Gordon Food Service Inc. History

Address:

333 50th Street S.W.
P.O. Box 1787
Grand Rapids, Michigan 49501
U.S.A.

Telephone: (616) 530-7000
Toll Free: 800-968-4872
Fax: (616) 2261-7600

Private Company
Incorporated: 1946
Employees: 4,400
Sales: $2.15 billion (2000)
NAIC: 42241 General Line Grocery Wholesalers

Company Perspectives:

Our family has been in this business for four generations--over 100 years. The progress and changes in the food industry over the past century have been astounding ... but the simple commitment we made to serving customers remains the foundation of our business philosophy today. We pledge that Gordon Food Service will continue to seek new technology which will advance the foodservice industry. Most importantly, we will keep listening and learning from the real experts--our customers. Key Dates:

Key Dates:

1897:: Original eggs and butter delivery business is begun.
1942:: Family business is reorganized and renamed by brothers Ben and Dan Gordon.
1946:: Gordon Food Service is incorporated.
1962:: Company opens a new headquarters and warehouse in Grand Rapids.
1965:: Paul Gordon becomes president as a second generation takes control of the business.
1985:: A second major distribution center is opened in Brighton, Michigan.
1991:: Paul Gordon's son, Dan, is named president.
1994:: Company reaches $1 billion in annual sales.

Company History:

Gordon Food Service Inc. (GFS) is the largest family-owned food service distributor in the United States and provides hospitals, restaurants, college dormitories, hotels, and other institutions with a wide variety of foods, beverages, and paper products. Marketed primarily in a territory that extends from Michigan's Upper Peninsula to southern Ohio and Indiana, and from Chicago to Cleveland, GFS's product line includes national brand names as well as products carrying its own GFS label. Having introduced new operations, technologies, and training methods that have since been adapted in other organizations, GFS is regarded as an innovator in the food service industry.

Company Origins

GFS traces its origins to the turn of the 20th century when Isaac Van Westenbrugge, a 23-year-old Dutch immigrant living in Grand Rapids, Michigan, borrowed $300 from his brother to start up a business providing dairy products to local grocers. Van Westenbrugge and his wife maintained a barn in back of their house for storing their merchandise, which they inspected by hand for freshness. Delivering cheese, butter, and eggs in a horse-drawn wagon to Grand Rapids stores, Van Westenbrugge became a successful businessman known for his commitment to high-quality products and dependable service. Eventually he was able to rent business space in the wholesale food district of Grand Rapids.

Within a few years, Van Westenbrugge sought to expand and, quitting his delivery business, entered a partnership in general grocery wholesaling. This venture ultimately dissolved in 1913, however, when he and his partner could not agree on product lines and expansion policies. Van Westenbrugge then began a new business in his original field of dairy product distribution, carrying the standard eggs, cheese, and butter, while adding new products on occasion, such as 'renovated' butter--made in the summer and re-churned for freshness in the winter--and Blue Ribbon brand margarine. Van Westenbrugge was able to provide quicker service this time, having replaced his horse and wagon with two rebuilt delivery trucks.

In 1916 an industrious young man named Ben Gordon, a classmate of Van Westenbrugge's daughter Ruth, began working part-time for Van Westenbrugge after school and on Saturdays loading and unloading the trucks. Gordon soon left to serve in the army during World War I, and when he returned in 1918, he moved to Indiana to pursue an opportunity with the Nucoa Nut Butter Company. Nucoa manufactured an inexpensive butter substitute made with coconut oil, a popular alternative during the war years when the price of butter rose to more than a dollar a pound. Gordon invested $1,500 to establish a sales and distribution office for Nucoa in Terre Haute, but after less than a year, as the war ended and butter prices plummeted, the venture failed, and Gordon returned to Grand Rapids. He began working for Van Westenbrugge again, this time as first assistant. Later that year Gordon married Ruth Van Westenbrugge.

Over the next ten years, the company began to deliver a wider variety of food products, introducing Philadelphia Cream Cheese, Rival Dog Food, Best Foods Mayonnaise, and several other items on its routes. The business grew rapidly, and in 1932 Kraft cheeses were added to the product line. In 1935 Gordon bought into Van Westenbrugge's business, and the name was subsequently changed to Gordon-Van Cheese Company. Two years later Gordon's brother Frank, having left his position as the manager of an A & P grocery store to work at Gordon-Van, was put in charge of opening and managing a new branch in Traverse City, Michigan.

The Gordon-Van Cheese Company went out of business in 1941 when it was purchased by Kraft. As part of the deal, Ben and Frank Gordon were employed by Kraft as general managers, but within a year they sought to return to their roles as independent food distributors. At this time, however, Ben was unable to participate in a competitive business venture, because of an injunction from Kraft. Therefore, Frank saw to the daily operations of their newly formed company, Gordon Food Service, while Ben went to work for the Office of Price Administration as a food price specialist. When Ben was able to rejoin Frank in the business in 1946, GFS was in full operation, servicing retail outlets in Grand Rapids, Kalamazoo, and Traverse City with a fleet of seven trucks. That year Gordon Food Service was incorporated, with Ben Gordon as president and Frank Gordon as treasurer.

