Maines Positions for Continued Success in the Next Century
Maines Paper & Food Service, Inc. (“Maines” or the “Company”) will be celebrating 100 years as an independent family-owned business in 2019. In anticipation of generations and decades to come, David and Bill Maines initiated a series of actions over the past two years to maintain the leading market position of Maines and their other family-owned enterprises.
Three generations of the Maines family have grown and strategically transitioned the Company from selling nickel candy to local grocers to becoming one of the largest independent foodservice distributors in the country. Building upon the strong foundation established by their father and grandfather, David Maines and his brother Bill joined the Company during the 1970’s. Together, they led the Company into the broader foodservice distribution industry with the blessing and support of their late father Floyd Maines. Collectively, Bill and David have led the Company from humble beginnings over forty-years ago to an industry leader today.
Decade after decade, the Company has grown through the implementation of progressive and innovative strategies. Since 2000, Maines has opened distribution centers in six states, strategically acquired other businesses to grow their base of existing and new restaurant brands and grown their overall top lines sales from less than a billion dollars to more than $3 billion today. The growth in the custom distribution division of Maines has been complimented by similar growth in their broadline customers, colleges and universities, business and industrial accounts and regional multi-unit customers. Today, Maines is the third largest independent, family-owned foodservice distribution company in the United States.
The impact of market changes and the recession that occurred in the last ten years have been felt throughout the foodservice industry and those that serve its needs. When the recession struck in 2009, many operators entered survival mode, abandoning traditional value propositions in pursuit of price point marketing strategies. As a result, a staggering number of restaurants depended heavily on food deflation and low interest rates to survive; two economic variables that are currently under pressure. This has been further complicated with significant demographic shifts, increased competition through new restaurant concepts, expansion of the number of locations of existing brands and material increases in regulatory burdens and wage laws. As the millennial population surpassed baby boomers in pure numbers, operators have adapted the way they go to market in response to this demographic shift. This includes appealing to the millennial group’s price point focus, desire for unique dining experiences and greater nutritional transparency. As a result, restaurateurs across the industry have experienced margin pressures and the challenges of juggling new menus with increased complexity.
Distributors have also not been immune to these restaurant industry conditions. Due to pricing demands, many distributors have relied on deep expense cuts, inflation related market gains and logistical opportunities to remain both competitive and profitable. Some that participate in the custom distribution segment of foodservice distribution have materially reduced their footprint in the national chain restaurant segment. This industry supply and demand shift is only in its initial stages. Due to the opportunity presented by these circumstances, we have continued to focus on our existing customer relationships, as well as prudently expanding or consolidating our focus based on market dynamics. We believe that this will position Maines well to take advantage of an upward turn in market trends when they occur and allow us to meet the family’s expectations in market downturns.
To manage through the current tough market cycle, Maines is advancing with a clear vision and proactive strategies to address near term pressures and position the Company for future opportunities. Today, we want to share some of these plans with you:
1. Maintaining a Strong Portfolio.
We’re proud to announce the addition of Tim Hortons to our customer base with a $500 million, five-year contract executed this month. This is in addition to initiating service to Chick-fil-A restaurants from two of our distribution centers over the past two years. Maines has also recently renewed contracts or expanded operations with: Olive Garden, Longhorn, Wendy’s, Boston Market, Applebee’s, IHOP, Chili’s, Burger King, and Subway among others. Maines currently provides distribution services to over 7,000 national account locations, 2,100 locations from our broadline division, and more than 400 locations in other hospitality related accounts.
2. Customer Commitment.
Maines’ strong market reputation is dependent upon our ability to meet and exceed our customers’ expectations. They rely on us as part of their team and we focus on enhancing their guest’s dining experiences. At a time when some distributors will overextend to gain new accounts, Maines remains careful not to sacrifice service level and profitability when evaluating new contracts. We carefully consider each proposal and ensure that we are well positioned to execute the scope of every agreement at the highest level. This includes agreements for both new customers and existing customer renewals.
3. Process Enhancement and Deployment of Technology.
For decades, Maines has been an industry leader in the deployment of strategic technological investments throughout its operations to enhance service and contain costs. Our operational teams utilize technologies such as Roadnet, Telogis, WebSphere, SAE, PowerWarehouse and others to provide cost-efficient warehouse management and last-mile distribution services. Our online ordering platforms are undergoing continuous development to provide enhanced capabilities and speed; with the integration of FSENet and participation in the GS-1 initiative, standardized and synchronized information with our trading partners will be at the fingertips of every customer. Internally, SAP, Vistex and other tools are utilized throughout allowing unprecedented access to real-time data, customer relationship management tools, and back-office financial resources; meanwhile, the HR department drives easy access to employee information through ADP outsourced services.
4. Efficient Allocation of Resources.
We regularly assess our geographical location and the related resources of our distribution services to assure that we are providing the best service opportunity possible while meeting financial performance expectations. These reviews provide both growth and consolidation opportunities. After extensive review of our existing contracts and service levels spanning more than 30 states, we have decided to reduce the footprint of our operational assets in Chicago, Illinois and surrounding states served from this market area to one distribution center from the two currently operating in that market.
Maines has resigned its membership in Distribution Market Advantage (DMA) of Schaumburg, Illinois. DMA is a cooperative of independent distributors that offer multi-unit regional and national distribution solutions. The services of DMA provide its members business opportunities that would otherwise not be an option for its respective members. Maines resignation from DMA is due to its outgrowing the value proposition the organization offers. We continue our strong participation in the other cooperatives we belong, especially Independent Marketing Alliance, Markon and Telos Logistics.
5. Growing Our Distribution Channels.
Maines Food & Party Warehouse provides an easy access point for our foodservice and retail customers to obtain high quality food, party supplies, and kitchen equipment at a moment’s notice. Our four stores currently serve the Binghamton and Syracuse, New York and Scranton and Wilkes-Barre, Pennsylvania markets. We are pleased to announce that we will be re-opening our location in Greece, New York. This expansion will allow for greater access to our customer base across Western New York and create enhanced market presence and branding for our broadline operations in the region. The Greece, New York location will house a state-of-the-art test kitchen and conference space. We will also be utilizing Greece, New York for a domicile location supporting two driver workforce locational opportunities in the greater Rochester, New York market.
6. Focus on Talent.
Our successes have been driven by the dedication of our associates at every level within the organization. We will continue to build upon our progressive policies and procedures to continue our tradition of recruiting and retaining the best talent in the industry. As a family-owned business, we have the flexibility to respond to our employee’s needs and shape a positive work environment in which our associates have greater ownership of our shared success.
“I see the incredible value our associates create every day for both our valued customers as well as the Maines family”, said Chris Mellon, President & CEO of Maines Paper & Food Service. “Whether a national customer declares that we are the best in the custom distribution segment or an independent operator is expanding their business as a direct result of their relationship with Maines, each day provides us with opportunities to drive our mission forward. As a relationship company, our success runs parallel to the success of our customers; our focus will always remain on execution and providing value to help every customer prosper”. Mellon added, “I am also confident that the work we have done with Ernst & Young in the development and execution of a comprehensive strategic plan will further position Maines for a bright future. We and the Maines family look forward to continued growth and prosperity at the Company over the next hundred years.”
Mobilizing the resources needed to develop and execute a long-term strategy is a luxury many companies don’t have given the current business environment. Through these uncertain times, Maines is proud to embrace these changes and bring our forward-thinking approach and market intelligence to help our customers prosper. As we approach our Centennial celebration, we will reflect on the many successes we have enjoyed, while looking forward to the next hundred years with enthusiasm and confidence.