CEO: Brand, Worker Loyalty Prompted Schulze & Burch to Buy Yarnell's

by Luke Jones  on Friday, Jan. 20, 2012 11:20 am  

Delivery trucks at Yarnell's Searcy plant.

When Schulze & Burch Biscuit Co. was first presented the opportunity to buy Yarnell's Ice Cream Co., President and CEO Kevin Boyle wasn't interested.

His Chicago-based company makes snacks like granola bars and toaster pastries - ice cream was out of his jurisdiction.

"But then we talked to some people down there a bit more about it," he said. "We learned what the brand meant to the state. Then we thought, how can we leverage it with our existing workforce and infrastructure?"

He was especially impressed when he learned that Searcy plant workers, after the June 30 closure, entered the factory and methodically shut down the equipment to prevent damage.

"The loyal former Yarnell's employees, on their own, did a proper decommissioning of the plant," he said. "They cleaned out the kegs, discarded materials, shut machines down and things like that. I thought, my gosh, this speaks volumes to the caliber of the employees down there, and their loyalty to this company."

Boyle and his team started measuring out differences between his 200-employee manufacturing plant in Searcy and the former Yarnell's facilities.

"We thought maybe there are some synergies between the two plants, and if we acquired Yarnell's, we could integrate it into our existing operation down there," he said.

In December, Schulze & Burch bought all of Yarnell's' assets - and none of its debt, which at its closure totaled $15.7 million - at auction for $1.3 million. The purchase included property, trademarks and recipes.

According to Gene Eagle, vice president of development finance for the Arkansas Development Finance Authority, Yarnell's still owes $1.94 million on a $2.5 million taxable bond issue by the ADFA in 2006.

But Schulze & Burch is free of that debt.

"We have nothing to do with anything from ADFA," Boyle said. "We just purchased the assets only. It wasn't a business, just assets."

The New Order

When Yarnell's closed, then-CEO Christina Yarnell cited rising fuel costs and a difficult dessert industry as reasons. Boyle said he sees where the failure came from, and he thinks Schulze & Burch can prevent it from happening again by crunching down on services and focusing on a core lineup.

"The commodities were crippling," he said. "The price of some of the major input, the milk and cream, had really gone through the roof."

One casualty of the bankruptcy was the old Yarnell's delivery trucks. Because of costs and the loss of the trucks, the trucks that formerly ran straight from the factory to the stores will be replaced with third-party transportation.

Schulze & Burch currently has a skeleton crew of 12 workers at the Searcy plant overseeing operations while the new ownership works to line up retailers interested in the brand's return. When that happens, Boyle said, the company will release a limited version of the ice cream line.

"We are relaunching the same, identical formulas that people have grown to know and love in Arkansas," he said. "We're not rolling out as extensive of a lineup."

The lineup will include ice cream sandwiches, the Guilt-Free line, yogurts and some of the "premium" flavors.

Boyle said some of the more complex, slow-moving or novelty items won't be sold initially. But all of that may one day be in grocery stores.

"The new flavors will be a result of market demand," Boyle said, noting that the engineers of past Yarnell's flavors were already back on staff.

And Boyle said demand should be high. For extended periods of time, he said, the homemade vanilla flavor was the top selling ice cream in the entire state.

"That was one of the reasons we were interested in this particular company," he said. "A product that powerful has some great potential for expansion."

 

 

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