Luis Obispo, makes and sells beef jerky and sausage. It also sells such products as specialty nuts, dried fruit, candies and seasonings.

business forward and staying true to what my parents would want to be done.” “But she’s doing it in a new-generation way and improving on anything they could have thought of when they were alive.” “I’m sure every day she goes to work in a building with nothing but memories for our parents,” she added. “In one way it could be emotionally challenging, but in another way comforting.” Kaney takes comfort in knowing that she’s doing all she can for the employees, her family and the customers who continue to support them. “I had a wonderful childhood, a great life and great parents who were very present,” she said. “I knew I had to find a way to do this.”

The Mercantile, established in 2013 at 950 Chorro St. in downtown San Luis Obispo, sells specialty food items, home décor and gifts. Kaney says the company sources all of its product ingredients from the highest quality suppliers it can find. The seasonings on its products come from its own proprietary recipes. Leadership: Katelyn Kaney is president and chief executive officer; Kenny Castro is plant/production manager. No. of employees: 24 Financials: The company is growing and profitable, said Kaney, who declined to disclose annual revenues and profits. The overall business, which includes both the beef jerky manufacturing and The Mercantile, has been growing 15 to 20 percent, year over year, she said. ......................................................................................

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Grow your business. Know your community. Get connected. Business people working together for a prosperous, balanced community. Get involved e: membership@slochamber.org p: 805-786-2774 www.SLOChamber.org s anluisobispo.com

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PHOTOS BY LAURA DICKINSON ldickinson@thetribunenews.com

Sylvester’s has been around for close to 30 years and has developed a cult-like following among locals. It does well in Atascadero, despite the plethora of fast food and chain restaurants. The exterior of Sylvester’s is painted a bright golden yellow.

BEATING THE ODDS

How Sylvester’s, Idler’s and other local ‘mom and pop’ stores are beating the big guys 14 FRIDAY OCTOBER 27 2017 | Biz Buzz Extra

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BY REBECCA JURETIC

Special to The Tribune

hen Barbara Lewin first opened The Blenders in 1974, Paso Robles had a population of around 8,000 and most grocery stores were of the small, momand-pop variety. She decided to sell both Merle Norman cosmetics and gourmet coffee beans — items not sold elsewhere. That “blend” of goods inspired the store name. When grocery chain stores came to town, Lewin let go of the coffee and began selling women’s clothing and accessories. Then, in 1994, Walmart opened. “It was a challenging time for everyone,” said Lewin, who recalls that many small retailers in Paso Robles closed their doors.

W

But The Blenders continued to adapt. As the Paso Robles downtown retail and restaurant scene flourished and its demographics changed, so did The Blenders by expanding its selection of mid to high-end women’s clothing. Today, Lewin, who now owns the store with daughter Lori Alpert, said the business remains profitable and stable. Despite fierce competition from both chain stores and online retailers, many small businesses like The Blenders continue to flourish in San Luis Obispo County. Successful small businesses tend to have some qualities in common, such as a solid business plan, said Michael Manchak, president and chief executive officer of the Economic Vitality Corp., a nonprofit that offers services to coun-

ty businesses. But there are intangible qualities too. “There are so many great examples of businesses that do well, that have amazing service, reasonable prices,” he said. “And even when the economy was at its worst, their customers were loyal and they survived.” CREATE YOUR OWN CULT-LIKE FOLLOWING Along a stretch of El Camino Real in Atascadero occupied by such fast-food restaurants as Carl’s Jr. and chain restaurants like Denny’s, sits a 1,900-square-foot restaurant called Sylvester’s Burgers. When Brian Englund began contemplating opening the restaurant in 2008, he encountered resistance. “One-hundred percent of Please see next page

Soccer mom Stephanie Drexler of Atascadero orders food with children Lucas, 9 (partially hidden), and Sydney, 8 (left). Lauren Herron, a server, takes their order.

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Families eat burgers on the outside patio at Sylvester’s in Atascadero.

PHOTOS BY LAURA DICKINSON ldickinson@thetribunenews.com

The “Hana” cheeseburger at Sylvester’s is topped with bacon, pineapple smothered in a teriyaki glaze, lettuce, onion, tomato, pickles and Sylvester Sauce.

