Projected 2009 revenues: $40 million
Number of customers: 2,500
Products carried: 9,000
Size of facility: 60,000 square feet.
Estimated product mix: 70% food items, 30% non-food (paper, janitorial, chemical, etc.)
2008 delivery truck miles: 700,000 (est.)
Each year, Dennis Paper & Food Service needs several million kilowatts of power to run freezers, coolers and other equipment at its Bangor plant. About five years ago, as energy costs threatened to rise, President Ron Dennis looked for alternatives to the retail rates offered by Central Maine Power Co. and Bangor Hydro. "We got educated and found that we could buy our power direct from the New England Power Pool," says Dennis. Using this knowledge, he formed a new company called Dennis Energy. Now, says Dennis, "I'm buying that power direct off the grid ... and reselling it to my wholesale [food] company."
This project gained momentum when Dennis met Jerry Tudan of Peregrine Technologies in Harpswell, an energy consultant with expertise in helping businesses manage their power costs. Tudan screens prospective clients carefully, since the wholesale price of electricity changes by the hour. To make financial sense, companies need a 24-hour energy profile, Tudan says. Supermarkets are ideal, as their coolers and dehumidifiers run constantly. Dennis Paper & Food Service was also a prime candidate. "We've allowed them to [turn] their automatic defrost cycles on during the midnight hours," says Tudan, so "these huge refrigeration machines [can run] at an off-peak rate. You can't do that if you're buying retail."
The wholesale power market is not for the faint of heart, as a daytime trip to the grid might cost twice as much as a midnight shopping spree. But at certain times - like one three-hour stretch this spring - overnight prices for electricity can drop to zero. So if a company runs equipment 24/7, and tracks the average cost of power, everything starts to make sense. "What would you rather be doing," asks Tudan, "paying 5 ½ cents an hour [retail], or averaging out at 4 cents an hour for a 24-hour day?"
Dennis estimates that creating Dennis Energy has reduced the electrical bill for his food business by 10%-15% a year. He expects other energy gains. Managers have improved lighting efficiency at the Bangor facility and are mulling plans to generate solar and wind power on site.
Ron Dennis is no celebrity. Few Mainers would recognize him and, unlike one competitor, his Bangor-based firm isn't mentioned as a takeover target by Warren Buffett. That's no surprise; in the broad line food service industry, it's easy to get lost in the crowd. Broad liners buy, sell and distribute a wide range of food and food-related products for clients across the nation; last year, they saw gross revenues of $216 billion. The largest, SYSCO Corp., earned the better part of $40 billion (and Buffett's attention). Dennis Paper & Food Service is tiny by comparison, with projected 2009 earnings of $40 million.
Because of its size, analysts have speculated that a larger firm will gobble it up. Apparently, Dennis hasn't heard the news. He steered his family-owned business into broad line distribution in 2002, when the last of 12 local competitors folded. Over the next six years, he posted average annual revenue gains of 20%. His company does virtually all of its business in Maine, serving individual customers instead of chain restaurants and other clients with national supply contracts. And this year, he projects an inflation-adjusted 14% gain. "That's huge," says Bob Goldin, a food distribution expert at the consulting firm Technomic Inc. "In a flat market or a down market," he notes, Dennis has "got to be doing something right to sustain double-digit growth."
Running with the big dogs
Business is not easy for broad liners, with fluctuating producer prices, high transportation costs and a public retreat from pricey restaurants. Goldin, executive vice president of the Chicago-based firm, says 2009 could be the worst year on record for broad liners, a statement that puts Dennis Paper & Food Service's revenue projections in context. He doesn't know Dennis and his staff, but says, "I suspect they're very service-oriented, highly flexible, very oriented toward local customer needs." University of Southern Maine economist Charles Colgan notes that Dennis Paper is not competing with SYSCO and other national broad line distributors on the basis of the products that it offers. "What they're selling," says Colgan, is "reliability, in terms of delivery, billing and all of those things," and "a competitive price for the service."
Dennis Paper & Food Service sharpens its competitive edge with innovative cost controls. For example, Ron Dennis launched a new company five years ago to buy electricity at wholesale prices (see "Power ploy," below). Rick Robertson, his vice president, says these things are all part of the company's thirst for growth. "All of our employees like to compete," he says. "And there is so much business out there … that we enjoy going to see new customers and telling them our story."
