Mike Townsley talks future growth at Bob Evans Farms after split

When Townsley came into the company many leaders had grown up through the system, spending decades at Bob Evans. They didn’t know anything else. So, as Townsley evolved the food division into more sophisticated manufacturing and employees left or retired, management brought in people who could help on that journey.

For example, he says the company’s sales department went from transaction selling to local market managers to category managers. Of the sales force of about 20, only a half dozen had the necessary skill set and attitude to make it through that transition.

“The rest, we brought in from larger organizations like a Sara Lee or Kraft,” Townsley says.

It wasn’t easy to reorganize the employees, though, after the restaurant sale. The food business was efficient, so there wasn’t much excess, but management had to identify who belonged in food and who belonged in restaurant. Then the middle group had to either go to food, restaurant or be eliminated. Bob Evans Farms ended up with about 1,000 people.

“We were actually more cost effective by separating the business than by running them together,” Townsley says. “Those conversations are never easy, but as far as the health of the business, it was decisions that we had to do.”

A clearer picture

Now that the restaurant and food businesses have been separated, it’s easier to tell the long-term growth story. Townsley says the company didn’t always know how the restaurants were going to perform from quarter to quarter. Bob Evans Farms wouldn’t be set up to take advantage of that growth without selling off the restaurants.

In his new role as president and CEO of Bob Evans Farms, which started this year, Townsley is spending a lot of his time talking about that growth story and plans for the future.

The company has demonstrated double-digit growth in its refrigerated side dish business for 20 years, and he believes that won’t stop any time soon with market trends, such as consumers shopping more on the perimeter of grocery stores for fresh and refrigerated products and Bob Evans Farms’ expanded capacity.

The company still had to make adjustments along the way. Bob Evans added a fourth line to its Lima facility last fall, but Townsley says that expansion should have taken place 12 months earlier.

“We were a little slow on the uptake as far as not really understanding the needs, and so even though we got through the last holiday season, we would’ve been better off if we would’ve had that line earlier,” he says. “I don’t think we missed sales, but we probably caused ourselves to be not quite as efficient and cost effective as we could’ve been if we would’ve started up a little bit earlier.”

When it comes to growth and strategy, you can learn from your experiences. The late decision to add another line, however, helped Bob Evans Farms determine it should go ahead and pursue another acquisition — Pineland Farms.

Townsley says the business would have been out of capacity in the next 18 to 24 months, so it needed to either build a facility or acquire someone. Building a new facility can cost $100 million before selling the first $3 package of mashed potatoes because of costs from the construction and startup.

With only five U.S. facilities that produce side dishes at the size and scale Bob Evans Farms needed, owning two of the five allows it to control a significant amount of the manufacturing capacity. The company has more than 50 percent market share of refrigerated dinner side dishes in the country, as well as a number of private label clients.