United Acquires Praters Foods

AMY SUNG

LUBBOCK, Texas — United Supermarkets here has acquired Praters Foods, a local prepared-food supplier, in a move that will expand the supermarket's prepared-food capabilities, streamline foodservice production into one location, and allow United to sell foods that were previously available only in the company's Market Street stores at all of their stores.

United Supermarkets’ Market Street locations have long had an excellent reputation for foodservice. Officials at the company said the acquisition of Praters Foods would allow them to offer Market Street dishes at all 50 of their stores.

“The big thing about bringing Praters in as part of our team is it allows us to centralize much of our foodservice production operations into one location,” Eddie Owens, spokesman for the retailer, told SN.

“Not only does that have impact for us from a food safety, food quality perspective, but from a retail perspective, it allows us to produce foods that had previously been available in our 10 Market Street stores. We can now make [those prepared foods] available in all 50 of our stores because they will produced from a central location rather than at the store level.”

Praters Foods, founded in 1955, operates a 75,000-square-foot facility producing signature holiday dinners, specialty cooked meats, entrees, casseroles, soups and desserts for the retail and foodservice industry under both private labels and the Praters brand.

United is still working out the details of the acquisition, but Owens told SN that although he has not heard anyone say this, he believes that anything currently carrying a United/Market Street/Amigos United label will most likely continue to do so. And, anything currently carrying the Praters' label will continue to do so, possibly with “A Division of United Supermarkets, LLC” added.

“I think it's entirely possible that they would still carry the Praters' label, but it might say something like ‘a division of United Supermarkets, LLC.’ But I think that we would want to protect and continue to market the Praters brand awareness that they have already established,” Owens said.

Prepared foods are a growing category, with demand generally outpacing supply, Neil Stern, senior partner at McMillan Doolittle, Chicago, told SN.

“Starting on a macro-level, obviously, prepared foods in supermarkets and the demand for them continues to grow, and retailers have been trying to figure out a way [to meet that demand]. If that's a trend, how do you do it, and that ranges from building elaborate kitchens in the store — a number of retailers have [also] built their own commissaries — to finding suppliers who can make this stuff and sell it.”

Stern said the acquisition was interesting, because while many retailers develop partnerships with regional foodservice companies to help satisfy demand for prepared foods — he cited Fresh & Easy Neighborhood Market, the Tesco-owned retailer that brought in many of its own suppliers from the U.K., and Sky Chefs, the airline commissary business — he noted that there weren't as many cases of supermarkets buying these companies.

“I can't think of many supermarket chains that have bought or acquired [foodservice] suppliers,” Stern added.

“Roche Bros. in Boston, the family also owns Hans Kissle, which is a similar business. And Hans Kissle not only supplies Roche, but they also supply other retailers. But I don't think there are a lot of other cases where you can say, ‘Hey, these guys are owned by a retailer and they supply other retailers as well.’ I think it's definitely on trend. At a minimum, if it means reliable and innovative supply for United, that's the starting point. Whether they can take this and become a national supplier, I think that's pretty ambitious, just given that this hasn't been done yet in the industry.”

Expanding the United name nationally is indeed a goal, in addition to giving United the ability to expand its store-level offerings with products that had previously only been available under the Market Street banner, Owens said.

“[The acquisition] opens up a whole new avenue for us in the area of manufacturing. It allows us to really expand our name nationally in a way that had previously not been available to us,” Owens said.

United plans to retain all of Praters' employees, and continue to sell Praters-brand products to other retailers.

“We will continue to produce and market Praters' brand products to other retailers as they have been doing for many years now,” Owens told SN.

“We've had Praters' products in our stores as other stores here in Lubbock have and even other stores across Texas and nationally. So we will continue with that book of business.”

Stern said the acquisition will certainly help United get the products on its shelves much more easily than if it were working with a third party.

“I think this probably underscores their commitment to prepared foods and commitment to it being part of their growth in the future,” Stern said. “And I think this gives them the platform to potentially do more with it. At the minimum, it's ‘what can you do to make their stores better today?’”