Mary Hartt knows the story well. Hartt, whose maiden name is Dysart, is co-owner of her family's Hermon-based restaurant and transportation business Dysart's, and chair of the Maine Restaurant Association. She appreciates Ron Dennis's offer to "do business with a locally owned Maine company, a third-generation family business," and says their relationship is based on a foundation of trust and commitment. Other clients appreciate a distributor who listens and learns. Raye's Mustard approached Dennis Paper & Food Service two years ago, hoping to fill large orders for institutional buyers. Dennis supplies the Eastport firm with key ingredients like evaporated cane juice and sugar, then loads the delivery truck with Raye's finished products for distribution along its route. Karen Raye, co-owner of the company, says the specialty mustard maker already had a strong following in others states and countries; using Dennis Paper & Food Service has expanded its Maine market while providing the ingredients it needs.
Bar Harbor Clam Chowder and Clam Juice have also found new customers in Maine, thanks to the Bangor broad liner. These and other products of Look's Gourmet Food Co. in Whiting are known around the country, and the boss is picky about his food service providers. Michael Cote brought years of natural foods experience to the seafood processor when he purchased it in 2003. He buys top-quality ingredients for his preservative-free line, and, for a time, he used five distributors. Now, he buys most of these goods from Dennis Paper & Food Service.
His first requirement of Dennis was to "get him to carry the right products with consistency, and make sure that we get the best prices for those products," says Cote. Now that his distributor is less than three hours away, Cote gets his ingredients on a weekly basis. That, he says, "reduces [both] our storage and operating costs."
The two companies share more than just a professional relationship: last year, both firms made Inc.'s list of the nation's 5,000 fastest-growing private firms.
Growing despite a recession
Ron Dennis describes a pretty simple formula for his company's success: put customers first and empower everyone — from the front desk to the front lines — to serve that cause. Top executives have worked in the warehouse, he says, and they would do it again tomorrow, if need be. A thin layer of management means easy access to people who can answer questions right away. This collaborative atmosphere has helped Dennis Paper & Food Service maintain a steady supply of skilled, motivated teammates who now number close to 100.
"When we entered the food business," Dennis recalls, "the commitment we made was to move into the major leagues and compete with the national companies" like U.S. Foodservice, Performance Food Group and SYSCO. To do that, he says, you offer the same services that huge companies do — and kick things up a notch. This means partnering with other independents to buy fresh products at good prices. It means training drivers to manage refrigerated trucks with three temperature zones, so they can help customers handle deliveries quickly and easily. And it means a little straight-talk about money, says Dennis. When food or fuel prices rise, for example, other distributors might try to recover those costs from independent restaurants. But the sales reps at Dennis Paper & Food Service respond to these pressures by turning into menu consultants, says Dennis, offering tips on plate presentation and blackboard specials, or using special software to help customers manage the cost-per-plate for each item. He believes this commitment to customer service is the key factor in his company's six-fold revenue increase since 2002.
And there's no plan to slow down any time soon. Dennis and his managers are deciding whether to expand the company's freezer and double its Bangor facility to better serve a growing demand for frozen foods and broaden the company's service area into the southern part of the state.
To guide the company forward, Dennis embraces its past — all the way back to 1892. That's when Samuel Dennis emigrated from Russia and registered as a peddler in Bangor; four of his six brothers (whose last name was probably Denisov or Denisovich) came to Maine in 1903. Within a few years, Sam co-founded a bottling company and sold it to three of his brothers, who moved the business to Cherryfield. In the decades that followed, shifting consumer preferences led the firm to other locations and the distribution of many new products. Through it all, family members changed their plans and their lives to protect the business. Ron Dennis' father, Lawrence, did this in 1945, setting aside plans for medical school when his father took ill. Raised in the family business, Ron Dennis returned to it in 1978 after a post-college sojourn in San Francisco. He became vice president of sales in 1985 and president in 2000. Dennis says he's grateful to many people, including his father who died in 2001, and his wife, Rose, who backed his decision to expand the business into broad line distribution one year later. His mother, Lena Dennis, just turned 90. She still comes to the office each day to file papers and, "to make sure I'm working, I guess," quips Dennis.
Dennis wants to remain focused on business in Maine, yet he won't rule out changes in the future. "I have two children [daughters Shaina and Mariah] and my heart would like to see it go to a fourth generation … time will tell," he says. After pausing for a moment, his competitive juices begin to flow, contemplating his position among the big dogs. "The way for me to grow outside the state would be through an acquisition of another independent food service broad line company in southern … in New England, somewhere."
Michael McCauley, a writer in Bangor, can be reached at firstname.lastname@example.org.