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everybody told me don’t open there because of the competition,” he said, adding that several locally owned restaurants were shuttered then because of the economy and “people gravitating toward fastfood.” But Englund was building upon a brand that started in 1988 in Los Osos and had developed a cult-like following for its

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large, messy burgers slathered with a special sauce. For most of its first two decades that original restaurant was owned by Larry Dailey. Englund’s father Gary was a silent partner for part of that time. After opening the Atascadero location, Englund purchased the Los Osos Sylvester’s in 2010. To increase its profitability, Englund began building on its strengths — mainly its relationship with the community and strong emotional ties with its

customer base. “People who came in when they were kids and moved away have to have it when they come back because they still have that connection,” he said. Englund began sponsoring sports teams and hosting fundraisers. He gives away free burgers to Cal Poly students during WOW Week and on people’s birthdays, snapping photos of them to post on Facebook and Instagram. He hired a community outreach director, called the company “vibe manager,” who visits schools and coordinates special promotions with local businesses. Since he bought the Los Osos restaurant, sales have tripled, and barely edge out sales at the Atascadero store. In 2013, he opened a third location in Oceano. Although Englund declined to disclose sales numbers, he said all three Sylvester’s restaurants are profitable. The Oceano restaurant has seen an approximately 15 percent annual growth rate in sales over the past two years. The older, more stable Los Osos and Atascadero restaurants are growing at about 5 to 7 percent. Englund opened Los Osos sushi restaurant Kuma in 2015 but has no other immediate plans to expand.

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Englund, who has a degree in business administration and a long background in the restaurant industry, said experts “claimed there would be no way the little guy could compete with large corporations. But the piece they didn’t figure in was the internet.” Sylvester’s has about 13,000 followers on Facebook and 8,000 on Instagram. Englund keeps a close eye on his Yelp reviews and creates opportunities for photo ops in his restaurants. “This is how the little guy connects with customers, how we can spread our vibe pretty purely,” he said. “Before, we weren’t able to do that.” Maggie Cox, president and chief executive officer of San Luis Obispo marketing and public relations firm Barnett Cox & Associates, said that social media has become “imperative for small business,” adding that it “allows companies to closely connect with their customers” as long as they provide content that has value. Jules DuRocher, who owns San Luis Obispo men’s clothing and lifestyle store Jules D with husband Jeff, relies on both

TEAM BUILDING

social media and one-on-one interaction to build the relationships that have sustained her business for five years. “We take the time to know (our customers), what is going on in their lives, their style preferences, their body type and sizing,” she said. “We are always out on the floor, creating opportunities to interact, engaging the customer.” This requires a well-trained staff. Most of the businesses contacted by The Tribune said that hiring, training and retaining qualified staff takes up a large portion of their time and resources. Englund, for instance, has monthly employee events and frequently offers rewards like gym passes and movie tickets to the approximately 100 employees at his four restaurants. For The Blenders, “difficulty finding good help” was behind the decision to close its San Luis Obispo store in the mid-1980s after 13 years in business, said Lewin. “We decided to keep things small Please see next page

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DAVID MIDDLECAMP dmiddlecamp@thetribunenews.com

Barbara Lewin and daughter Lori Alper sell cosmetics and women’s clothes and accessories at their Paso Robles store, The Blenders.

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and hands-on so that we can take care of our customers well.” She and Alpert run the Paso Robles store most days and have only one part-time employee. “Competition from all the bigger stores pulling off an already small supply (of workers) is a struggle for retailers,” said DuRocher, who has two part-time employees. To compete, the store pays a competitive wage, she said, which only adds to high overhead costs. Despite these challenges, Jules D has grown from a 600-square-foot accessory boutique into a 2,600-square-foot lifestyle store that includes mid- to high-end men’s clothing, shoes and accessories, as well as products such as razors and bags. DuRocher said that the business is profitable and sales have been growing at around 15 percent annually in recent years. Online shopping has been Jules D’s

