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W.S. Lee & Sons: Still Going Strong after 130 Years

Staying in business for 130 years is easy once you commit yourself to your customers. After that, you can overcome the logistical difficulties of delivering foodservice products in eight states plus the District of Columbia and competing with national broadliners.
In a nutshell, this has been the formula for success adopted by W.S. Lee and Sons, Inc., Duncansville, PA, as it evolved from being a local food distributor to a regional independent broadliner with street and national accounts. However, the descendants of the founders are quick to point out that the formula would be insufficient without the determination to staying the course and not selling out.
"So far as I know, we're happy with where we're are at and we want to go another 130 years," says Walter J. Lee, Jr., chairman of the board and grandson of the founder, W.S. Lee.
Founded as a general store in 1872 in Altoona, PA, at a time when central Pennsylvania was a thriving anthracite region, W.S. Lee underwent several crucial expansions that moved the company from a mixture of retail and institutional business to complete broadline institutional distribution. Walter J. Lee's earliest recollection of the business is from the twenties, when the company sold butter, eggs, cheese and poultry to restaurants, schools and grocery stores. "Much of the sales was store door delivered. We had some of the products on our vehicles, we took orders and delivered the. We sold off five small trucks to small stores and restaurants," Lee remembers.
According to him, W. S. Lee & Sons was one of the first companies to grasp the market potential of distributing frozen food, which would fuel future facility growth. In 1952 the company completed a 1,500-square-foot addition to the facility's coolers. In 1960 an additional 7,500 square feet of garage and freezer space were added. By this time, W. S. Lee was experiencing growth in all facets of the business and the payroll grew to 25 persons. In 1967 the business constructed another 3,000-square-foot addition. The company grew from a small neighborhood general store to a foodservice distributor serving the entire Altoona area.
By the mid 1970s, the number of customer doubled and focused. After three successful building expansions, the Altoona location could not accommodate any more. The company acquired property along PA Route 764 in nearby Duncansville. In 1979, the broadliner constructed a 43,000-square-foot building at the new location. The expansion enabled the company to increase the number of products handled by the company and expand its market area. The workforce grew dramatically, reaching 60 employees by year's end.
"More recently expansion was driven by geographical coverage and the changing of needs by the customers, which includes demographic changes, taste profile changes and manufacturer changes. All of these have combined for a wide variety of consumer-driven product changes," says Robert Lee, president and CEO, and Walter's son. "Home meal replacement is becoming very popular because of changing demographics. There are more single parents, there are more families with working parents and they are so much more on the go that they look for the convenience of prepared meals."
According to Robert Lee, the distributorship, which is a member of UniPro Foodservice, Inc., Atlanta, prides itself on being an independent broadliner that focuses on service, quality and dependability. Its customers include all commercial and noncommercial categories, with an 80:20 ratio of street and chain business, which includes national, regional and local accounts.
W.S. Lee & Sons instituted five years ago a customer-oriented program dubbed "Priority Gold" in order to provide those accounts that purchase at least 80 percent of products from it with a high level of service.
The broadliner has the daunting task of distributing foodservice products to street and chain accounts through the Mid-Atlantic States, in area infested with a wide range of competitors. Being a family-owned and operated business has eliminated a lot of wasted efforts from doing business, Robert Lee says. "As a family-owned independent we are able to talk one on one with the owners and key executives of national accounts or regional accounts. Those relationships are not only extensive but also very important in developing the business."
W.S. Lee & Sons, which ranks No. 47 in the ID Top 50, considers itself a national brand house, with some 80 percent of its lines falling into that category. The remainder is covered by the UniPro brand or Lee label, which is reserved for such products as fresh steaks, produce, some other meat lines, salad dressings, "where we can really have a niche and set ourselves apart within the higher-quality product," Robert Lee notes. Group membership, he continues, has helped the company stay competitive through buying and marketing advantages of combining our numbers.
The broadliner has also organized its customers into committees so that they can also collectively discuss new items and buy products at better prices. In return for this cooperation, Robert Lee tells of a remarkable distributor service: "We've done a TV advertising campaign for our restaurants. We negotiated for our committee customers so that they all could benefit from lower costs by pooling their advertising together. We would created TV advertising for three or four non-competing restaurants and by pooling all their advertising money together we could get a much lower rate and much more exposure for them," he says, adding that the effort was successful.
With projected sales of $85 million this year, Robert Lee is optimistic about an upturn in business next and is gearing for 12 percent growth. "We've been growing at a pretty strong pace but a lot of that has had to do with the addition of geographic coverage, adding DSRs, customers in numbers and categories," he says. "Growth rate will come from account penetration within geographic coverage where we already are in. both in street and national account divisions."
However, his No.1 challenge is the high rate of insurance coverage-liability, healthcare and workmen's compensation. "Those are significant pieces of the puzzle that contribute to our expenses. We've seen exorbitant rate increases. Many distributors are facing the fate of having problems just finding insurance and insurance carriers, let alone getting competitive rates."
If 130 years in business isn't unique enough, then the broadliner's heliport should also contribute to its singularity. Robert Lee says that it was the idea of his aviation aficionado brother, W. James Lee III, executive vice-president. While the site has helped in local med-evac emergencies, customers haven't yet flown in to pick up foodservice products - "but we're still hoping that that will happen," says Robert.

Partnering on Quality and Quantity
W.S. Lee & Sons' business relationship with Presbyterian Homes, Hollidaysburg, PA, has lasted a relatively small amount of time, when compared to its history, but it has been a partnership based on quality and quantity.
Presbyterian Homes is a group of five nursing homes that offers nursing, personal care and independent living arrangements for more than 600 residents. The distributorship has been a prime vendor for the facility for five years but it had been doing business with the group for much longer, supplying foodservice to four out of five homes, while a food management company operates the fifth one. Some of the facilities also offer meal programs to the 600 employees. W.S. & Lee provides a full range of menu products, including dietary items, such pureed foods, in addition to some of the paper products.
"We have a good partnership. We partnered with them on quantity and quality. As our needs grow, we express them to W.S. Lee & Sons and they respond to our needs," says Elia O'Fiesh, chief financial officer of the facility.
The nursing facility works through the distributor's sales rep Charlotte Bere, with whom the staff prepares menu items and new products. O'Fiesh notes that W.S. Lee & Sons is also considering holding a food show in order to generate new product ideas specifically for the healthcare industry.
O'Fiesh adds that membership in the St. Louis-based AmeriNet buying cooperative is another reason for the relationship with the distributorship. "What's good for us is that the buying coop negotiates for us pricing and W.S. Lee & Sons has to abide by that pricing. We, as members, get the benefit of that pricing. AmeriNet also audits the pricing independently so I don't have to worry whether prices are being raised because they have a contract and they have to abide by that contract," he says.
"As far as delivery and service, we don't have any problems with them. They respond to our needs and concerns," O'Fiesh adds.

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