In 1947 Ben's oldest son, Paul, a college graduate and World War II veteran, joined GFS as a salesperson. That year, the company opened a fourth sales center and warehouse in Lansing. The following year, the company's headquarters and main warehouse in Grand Rapids moved into a new facility that featured refrigerated storage space for frozen food products. Frozen foods became the focus of GFS's sales push in the 1950s. Among the first frozen foods the Gordons distributed was a new item becoming popular in restaurants at the time, french fries. By the end of the decade, GFS had employed two salespeople, and the company's concerns began to shift from merely selling to providing 'food service,' a new concept that came to denote broader and more thorough service to larger, institutional markets. Rather than arriving at a retail establishment with a supply of products for the merchant to choose from, as had been the norm at GFS, the new GFS sales staff began spending certain days taking advance orders and other days delivering.

Shifting Emphasis and Leadership: The 1960s-70s

By 1960 GFS was redefining its business as a food service distributor with a product line consisting mainly of frozen foods. The company had profited from the need for a local frozen food distributor in southwestern Michigan. With limited freezer space, Grand Rapids operators were forced to place small frozen food orders frequently. Because orders had to be brought in from Detroit or Chicago, many stores had difficulty stocking enough frozen food to meet customer demands. GFS was positioned to step in to fill this need and others. Throughout the 1960s the company expanded its sales staff as well as its product line, which came to feature grocery and disposable items.

In 1962 GFS built a new 54,000-square-foot headquarters and warehouse in Grand Rapids. This building would be expanded several times over the next ten years, eventually becoming the largest distribution facility of its kind in the country at 400,000 square feet. In its first year of operation the warehouse was also the site of the first annual trade show--featuring informational seminars and booths highlighting new food products--held by GFS. During this time, Ben and Frank began preparing to turn the company over to the next generation of Gordons. In 1965 Paul Gordon was made president of GFS, Ben became the company's chairperson, and Frank stepped in as vice-president. John Gordon, Ben's younger son, who had joined the company in 1953 as the manager of the Traverse City operation, was appointed secretary-treasurer.

GFS became fully committed to the food service industry in the mid-1970s when it discontinued the last of its accounts with retail establishments. Marketing mainly to restaurants, hotels, and schools in western Michigan, the company had around 4,000 steady customers by 1974 and achieved $36 million in annual food service sales that year. Realizing that GFS drivers had a great deal of contact with customers, the company changed the title of driver to 'sales serviceman' and provided this staff with special training in customer relations and sales. In recognition of this commitment to customer service as well as its continued growth and success, GFS received the first annual 'Great Distribution Organization' award from the trade magazine Institutional Distribution in 1974.

New Technology and Product Lines: Late 1970s-80s

Years of technical innovation and expansion followed for GFS. Committed to exploring newer and more efficient means of keeping records and filling orders, the company transferred much of this information onto microfiche in 1977. The microfiche price books and customer records, along with handheld viewers, allowed sales representatives to carry much of the information they needed with them in a briefcase or pocket when calling on customers. In 1980 the company's Grand Rapids warehouse was among the first of its kind to become automated when a computerized order selection and sorting system was installed for its warehouse products.

Given its rapidly expanding territory, GFS soon needed more distribution space than its Grand Rapids facility could provide. In 1985 the company broke ground for a second distribution center in Brighton, Michigan, intended to service the eastern half of its territory. The 40-foot-high, $15 million facility was slated for completion in August of the following year, but was delayed due to an accident in which several 400-foot-long racks of processed food crashed to the floor. No one was injured, but the building suffered water damage. Nevertheless, the Brighton Distribution Center opened only a few months later than expected. Run by the same mainframe computer that controlled the Grand Rapids warehouse, the highly mechanized Brighton center featured automatic inventory selection machinery and nearly 20,000 feet of conveyor belts that carried products directly into GFS delivery trucks.

The GFS product line also expanded during the 1970s. Noting that increasingly health-conscious Americans were selecting more meals from restaurant salad bars and purchasing more raw vegetables from grocery stores, GFS began marketing fresh, precut vegetables to customers interested in saving preparation time. By 1989 the company offered more than 100 different vegetable items. Also added to the GFS menu were ethnic foods, as the popularity of Chinese, Mexican, Cajun, and other cuisines increased in the Midwest. Furthermore, in addition to its already wide variety of canned goods, meats, dairy products, frozen foods, and main dish items, the company expanded its line of disposables, including paper napkins and silverware, as well as other nonfood food items, such as coffee machines and soap dispensers.