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biggest threat — as it has even for large chain stores such as Sears and Sports Authority which recently closed stores locally. After toying with setting up an e-commerce site, DuRocher decided to remain a traditional retailer. “There’s so much online and people do it really well — why compete with that?” she said. “We’re about a personal experience. That’s what we do.” Even as consumers are migrating toward impersonal online buying, customer service still matters, Manchak said. This is something the small business can do well. “Yes, we all take out our phone to check prices on Amazon, but there is a lot you can’t get by pushing a button,” he said. “When you go to the small local store, they bend over backward to help you and solve your problems. That’s what you remember and come back for.” DuRocher knows that some people who walk through her doors will end up buying the same products online to save

money. “It’s going to happen, and maybe that type of customer isn’t our customer,” she said. She believes that many San Luis Obispo County residents still “want a sense of community, which you can only experience in person,” she said. “People want local businesses to succeed and will come to us, even when they can buy something online.” FIND YOUR NICHE One of the benefits touted by retail giants like Walmart and Amazon is onestop shopping — finding a staggering number of goods in one place. But not all shoppers appreciate an impersonal, generic shopping experience. Manchak believes that small businesses with a strong specialty will fare well with certain customers. He cited Lemos Feed & Pet Supply, which competes well against chain stores like Petco because of its large selection of specialty pet foods. The Blenders found its niche by taking

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DAVID MIDDLECAMP dmiddlecamp@thetribunenews.com

Jules D, a men’s clothing and accessories store on Higuera Street in downtown San Luis Obispo has been in business for only five years, but has grown steadily. Owner Jules DuRocher, above, takes pride in making sure customers have a brand and fit that’s right for them.

the time to get to know its customer base of local women 35 and up. Its line of Merle Norman cosmetics, which accounts for half of its sales, is not sold elsewhere in the county — or online — said Lewin. The owners carefully research clothing lines to make sure they appeal to their customer base and are not offered in most other stores. So solid was loyalty from The Blenders’ customers that business barely skipped a beat when it moved away from the downtown core after the San Simeon earthquake, Lewin said. Jules D also strives to offer hard-to-find clothing and accessory lines. This motivated their decision to begin selling Hickey Freeman suits this past summer, a line not available elsewhere in the county, DuRocher said. The suits are highly customizable, down to liners and buttons, a service not easily offered on a website. Aside from Sylvester’s top-secret sauce, its specialty is providing “an experience,” said Englund. One of its competitors is Please see next page

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PHOTOS BY DAVID MIDDLECAMP dmiddlecamp@thetribunenews.com

Owner Don Idler, left, and his son, Bryan, manager of Idler’s Home store in San Luis Obispo, focus on matching prices of national outlets and providing local service.

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In-N-Out Burger, which has its own cult following, yet also offers a grab-and-go dining experience lacking in ambience. “Here, you may wait 45 minutes, but you’re drinking a beer or a glass of wine out on the patio, out by the Sunken Gardens,” he said. “It’s families spending time together after their kid’s game or hanging out with friends. A place like ours depends on that feeling of community.” REMEMBER YOUR ROOTS — AND INNOVATE Don Idler recalls two main pieces of advice learned from his late father, Bud, who opened the first Idler’s appliance store in San Luis Obispo in 1954. “He said, don’t forget your roots. And you can’t do business the same way year after year,” he said. That philosophy has been the foundation for the family business, now called

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Model kitchens are on display at Idler’s Home in San Luis Obispo.

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The main showroom of Idler’s Home store in San Luis Obispo offers a large variety of brands.

Idler’s Home, which has stores in Paso Robles, San Luis Obispo and Santa Maria. Idler, who is president of Idler’s Inc., owns the company with wife Janis. To Idler, “remembering your roots” means committing to the way his parents ran the business. “Anybody who walked in was a treasured guest,” he said. “We can’t forget that as a local business, we’re serving our community.” Innovation is the second part of the formula, something Bud embraced back in the 1970s when he was one of the first appliance dealers to join the cooperative buying group now known as Brand Source. With a network of about 5,000 small businesses around the United States, members have leverage to negotiate better prices with vendors. “It’s how we sell products at the same price as Lowe’s or Home Depot,” said Idler. “It’s how we’ve all been able to hang on.” Unlike eating at a restaurant or buying clothing, shopping for appliances is more calculated than emotional, so pricing

