Loffredo Fresh Produce Expands Midwestern Distribution

Aug. 1, 2000
Loffredo Fresh Produce started with a garden and maintains one to this day. No longer the 800-acre truck farm that supplied the company in its early days,

Loffredo Fresh Produce started with a garden and maintains one to this day. No longer the 800-acre truck farm that supplied the company in its early days, this garden farmed daily by Gene Loffredo Sr supplies herbs, peppers, green onions, and tomatoes to the Loffredo family and to customers who demand fresh vine-ripened tomatoes.

Start with a garden. Guisseppi Loffredo did. In 1892, Loffredo Fruit and Tobacco Company began serving hotels and restaurants in downtown Des Moines, Iowa. By 1918, the family moved operations to an 800-acre farm south of the city. It produced tomatoes, bell peppers, romaine and leaf lettuce, asparagus and, of course, corn.

Eighty-two years and four generations of Loffredos later, the company is still there serving the same markets from a 62,000-sq-ft headquarters and distribution center. The location is new. Business began to boom when restaurants installed salad bars. Four years ago, Loffredo Fresh Produce Company moved from its farm to a new building a few miles away on the opposite side of the Des Moines airport. The trade area has expanded. In 1990, the company opened a large branch in Omaha, Nebraska, and in 1997, expanded again to a small facility in Rock Island, Illinois. In June 2000, Loffredo Fresh Produce expanded again, opening a 10,000-sq-ft branch in Kansas City.

Omaha has the largest of the branch operations with a 20,000-sq-ft facility, which has 8,000 sq ft of chilled space. The new branch in Kansas City has the second largest amount of floor space at 10,000 sq ft of which 8,000 sq ft is chilled. However, at six trucks, Kansas City has the smallest fleet. The Rock Island branch has 5,000 sq ft of chilled space in an 8,000-sq-ft building. Both Omaha and Rock Island have fleets of 10 trucks. The Des Moines headquarters has 40,000 sq ft of chilled storage and processing space in a 62,000-sq-ft building with 19 shipping doors and four doors for receiving. The headquarters fleet consists of 20 refrigerated straight trucks and 11 tractors and refrigerated trailers. Branch operations were originally set up to serve chain restaurant customers such as Outback Steak House, Olive Garden, and Red Lobster. Once the chain business is established, Loffredo Fresh Produce begins cultivating general foodservice accounts in areas surrounding the branches. With a population base exceeding two million, Kansas City has the potential to become the largest operation within the company.

As recently as 1980, the company still sold produce harvested from its own local farm. Much smaller now, but still cultivated with care by Gene Loffredo Sr, father of the present generation of managers, the garden still grows alongside the headquarters building. In 1993, the five brothers of the fourth generation bought out Gene Sr. The management team now consists of Gene Loffredo, chief executive officer, and four vice-presidents: John in charge of sales, Mike who handles buying, Larry overseeing accounting, and Jim running distribution and transportation. Although no longer an active manager, Gene Sr remains close to the business, arriving at 6 am and leaving after 4 pm as he always has.

Retail Distribution With its expanded trade area, Loffredo Fresh Produce also has begun providing service to retail stores in addition to its traditional foodservice accounts. Roughly 40% of company business is fill-in orders for chain stores and independent grocery retailers. "We're not big enough to be the main supplier for retail stores," Jim Loffredo says. "But in our foodservice market, we are the primary supplier for many hotels and restaurants, and we maintain that position against stiff competition. Des Moines is a city of about 500,000. Even at that size, it attracts attention from the big broadline distributors, so we have to go head-to-head against Sysco, Alliant, and many of the other foodservice houses."

The keys to winning this competition are quality products and attentive service, Jim Loffredo says. The company receives an average of 50 inbound loads a week. The two big receiving days are Sunday and Wednesday when 25 to 30 of the weekly total arrives. Roughly half the company's inbound requirements are filled by a single carrier that dedicates its eastbound traffic lane to Loffredo Fresh Produce.

"A few years ago, a local truck operator approached us with the idea of becoming our primary transportation supplier," Jim Loffredo says. "We agreed on the condition that we get a stable rate year round and that our name would go on the trailers. As a result, we get 25 loads a week in trailers with our logo on the sides. The markings are in different colors because produce comes in different colors.

