Much like the Pandemic itself, last month’s news that The Middleby Corporation had announced plans to purchase one of its major competitors, Welbilt, is set to impact everyone and anyone involved in the restaurant and foodservice industry across the nation and the globe.
The impact begins with restaurateurs and the equipment and supply dealers that serve them. Both Middleby and Welbilt create dozens of brand name equipment and supplies that are used in a vast array of kitchens. The most pressing of those questions is what impact the proposed acquisition will have on pricing of heavy-duty kitchen equipment and supplies.
The proposed deal brings back reflection to the similar scenario that the industry dealt with in 2013. In a proposed agreement, Sysco announced that it would acquire US Foods for $8.2 billion. But in June 2015, US Federal Judge Amit Mehta ruled that the combined Sysco-US Foods would control 75% of the U.S. foodservice industry and that would stifle competition. Within days, Sysco terminated its merger with US Foods.
The industry is also waiting to see what impact the Middleby/Welbilt deal would have on the equipment representation community. Restaurant and kitchen equipment manufacturers typically engage the services of local rep firms. Those firms market multiple lines of hot and cold kitchen equipment as well as small wares to their local restaurant equipment and supply dealers. The question becomes one of consolidation to reflect the elimination of completion. With Middleby manufacturing the Turbo Chef line and Welbilt marketing the Merrychef line, one option may be to consolidate the representation of the lines under the Middleby umbrella. In the case of Metro New York, the well-respected Pecinka Ferri rep group has the entire Middleby line, while Garden State based P3 Reps handles Merry Chef.
Among the key questions in advance of representation and distribution of the newly combined operation is the actual fate of some of the lines. Will government approval of the deal be contingent upon the sale of competing brands (MerryChef and TurboChef) etc.? Or will the new board with the input of Welbilt investor Carl Icahn simply choose to extinguish some of the newly acquired brands? That strategy may prove to be consistent with Welbilt’s 2020 plant closings and job cuts to adjust for the impact of the pandemic on the restaurant industry. The company said at the time that it was shuttering five of its 10 North American plants for one to two weeks, as well as three of its six facilities in Europe, the Middle East and Africa.
It will also be interesting to see the impact that the proposed deal has on the industry’s trade shows. Both Middleby and Welbilt have long been major exhibitors on the show floors of key events including the NRA-National Restaurant Association Show in Chicago, Milan’s Host Milan and the NAFEM-North American Food Equipment Manufacturing Show. Time will tell whether the newly formed company will consolidate its trade show exhibit space and footprint as convention centers and shows welcome guests once again later this year.
The deal brings to the forefront one of the industry’s key executives that has toiled tirelessly in the background. For the better part of a decade, Middleby CEO Timothy FitzGerald worked in the shadow of the iconic Selim Bassoul. “This announcement represents a milestone event for Middleby, Welbilt and the Commercial Foodservice Equipment industry. The combination of our two great companies creates a leading player with a comprehensive product line, global footprint and advanced technologies and solutions that are well positioned to serve our rapidly changing customer needs and capitalize on emerging industry trends. The acquisition of Welbilt is a transformational opportunity for Middleby and a compelling combination that will benefit all of our stakeholders,” FitzGerald said. “We are excited to welcome the Welbilt team and we will benefit from the highly talented group they have assembled.”
Under Bassoul’s rein with FitzGerald executing the vision, Middleby stock rose more than 1,500 percent during the past 10 years. The duo’s steady stream of acquisitions lifted annual revenue from $127 million to nearly $3 billion before Bassoul’s retirement in 2019.
Middelby’s commercial foodservice portfolio includes Anets®, APW Wyott®, Bakers Pride®, Beech®, BKI®, Blodgett®, Blodgett Combi®, Bloomfield®, Britannia®, Carter-Hoffmann®, Celfrost®, Concordia®, CookTek®, Crown®, CTX®, Desmon®, Deutsche Beverage®, Doyon®, Eswood®, EVO®, Firex®, Follett®, frifri®, Giga®, Globe®, Goldstein®, Holman®, Houno®, IMC®, Induc®, Ink Kegs®, Inline Filling Systems®, Jade®, JoeTap®, Josper®, L2F®, Lang®, Lincat®, MagiKitch’n®, Market Forge®, Marsal®, Meheen®, Middleby Marshall®, MPC®, Nieco®, Nu-Vu®, PerfectFry®, Pitco®, QualServ®, RAM®, Southbend®, Ss Brewtech®, Star®, Starline®, Sveba Dahlen®, Synesso®, Tank®, Taylor®, Thor®, Toastmaster®, TurboChef®, Ultrafryer®, Varimixer®, Wells®, Wild Goose® and Wunder-Bar®.
Welbilt traces its roots back to New York. In 1929 when brothers Henry and Alexander Hirsch founded the Welbilt Stove Co. The company was called Welbilt until 2000 when it changed its name to Enodis. Wisconsin-based The Manitowoc Company bought Enodis in 2008 and the current company was spun off in 2016 as the rechristened Manitowoc Foodservice Inc. It changed its name back to Welbilt.
With the industry, now welcoming back its dining patrons, and many restaurants about to be flush with the cash infusion of the $28 billion RRF grant funding, the timing to make this new venture succeed seems perfect. Let’s see if regulators agree.
