Popular NC snack maker partners with private equity firm to boost growth
A Charlotte private equity firm and owner of Duke’s mayonnaise brand has made an undisclosed investment in another Southern food staple expected to help it grow.
Falfurrias Capital Partners on Thursday said it has made an undisclosed investment in the 87-year-old, family-owned company Carolina Foods, a manufacturer of baked goods including Duchess products, also based in Charlotte.
Carolina Foods’ 400 employees are not expected to be affected by the transaction, the investment company said in a news release.
The company’s annual sales were more than $77 million as of September last year, according to Data Axle database reports available on the North Carolina Department of Commerce website.
Neither company is disclosing the size or nature of the investment, a Falfurrias spokeswoman said.
Carolina Foods CEO Paul Scarborough, son of the company’s late founder Vernon Scarborough, will remain with the company, as will third-generation company leaders Katie Scarborough Caldwell and Ruffin Scarborough.
Marc Oken, a founder of Falfurrias, told the Observer only that the investment in Carolina Foods is “significant,” and the Scarborough family will stay involved in the company.
“This partnership will give us the financial resources and management expertise to take Carolina Foods to another level,” said Paul Scarborough, who joined the family business in 1977, in the release. “Falfurrias has a tremendous track record of helping the companies they invest in realize next-stage growth, and their expertise in food marketing and distribution will be especially useful to our organization.”
Tad Dickson and Mary-Ann Somers, who served as advisors to Falfurrias throughout the transaction, will serve on Carolina Foods’ board of directors.
Dickson is a former CEO of Matthews-based Harris Teeter grocery chain and serves as a member of the board of Dollar Tree. Somers led Hershey’s confection business and Coca-Cola’s water, tea and coffee segment.
About Carolina Foods
Carolina Foods was founded in 1934 by Vernon Scarborough as a family-owned sandwich business serving textile mills, furniture manufacturers and lunch counters throughout the Carolinas. After World War II the company expanded its products to include glazed doughnuts and pies.
In 1992, under Paul Scarborough, the company began to focus exclusively on its baked goods.
Carolina Foods has grown to multiple locations across Charlotte, including its 100,000-square-foot manufacturing facility in South End.
The wholesale baker specializes in prepackaged doughnuts, pies, fritters and other goods under the Duchess brand distributed in all 50 states, plus Puerto Rico, Mexico and Canada.
Carolina Foods produces nearly a million honey buns daily, and enough doughnuts each year to circle the globe twice, according to the news release.
About Falfurrias
Falfurrias was founded in 2006 by Oken, former CFO of Bank of America; Hugh McColl Jr., former chairman and CEO of Bank of America; and Ed McMahan, former principal at Chicago Growth Partners.
This is Falfurrias’ third investment in packaged food companies in the last two years.
In 2019, Falfurrias acquired leading condiment, sauce and spice manufacturer Sauer Brands Inc., known for its Duke’s mayonnaise brand, and also acquired the popcorn seasoning company Chicago Custom Foods.
“We see tremendous growth potential for Carolina Foods, including expanding both its manufacturing capacity and distribution footprint,” Oken said in the release.