"Our house carrier goes to California with fresh meat, makes one or two stops per trailer to load produce, and heads back for Des Moines. The total turn is four and a half days with a 30-hour return leg. Every truck makes one trip a week. In addition to consistent service, the drivers are well trained to handle produce. If a driver sees a potential quality problem, they call to alert us."

Established Vendors Those calls are rare because Loffredo Fresh Produce buys from established vendors with strong reputations. The inventory includes lettuce from Dole, citrus from Sunkist, Grimmway carrots, Driscoll strawberries, Greenhouse herbs, avocados from Calavo, and Christopher Ranch garlic. Quality has been even higher since January 1, 2000, when the company joined Pro*Act, a national buying group for the produce industry. Pro*Act's national membership increases the buying power of independent distributors such as Loffredo Fresh Produce, ensures high quality from nationally recognized growers, and reduces a distributor's need to purchase goods on the expensive spot market.

In addition to produce, Loffredo Fresh Produce handles other perishables for restaurant operation. These include Schullsburg Creamery cheeses, dairyproducts from Roberts Dairy, eggs and egg products, Mrs Crockett's prepared salads, and Bonne Chere salad dressings and sauces. The company also distributes stock bases, seasonings, pickles, and cooking oil.

Rapid Inventory Turns With quality produce in the house, the next step is to provide the service to maintain that quality all the way to the customer's cooler. "Our customers couldn't get produce much fresher if they picked it themselves," Jim Loffredo says. "We get it from the West Coast in 30 to 36 hours and then have it in our customers' hands within another 24 hours. Obviously we can keep hardy produce like onions or potatoes longer, but on average our inventory turns in two days, so rapidly that shrink from aging is almost negligible, less than 5%. In addition to trucking, we fly fresh herbs in daily as well as special orders for individual customers. Special orders go to the customer on the same day they arrive."

Getting produce back to Des Moines is only part of the supply equation. Getting it off the inbound truck and ready for order selection is the other part. "We try to pamper inbound drivers, whether they work for our regular carrier or some other truck line," Jim Loffredo says. "We do not require appointments and we do not have set receiving hours. We unload inbound product as soon as it hits our yard. I really mean that we unload it; we don't have any lumpers on our property. If an inbound load needs to be sorted on the dock, we take care of it, not the driver. I know what these road drivers go through, because I personally make truck trips to California. Drivers have enough waiting at packing sheds. They don't need any more waiting or freight handling at our dock."

Loffredo Fresh Produce achieves its service levels by staying open almost around the clock. Officially, order cutoff is 5 pm, but in practice, customers call in orders as late as 10 pm. By two the following morning, trucks are all loaded and ready to go. The warehouse crew selects orders and loads all the trucks. The warehouse closes only between 2 and 4 am.The company has two routing schedules. Rural routes are gone all day, making 15 to 20 stops. Local routes in Des Moines, where 40% of the volume is delivered, require 15 to 20 stops between 5 am and 10:30 am. When the morning part of the route is finished, drivers return to headquarters and reload their own trucks for an additional afternoon route that usually has five to 10 stops. Orders for the afternoon route may come in with drivers from morning customers who forgot to order a specific item, or customers may call. At times, trucks return to a customer location that was visited just hours earlier.

The warehouse crew helps with selecting afternoon routes, but that job is mostly left up to the drivers. Warehousemen spend the early afternoon concentrating on retail order selection. In general, foodservice delivery is a morning operation, and retail moves in the afternoon and early evening.

Urban routes are based on making four stops per hour in an area with a radius of roughly 10 miles. Sending drivers into the same general area daily helps with customer service. "We don't like switching drivers from route to route because it upsets the customers," Jim Loffredo says. "In fact, until about four years ago, drivers were our primary sales force, and they still act that way. Drivers know that the customer is always right, that the time required to keep the customer happy is the time required to make a delivery. We would like drivers to finish a stop in 15 minutes, but if a chef wants to look at every tomato in a carton, we stay at the stop until the customer is finished.

"We try to avoid going to the same place twice on the same day," Jim Loffredo says. "Sometimes, we just can't help doing that. If customers order, they get it. And they can order as little as they need. We will deliver a single item, one bunch of bananas if that is what the customer needs. In fact, we once sold a single bunch of thyme."

