Feb. 22, 2011
by Joel Crews
The successful transition of passing a business from one generation to the next requires careful consideration and respect for what has been accomplished while keeping an opportunistic eye on the future. Uncle Charley’s Sausage Co. has evolved to the next generation almost seamlessly. The new boss is hardly a newcomer to the business and while he appreciates the company’s history, he has demonstrated the value of working smarter in an industry where stagnant companies are buried by the competition.
Founder Charley Armitage still comes to the office almost daily, but the 77-year-old’s son, Chas, runs the company on a daily basis nowadays.
“He still has the big office down at the end of the hall, but I’ve been in charge of operations for about seven years,” says the younger Armitage, who was officially named president about a year ago. Chas worked in that capacity without
the title for many years before the torch was passed, which became necessary when his dad’s health issues forced him to take a less active role in day-to-day operations. With his son on board, Charley focused his energy on sales, while Chas spearheaded production.
“It was really what the company needed at the time anyway,” Chas says. “Dad’s a very gifted salesman with a lot of integrity and a great product to sell. And I have always been the type who’s managed to get the square peg in the square hole quicker and easier than most, so production was a much better fit for me. So I was able to make the best product and he was able to sell the best product,” and by 1996, Uncle Charley’s became the No. 1 sausage brand in Pittsburgh, Pa., and the surrounding areas.
Through the transition, the younger Armitage incorporated some new ideas and hasn’t been shy about putting his signature on the business his dad started in 1988 and successfully grew for more than 20 years. Chas’ business philosophy isn’t a huge departure from his dad’s, whose input and opinion are always considered when making critical business decisions.
“Fortunately, we’ve always gotten along and we’ve always seen things about the same way,” Armitage says. Smarter plant
About six years ago, as business continued to boom, Armitage increased the size of the 14,000-sq.-ft. plant by almost 30 percent with a 4,000-sq.-ft. addition. Another renovation was made in 2007 to ensure sanitation standards were keeping pace with the growing production. This project included building a wall about halfway down the parallel 120-foot-long production lines to accommodate more thorough cleaning of the processing portion of the plant. “This allowed us to use highsteam, high-pressure sanitation using caustic soaps and rinses on the food side,” which the equipment on the labeling and packaging end of the line couldn’t withstand, Chas says. The more delicate packaging and labeling equipment is now able to operate more effectively and for many more years thanks to its separation from the sanitation rigors on the processing side. The company also had to invest in faster and more sophisticated equipment to keep up with the growing production demand. Dual-head labelers and automated tapers and boxers were among some of the technology Armitage adopted to keep pace.
From an operational standpoint, the company is fortunate because its plant is strictly a fresh pork sausage processing facility. “I don’t have different species I have to keep track of; I don’t have any smoked or cooked products being made at this plant, so operations here are fairly simple,” he says of the plant’s three processing lines. In the name of keeping it simple, Uncle Charley’s contracts with Leidy’s in Souderton, Pa., to process its smoked products, including boneless ham, cubed ham, kielbasa and sausage. The success of the relationship with Leidy’s is based on the firms’ shared approach to business, which stresses the importance of putting the product and the customer first. Four other meat companies are doing private-label processing for Uncle Charley’s branded products. Pioneer Packing Co. and Calihan Pork Processors supply the Uncle Charley’s plant with daily shipments of pre-rigor pork, where 20,000 lbs. of product are made four days per week by 25 line workers.
Beyond working smarter in the processing plant, Uncle Charley’s has also succeeded by utilizing marketing and merchandising smarts. One successful venture has been its participation in what many retailers in the Northeast call the “Pick 5” program, which offers shoppers any five items in a designated meat case for $20. “The stores challenge processors like us to come up with some products that matches that price formula, which means I have to sell it to them for $3 and they sell it for $4,” which allows for about a 30 percent mark-up for the retailer. “And it’s a bargain for
the consumer because most items in the meat case are marked up by 35 to 40 percent,” he says. The Pick 5 program,
which many of his retail customers now offer, has been the company’s biggest growth area for the past three years. To be able to offer Uncle Charley’s products at that price, Armitage says he went back to the drawing board to develop less expensive packaging for products in that program, including the company’s bacon.
Sticking to a business model based on a high-end food product has its challenges, especially during an economic recession. In terms of the sausage segment in general, Armitage says growth over the past couple of years has been minimal at best for Uncle Charley’s, while others in the segment have seen sales ebb by 20 percent or more. “For whatever reason, sausage seems to have fallen slightly out of favor,” compared to just three years ago, he says. “It’s nothing we’ve done. It’s just that something has changed out there.” Fortunately, the company’s increasingly diverse products have carried the day. Meanwhile, Uncle Charley’s Sausage products maintain an enviable retail presence with customers ranging in size from small independents to Wal-Mart stores in the Northeast.