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becomes a bigger factor. “Our prices cannot be higher than big-box stores, but we still have to offer the level of service that people expect,” he said. “The bar is set higher and we understand that.” Don Idler has demonstrated his own ability to adapt and innovate. He expanded the company’s portfolio to include beds, furniture, cabinetry, kitchen design and outdoor living items such as spas and barbecues. While appliances are still the company’s “bread and butter,” these other categories account for 40 percent of sales. Idler’s also has expanded its online presence in the past three years, adding online sales, enhancing its website and using social media. It is also in the process of converting all delivery trucks to electric hybrids to save on fuel costs. When the recession hit, just two years after investing heavily in a new Paso Robles store, Idler’s sales dropped 30 percent over two years. It was forced to freeze hiring and close its Atascadero

location. But the business has recovered, with sales growing last year by 18 percent over the previous year, well ahead of the appliance industry as a whole, which is growing at 4 to 5 percent annually, said Idler. Currently, it has 80 employees. Last September, the company felt confident enough to open a Santa Maria store, which may expand in the near future. Idler believes that the combination of fundamentals and innovation that has informed his family business over the past 63 years will help it thrive well into the future. Already, son Bryan Idler is the company’s buyer and manager of the San Luis Obispo store. Daughter Jennifer is the human resources director and corporate secretary. “To see the third generation involved in the business couldn’t have made dad more well-pleased,” said Idler. “I believe the business will keep going, Lord willing.”

Biz Buzz Extra | FRIDAY OCTOBER 27 2017 21


After Equifax, do we need to dump Social Security numbers?

BY SUSAN TOMPOR

Detroit Free Press

he Equifax data breach has led policymakers and citizens alike to ask a startling question: Do we need to figure out a way to stop using Social Security numbers? Seriously. Is it possible that so many crooks already have our number that there’s no other way to stop the filing of fake federal tax returns or protect our IDs so that fraudsters don’t open up credit cards in our names? Has the Social Security number outlived its usefulness? That was suggested by cybersecurity coordinator Rob Joyce, who spoke recently at a conference organized by The Washington Post. The White House is looking at ways to phase out the use of Social Security numbers, Joyce said. Likewise, former Equifax CEO Richard Smith testified in Washington that another system is needed with a rising numbers of hacks. There are no details of how this would work. And don’t expect any quick changes, either, even as we grapple with the fallout from the Equifax data breach first announced in early September. The Equifax story, of course, just grows more annoying for consumers by the minute, as the company says more accounts than originally thought were hacked. In early October, Equifax said more than 145.5 million people may have been affected, or 2.5 million more than initially reported. The Equifax breach involved Social Security numbers, birth dates, names

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and addresses. Equifax noted that some driver’s license numbers may have been stolen, too. It’s not uncommon, of course, for retailers, restaurants and others to revise their numbers upward after the first announcement of a security breach. Brian Krebs, who writes the blog KrebsOnSecurity.com, said he’d suspect that one day we'll be told that even more people will turn out to have been compromised as part of the Equifax breach. “I’ve been telling people to assume you’re compromised,” he said. Krebs pointed to the example of Yahoo, which had previously said 1 billion of its accounts were hit by a cyberattack in 2013. But last week, Verizon Communications, which acquired Yahoo in June, disclosed that all 3 billion of Yahoo’s user accounts were compromised. With the Yahoo breach, crooks obtained names, birth dates, phone numbers and passwords, as well as security questions used to reset lost passwords. Krebs — who tracks what’s for sale via the many online marketplaces that criminals use — said it’s hard to know where some stolen data came from because there have been so many breaches. He has noticed a lot of scammers this past month who are trying to trick other con artists into thinking they have the “Equifax” data for sale online. More infuriating news: The Internal Revenue Service somehow saw fit to award a multimillion-dollar no-bid contract to Equifax to prevent fraud in late September. The service is to verify taxpayer identities. But after members of Congress complained, the IRS suspended that contract on Oct. 13. Krebs said the Equifax verification model, which asks personal questions such as information about your past car loans or a mortgage, can be readily found elsewhere online. Krebs reported in May about another hacking incident involving an Equifax subsidiary, TALX, which provides online

