By Michael Jacobs / email@example.com
It’s hard enough to build one company from scratch to a buyout. Howard Halpern, backed by wife Lynne and son Kirk, has done it twice with essentially the same business: a specialty meat distribution company that provides the protein at the center of your plate when you dine out.
Halpern, who came to Atlanta from Miami in 1966 to distribute produce to the newly arrived Burger King chain, started Buckhead Beef in 1983 with five butchers and his wife, “who has always been my support system.” The idea was to apply the lessons learned from four years of operating Halperns’ The Gourmet Grocer in one of the nation’s first mall food courts at Lenox Square.
“It was a great experience for me. It really honed my skill and understanding of relating to the customer directly, as opposed to being a wholesale business and being somewhat removed from it,” Halpern said in an interview from his home at the St. Regis in Buckhead.
He had switched from produce to meat more than a decade before opening Buckhead Beef when he did some simple math. He could sell hundreds of bags and boxes of lettuce, tomatoes and onions to fast-food restaurants for $3 to $4.50 each and make a gross margin of 25 cents per bag or box, all of which he had to haul around himself. Or he could sell a 60-pound box of tenderloins for $120.
“I figured I’m going to learn and get into the meat business, and that’s what I did,” Halpern said.
Buckhead Beef rode the expansion of steakhouses nationwide to rapid growth until Sysco bought the company in 1999. Halpern stayed on as the CEO of the foodservice company’s East Coast meat operations and oversaw expansion through the purchase of 11 other specialty meat operations in five years.
When he left Sysco, the meat operations had grown from $850 million in annual sales to $5.2 billion.
Dozens of high-quality, family-owned operations similar to Buckhead Beef were bought out. Halpern said half of them no longer were profitable within five years, and all of the founding families left.
He said Sysco, in which he still holds stock, and its broad-line rivals are good companies with a flawed approach. “Their philosophy was to bring everything under one roof, and I am convinced that the specialty companies have to remain separate.”
So after he waited out his one-year noncompete clause with Sysco, he and his family started over again in 2005 with Halperns’ Steak & Seafood. “I just felt that a family-run, center-of-the-plate protein business that brought efficiencies, technology, and good old-fashioned care and concern for the products — that there was a big void and that we could go out and fill that void.”
Of the first 250 hires at the new company, Halpern said, 175 came from Buckhead Beef.
But because he is a man who learns from his mistakes — “I made all the mistakes anybody would make and then probably more” — and always tries to be an innovator, Halperns’ Steak & Seafood wasn’t simply a copy of Buckhead Beef.
The name reflects the obvious difference: the larger role of seafood, which makes up a third of Halperns’ business.
Consumer tastes have changed the past 30 years, and Halperns’ applies improvements in technology and processes to meet the increased demand.
On the technology side are special plastic bags that allow oxygen in without letting liquid out, as well as the use of ozonated water that doubles freshness by killing all bacteria within seven seconds.
On the process side, Halpern decided to handle fish with the federal safety standards for meat. The company also takes traceability and sustainability seriously, contracting with specific fish boats and bar-coding every container of fish and some individual fish to track them from the dock to the restaurant.
If a restaurant calls to check on the source of a fish, Halperns’ can provide the answer within five minutes.
“All that creates a great comfort level for the customer and the consumer,” Halpern said.
A different business plan helped Halperns’ to grow in a decade to four times the size Buckhead Beef was when Sysco bought it.
The company bought other East Coast purveyors operated by their founders or their founders’ children who maintained a passion for the business and emphasized quality, integrity, and treatment of employees and customers. Those families wanted to be part of the business but also wanted some financial security.
Halpern told them upfront that the goal was to sell the company at some point and that they would benefit when that time came, which it did Jan. 7 when Gordon Food Service purchased Halperns’ Steak & Seafood.
Unlike Sysco, Gordon is a fourth-generation, family-owned company that is not public and never will be, Halpern said, so the companies will grow as they were built. Gordon supports operating Halperns’ separately to maintain its quality brand and is putting two Gordon facilities in Michigan and Kentucky under that brand as of Nov. 1.
“These are people who are real, genuine people, and they are not driven by the next quarterly result,” Halpern said.
Florida is an example of how well the companies mesh, Halpern said. Gordon sells $1 billion a year in food in Florida, but only $3.5 million in steaks, while Halperns’ sells $100 million in steaks in Florida.
Halperns’ has 17 target markets. Gordon will provide a start in some, and Halperns’ is easing Gordon’s entry into others, including Atlanta and the mid-Atlantic. They’re launching together in Texas.
The sale to Gordon made about a dozen new millionaires, and a dozen others have a chance to get there within a year, which Halpern said gives him a lot of naches (satisfaction).
The Gordons are deeply religious Christians, but Halpern said their faith is compatible with his Judaism. “It’s the same kind of people; they just go to a different church.”
That compatibility comes through in the treatment of employees, and Halpern said none of his 600-plus employees have left since the sale and all of the management has signed on for five more years.
Halpern himself is in no hurry to retire. He is committed to serve two years as CEO and five years as chairman because he is doing a job he loves. “The business success that I’ve been very blessed and fortunate to have is directly tied to the passion I have for the industry.”