Recipe for Success – Orange County Business Journal

What is the key to celebrating three quarters of a century in business?

Marc Wetterauwho is only the third chief executive in the 75-year history of Golden State Foodshas a relatively simple answer.

“It’s just an exceptional culture,” Wetterau told the Business Journal during an exclusive interview at the company’s headquarters in Irvine.

“Culture is so important – what we represent, what we stand for. It is the most powerful part. Without the culture, the strategy and structure would not be as strong and impactful. »

Golden State Foods is back in growth mode after seeing annual sales drop from about $7 billion to about $4.5 billion in 2019 after losing units that supplied its longtime customer McDonald’s Corporation.

Golden State Foods, which employs 6,240 people worldwide, is Orange County’s fifth-largest private company by revenue. The Business Journal’s annual list of the county’s largest private companies estimates that sales climbed 11% to $5 billion in food manufacturing and distribution and are expected to rise about 14% to $5.7 billion. dollars this year (see list, page 32).
It is present in more than 50 countries on five continents. It serves 125,000 stores in more than 200 well-known brands such as KFC, Taco Bell, pizza hut, Chick-fil-A and Wendy’s.

“You go to one of these quick-service restaurants, a lot of the products inside of these restaurants, our people were instrumental in developing and creating it,” Wetterau said.

The company, which has helped develop famous recipes such as McDonald’s Big Mac sauce, has 11 innovation centers around the world to create new ideas for their customers’ menus.

“There are a lot of sauces you can give us credit for, but that’s not something we want to talk about because when we’re developing these products exclusively for these customers, we’re behind the scenes,” Wetterau said.

“Our rewards are being able to process the products and deliver them.”

McDonald’s handshake

Golden State Foods, often known as GSF, dates back to 1947 when Bill Moore began selling meats from his home to restaurants and hotels in Los Angeles.

Business picked up again in the 1960s when Moore developed a close relationship with Ray Kroc, who founded McDonald’s System Inc. in 1955 and later purchased the name and operating rights of McDonald’s Corp. in 1961; he worked at McDonald’s until his death in 1984, according to the company’s website.

As this chain grew, so did Golden State Foods.

Besides Big Mac sauce, he helped roll out many flagship products, such as Triple Thick Shake syrups, McNugget dips, McDonald’s brand ketchup, and flavored coffee syrups.

In 1976, Moore gave up the role of CEO to Jim Williams.

Wetterau began his career in 1980 at St. Louis Wetterau Inc.a family food manufacturer and marketer founded by his great-grandfather in 1869. He rose through the ranks to become President and CEO of Shop ‘N Save in 1987 and then President and COO of Wetterau Inc. , which sold for $1.1 billion in 1992 in Minneapolis SuperValu Stores Inc. So he, his brother Conrad Wettereau and former partner of Wetterau Inc. Mike Waitukaitis continued to train Wetterau Associates LLC to buy and run businesses.

Their two biggest investments became Anheuser-Busch Cos.largest independent distributor in Massachusetts, and Golden State Foods, which the company purchased in 1998 with the help of Yucaipa Cos by Ron Burkle.which was acquired in 2004.

Wetterau chose to buy Golden State Foods—which moved from Pasadena to Irvine in 1992—because “we liked tying ourselves to one of the best in the business.”

“McDonald’s was doing an amazing job. This organization has managed to stay focused on the customer itself.

Golden State’s business continued to grow by expanding into other fast food restaurants like Starbucks and into new geographies such as China, Australia and the Middle East.

After McDonald’s decided to consolidate its suppliers, in 2018 Golden State sold much of its distribution-related business to McDonald’s.

Golden State used cash from the sale of these units to increase manufacturing and logistics investments, such as a new liquids plant in Texas, a plant expansion in Georgia, and a new plant in New York.

As part of its growth strategy, GSF is also supporting its customers in China, recognizing ongoing supply chain issues.

“It is extremely difficult for all of us. The time frame for ingredients from Asian markets has increased significantly,” Wetterau said. “Stabilisation is approaching. By the end of the year, things will start to look up. It will take another 18 months to return to previous levels.

Five main activities

Golden State Foods now has five core businesses: proteins such as hamburger patties; liquid products such as syrups and condiments; produce; dairy products such as ice cream and smoothies; and logistics.

It extends to areas such as electric trucks, which is a “top priority,” Wetterau said. The company ordered 45 VOLVO electric trucks, most of which are expected to arrive within the year. The company’s Quality Custom Distribution unit has a fleet of 700 Class 8 tractors that make more than one million last mile deliveries a year, averaging more than 35 million miles on the road every year .

“The will is there, but the technology is lagging behind,” Wetterau said. “We will definitely stay on top of that.”

The company is constantly evaluating whether to retain its California headquarters, particularly when its leases are up for renewal.

While he called Orange County “fabulous” and “very special,” the state government “isn’t as business friendly as it should be.”

“We will be here as long as the state is fair to our associates.”

Sales, which fell to about $4.5 billion after the divestiture, are now rebounding to “well north of $5 billion.”

“From a balance sheet perspective, we are stronger than ever,” Wetterau said. “We’re back in growth mode.”

The company has relatively low debt levels and is considering acquisitions when the time comes, he said, adding that no initial public offering is planned. He turned down new clients as he worked to stabilize, he said.

“We have to breathe deeply. We are very careful when accepting new clients.

“Growth is very strong, in the double-digit range. It is very important to ensure that we satisfy customers.

Even though Wetterau has been in charge for 24 years, he has no intention of stepping down anytime soon.

“I love what I do, and if I can earn a few more years that would be fantastic,” he said.

“I will never disconnect from this company.”

Golden State Foods Timeline

Bill Moore founds Golden State Foods as a supplier of beef to restaurants and hotels in Los Angeles.

Gets the McDonald’s business on a handshake with Ray Kroc. Achieved
$2 million in annual sales.

Wins new customers like In-N-Out, Disneyland; begins exporting to McDonald’s in Asia, South America and the Caribbean. Annual sales exceed $20 million.

Sales reach over $337 million per year. Helps refine McDonald’s famous sauces for Big Mac and Filet-O-Fish. First to implement ‘one stop shopping’ in a fast food format, revolutionizing the industry. Becomes exclusive supplier of McDonald’s. Jim Williams became the company’s second CEO in 1976. Founder Moore died in 1978.

Williams focuses on McDonald’s. Started making McDonald’s ketchup, McRib patties and sauce, McNugget sauces and dressings for new salads. Sales exceeded $1 billion in 1989.

Moves headquarters to Irvine in 1992. Expands to Australia and the Middle East with a processing plant in Cairo in 1994. Sales reach $1.7 billion. Wetterau Associates and The Yucaipa Companies buy Golden State Foods in 1998. Expands to other fast food chains.

2000s :
Forms logistics unit. Starts a charity that has since raised over $60 million for 600 nonprofits. Yucaipa bought it back in 2004. Sales reached $4 billion in 2009.

Acquired KanPak China in 2012 to expand into China and KanPak US in 2013. Acquired Groenz in 2013 and Snap Fresh Foods in 2014 to expand into New Zealand. Sales topped $7 billion before it sold nine of its dedicated fulfillment centers that served McDonald’s. Sales drop to $4.5 billion a year. Uses cash to further invest in other areas of business logistics and manufacturing.

Double-digit sales growth, “far north” of $5 billion a year.

Michael M. Tomlin