payroll and tax services. Equifax said then that crooks were able to reset a 4-digit PIN given to customer employees as a password and then steal W-2 tax data after successfully answering personal questions about those employees. ID thieves, of course, can use data from W-2 forms to file fraudulent federal income tax returns to engage in tax refund fraud. As for trying to move away from Social Security numbers as an ID, it’s a gigantic step for banks, employers and others to totally abandon the practice of using Social Security numbers, which were developed in 1936. Many see a reason for change. “We do need to develop a new verification system based on some sort of two-factor authentication that does not include Social Security numbers,” said Mike Litt, consumer advocate for the Public Interest Research Group. Litt said the organization’s leadership has called for moving away from Social Security numbers for a decade. “Fundamentally, this nation needs to wean the private sector of its over-reliance on Social Security numbers as unique identifiers and database keys,” said Edmund Mierzwinski, consumer program director for PIRG. John Ulzheimer, a credit expert who formerly worked for credit-scoring company FICO, said perhaps Social Security numbers could be restricted to track earnings. He noted other combinations of data can be used for many financial services. “Heck, my phone and several of my bank’s apps use my fingerprint for authentication,” Ulzheimer said. But he acknowledges this might be a tough sell. “That will be a slow turning ship, though, given how ingrained Social Security numbers have become,” he said.

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Few Californians have earthquake insurance, but interest has jumped since the Mexico quakes BY JAMES F. PELTZ

Los Angeles Times

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ill and Liz Barlak have carried earthquake insurance on their three-bedroom house in Burbank since the couple bought the property 30 years ago. “It helps us sleep at night,” said Bill Barlak, 66, an engineer. “I wouldn’t buy a home without it.” Which makes the Barlaks part of a minority in California. The state’s population, housing stock, home prices and number of renters all have soared in the 23 years since the Los Angeles area’s last major earthquake, a magnitude 6.7 temblor centered in Northridge that left 57 dead and caused an estimated $44 billion in property damage. Nonetheless, the percentage of homeowners and renters who have earthquake insurance has dropped sharply. That might change after the recent deadly earthquakes in Mexico, which were a reminder that California is considered overdue for another major quake of its own. The Mexico quakes, and before that the hurricanes in the southern United States, sparked a dramatic increase in website visits and calls to the California Earthquake Authority. The CEA was created after the Northridge quake to provide earthquake coverage on behalf of the insurance companies that comprise its membership, spokeswoman Sarah Sol said in an email. Only 10.8 percent of Californians with residential insurance had earthquake coverage at the end of last year, coms anluisobispo.com

pared with nearly 33 percent when the Northridge quake struck in the early morning of Jan. 17, 1994, according to the California Department of Insurance. Renters as a group are even less inclined to have an earthquake policy. “It’s stunning,” said CEA Chief Executive Glenn Pomeroy. “The fact that 90 percent of homeowners are uninsured is a terrible thing for California to be resilient and survive the next big quake,” said Pomeroy, whose privately funded, not-for-profit organization handles about 80 percent of earthquake policies in the state and now has the ability to pay up to $15 billion in claims. Theories as to why more residents don’t get coverage range from faded memories of earlier quakes to confusion over coverage and pricing. Dwellers often mistakenly believe earthquake coverage is part of their normal homeowners or rental insurance policies, or have the misconception that if the quake is big enough, the federal government will give them help. But grants from the Federal Emergency Management Agency under its individuals and households program are capped at $33,300. Initially, the CEA’s policies were expensive and somewhat skimpy, including only $5,000 for replacing personal property (in addition to the replacement cost of the structure) and only one deductible of 15 percent. Today, however, the CEA personal-property coverage is up to $200,000, and the “loss

of use” coverage — for living expenses while a home is being repaired or rebuilt — is up to $100,000. Condo policies can cover damage assessments levied by homeowner associations. Premiums vary depending on where the house is located, its age, style of construction and soil conditions, to name a few factors. Overall, the CEA says premiums on its policies have dropped by more than 50 percent since the authority was created. (The CEA website has a tool that shows coverage options and estimated cost.)