By 1991 nonfood products accounted for nearly 20 percent of the company's sales. Another ten percent of GFS sales was attributed to GFS Marketplace Stores located in Michigan, Indiana, and Ohio. GFS began the cash-and-carry retail outlets in 1979 primarily to service the emergency needs of customers. They also became the primary supplier for smaller customer who preferred pickup rather than delivery. GFS Marketplace Stores soon began to serve individuals and groups planning to host large gatherings or events. The 26 Marketplace stores offered complete lines of meats, seafoods, desserts, vegetables, and other items, such as coffee cups and stir sticks, economically priced in bulk quantities. Sales staff were available to help the customer plan an event, offering advice on how much food should be purchased or how to most successfully meet an already planned budget. Nonetheless, the bulk of GFS's business remained in commercial markets. In addition to its traditional customers--hotels, restaurants, country clubs, nursing homes--the company also gained large sales from supermarkets wishing to use a food service distributor to stock their delis and salad bars. In 1987 GFS reported $530 million in sales from an estimated 10,000 active accounts. The following year it was given the Great Distributor Award for a second time.

GFS credited its success to the high quality of its products, the innovations it effected in food service industry, and the dedication of its employees. Aside from providing its staff with state of the art equipment and facilities, GFS educated its sales force through ongoing and comprehensive training programs. Furthermore, the company offered several incentive plans, including profit-sharing and individual performance awards. Institutional Distribution reported in 1988 that the average GFS sales representative handled 55 accounts translating into a yearly sales figure of $2.9 million. Hoping to achieve an increase in sales of 15 percent every year, GFS equipped its sales force with laptop computers. This allowed sales associates to access information about product availability, food preparation instructions, and menu suggestions.

Further Growth in the 1990s and Beyond

By 1991 GFS sales reached $800 million, and the company had become the eighth largest food service distributor in the country, offering more than 10,000 products to its 10,000 customers. At the beginning of the year Paul Gordon's son, Dan (who had joined GFS in 1972), took over the presidency and Paul became the company's chairperson. Under Dan Gordon, the company saw more expansion. Purchasing a 20-acre lot on Clay Avenue around the corner from its corporate headquarters, the company erected a $35 million, 16-million-cubic-foot warehouse and distribution center that featured 32 receiving docks, a five-mile-long system of conveyor belts, and computer-controlled machinery to stack cases of food and track them as they were shipped. The Clay Avenue Distribution Center was completed in 1993.

GFS went international in 1993 when it purchased the Ontario and Quebec divisions of Maple Leaf Food Service from Maple Leaf Foods Inc. The result was Gordon Food Service Canada, a venture that eventually would be augmented by the purchase of two additional family-owned food service distributors to make it the second largest food service distributor in Canada. Four primary distribution centers were established to service the market. GFS would top $1 billion in yearly sales in 1994, but once the full benefit of the Canadian operations were realized, the company's revenues would jump to $1.657 billion for 1997.

Early in 1998 GFS opened a major new state-of-the-art distribution facility occupying 50 acres of land in Springfield, Ohio. The warehouse, with it 20 million cubic feet of capacity and ceilings that at points reached 110 feet high, was even larger than the flagship Grand Rapids facility and was designed to carry some 7,000 items. It would service a 250-mile radius, sending out 200 truckloads a day to a territory that included northern Kentucky, Indiana, central and southern Ohio, western Pennsylvania, and parts of West Virginia. GFS anticipated that the Ohio center, once fully operational around 2002, would do $500-$600 million in business. The company's total warehouse capacity now reached 1.5 million square feet.

GFS Marketplace Stores also grew at fast clip, going beyond its original purpose to serve as satellite distribution centers to compete with supermarkets and the rash of wholesale clubs that became popular with consumers. Like the clubs, GFS charged no membership fee. With the opening of a Rockford, Illinois outlet in December 2000, the number of GFS Marketplace stores reached 77.

GFS continued its commitment to technology. Not only was the inventory of all its distribution centers maintained by a centralized system, the sales force had immediate access to the information via laptop computers, along with advanced order entry capabilities. For its customers GFS also created and supported GFS Plus, software that featured sophisticated food service management tools to allow customers to control inventory and order products, as well as plan recipes and menus. Furthermore, GFS made available the NutriQuest software, which could provide nutritional analysis of the GFS products used in the recipes.

GFS entered a new century ranked number 74 in the Forbes Private 500 with more than $2 billion in annual sales, still very much an independent, family-run company. There has been no decline in fortunes that beset many companies when its founder has turned over the reins. For more than a hundred years the family business has enjoyed even greater prosperity with the advent of a new generation. There is nothing to indicate that GFS will not continue to enjoy healthy growth in the foreseeable future.

Principal Divisions: Gordon Food Service; GFS Marketplace.

Principal Competitors: McLane Foodservice, Inc.; Costco Wholesale Corporation; Alliant Exchange, Inc.; U.S. Foodservice.

Gordon Food Service Inc. History

Company Perspectives:

Key Dates:

Company History:

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