By Kathryn Mykleseth
March 6, 2017

After 21 years of business in Hawaii, a family-run bakery and restaurant chain is working to sell some of its products on the mainland.

Matcha macarons, the Big Boy deli sandwich and braised-duck dip panini are some of the items on La Tour Cafe’s menu familiar to its Hawaii patrons, but Brandon Lam, sales manager at La Tour Bakehouse, and his brother, Trung, are betting on their furikake puffs to expand the family’s business to the nation’s palates.

“Right now it’s just a small percentage, but if this takes off it could warrant its own facility,” said Brandon Lam last week at the family’s bakery on Nimitz Highway.

The puffs, made of brown rice and cornmeal and coated with furikake and honey, became available in Hawaii Costcos at the end of February, and Lam said he is working with a distributor to get it into 52 Costco stores in the Western region of the U.S. If successful, this would be the first time the family’s products would be sold on the mainland.

“I think the challenge is making it special enough that there is nothing comparable,” said Trung Lam.

The Lams’ expansion bucks the trend of a declining manufacturing industry in Hawaii.

Making sure production will meet demand with consistent quality is a major obstacle for small businesses looking to sell outside of Hawaii, said Joseph Burns, director for the Hawaii Small Business Development Oahu Center.

Burns said if a small business can make it work, the added customer base can provide a major boost for the state’s economy.

“Funds that flow to Hawaii from exports expand our economy. There is a great deal of growth potential for small businesses, since the vast majority do not export,” he said. “We are a small market given our population, so exporting can diversify a company’s revenue sources while creating jobs and increasing the tax base.”

Another obstacle for Hawaii is high shipping costs. “A majority of raw materials and parts used for manufacturing are imported, adding substantial cost to the end product,” according to a November report release by the Department of Business, Economic Development and Tourism.

Hawaii’s manufacturing industry employs a small fraction of the state’s workforce and has been a declining industry for more than a decade.

Between 2005 and 2015 Hawaii’s manufacturing industries added only about 200 jobs, while Hawaii’s total economy added about 67,000 jobs, according to the DBEDT report. Between 1998 and 2015 the share of manufacturing jobs in the state decreased by 0.5 percentage point.

Despite the challenges, DBEDT said there are advantages bolstering the manufacturing industry, in part because of the state’s brand.

“Hawaii’s biggest advantage for manufacturing is that it has a global market of 8.5 million people that visit the state each year,” the report said. “There is tremendous potential for Hawaii to manufacture more products for the tourism market.”

Hawaii visitors spent a record $15.6 billion in 2016.

“When we approached Costco with the product, they said they really want Hawaii products. That’s even national or in the region,” Brandon Lam said.

Lam’s bakery was able to supply puffs of Costco proportions because of funding La Tour received from a grant from the Manufacturing Assistance Program (MAP).

The program, offered by the Hawaii-based High Technology Development Corp., matches funds up to 20 percent, with a $100,000 maximum grant, for isle manufacturers looking to expand their production and employment though buying new equipment or training. HTDC said the grant’s purpose is to help Hawaii manufacturers be more competitive, reduce imports and increase exports from the state.

La Tour was awarded $27,000 in August for two ovens, conveyor belts and cooling belts — the machines necessary to produce enough furikake puffs to satisfy the needs of local Costcos.

Before the machines, La Tour Bakehouse was making the puffs in small batches by hand, mixing the rice puffs, adding the coating, cooling, bagging and sealing them.

“At some point it just stopped making sense to do it by hand because we weren’t going to be able to scale,” said Trung Lam, operations manager at La Tour.

La Tour was among 51 projects that have received money from the MAP grant since it launched in 2016. For the 2017 grant, 12 businesses have applied, requesting a total of $403,677.45. The deadline for MAP applicants is April 30.

Meli James, head of new ventures at Sultan Ventures, said the grant gives Hawaii companies the ability to overcome production barriers similar to what the Lams were facing.

“What we’re going to start to see is more of these companies that are creating these amazing products that we love here … be able to have that surplus and be able to start exporting,” she said.

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