Also, the deductibles on CEA policies now range from 5 percent to 25 percent. The CEA notes that another fear about earthquake insurance —that homeowners and renters must come up with the money to pay deductibles — is unfounded because the deductible is subtracted from the claim payment. “There is no out-of-pocket requirement,” Pomeroy said. “If you have a home destroyed, we'll pay the replacement cost, less the deductible, and they can choose how to rebuild.”

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Biz Buzz Extra | FRIDAY OCTOBER 27 2017 23


PHOTOS BY JOE JOHNSTON jjohnston@thetribunenews.com

Weekday mornings at Sierra Vista Regional Medical Center start off with a morning “safety huddle” to discuss quality and safety goals being measured. It’s part of the hospital’s Lean Daily Management initiative that, among other things, involves all employees in a problem-solving process.

24 FRIDAY OCTOBER 27 2017 | Biz Buzz Extra

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LEAN DAILY MANAGEMENT

How Sierra Vista, Twin Cities reached out to employees to change their cultures In 2014, Sierra Vista Regional Medical Center and Twin Cities Community Hospital began ‘Lean Daily Management,’ which engages employees to help solve problems, saving the hospitals time and improving results. BY REBECCA JURETIC

Special to The Tribune

ust after 9 a.m. on a recent Thursday morning, Michael Bell, chief operating officer at Sierra Vista Regional Medical Center, walked into the emergency department with members of his leadership team. He reviewed department statistics with the clinical supervisor and asked about safety concerns. He examined a chart, noting a spike in patient walkouts the previous day. Unruffled, the supervisor gave a full report, saying there was no single explanation for the walkouts. Another staff member suggested that nighttime security guards use hospital cell phones for easier communication; the leadership team took note. The ease of this exchange is the result of a cultural shift, initiated through Lean Daily Management, a system implemented by both Sierra Vista in San Luis Obispo and Twin Cities Community Hospital in Templeton in October 2014. They were the first Tenet California hospitals to launch the program. Others have since followed suit. Lean Daily Management, or LDM as it’s called, is now integrated into every

J

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Sierra Vista Regional Medical Center in San Luis Obispo and Twin Cities Community Hospital in Templeton changed their culture by implementing Lean Daily Management in 2014.

department at Sierra Vista and about 90 percent of the departments at Twin Cities, although Twin Cities chief executive officer Mark Lisa, who was instrumental in the program’s rollout, expects that number to increase. Its aim is to fulfill the hospitals’ goal of providing “safe, high-quality patient care,” Bell said. Achieving that goal depends on effective problem solving. In the past, problems were handled by department directors, then brought to the executive team when they reached a “level of frustration,” he said. LDM engages and empowers all employees to be problem solvers, and to determine the best ways for the organizaPlease see next page

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JOE JOHNSTON jjohnston@thetribunenews.com

Amy Abbot, patient access representative at Sierra Vista, shares results of an indicator that they’re tracking during the hospital’s morning rounds. continued ...

tion to meet its goals. It makes sense to include frontline employees in the problem-solving process, Bell said, because they are “more likely to create a solution that is more organic to that unit, which often results in greater success.” The methodology appears to have paid off. In the first full year after implementing LDM, Sierra Vista employee engagement scores increased the most out of all 80 Tenet hospitals nationwide, said Nick Wettlaufer, lean manager for both hospitals. Last year, Twin Cities increased second most. That same year, Sierra Vista was ranked ninth and Twin Cities was 11th in patient satisfaction. WHAT IS LEAN THINKING? The general concept of lean thinking began in the automotive industry, yet today about half of its practitioners are in healthcare, according to Eric O. Olsen, director of Central Coast Lean, a research project within Cal Poly’s Orfalea College of Business.