Call List Improves Ordering Use of a call list by customer service representatives helps eliminate double deliveries and emergency orders. Every customer is called on specific days. A specific buying history allows representatives to question customers about orders, reminding them of what they usually buy. Small rural accounts get called and receive deliveries once or twice a week. Larger urban customers may need six calls a week. The buying history also allows sales representatives to explain the cost of frequent, small deliveries.

"If we can consolidate two or more deliveries for single customers, we can reduce costs for us and them, Jim Loffredo says. "We understand the need for frequent delivery. We are in the produce business after all. Some customers have small storage areas and high volume. They may actually need six or seven deliveries a week. A big step toward more efficiency would be eliminating afternoon deliveries to the same location as a morning delivery."

Giving customers exactly what they need adds to the cost of distribution, but it also helps Loffredo Fresh Produce gain business. One of the principles of dealing with chain restaurants is regular delivery to every location regardless of order size. The fact that one restaurant is in a remote location or that it places only small orders gets built into the system. The total volume of chain business is large enough to sustain a few difficult deliveries. The same ideas apply to small customers on rural routes. "Small deliveries out in the country are low margin business, but if we already have a truck in the area, any additional volume becomes a contribution to sales," Jim Loffredo says. "It costs about $25 to stop a truck, so if the sale amount exceeds the cost to stop, we have covered the overhead for that part of the route. Our accounting system provides a detailed cost allocation for every customer and every stop we make."

Six Nightly Shuttle Loads In addition to loading local route trucks, the Des Moines warehouse ships five to six full trailer loads to Omaha nightly. These loads include general inventory and batch-picked orders. "We don't send out individual orders," Jim Loffredo says. "If we have 50 orders for lettuce, we ship enough to make up the orders instead of filling valuable trailer cube with prepicked orders. At present, all inbound produce delivers in Des Moines for shipment to branches on company trucks. Fairly soon, we want to route our inbound loads past Kansas City and Omaha to drop off their requirements before the equipment comes on to Des Moines. In fact, we want Omaha and Kansas City to grow into full line houses. We have the potential for a lot of retail business in Omaha, and the population in Kansas City suggests a large foodservice market."

Route drivers work five to six days weekly, averaging 44 hours per week. Tuesday and Wednesday are the slowest delivery days. Typically, drivers are off Sunday and half a day sometime midweek.

Used Trucks Cut Cost Distributing produce is a low margin business with relatively high costs, especially the way Loffredo Fresh Produce approaches customer service. To mitigate some of those distribution costs, the company saves money by purchasing used trucks. "We've found that buying five-to-six-year-old trucks costs less than half what the same vehicles would if purchased new," Jim Loffredo says. "The only new trucks in our fleet are leased vehicles at some of our branches."

The basic route truck in the Loffredo Fresh Produce fleet is a 4900-series International mounting a refrigerated body from Kidron or Morgan. Truck bodies range from 18 to 24 ft and are cooled by Thermo King MD-II or KD-II refrigeration units. To merit consideration for purchase, trucks need a ramp under the rear door, a roll-up door at the rear, and at least one curbside door. Several recently purchased Dorsey refrigerated trailers use Carrier Transicold Ultra units. The most common power train in the straight truck fleet is an International DT-466 engine rated at 210 horsepower and a Fuller six-speed transmission. Although automatic transmissions would be ideal for urban distribution, they aren't readily available on the used truck market, Jim Loffredo says. "A lot of our fleet has come from leasing companies like Penske or Ryder," he says. "We use the Internet to search for trucks and are willing to look anywhere in the country for a deal."

Running used trucks requires an efficient shop, Jim Loffredo says. Vehicle mileage can range from 30,000 to 90,000 annually, depending on route assignment. All equipment is inspected monthly. Oil samples are drawn at that time. Oil analysis is used to set a change interval that is customized to each vehicle. In general, intervals range from 4,000 to 10,000 miles and change periodically based on analysis results. Kendall motor oil and gear lubricants are used.

International DT-series engines are easy to maintain, Jim Loffredo says. They can be rebuilt using a standard overhaul kit readily available from International dealers. An overhaul performed in the company shop takes about two days.

Loffredo Fresh Produce believes in keeping vehicles as long as they remain useful. The straight truck fleet contains three vehicles from the 1988 model year. Three of the tractors used for shuttle service are Peterbilt conventionals built in 1986.

About the Author

Gary Macklin

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