Maines Paper & Food Service Inc. - Company Profile, Information, Business Description, History, Background Information on Maines Paper & Food Service Inc.

101 Broome Corporate Parkway
Conklin, New York 13748

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History of Maines Paper & Food Service Inc.

A private company based in Conklin, New York, Maines Paper & Food Service Inc. is one of the leading foodservice distributors in the United States, with annual sales in excess of $1.6 billion. The company's core business is the distribution of a broad line of products throughout New York State and northern Pennsylvania. These customers include restaurants (whether they be single units or regional chains, white table cloth or casual), convenience stores, delis, bars, pizzerias, educational institutions, healthcare facilities, cruise lines, concessionaires, and camps. The broad line of products includes fresh, frozen, dry grocery, paper goods, and beverages. Maines's QSR (Quick Serve Restaurants) division is primarily dedicated to serving the needs of the Wendy's and Burger King fast-food chains. Maines also operates an equipment and supply operation, selling a wide variety of equipment and smallware products while also providing services such as kitchen layout, design, and installation. Maines offers institutional products to independents and the general public through Maines Food & Party Warehouse, two cash-and-carry operations in Johnson City and Syracuse, New York. The company maintains distribution centers in upstate New York, the New York City metropolitan area, Massachusetts, Maryland, Ohio, Illinois, and Tennessee. Maines's service area stretches from Maine in the northeast to as far south as Georgia, as far southwest as Louisiana, encompasses the entire Midwest, and reaches as far west as Montana and Wyoming.

Company Founding in 1919

Maines was launched under modest circumstances in 1919 when Floyd L. Maines, Sr., moved to the Binghamton, New York area and established a candy distribution business in the small town of Conklin. In the first year of operation he sold $30,000 worth of nickel candy bars--Hershey bars, Milky Ways, Reese's Peanut Butter Cups, and the like. It was not until a second generation joined the company in the form of Floyd L. Maines, Jr., that it expanded beyond the candy distribution business. After a five-year stint in the Navy during World War II, the younger Maines took a permanent position with the company in 1947, although according to family lore his first inclination was to become an FBI agent. Nevertheless, he was an aggressive businessman and able to persuade his father that Maines Candy Company, as it was now called, should offer a far more diverse selection of products, including paper goods such as napkins, cups, and straws, as well as fountain supplies and even toys. Nevertheless, it remained a small operation, served by a single small truck and a family station wagon. But the younger Maines also recruited some friends to act as sales reps for the growing company, resulting in steady growth for the next two decades.

A third generation of the Maines family became involved with the company when Floyd Maines, Jr.'s son David came to work for the company in 1970. It was during the early 1970s that Maines finally reached the $1 million mark in annual sales. In 1972 the company decided to become involved in food distribution, hiring a veteran of the business, Jack Olin from Binghamton-based Willow Run Foods, to head the effort. Sales began to climb, but the young blood in the family, David and his younger brother Bill, were determined to reach far greater heights. A profile of the Maines family published by Binghamton's Press & Sun-Bulletin in 2002 shared the reflections of longtime customer Frank Kelly, a small franchiser of area Burger King restaurants. Kelly recalled an incident in 1974, at a time when David Maines was 24 and his brother William was an 18-year-old college freshman at Babson College in Massachusetts. Maines showed Kelly "a copy of ID magazine, a trade journal for the food distribution industry. It listed Maines Paper & Food Service as an up-and-comer in the business. 'Frank, when Billy gets back from college, we're going to make a plan and we're going to town,' Kelly recalls David Maines telling him."

Addition of Frozen Foods Leading to 1970s Growth

Maines was growing at a steady clip by the time Bill Maines joined his brother in the family business in 1978. Annual sales had ballooned to $11 million, due in large part to the expansion into foodservice, and the company's association with Burger King. According to Kelly, "When Burger King went into frozen products, that gave them the opportunity to open their first frozen plant. Once they got to be experts in that, it didn't take much to jump in sales." As the Maines brothers came together and began assuming greater day-to-day control, the company experienced even more explosive growth. Because the product mix now included frozen foods, canned goods, beverages, and cleaning supplies, the company changed its name from Maines Candy Company to Maines Paper & Food Service. According to Frank Kelly, the two brothers were close friends who worked well as a team. He described David, the dynamic salesman who also concentrated on expanding markets, purchasing, and pricing, as "Mr. Outside," and Bill Maines as "Mr. Inside," the one who upgraded the facilities and computerized distribution. The younger brother also proved to be a tough and skillful negotiator.

