Counter culture: evolutionary ideas help Chef Solutions build a $550 million business in...

Don't look now, but there's a counter culture movement at Chef Solutions. And considering that it's a leader in deli-style salads, side dishes and bakery foods, you might imagine a wicked food fight at the company's Chicago-area offices.

You know ... gobs of mashed potatoes flying through

But nothing could be further from the truth. In fact, Chef Solutions is enjoying an evolutionary change of culture, and the aforementioned "counter" is simply a crowded one (pictured, at left) from the company's new research & development center.

Meanwhile, the cultural change has been quite real since Lufthansa's LSG Sky Chefs sold Chef Solutions last June to Questor Partners Funds, Southfield, Mich. And although there's always a lot of work associated with change, visitors to Chef Solutions' Schaumburg, Ill., offices can see it's been a labor of love.

"There are two moments I'll never forget," says Steve Silk, a 25-year food industry veteran tapped as the company's new president and chief executive officer. "The first came last June at a 'town hall' meeting here ... When I told employees that I thought there was still strong equity in the Orval Kent and Pennant names, I could see people nodding in agreement, and there was even applause.

"The second moment came this past August or September," he continues, "when we realized that our business objectives were easily going to be within reach. We had been profitable for each of the first several months and--just as some plant-level improvements were kicking in--it was clear that not only were we on track, but we are on the way to reach an entirely new plateau."

As assembled by LSG, Chef Solutions already ranks among the nation's largest suppliers of refrigerated and frozen prepared foods to in-store delis, bakeries, national accounts and foodservice customers. Ten factories (including one in Mexico) produce as many as 2,000 different items under such well-known national and regional brands as Orval Kent, Yoders, Mrs. Crockett's, Pennant and La Francaise. In total, Chef Solutions employs about 2,600 people.

"This is an exciting opportunity," says Silk, who most recently had run ConAgra Refrigerated Foods, the $1 billion consumer division of ConAgra's processed meats business.

"Chef Solutions was constructed to address consumers' active and fast-paced lifestyles. Growing up, my mom had a particular menu planned for each night of the week. Today, you hear that as many as 75 percent of all meal decisions are conceived after 4 p.m. And chances are, many people also are consuming an entree or snack in the car. We have a company that's uniquely positioned and well aligned to respond to all these trends, and across all channels."

Chef Solutions' new management team features leaders from both inside and outside the company. They include Dan Scales, a veteran of Campbell Soup/Pepperidge Farm, Pillsbury and Sara Lee, as well as Mark Brown, who most recently was executive vice president and general manager with the ConAgra Foods deli division.

Speaking of alignment, Chef Solutions created a divisional business structure whereby its refrigerated prepared foods and bakery foods businesses are separated and managed, respectively, by Brown and Scales. In November, the company named the divisions after two of their best-known brands, Orval Kent Foods and Pennant Foods (see profiles, starting on page 24).

"Just as Procter & Gamble doesn't use its name as a brand, Chef Solutions will still exist as a corporate entity," Silk notes. "This structure is about leveraging our professionals' expertise in their business and respecting the brand equity that we have with customers."

While Brown and Scales concentrate on their customers' industry-specific needs, Silk focuses on customer relations from the inside out. That is to say he's intent on improving Chef Solutions' infrastructure.

In part, it means enhancing a year-old enterprise software package so that it gives divisional and functional-area managers more timely, accurate and appropriate data. Silk also intends to bolster Chef Solutions' customer service and supply chain functions. The objective: Ensure the company is delivering the right order, on time, at a 99-percent industry standard.

"I divide this year [2005] in half," he says. "These first several months represent the slowest season before demand quickly rises in the summertime. It's now that we need to complete our supply chain rationalization and IT efforts. We want improvements to stick, with service levels remaining exceptional when customers need them.

"All the while, we want to further penetrate our customer base and complete our learning about these categories. Not only do we want to more effectively meet customer needs, we also want to lever-age these partnerships and our brand equity to go on the offensive with innovative products.

"By the end of the year, we want a vibrant business that's successfully served its customers during their peak seasons. With that, we would hope to grow by other means, including new products, more sales with existing customers and/or by acquisition."

Silk concludes: "Questor has been very diligent in learning about our business and extremely supportive of initiatives. Even after acquiring us, they have infused the business with capital and have been very appreciative of what we've been able to do. They've had a great taste of the food industry and are hungry for more."

DID YOU KNOW?

Questor Management Company LLC, with offices in Southfield, Mich., and New York, manages the Questor Partners Funds, which have more than $1.1 billion of committed equity capital. Questor's objective is to acquire corporate orphans or under-performing businesses that are in transition and offer the potential for superior returns.

