MARSHALL, Minn. — Home meal delivery services are hot right now, but it isn’t often that Schwan’s Co. is mentioned as one of the innovators in this growing space.
That’s because the Minnesota-based food company has been doing it for 65 years and hardly catches the eye of trendwatchers. From consumers’ distrust of processed foods to shoppers flocking to on-demand food services, the company is fighting battles on multiple fronts. Schwan’s leadership sees these challenges and is seeking to address them all. With increasing competition from online meal-kit and grocery delivery startups, Schwan’s is looking to capture convenience-minded customers who are increasingly turning to digital sites to find their next meal.
“We were doing home delivery of food before home delivery of food was cool,” said Pat Anderson, senior vice president of product innovation. “When we get asked, ‘What are you going to do about all the new meal kits on the market?’ we say, ‘Celebrate them.’ They are talking about getting food delivered to your home that is easy to prepare, and that makes it easier for us to sell our story.”
Schwan’s home delivery got its start in 1953 when Marvin Schwan bought a refrigerated truck and decided to take the family business – a creamery – on the road. Unlike many of today’s new home-delivery food companies, Schwan’s originally catered to a rural crowd, offering its customers products they couldn’t get anywhere nearby.
And while Schwan’s elicits images of gold trucks for many Midwesterners, the company is more than home delivery, which still has 1.35 million active customers. The Marshall- and Bloomington-based company with $3 billion in annual sales owns a small cadre of retail brands, like Red Baron, Freschetta and Tony’s pizzas, Mrs. Smith’s pies and Edwards desserts.
Starting with frozen pizza in 1966, the company has added many brands through a series of acquisitions over the decades. Red Baron was created by Schwan’s in 1976. That brand developed a fan base through its flashy Red Baron Squadron – a small fleet of World War II-era Stearman planes that performed at air shows around the U.S. It was the nation’s longest-running civilian aeronautics team when Schwan’s disbanded the group in 2007.
The company also operates a food service business that sells to schools, hospitals and other institutions.
Dimitrios Smyrnios, a food industry veteran who spent the previous 20 years at Nestle, came to the company 3 1/2 years ago during a challenging time. Schwan’s expenses were outpacing sales, communication across the operation was patchy, and employee morale was low. Smyrnios spent the first 100 days on the road, touring facilities and talking to employees to get a pulse on the company.
Based on that feedback, he reintroduced profit-sharing and established a three-year operational turnaround plan focused on speed and simplification.
“I’m ecstatic about the turnaround results, but I want to keep improving,” Smyrnios said. “The next three years is going to be focused on strengthening our credibility.”
During Smyrnios’ tenure, the executives and about 350 employees moved from the small Minnesota city of Marshall to the Minneapolis suburb of Bloomington to have access to the airport and a wider talent pool. A company jet still flies twice a day between the two cities. There are 1,300 workers in Marshall, including the R&D team and facility, and Schwan’s is a major philanthropic donor in the community.
But simplification also means reorganization, which resulted in job cuts. The company, which is privately held, would not provide an exact number, but Smyrnios said they had to trim in certain areas. Many of the affected workers were offered jobs in other areas, he said but the process cost a net loss of jobs companywide.