Fast-food chain sales helped to fuel growth in the 1980s, as did the addition of casual dining customers. Maines also looked to make sales to independents and the general public. In 1984 the company opened its first cash and carry operation in Johnson City. A year later the company grew through acquisition, adding the Ground Round chain to double revenues. As a result, the formerly up-and-coming company cracked Institutional Distributor magazine's top 50 food distributors in the United States, ranking 43rd. The company's momentum continued in the second half of the 1980s. To keep pace with sales, warehouse space steadily increased, from 40,000 square feet in the 1970s to 135,000 square feet by 1986. A year later a second distribution center was established in Cleveland, allowing Maines to handle the business of customers with Midwest operations. Maines closed the decade by acquiring a new freezer facility, primarily used to service the all-important Burger King account. Also in 1989, Maines added milk, soft-serve, and shake mixes, as well as a complete beverage program to both the Conklin and Cleveland centers. The cash-and-carry facility also was expanded by 10,000 square feet, to 24,000 square feet, to allow the addition of a full beverage center. By this stage Maines was able to become a virtual one-stop supplier for many multiunit restaurant operators. More than 80 percent of the company's sales came from multiunit operations, with the Conklin distribution center serving these customers in 12 states, from Maine to Virginia, and the Cleveland facility handling western Pennsylvania, Ohio, Indiana, Kentucky, and Michigan.

Sales in 1989 totaled $166.9 million, but that number would grow exponentially during the 1990s. An important step in the company's continuing momentum was the 1990 purchase of Prescott-Pierson Equipment Services, a Binghamton equipment supplier and contracting company, the addition of which allowed Maines to now offer a full line of smallwares and equipment, as well as heating and air conditioning and refrigeration installation and service. Maines supplemented the business by adding a showroom and design consulting service. The Prescott-Pierson operation was moved to a separate Conklin facility, where it formed the basis of the Maines Equipment & Supplies division. While multiunit customers continued to contribute the lion's share of sales, Maines increasingly emphasized sales to independents, so-called street sales, taking advantage of a shifting marketplace. The sale of Buffalo-based S.M. Flickinger Group to a larger company and the decision of Willow Run Foods to exit the street business left Maines with an opening to exploit in much of its territory. The average order from multiunits totaled $3,725 and $850 for independents. To further attract street customers, Maines added several hundred items geared toward independents. It also procured additional storage space in Conklin: 15,000 square feet for refrigerated and frozen items and 60,000 square feet for dry storage. Increasing sales also resulted in the purchase of 14 45-foot trailers and tractors, increasing the company's fleet to 39.

In the early 1990s Maines topped the $200 million mark in annual sales and continued climbing steadily. To keep pace with demand, the company had bolstered warehouse space by acquiring storage in a pair of offsite warehouses, followed by the addition of public storage at two area companies. Maines now maintained five separate locations in the Conklin area, in an efficient setup that caused some pallets to be handled three times as they shifted between warehouses before being shipped to customers. Maines established a senior management team to consider how to reorganize the distribution operation, and it concluded, not surprisingly, that the company needed to consolidate the warehouses and handle distribution in a single, state-of-the-art center that incorporated the latest in technology and equipment. In addition to the consolidation issue, Maines was growing increasingly concerned about the cost of doing business in New York State, burdened by high state taxes and workers' compensation costs, as well as expensive utilities. To gain leverage, the company looked six miles south to Pennsylvania, which soon offered a package of tax rebates and construction premiums if Maines would relocate across the border. Floyd Maines, Jr., then wrote to New York Governor Mario Cuomo to see if New York had a counteroffer. Instead, he heard nothing from the governor's office. At the time, 1994, Cuomo was running for reelection, and the perceived snub threw the Maines family into the waiting arms of Cuomo's opponent, George Pataki, who seized upon the situation and made it into a major campaign issue, even appearing at the Conklin plant to make a public pledge to keep the company in the state. After Pataki unseated Cuomo and came into office he helped to arrange a $20 million economic development package to keep Maines in New York.