Chef Solutions marks Questor's first food industry venture. The company has completed more than 20 acquisitions worldwide, including the purchase of GeoLogistics, a global freight forwarding and logistics services provider, and Teksid Aluminum, an aluminum castings supplier.

Chef Solutions operates a third division dedicated to Direct Store Distribution (DSD). I & K Distributors, Delphos, Ohio, carries approximately 3,500 SKUs of dairy, bakery, meat and specialty department lines and services more than 6,000 retail customers in Ohio, Michigan, Kentucky, Indiana, West Virginia and Canada. The business' 85 sales professionals are equipped with the latest in DSD order-entry technology. Among I & K's main products and brands are Yoder's deli-style salads, Reno's pizza, Bernea Farms sour cream and dips and Michigan brand cottage cheese.

Steve Silk formerly was president of ConAgra Refrigerated Foods, a ConAgra Foods division with more than $1 billion in annual sales. He has been president of Hebrew National, Estee Corp. and United Weight Control and also has held executive posts at Lea & Perrins and General Foods Corp.

Once a certified public accountant with Arthur Young & Co., Silk later would be named Adweek's "Marketer of the Year" in 1988. He holds a BBA degree (summa cum laude) from Pace University in public accounting and English and MBA degrees with honors from Harvard Business School.

BACK TO BASICS

Orval Kent focuses on its strengths in deli-style salads, mashed potatoes and side dishes.

Ready for a little word association? Ask consumers about the "basics" in food and, chances are, most associate the term with meat and potatoes.

And you wouldn't get an argument from Mark Brown. Yet talk to Brown today, and you'll find that the 20-year food industry veteran now equates the "basics" as potatoes and even more potatoes.

The new president of Chef Solutions' Orval Kent Foods division, Brown is committed to a back-to-basics approach for the company's refrigerated prepared food business.

"We're going to focus on our roots in refrigerated prepared deli-style salads, mashed potatoes and side dishes," he says. "We also have under-leveraged strengths, including fresh-cut fruit."

Meanwhile, there's no doubting Orval Kent's stature as one of the nation's largest refrigerated prepared food processors. With plants stretching from Linares, Mexico, to Delphos, Ohio, the business processes up to 1,000 different types of prepared deli-style salads, side dishes, fruit and desserts. Its brands include the well-known name-sake, Orval Kent, as well as Mrs. Crockett's, Yoder's, Green Hill and Citrus Sensations.

Brown knows, however, not to equate size with strength. Since joining Chef Solutions last September, he's worked behind the scenes to assess and address every facet of this complex business.

It's meant reviewing every product to identify non-performing and/or under-performing SKUs. It's meant closing a plant in Fort Worth, Texas. It's meant hiring new operations people and/or introducing new practices and processes in other factories.

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It's also meant introducing programs to track and improve order fulfillment and customer service. And while Orval Kent has enjoyed strong sales in foodservice and national accounts channels, it recently hired Acosta Sales & Marketing Co.'s Fresh Foods Division, a national brokerage house, to represent Orval Kent brands to the retail trade.

Along the way, Brown says Orval Kent has met or exceeded every one of its monthly profit and sales goals. Yet that's just gravy, so to speak. Brown says he is more concerned with how Orval Kent goes about building "a winning organization."

"There's already been a tremendous sense of teamwork as we've identified operations objectives, executed them quickly and seen results," he says. "Another example involves several plant managers who recently got together to share ideas. Coming away from that meeting, they already have made some significant in-plant improvements. Moreover, the process was so positive that we ended up tapping a corporate engineer to run one of the most complex plants (in Wheeling, Ill.)."

Brown continues: "Every morning, we're focused on positioning this division for growth by executing these basics and developing our vision for the business ... We have a tremendous product line that's respected by the trade and well received. Soon, we'll be looking for opportunities to see how far we can take this business."

Brown and Steve Silk say their past experience taught them the value of investing behind value-added, high-quality branded products. Moreover, they're committed to leveraging the equity of each of Orval Kent's many brands while pursuing new opportunities.

And although officials are reticent to disclose details, Brown reiterates that the company's prepared fresh fruit line is "under-leveraged." Moreover, the company has tremendous resources to take advantage of what Brown terms an "exploding market" in refrigerated mashed potatoes.

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"These are exciting times," he concludes. "We look to continue to focus our efforts on core competencies that meet the needs of both our customers--foodservice and retail operators--as well as consumers. Both are looking for fresh, high-quality, on-trend convenient deli-style salads and sides, refrigerated mashed potatoes, fresh cut and hand-trimmed fruit. Looking ahead then, we plan to enhance the refrigerated prepared foods portfolio through innovation and best-of-class product development and capabilities."

