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Waugh Foods: It certainly plays in Peoria

Waugh Foods, Inc., Peoria, IL, a regional broadliner founded here more than a half a century ago, has developed a successful niche business plan that has kept it flourishing in America's heartland despite national trends to the contrary. Foresight, adaptability and a fighting spirit have been the hallmark of this family-owned distributorship.
Started by native Peorian Joe Waugh Sr. right after graduating from college, the company initially served as a frozen food supplier to the retail trade. It made its transition to foodservice in 1971 and then in the early 1990s it expanded into broadline distribution. "The name was Waugh Frozen Foods, with a little Eskimo logo. In 1992-93, we started losing business because we couldn't provide full-service broadline capabilities. That's when we really started to diversify the company. The industry was changing and we saw that within the next five years, if we didn't change, we would be out of business," explains son John Waugh, president.
Rick A. Look, general manager, adds that the large broadliners were able to secure more lucrative contracts because of the vast number of goods that they offered. "It's difficult to drive gross profits on a delivery of frozen foods. I truly believe that if this company hadn't made that decision, we wouldn't be here today," Look notes.
Furthermore, operators in rural, central Illinois, look for one-stop shopping in order to reduce the number of deliveries and invoices and to sign prime vendor contracts. This rationalization and the earlier addition of a new storage facility helped Waugh Foods build new business.
Warehouse expansion can be seen as the timetable of growth for Pocahontas Foods member. Son John says that when the facility opened in 1974 the company wasn't doing $3 million in business and when he joined the company after college in 1982, he was the 12th employee - now there are 70. On August 3, the family broke ground on a new, state of the art 44,000-sq.-ft. facility, which will be opened in January 2003. "It's just hard not to put emphasis on what this new building is going to do for us. It's truly amazing that we've been able to use the resources that we have over the years. 2003 is going to be a breakthrough year for this company," he says, with Look interjecting his amazement that the company did $30 million in business last year. "We sold 1.4 million cases out of a 6,000-square-foot freezer and 17-18,000 square fee of dry space next door," Look notes.
The facility will have digital controls on all freezer and cooler temps and some 8,000 square feet of chilled receiving space for HACCP compliance. It will have a separate ice cream freezer because Waugh Foods does a fair amount of ice cream and novelty business. It was designed with the company's next expansion in mind.
The networking opportunities through membership in Pocahontas Foods expanded the Waugh team's knowledge and skills, which the company executives say "has led tremendously to our success."
The warehouse will feature the planned item retrieval system (PIR), which John Waugh expects will tremendously improve picking efficiency: "It's also going to allow us to use floor to ceiling space. The number of cases picked per hour will go up dramatically."
The Waugh team also believes that being a family-operated business has helped keep it stay competitive against the corporate broadliners. "We have the flexibility to make decisions. If it's a new item or new services that we want to provide, the three of us can sit down and decide. Customers can call me directly. There is still that personal relationship. You see Dad with customers that he's know for 54 years. There's a big difference with dealing with a family-owned company," John Waugh says. Look adds that the company is involved in local civic events and customers reward it for its support.
Joe Waugh Sr.'s image is used to market the integrity of the distributorship, with the marketing department using his photograph as a general, a builder or baseball coach on its sales brochure, dubbed "Waugh Illustrated." John Waugh explains that the company markets itself like a large distributorship. The message of Waugh's award-winning marketing campaigns is "Partnering with suppliers, employees, and customers. It's family and integrity. When we partner with our suppliers, we make sure we grow their business, we make sure they get all the attention. If they are going to contribute to our company, through their marketing plan, then we have to support them," says John.
The team speaks with great enthusiasm about the new facility, with Joe Sr. leading the charge: "We haven't begun to fight yet. If we don't reach 25 percent next year, then I'll be a sad man."
"A lot of the barriers to success are going to go away with the additional space. Slotting of additional skus, geographic expansion, we postponed geographic expansion because we just can't support market places that are too far away without additional products," he points out.
The business climate has not dampened the company's gusto. After all, they explain, Peoria is not a major metropolis. "In Peoria we are somewhat immune to some of the global economic woes that have hit over the past few years. We're in control of our own destiny. We understand that we have to fight harder everyday for that next piece of business. And we're committed to it," Look says.

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'Truly a Partnership'
Service and integrity are the main ingredients of Waugh Foods' successful relationship with Illinois State University, Normal, IL, according to Mike Lee, director of campus dining services.
Waugh Foods has been doing business with the university for some eight years, starting out as a produce supplier and then last year being awarded a prime vendor contract.
"We awarded Waugh Foods the prime vendor contract not merely on price. We found that with our other vendor, a larger, national distributor, there were challenges in service issues," Lee says. "Waugh Foods has provided higher service, the company has been more attentive to our needs and its response time has been faster. The Waugh financial and service combination offered better value to the university."
The prime vendor contract calls for Waugh Foods to initially provide some 80 percent of the institution's foodservice needs. The university, with a student population of 21,000 students, does $14 million in residential dining, $3 million in catering and retail and $500,000 in concessions. Lee notes that Illinois State set out on the rare initiative of constructing food courts right in the residential halls.
"Waugh has demonstrated a commitment to seek for us better products at better prices without being asked," Lee says. "They are very aggressive and that will help us in tight financial times."
Illinois State and Waugh Foods have developed a multi-level relationship, in which Lee regularly meets with John Waugh, president of the distributorship, while the Director of Program Sales Jim Susin and ISR Linda Krisman keep tabs with the associate director of campus dining, the IT people speak with one another, and so one.
"Multi-level relationships work well and the process allows us to think futuristically. With more and different people sitting and talking at the table, we will have a diversity of ideas with which to do business successfully," Lee says.

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