Butterball Farms remolds business model

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Founded in 1955, Butterball Farms is a producer of specialty tabletop butters and premium flavored butters with about 140 employees. Courtesy Butterball Farms

Butterball Farms has had stable revenue during the past four years, but CEO Mark Peters recently decided it was time to make some changes to advance into growth mode.

Last month, he announced the Grand Rapids-based company is forming two divisions: Butterball Farms Operational Excellence (OE) and Butterball Farms Rapid Growth (RG).

Peters promoted Dave O’Hagan from COO to president of the OE division and Craig Gustafson from VP of sales and marketing to president of the RG division.

O’Hagan joined the company in 2014 and Gustafson was hired in 2018.

Their previous positions will cease to exist, and they will assume profit-and-loss and management responsibilities for their respective newly formed divisions.

Founded in 1955, Butterball Farms is a producer of specialty tabletop butters and premium flavored butters with about 140 employees and one facility at 1435 Buchanan Ave. SW.

The company makes individual butter servings; butter tubs; butter dollops; butter sauces and bases; butter spreads and blends; chef’s rolls; and baker sheets, which go into dough preparations.

About 85% of the company’s book of business comes from large customers such as McDonald’s, but it also is a supplier to other restaurants, airlines, cruise ships, food manufacturers, caterers, country clubs, foodservice distributors, hotels, colleges and universities, online meal kit services, and grocery store commissaries where prepared meals are produced to sell in stores.

Peters said the catalyst for the two new divisions came about recently when he was examining the company’s budget.

“I came to a realization that we really can’t control about between 80% and 85% of our revenue. We have a lot of big customers — McDonald’s is probably our largest, along with some others — and once we have a deal with them, we don’t really have any control over how much they stock,” he said. “We can lose it by poor performance, but we really can’t grow it. So, what I’m left with is 10% to 15% of my business (is in) areas where we can have an impact.”

Peters allocated the “uncontrollable” 85% of Butterball’s revenue into O’Hagan’s OE division, which will aim to “protect and defend” that revenue stream by keeping the big customers satisfied through consistency and reliability.

He created the RG division to generate new revenue possibilities by ideating new products and entering new markets.

“It’s about acquiring new customers and converting customers to our business with a little bit more innovative and exploratory problem-solving,” he said.

In order to jumpstart the RG team’s imagination, Peters said he believed a change of scenery was required. Thus, he chose to locate the RG division at the membership-based workspace Worklab by Custer, at 99 Monroe Ave. NW, Suite 200, in downtown Grand Rapids.

Gustafson — who has over 30 years of sales and marketing experience in the entertainment, consumer products and food industries — has been building his team at Butterball over the past year and likely will hire three to five more employees for the RG division in the near future.

Due to some natural attrition through retirements, Peters, O’Hagan and Gustafson have been working on “talent mapping” for the company for both divisions going forward, Peters said. Part of the vision is to farm some of the new work out on a contract basis to bring the skills needed to the team while keeping costs in check.

“We’re still working through some of that. This is all very new; we’re one month into it,” Peters said.

He added he is confident O’Hagan and Gustafson will do well in their new roles.

“They’re both really skilled, seasoned executives. … Dave’s got a long history of running manufacturing plants, and I think he’s got a couple of lean projects coming in this year, so he can just continue to make our operation more efficient and more reliable,” Peters said.

“Craig has got a long history in sales with a number of different kinds of companies, so this idea of rapidly growing a company and really having autonomy to do that fits his history pretty well.”

While Butterball is a private company and does not disclose revenues, Peters said he is shooting for $100 million in revenue in the next four years, and he believes it is an achievable milestone with the changes that are now in place.

“I am excited about the RG business creating a place to progressively test new ideas and investments and to be an influencer in the marketplace, while our OE business will continue to deliver at a high level of excellence for our valued customers,” he said.

“With this new and focused organizational structure, we will better drive decision-making with velocity and push key initiatives to accelerate performance.”

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