AT A GLANCE

Division: Orval Kent Foods

President: Mark Brown

Product line: Approximately 1,000 SKUs of refrigerated products, including prepared salads, potatoes, side dishes, fruit and desserts

Brands: Orval Kent, Mrs. Crockett's, Yoder's, Green Hill, Citrus Sensations

Plants: Four--Baxter Springs, Kan.; Delphos, Ohio; Wheeling, Ill.; Linares, Mexico

By Bob Garrison

RAISE THE BANNER

Pennant Foods embraces its bakery heritage, focuses on strengths.

By any name ... a flag, banner, or pennant is meant to be seen. So, too, is a brand.

And that's why bakery industry veteran Dan Scales says he was so excited during a recent national sales meeting. After restructuring itself around a more division-oriented and customer-friendly model, Chef Solutions' top brass decided to operate the company's bakery group under the name of one of its oldest and best-known brands: Pennant Foods.

Scales is the division's president and a 25-year-plus baking industry veteran who's worked with Campbell Soup/Pepperidge Farm, Pillsbury and Sara Lee. When he shared the name change news with his bakery sales team, he says they applauded.

"We're excited about the move because Pennant has more than 60 years of credibility and recognition within the bakery industry," he says. "I appreciate our relationship with [principal investor] Questor Partners because their investment has enabled us to pull together several top professionals and align all our functional areas to this business alone."

And that's been no small feat. Pennant Foods supplies the food-service, in-store bakery, retail and commercial channels with products suited for every form of preparation. These include frozen doughs, fully baked thaw-and-serve products, batters and mixes. The division's six plants from Chaska, Minn., to North Haven Conn., produce as many as 1,000 SKUs.

Notes Scales: "Today, our manufacturing and technical capabilities rival the industry's largest players, yet we can execute like a smaller mid-size company. We are quicker to market, more flexible and responsive to customers."

That said, Scales is determined not to let Pennant get ahead of itself.

"We want to stabilize our business with a bakery focus and work at further penetrating our customer base and existing channels," he adds. "It's important to get those basics right. At the same time, we'll focus on our core products, which are puff pastry, cookies, croissants, cinnamon rolls and Danish, as well as bakery ingredients."

Complementing Pennant's work this year will be an increase in marketing and promotion to reacquaint customers with the division's brands, including Pennant, La Francaise and Sweet Bites.

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Speaking of Sweet Bites, Scales says Pennant already has a hit with Sweet Bites[TM] Cini-Minis, pre-packaged cinnamon rolls ready for grab-and-go sales. A 5.8-oz. package comes complete with six bite-size cinnamon rolls and a cup of cream cheese icing. A snap-on lid protects the product, which is designed for direct sale to consumers in a rush at an in-store bakery or convenience store. Consumers may heat the product in either their microwave or conventional oven.

"Response so far has been tremendous, "Scales says. "Cini Minis fit our quality and heritage and represent an innovation in both formulation and packaging."

He continues: "Overall, we want to target specific day parts, like breakfast, where we have products that fit. Additionally, snacking also offers another opportunity. In both cases, we're talking about developing items that offer grab-and-go convenience. It's a tremendous growth platform."

AT A GLANCE

Division: Pennant Foods

President: Dan Scales

Product line: Approximately 1,000 SKUs of frozen doughs, fully baked thaw-and-serve products, batters and mixes. Items include puff pastry, cookies, croissants, cinnamon rolls and Danish, muffins, mixes, fillings, icings and glazes

Brands: Pennant, La Francaise, Sweet Bites

Plants: Six--Chaska, Minn.; Dalton, Ga.; North Haven, Conn.; Northlake, Ill.; Rochester, N.Y.; and Thorofare, N.J.

By Bob Garrison

SOLUTION CENTER

Chef Solutions' corporate R & D center in Mount Prospect, Ill., embodies the phrase "food for thought."

Food for thought. Sure, the phrase is familiar. But what if you could somehow embody it? Truth is, it might look something like Chef Solutions' two-year-old corporate research and development center in Chicago's Northwest suburbs.

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Representing the efforts of as many as six former legacy companies, this 20,000-square-foot operation in Mount Prospect, Ill., is full of refrigerated prepared food and bakery labs, sensory kitchens, simulated customer kitchens and merchandising areas. Covering both ends of the spectrum, the building also boasts a fully equipped consumer research area, as well as a pilot manufacturing plant.

