Amid a downturn in the food service industry, brokers are undergoing a wave of consolidations, including Grand Rapids-based Wolff Group.
Wolff Group announced last week that it has merged with The Edelstein-Mohan Group LLC of Pittsburgh. That follows a year in which Wolff acquired three other foodservice marketing companies, said Senior Vice President and CFO Mike McDonald.
Those acquisitions included A.W. Schroder Co. of Florence, Ky.; Enterprise Food Brokers of Cleveland; and Parsley Marketing of Richmond, Ky. Wolff Group’s footprint now extends into Indiana, Kentucky, Ohio and Pennsylvania, as well as Michigan.
Wolff Group specializes in sales and marketing on behalf of manufacturers to companies, such as Grand Rapids-based Gordon Food Service, that supply organizations such as schools, hospitals, restaurants and the military, McDonald explained.
“We have more than doubled our size in the last 24 months through organic growth, acquisitions and mergers,” McDonald said.
The company now has 75 employees scattered throughout its service area, including about a dozen in the Grand Rapids office, where company-wide functions such as human resources and accounting have been centralized, McDonald said. Company President & CEO Stuart Wolff is based in Livonia, which houses a marketing staff, he added.
Wolff Group last year launched “a strategy to build a broad, single-point-of-contact agency network to better meet the needs of its manufacturer, distributor and operator customers,” according to the company’s press release.
Bob Goldin, executive vice president of food industry consultant Technomic Inc. of Chicago, said the food service industry has been coping with reduced volumes over the past year. That is boosting consolidation among brokers to cut costs, similar to the trend that occurred in the retail food broker market in the 1990s, he said.
“Brokerages traditionally have been pretty much independent local market companies,” Goldin said, aside from a few regional firms. “It’s changing, although there are still a lot of independent local market brokers.”
He said consolidations are trending up for cost efficiencies and for a lack of succession options.
“It’s hastening,” he added. “Volumes are down for everybody in the industry and brokers get paid based on volume.”