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Ahold Splits U.S. Foodservice
Into Two Separate Units
Ahold announced that it will reorganize its embattled U.S. Foodservice division into two separate units, each focusing on a specific customer segment.
One division will focus on broadline foodservice distribution, which has made up 87 percent of U.S. Foodservice's net sales.
It will continue to supply food, equipment and related supplies to independent restaurants, healthcare providers, hospitality customers, government entities, educational institutions and other foodservice customers. It includes 67 distribution centers in 36 states and employs about 25,000 people.
The other division will focus on multi-unit chain restaurant accounts, primarily in the quick-service and casual theme restaurant segments. That division will be given its own brand identity. It currently includes 11 distribution centers in 10 states and employs about 2,100 people.
Along with the reorganization, Ahold announced four initiatives to drive growth of its broadline business, which last year totaled $12.4 billion. They include:
- Accelerating private brands penetration. In 2005, the company's 60 private labels accounted for about 26 percent of total net sales;
- Investing in the sales organization;
- Strengthening targeted brand geographies; and
- Rolling out a comprehensive operational excellence program.
Over the next three years, the company is targeting an annual broadline net sales growth of at least 5 percent and operating margins of at least 3 percent. Ahold also plans to make significant investments in systems and infrastructure improvements, reduce total U.S. Foodservice administrative costs by $100 million and consolidate one of its Chicago-area distribution centers.
The company is also looking at expanding third-party distribution partnerships to develop its regional inbound network and reduce inbound logistics costs, and is looking to possibly acquire some companies to give it a presence in some parts of the country.
"U.S. Foodservice represents a significant part of Ahold's business and value," says Ahold CEO Anders Moberg. "Our management team has accomplished a major organizational overhaul at U.S. Foodservice during the past two years, integrating the past acquisitions, strengthening the operations, improving internal controls, enhancing corporate governance and restoring employee pride. U.S. Foodservice's financial performance is recovering, and the plan we are presenting today details the strong opportunities for pursuing profitable growth and creating a more valuable and transparent business for Ahold shareholders."