That's not all. The facility's centerpiece is a 700-square-foot presentation kitchen (shown on cover) fully equipped for almost anything ... from face-to-face customer presentations to product training seminars for both customers and salespeople. The room features state-of-the-art audiovisual equipment, including well-placed video cameras, viewing monitors and even a large projection screen.

Managing the facility is Jim Paskind, vice president of research and development and quality assurance. A 24-year food industry veteran, Paskind is familiar with the cutting edge in refrigerated food product development. Before joining Chef Solutions last September, he was general manager in charge of ConAgra Refrigerated Foods' New Products Group, which focused on convenience meals.

That said, Paskind says he was "wowed" by Chef Solutions' commitment to research and development.

"Prior ownership had positioned this unit very well--on both sides of the business--to be a leader in innovation," he says. "The most positive aspect involves our people's capabilities and expertise. Combined with these facilities, we now have the opportunity to execute against the 'vision' and make the business grow. That's exciting for me. I'm looking forward to the next 12 months."

Paskind manages a group of 17, including an executive chef, food technologists and culinary experts. Represented on the team are researchers from many of Chef Solutions' legacy companies, combined with some outside talent.

Although it may seem subtle to casual observers, Paskind says his group's research efforts and speed to market are dramatically improved by a shift to separate divisions: refrigerated foods and bakery foods.

"We've had the same skilled personnel--technologists and culinary experts--on both sides of the business," he says. "However, now our people can focus as they work side by side with sales and marketing and meet directly with customers. Even during the past several months, there's been a significant improvement in understanding customer needs and quickly bringing technology to bear on those opportunities."

Paskind credits Chef Solutions' new structure, in part, for the retail industry's embrace of new Sweet Bites[TM] Cini Minis, a prepackaged offering of bite-size cinnamon rolls, complete with dipping sauce. Although developed earlier, Paskind says his company's bakery experts now can meet directly with customers and better convey the product's unique packaging and formulation attributes.

Meanwhile, Cini Minis provide a great example of what Paskind and his team are aiming for this year. First and foremost, the R & D group is charged to work within Chef Solutions' core product line and develop items of interest to existing and new customers. Secondly, Pennant Foods is to use its product strengths and develop new breakfast and snack-oriented products. Cini Minis fit the bill on the both fronts.

Orval Kent's mission is the same. Leveraging the company's expertise and broad product line, division researchers are to develop new deli-style salads, side dishes, fruit offerings and desserts with added value to customers and consumers alike.

It's here, in person, that Paskind gestures and points to the presentation kitchen behind him.

"We've got the ideal setup here to better understand customers' needs and solve business problems. We're also in a position to get rapid consumer feedback on the products we're developing. It's pretty exciting."

Personality Profile: Jim Paskind

His title: Vice president of research & development, quality assurance

His background: A 24-year food industry veteran, Paskind joined Chef Solutions last September after serving as general manager for ConAgra Refrigerated Foods' New Products Group.

His to-do list for '05:

1. Build Chef Solutions' core business with existing and new customers.

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2. Channel more direct customer and consumer interaction into new product planning.

3. Strengthen staff. Accelerate development of R & D and QA managers, food technologists and culinologists.

What's on his mind: food safety.

Quote: "One industry issue that stands out for me is food safety. Having grown up in the perishable foods business (processed meats), I know it's the cornerstone of how you do business, how you operate your facilities and how you partner with everyone in the supply chain.

"It still concerns me that with so many various points of contact along the supply chain for perishable foods, the opportunity for product failure is there with each touch point. I think the industry needs to continue to focus and help each other in addressing high-risk areas within the supply chain."

Q & A ABOUT QA

R & FF Your title includes quality assurance. What would you like to achieve this year on that side of the business?

PASKIND: Consistent with our company's primary goal--build the core business with existing customers--our focus will be to enhance our process control capabilities. Our facilities do a great job with understanding manufacturing. We want to lead even more advances in product consistency, process consistency and process ownership. Again, our production people already do a great job. I just think that we have an opportunity to take some of these areas to the next level.

R & FF You spoke earlier in our interview about the importance of food safety. How is your group addressing that in the plants?

PASKIND: We will enhance all of our food safety efforts to decrease any margin for error. It means reviewing our manufacturing and engaging our key suppliers, many of which already are providing solutions in the area of in-plant food safety.

There are several of us with a knowledge base of food safety from prior perishable foods experience. While there may be a few new ideas that we can bring, I've already found, to my delight, that much of the industry's latest thinking and technology already are being applied or under investigation here. This puts us on the right side of this whole issue, and that's where we want to stay.

By Bob Garrison