Case #810

$25 million distributor of health foods

Based in the Great Lakes region, this company distributes health and natural foods to independent health food retailers as well as local cooperative buying groups.

Sales volume had been declining and the company had numerous operational issues, including delinquent orders, stock-picking errors, billing errors, etc. As a result, the company, saddled with $4 million in debt, was losing money and running out of cash when the lender suggested our crew.

After our assessment, a new business plan was developed to cut costs, increase prices and address operational problems—including on-time deliveries, pick-and-pack accuracy, truck routing and facility layout.

Near-term changes brought the company back to profitability and started to restore liquidity to adequate levels.

Management decided to attack most of the operational issues alone and without our assistance, contrary to our recommendations. As is often the case in our assignments, management meant well but was ineffective in fixing most of its long-standing operational issues. Eventually, the company fell back into more serious financial distress and management attempted to work out of it on its own this time. They failed. The company was liquidated, with the secured lender paid in full.