February 1, 2005
By Barbara Young
Sizzling taste profiles, topnotch quality, and low retail prices keep Arizona-based Bar-S Foods on course toward category dominance for its line of processed meats.
As the president of Arizona-based Bar-S Foods, Bob Uhl is living his professional dream.
“I wanted to be president of Bar-S,” says Uhl, who began as the company’s first treasurer and vice president of finance. “It did not happen overnight and it took a lot of commitment and work. It’s because of this that I tell our people they can do whatever they put their minds to and are willing to work for.”
Now that he is living his dream, Uhl is passionately working on his business legacy.
“We are working on becoming the premier company in the processed meat industry,” he intones.
Asked for elaboration, Uhl acknowledges the vagueness of the declaration, but does not see that as weak business strategy. “We leave it to interpretation,” he muses. “But it usually means the best, in the lead, and having a degree of excellence that people look up to. Consumers have to feel they are consuming a premier product. We bring value to the marketplace with quality at a low price.”
To that end, Uhl says the Bar-S strategy is based on defining distribution based on retailer perception concerning quality. “Increasing quality while decreasing cost creates value,” he says.
Uhl knows that low cost is paired with low quality in some instances, which is why Bar-S uses a 67-point quality check system that includes color testing and measuring bite and snap of hot dogs. “Visual appeal is important, and we make sure our people meet and understand quality parameters,” Uhl says. “We also get feedback from our customers concerning quality.”
At age 24, Bar-S Foods has evolved into a sophisticated private business of 1,500 employees, four manufacturing facilities, and a streamlined portfolio of smoked sausage, franks, sliced lunchmeat, and sliced bacon. The company generates annual sales of $400 million.
In 10 years, net income increased 500 percent and branded product sales doubled. Sales growth compounds at a rate of 7 percent a year. Pounds-per-sales-person increased 200 percent in 10 years, pounds-per-labor-hour rose by 25 percent. These numbers are not accidental nor incidental, says Uhl, explaining that investing in the best plants and equipment is essential.
“We put nearly all the income back into the company,” Uhl emphasizes. “It goes toward improving the process and rewarding employees.”
The company’s business approach in this regard began in the ‘80s with its Winner’s Circle program — a systematic method of recognizing and rewarding superior performance throughout the organization. These days, physical and mental fitness is the companywide call to arms. Points earned by teams and individuals accumulate in an account established for employees. As a daily reminder, team members at all locations warm up with a series of stretching exercises before jointly reciting the company’s pledge regarding its mission and commitment to quality.
“It may seem hokey, but we can’t grow if we are not fit people,” Uhl says. “We have been working this plan a long time and have refined the concept. This is a business strategy. We are not in a game. We are at war. If our company doesn’t perform better than the competition, we won’t survive.”
Health and fitness as a business strategy started with Tim Day, company founder, chief executive officer, and chairman. He inspired employees to stop smoking, lose weight, exercise, and focus on their health under a fit-to-win program.
“Superior physical and mental fitness leads to a distinct competitive advantage, making us more effective, productive, and a tougher competitor in the marketplace,” Day says. “It’s hard to duplicate our culture of disciplined and focused people in pursuit of excellence. I’ve always said the enemy is on the outside not inside. We may have problems, but we have the processes to air them.”
Bar-S managers do not simply pay lip service to the fitness concept, either. The company offers free health screenings, financial awards, and other prizes for employee accomplishments (see “Profitable production”).
Day — in the cruising stage of his career — continues to guide and nurture the business, although not on a daily basis. “What I provide is a figurehead to our people through voice mail, meetings, and in our newsletter,” he says. “I still oversee all aspects of the business, but I try not to get in the way. I bring many years of experience, so I have some judgment and wisdom, hopefully.”
Current market forces, especially escalating raw-material prices, is a chief concern shared by Day and Uhl, whose business association began when both worked at the defunct Cudahy Company.
“We are trying to diversify our raw materials,” Day reports. “We know there is no perfect solution. We are a packaged goods company. Raw material cost is always an issue and we have managed to survive and do pretty well.”
By streamlining its product line — from 396 in 1995 to 119 in 2004 — Bar-S positioned its business for efficient growth. “We focus on one brand,” Day says. “We don’t want to divert our efforts with many brands because it doesn’t make sense to do it to gain marketshare.” Acquiring other company’s property also doesn’t make sense for Bar-S. “You acquire problems when you buy existing businesses,” Day says. “The integration process is difficult for one thing. The facilities are often old and not well laid out.”
Construction for the Bar-S plant in Altus, OK, was completed in 1993, and is currently being remodeled to increase capacity at a cost of $40 million. The plant, which handles lunchmeat and hot dogs, is also increasing in size to handle corn-dog production — previously a co-packing arrangement.
Based on volume nationwide, Bar-S branded lunchmeat ranks number-two, showing a 40-percent increase in 2004. Meanwhile, bacon and dinner sausage both rank number four, and corn dogs hold steady in third-place, with sales increasing 57 percent over the previous year.
Sales for Jumbo Jumbos® franks rose 20 percent, and overall frank sales rose 10 percent in 2004, attributed to new distribution channels and successful customer promotions.
Rapid sales growth positions Bar-S as a prominent national brand, notes Linda Boodman, vice president of sales and marketing. Boodman began earning her stripes at Bar-S as an administrative assistant for the sales department.
“Coming in at the bottom meant I had to learn it all,” Boodman says. Now 21 years later, her team, including an international component, is responsible for the past year’s 10-percent increase in frankfurter sales “We have been successful developing specific promotions tied to the special needs of our retailers,” Boodman notes.
“Our claim to fame is to provide equal or better quality than competitors at a better price. There is significant demand for products at a great price — those that retailers can aggressively promote. That is why we always focus on driving down costs. We also continuously analyze the structure of our sales organization to ensure our team is properly aligned with the changing retail environment.”
To that end, a new product-development initiative targets the current low-carb trend. Bar-S plans to produce a low-carb frank containing higher levels of protein, less sugar, and no starch fillers.
Other growth initiatives include international marketing projects. Less than 10 percent of Bar-S business is international, but that is subject to change. “We see growth in Mexico,” Uhl says.
His main goal, however, is staying on course by following basic business principles coupled with helping retail customers grow their business.
“We have a great relationship with the trade,” Uhl concludes. “We want retailers to make the most of our products at fair margins. Our core strategy focuses on product taste and quality, food safety, packaging, service, and customer relationships.” NP