Opening a New Distribution Center in 1997

In 1997 the company consolidated its operations, moving into a new $25 million state-of-the-art 340,000-square-foot headquarters/distribution center in Conklin. It featured five different temperature zones for coolers and freezers and shipping/receiving docks, a test kitchen, and learning center complete with a 350-seat auditorium. The new facility also allowed Maines to now offer fresh produce (as part of the Markon fresh produce purchasing/marketing cooperative), fresh poultry, and fresh seafood. Because the center offered such a vast array of items, some 13,000 in all, it relied on a new high-tech warehouse management system, the PkMs system offered by Atlanta-based Manhattan Associates. Although the previous system was appropriate for the smaller Cleveland facility, which offered only a few hundred items, it was woefully inadequate for the new Conklin site. It offered no level of detail beyond total inventory, and offered no capabilities in product rotation, tracking, and productivity management. Under the new system, however, every pallet entering the center was assigned a unique identifier in the form of a barcoded license plate, allowing PkMs to create a history for each pallet and to track its progress, from being received to being shipped. The system's logic capability not only could locate a product in the huge facility but also direct the best way to pick it. Once the bugs were worked out of the system, its data was married to the delivery drivers' handheld scanners, so that the drivers could track, trace, and verify product from the warehouse to the point of delivery.

Other developments in the 1990s included the 1993 opening of a second cash-and-carry operation, located in the Syracuse area. In 1995 the company opened its own truck driving school, Maines Driver Training Institute, to take care of the training needs of its expanding truck fleet. It would expand to train outside drivers as well, providing the training necessary to earn a commercial driver's license (CDL) for interstate transport. It would grow to become one of the most respected truck driving schools in the Northeast.

Maines opened the new century with a number of changes. Floyd Maines had retained the titles of CEO and chairman well past the time his sons had taken over effective control of the business. Then in 2000 the company brought in its first nonfamily member as its chief executive, naming CFO Chris Mellon to the post. He had joined the company two years earlier. David and Bill Maines now became co-chairmen of the company, focusing on the big picture, while Floyd Maines, Jr., became chairman emeritus. The year 2000 was also noteworthy because of a $3 billion contract the company received to supply food and paper products to 1,700 Burger King restaurants, a deal that made Maines the largest foodservice distributor in the country and elevated it to the top ranks of national food distributors with approximately $1.2 billion in annual sales. To accommodate the increased business, Maines opened four new distribution centers in 2000, located in Oxford, Massachusetts; Oakwood Village, Ohio; Farmingdale, New York; and Conklin.

Maines's expansion continued during the first half of the 2000s, as operations were established in Maryland and the Chicago area in 2003. The Chicago facility was acquired from Marriott Distribution Services to accommodate a new $1.4 billion contract serving the 11 midwestern states for Darden Restaurants, Inc., the corporate parent to restaurant chains Red Lobster, Olive Garden, Smokey Bones, and Bahama Breeze. In 2005 Maines acquired a distribution center in Memphis, ideally suited to serve the southern locations of the Wendy's hamburger chain, which in 2005 signed a $2 billion contract. This came on the heels of another $515 million contract with Burger King and other multiyear contracts totaling $5 billion, all signed within two months of each other. Maines was now generating annual sales in excess of $1.6 billion, and there was no reason to suspect that its growth would tail off in the near future.

Principal Divisions: Broadline Distribution; Systems Distribution; QSR Division; Maines Equipment and Supply; Retail; Maines Driver Training Institute.

Principal Competitors: SYSCO Corporation; U.S. Foodservice, Inc.; Performance Food Group Company.


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