SpartanNash plans to exit its Indianapolis-based Fresh Kitchen operations, which the company purchased as part of its Caito Foods acquisition in 2017.
At the time of the deal, Fresh Kitchen was described as a new 120,000-square foot, $32 million facility that would be operational in the first quarter of that year. The facility was designed to cook and package fresh protein-based foods and meal solutions.
SpartanNash reported later in 2017 that the startup of Fresh Kitchen was taking longer than anticipated, but it remained optimistic.
In early May of this year, then-CEO Dave Staples stated in a preliminary earnings report that the company had “engaged a team of outside production experts for our Fresh Kitchen to improve our execution and best position us for sustainable improvements in our business for the remainder of 2019 and into the future.”
The Fresh Kitchen exit is expected to improve operating earnings and EBITDA results in the company’s food distribution segment, according to a news release. The annual net sales impact of the move is projected to be about $20 million.
“The company will shift its focus and expertise to its produce distribution and fresh-cut operations, which have been the hallmark of the Caito business,” SpartanNash wrote.
The company expects to complete its exit of Fresh Kitchen operations by the end of the fiscal year.
In the same release, SpartanNash announced the resignation of Staples and downgraded its guidance for 2019.
The company has been navigating a number of changes and obstacles in recent months.
In May, Staples cited “challenges in the supply chain, Fresh Kitchen and retail operations” plus the voluntary recall of certain melon products from the company’s fresh-cut fruit operations as barriers to improving the bottom line.
Since the beginning of 2019, SpartanNash has named a new president of food distribution, a new chief merchandising and marketing officer and a new chief information officer. Chairman and former CEO Dennis Eidson will serve as interim CEO while the company searches for a successor to Staples.