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Hospitals in particular, with their unending onslaught of challenges, many with potential life-or-death implications, are a natural application for lean problem solving. “Every hospital in the country has some kind of play in lean — or is at least familiar with the concept,” said Olsen. Lean thinking involves three questions, Olsen said: What is the value of your product or service to your customer, how do you deliver that value, and how do you get your staff involved with problem solving? “Lean daily management is a really elegant way to put all three elements together,” he observed, adding that several departments at Cal Poly have adopted lean practices. Olsen, who first encountered lean thinking in the early 1990s while working at Hewlett-Packard, has studied the program at Sierra Vista closely. “I was blown away,” he said. “I’d never seen anything that well done, that systematic.” Individuals from nearly every Tenet California hospital have visited one or both of the local hospitals, and all have

either implemented LDM or are in the process of doing so, said Ron Yukelson, chief strategy officer for both hospitals. Twin Cities and Sierra Vista have also demonstrated their LDM methods to other local industries, as well as politicians and first responders. HOW IT WORKS AT SIERRA VISTA Every weekday morning at 8:30 a.m., Sierra Vista senior leadership, directors and clinical nurse leaders who are on shift meet for a “safety huddle.” A similar meeting occurs at Twin Cities. The agenda: a review of various safety concerns, hospital census, compliance with policies and regulations, and service recovery opportunities. Leaders discuss any issues that need resolution. Also part of this meeting is a review of the “glass wall,” an enclosed board displaying charts that track progress toward top priority goals identified by the leadership team. This includes goals in the area of service, growth, people, quality, cost and safety. Yukelson calls the data powerful, allowing the leadership team to identify

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trends, solve problems and analyze performance on a daily basis. The meeting ends by celebrating achievements of individuals who have gone “above and beyond” and “great catches,” where employees report an error, or potential error, made by them or another staff member. Employees cited for a great catch receive a personally written note from the CEO that is signed by the entire administrative team. The LDM process celebrates great catches because it often “prevents a larger problem,” said Wettlaufer. An example he gave was a hospital employee who stopped a blood transfusion before it started because of an unclear patient label. Such errors are common in healthcare and are often not caught or reported COURTESY PHOTO because “the culture may not celebrate Holly Cole, RN, director of Medical/Surgical ‘whistleblowers’ or those who disrupt Services at Twin Cities Community Hospital, flow for the right reasons,” said Bell. The transparency and non-punitive nature of completes her department’s data before LDM creates a culture where staff are reporting its progress on specific goals comfortable speaking up to potentially during the morning round. avoid patient harm. It’s what the exec-

utive team likes to call being “hard on process, but soft on people.” THE “GEMBA” WALK At the close of the safety huddle, staff takes the time to meet in the hall and resolve any issues face-to-face — a type of interdepartmental communication that was rare before LDM. Next, comes what in LDM lingo is called the “gemba” walk. Gemba in Japanese means “the real place,” which refers to the location where work is performed. At Sierra Vista, one hospital executive, a department director, and others who wish to participate make rounds every weekday morning and on one night each week. Groups rotate through different routes so that everyone visits every department within a month’s time. Twin Cities has a similar gemba system. The rounds are important, said Lisa, because executives who do not normally deal with clinical issues must “push away Please see next page

1010 Murray Avenue, San Luis Obispo

SierraVistaRegional.com

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from their desks … meet people, learn about various processes and operations within the organization.” In each department, there is a gemba board with charts reflecting that department’s own goals. Days on the chart are colored in — green for when the goal has been achieved, red for “fallouts,” or times when that department fell short of the goal. The department decides when each goal has been met — what the organization calls a “win.” Sometimes these charts reflect progress toward overcoming problems identified by that department. For example, Wettlaufer said, lab workers found their work disrupted by nonessential phone calls. So they tracked the problem and found that most calls were requests for test results. A fix, implemented with the help of the information services and medical records departments, reduced those calls by half. Other charts track ways the department has decided to support larger hospital goals. These results feed into the “glass wall” metrics. For instance, when leadership wanted to reduce emergency department wait time, gemba charts were posted in multiple departments to tighten up turnaround times. So far this year, the median wait time for a patient, from walking into the emergency department to admission, has decreased by more than 30 minutes from last year. The tone of the gemba exchange is non-judgmental. “We’re not there to solve, punish or ‘catch’ anyone,” said Wettlaufer. “It’s just time for staff to interact with executives, whereas before they might not have even been able to recognize the COO (chief operating officer).” In addition to reviewing the gemba board, the group discusses safety and staffing. Staff members are encouraged to bring up their own challenges and suggestions. This is an opportunity for problem-solving to occur collaboratively and efficiently, in real time. These conversations sometimes result in important new programs and services. For example, a forthcoming stroke prevention program at Sierra Vista was a direct result of conversations with staff that occurred during gemba rounds. The entire morning routine, from safety huddle to post-gemba debrief session, takes around an hour and a half — seemingly an eternity for a busy executive. But

