Hormel Delivers Consistency

It sounds so simple. Consistency.  It’s what restaurants look for every day in their foodservice operations.  But Tom Day of Hormel can tell you there are very few companies who can deliver on that promise.

“Foodservice professionals need to make sure within their restaurant operation that every time they order a food product, that product arrives safe and wholesome, and they get what they pay for, each and every time,” said the group vice president for refrigerated foods.

Sounds easy enough but does every company make it happen? “I’m fortunate to work for one that does,” he says.

Day says the foodservice business has changed quite a lot in the 32 years he’s been in it.  “Today's end users are much more interested in innovation.  They want to have a point of difference,” he says.

They want to be able to use product in multiple ways.  “In today's business world, you really want to be able to use that ham across all parts of the operation, and so we've worked very hard with recipes and ideas that allow restaurants to move our product in different ways and in different uses as their customers change,” Day says.

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Back in the ‘90's, you could open up a restaurant and have it be pretty successful, Day says, but since 2007, when the Great Recession hit, “Everybody's had to work a little bit harder.  The integration of your products, the idea of the flavors in regards to differentiating yourself, has certainly been a part of it.  As in every kind of business, the industry has to stay both relevant and adapt to an ever-changing world.”

For one thing, ethnic flavors have become a big part of the restaurant world. “People are not afraid to experiment and try new cuisine, and as a result of that, products like Austin Blues™ barbecued pulled pork and our Cafe H™ line, like our Chicken Carnitas, have done an extremely good job of helping to address end users’ needs,” Day adds.

Austin Blues is a line Hormel has had for 10 years.  “And although barbecue has always been out there, authentic barbecue really hasn’t had a place. So we made a decision to come up with authentic barbecue that was not sauced,” says Day. “And so we made a brisket that smoked for 16 hours, a pulled pork that's smoked for 12 hours, the way they used to do it, and still do, in many parts of the country.  We made that commercially viable for people that don't have a smokehouse or smoker.”

While it’s not clear that Hormel was the factor behind the explosion of barbecue, there’s no question that “barbecue today is on a lot of menus across the country, where historically it was regionally focused in say, Kansas City, Texas, and certainly in the Southeast,” Day says.

Hormel’s Cafe H line was set up to capture a different kind of flavor, Latin dishes, according to Day.  “We went down to Mexico and captured what I'm going to say is authentic recipes, and from that portion of the country, we stayed true to what a carnitas meat is supposed to be, and then launched those as customers started to look for it,” Day says. “And then we have our Natural Choice product, a very clean label, that addresses health and wellness, which are very important goals today.”

So how does Hormel get its products out to the marketplace?  Day says the company has always viewed this industry as a three-legged stool – manufacturer, distributor and operator.  “So, where some companies view it either as an operator or a distributor sale, we look at the entire stream because we all have to work together.”

What Hormel tries to do is focus very carefully on the operator in order to come out, again, with those items that create value, Day explains.  “We’ve determined what is called a pre-strategy – items that are precooked, pre sliced. And for the most part, the distributor community has been very supportive of that innovation because they want to be the ones who bring new items to the operator. So we spend a lot of time working with the distributor community.”

Hormel is fortunate in that its distributors have good placement of its product, primarily driven by its direct sales force.  “They work very closely with both the local distributors and the local operators to move our products through the system,” Day adds.

As for the brokerage part, “We've only got 6 or 7 of what I would call true business partners that are brokers.  The rest of it is all handled by our direct sales force. And that does make us a little bit unique,” Day says.

“Clarity, and alignment is a big part of what we talk about within our company. To make sure that our salespeople, who are really true entrepreneurs, are charged with moving our company forward, that they've got the tools that they need,” Day says. “And obviously the time and the focus and the education and training to make themselves successful.”

To that end, Hormel has an internal training program called “the selling edge,” that clarifies for sales reps what customer expectations are, both from the distributor level as well as end user level. “We backed that up with an online training program that we implemented about eight years ago.  So 24 hours a day, we've got basically a library that our reps can learn from,” says Day.

Customers can reach sales reps just about any time of the day or night over mobile devices and other online avenues.

“What I think, most importantly, is the idea of open communication, both up and down the organization, that says, we're all here to help each other. If you've got a question, you've got something you need, you pick up the phone. And we've got the appropriate resources – be that in quality assurance, R and D, our product management team, or certainly within our sales group – to get things accomplished.”

Cash and carries like Restaurant Depot have also changed the game, Day admits. 

“They're certainly a part of our overall structure,” he says. “We’re fortunate we do business with all of them, because they are in that big umbrella called food service.  But it hasn't really changed the way we go to market.  It’s just a part of the way we go to market.”

Hormel has put together a strategic plan for every segment of the food business, says Day.  “Segments,” is what the company calls them, and each has its own issues.  “Certainly, nutritional issues are continuing to be on the forefront everywhere, not just the school segment.  We don't have one line of products for colleges and universities, a specific line for health care. We've got products that work across all the segments.

“Our goal is to always be front of mind. And so, when it comes to delivering value-added products, our pre-strategies, that's where we spend the bulk of our time. We can't afford to have a direct sales force out there, selling items that do not deliver value for our company, or for the operator. So, we spend a lot of time with that, and keep that focus in place. We don’t allow ourselves to get too far off course.”

As for 2014, “You'll continue to see us concentrate on the idea of, obviously, quality, safe, wholesome food, the idea of creating value,” says Day. “We’ve just recently come out with a line of products called fire-braised meats. We will be adding some extensions to that.  And R and D is always working on new ideas.  So it’s a mix of the old and the new.  Our recipe has worked out very well for our success.”