Since its founding, Uncle Charley’s has sourced its pork from smaller, leaner hogs that the Johnsonvilles and Bob Evans of the world didn’t utilize. By targeting hogs weighing between 425 lbs. and 450 lbs., the company has been able to avoid bidding wars with the juggernauts while accessing much leaner raw material for its sausage. About five years ago, Armitage decided to bring this attribute to the attention of consumers by including a starburst on the package claiming the sausage is 40 percent leaner than USDA standards. Next, it occurred to him the company’s practice of never adding preservatives to its sausage could also be a selling point, and another starburst was added to packagestouting that point. Smarter future
The second-generation owner of Uncle Charley’s is challenged on many fronts by issues his founding father couldn’t have fathomed in the late 80s. For example, in the name of going green, the company has added a propane-fueled delivery truck to its fleet, which generates its own electricity and powers the refrigerated cargo area. “It runs a lot simpler and much quieter than a big diesel motor and I’m not emitting any fumes or pollution into the atmosphere,” Armitage says, pointing out his willingness to invest in new ideas and the necessity of upgrading the plant’s equipment. This was the philosophy behind the purchase of a new labeling machine (from Ravenwood Packaging) he discovered at the 2009 AMI Innovation Showcase. The machine uses labels that reel on top of each other and don’t require adhesive
backing paper, “so I don’t have any of that to throw away and I don’t have to kill any extra trees,” Armitage says. The labels C-wrap around the products, providing more room for product information and the company to be printed on the package. Soon, the company will take delivery on two more of the labelers. “It does with one label what used to take two labels to do,” and the machine doesn’t require changeover for various weights of products.
It was also at the AMI show where Armitage kicked the tires on an 11,000-lb. bowl chopper that he eventually bought. The equipment not only put productivity in high gear, but also improved the consistency of the sausage mixture. It reduced the time needed to mix 300 lbs. of sausage, ready for stuffing into natural casings, from three-and-
a-half minutes to just 20 seconds.
“I’m always on the lookout for something that can help us, either with the quality of our product or by streamlining a process.” The company is also planning to install a plant-wide sanitation system of drop stations for foaming, sanitizing and hot water dispensing designed by Zep Inc., which has Armitage almost giddy. “I like knowing that I have one of the most modern plants in the industry.” Italian sausage intellgence
Growing up in a family that owned and operated a meat processing business, Marc Cinque learned about working harder en route to learning to work smarter. Garden State Sausage was founded in 1956 and Marc’s father purchased it 12 years later. In high school, days for Marc and his younger brother, Steve, started at 2 a.m., when the two were expected to arrive at the Cinque’s Hawthorne, NJ-based processing plant and drive delivery routes for five hours each day before heading to school. “I guess you could say we learned the business starting from the loading docks,” Marc recollects. Eventually the two siblings would take over the business, after their father became too ill to run it. Marc recalls when he graduated from high school and it became quickly evident that he and Steve would be responsible for carrying on the family business, which at that time (in 1986) had 12 employees and annual sales of $1 million. In 1999 the Cinques changed the name of the company to Premio Foods Italian Sausage, on the advice of marketing guru, Al Reis. “This is the point where the business really took off,” Marc says. Premio Foods remains a privately held processor of fresh dinner sausage that has seen annual revenues grow to an estimated $140 million with approximately 400 employees.
Premio processes both sweet and hot Italian sausage in links, patties and as ground products in addition to Luganiga, and varieties flavored with basil, garlic, rosemary, onion, mushroom and cheese. Its “World Flavor” line includes Argentinian, Salvatorian and Mexican chorizo as well as beer bratwurst, kielbasa and Cajun sausage and the company also offers two varieties of breakfast sausage.
Premio Foods, still based in Hawthorne, has overcome its share of challenges over the years. The mettle of the Cinque family and the business was especially tested in 2009, when Steve was diagnosed with ALS (Lou Gehrig’s disease) and died later that year at the age of 49.
“Besides being an absolutely devastating tragedy for Steve’s family and our family, this moment was a watershed in my professional life,” says his brother. Having shared the same vision and goals for many years, Marc says Steve’s passing
galvanized his commitment to achieving those goals, which he says include “providing a tasty, healthy, attractive meal for a family of four for under $10,” as well as developing products that are low in sodium and taking steps to conserve
energy and making sustainability and recycling a goal of the business. A key part to making the goals a reality included
hiring Charlene Gmunder, a proven food-industry executive, to work as the company’s vice president of operations. Since joining the company in 2008, one of her key initiatives has been implementing “lean manufacturing” in the company’s processing operation. The Premio management team is also working with Rutgers Univ.’s Center for Advanced Energy Systems to reduce its power consumption while eliminating waste and incorporating sustainability principles into their process.
Listening and responding to customers, including retail giant, Costco, has been an important part of Premio’s success. In fact, the company at one point was asked to provide a solution for the tray packaging used for its 5-lb. Italian sausage sold at Costco. Customers wanted to be able to cook part of the product and freeze the remaining portion. Premio was also asked to develop a more environmentally friendly package for Costco. Addressing these challenges without incurring additional costs or increasing the cost to Costco was the goal of what Cinque refers to as “The Costco Challenge.”
“We developed one-of-a-kind packaging for the same 5 lbs. of sausage in four individually wrapped packages,” allowing the customer to use one pouch and freeze the rest. “We eliminated the polystyrene tray and now wrap in cellophane that is disposable,” Cinque says, all without increasing the cost. Today, that product is Costco’s top-selling Italian Sausage. “Our motto is “cost effective, cost efficient, cost friendly.”