28 FRIDAY OCTOBER 27 2017 | Biz Buzz Extra

JOE JOHNSTON jjohnston@thetribunenews.com

This wall in Sierra Vista’s administrative conference room is filled with charts tracking top goals in such areas as service, growth, people, quality, cost and safety.

the administrative team insists the process saves time. “It’s actually decreased the number of meetings where we have to pull individual workers off the floor to solve problems,” said Bell. The leadership team has committed to not scheduling appointments during that time. “We call it the daily ‘no fly zone,’ ” said Yukelson. AN ONGOING PROCESS The mechanics of LDM “isn’t rocket science,” said Olsen. Far more difficult is getting employees to buy into a new way of thinking and working, which he believes the local Tenet hospitals are doing exceptionally well. Administrators at both hospitals believe that LDM is now ingrained in their hospital’s culture, but getting there took time. “Initially, some employees did not see the value in Lean Daily Management, nor did they necessarily want to participate,” Yukelson said, adding that many of those employees have likely “self-selected themselves” out of the hospitals. The year after implementation, employee turnover was high —about 13 percent at Sierra Vista, compared to 9 percent the previous year. By last year, that number was 8 percent, fifth lowest of all Tenet hospitals. Initially, some were wary of the trans-

parency demanded by the program, distrustful of claims that it is non-punitive. Others resented the added work “piled on top of already busy schedules,” said Lisa. Eventually, employees began seeing results. “Once various departments starting solving troublesome, yet seemingly simplistic process issues, more people started taking to the methodology,” he said. The success of LDM also depends on cooperation from the hundreds of doctors in private practice who work at each hospital. Many now show up for the safety huddle and gemba meetings. Yukelson said that LDM has addressed one of their main complaints, which was a lack of visibility of administration in hospital units. He noted that physician satisfaction surveys have been “trending upwards” for the past three years. There is an attitude of humility built into lean thinking, where an organization never feels it has reached the end of its journey. Lisa said the hospital will “continuously have to practice, learn, keep (the concepts) in our conversations and focus.” However, he also believes that the changes made will be long-lasting. “Even if I depart the organization, we believe in it so strongly that it will never leave,” he said.

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Biz Buzz Extra | FRIDAY OCTOBER 27 2017 29


BIZSNAPSHOT

WAYNE NICHOLLS Telegram-Tribune

Mark Landstrom puts finishing touches on his Eskimo Pie sign restoration, with help from artist Gini Allen in 1989. The sign can still be found at High Street Market & Deli, on the corner of High and Carmel streets in San Luis Obispo.

This old ad is a neighborhood icon BY DAVID MIDDLECAMP

dmiddlecamp@thetribunenews.com

S

ometimes advertising is more than a sales tool. It becomes a beloved part of the landscape. In 1989, graphic artist Mark Landstrom liked the peeling Eskimo Pie advertisement on what is now the High Street Market & Deli. So he offered to repaint it at a discount, according to an article published June 12, 1989 in the then

30 FRIDAY OCTOBER 27 2017 | Biz Buzz Extra

Telegram-Tribune. The circa 1949 sign had been revealed when building owner Luis Westbrook removed shingles on the Carmel Street wall. For those who don’t know, the idea for the chocolate covered ice cream, patented in 1922, was born when a boy couldn’t decide between ice cream and a chocolate bar in a store owned by Christian Kent Nelson and Russell C. Stover. Stover later found the eponymous candy company.

Landstrom researched company archives to find the original design and stripped the flaking paint away. In doing so, he discovered three R.C. Cola advertisements underneath the original Eskimo Pie ad. When neighbors saw him working on the sign, Landstrom said at the time, they were concerned that he was painting over it. “It’s like a neighborhood icon.” When they found out he was doing just the opposite, they would “drive by and say thank you.”

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