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The Middleby Food Processing and Bakery Group is driven to perfection

Middleby Corporation (NYSE:MIDD) is the world’s largest manufacturer of premium commercial foodservice, residential kitchen, and industrial food processing equipment. What you ate or drank today was likely touched by Middleby equipment.

In 2005, Middleby acquired Alkar-RapidPak in an effort to provide the firm’s foodservice customers a more reliable supply from their food processors, the company is a maker of batch and continuous cooking / chilling equipment and packaging machines. That acquisition established the company’s food processing group.

“We started adding unique brands that had something very different in the marketplace, whether it was unique innovations, strong management team, or proprietary intellectual capital,” said Mark Salman, president of Middleby Food Processing and Packaging.

In 2012, the firm launched its bakery platform with the purchase of Auto-Bake, a global designer and supplier of fully automated industrial baking systems. Today, the food processing group is made up of 22 brands, is approaching half a billion in sales, and a market cap for Middleby Corporation in excess of $9 billion. Processing categories include preparation forming / depositing / make-up,  thermal processing, and slicing / packaging.

Multiple thousands of food processors in over 100 countries depend on Middleby Food Processing brands, which are supported by a global network of sales offices, robust parts and service organizations, and 17 manufacturing facilities. Protein processing categories include products such as bacon, salami, prosciutto, sausage, hot dogs, deli meat, poultry, fish, and alternative proteins. In addition to bread and bun lines, Middleby Bakery brands are experts in cakes, biscuit, cookies and cracker lines.

As automation and a heightened need for flexibility drive market shifts in commercial food processing, the division’s high quality, internationally recognized brands keep the organization on the cutting edge. In addition to breakthrough technological developments, Middleby helps identify and create unique products for customers that have rapidly changed course during the pandemic, enabling them to strengthen their market presence.

Peter Jongen, who serves as president of meat and cheese slicing innovator Thurne-Middleby Ltd located in the UK., notes that the labor-intensity of food processing is also accelerating the interest in automation. “Obviously labor is expensive, it is unreliable, and nowadays it is also an additional hygienic risk, so in the last year-and-a-half the focus on full automation is even bigger than before," Jongen said.

Salman emphasized the strong trend towards food safety as another driver of innovation. “We’re able to provide much cleaner and dependable products. Another is food security, where you need localization of manufacturing around the globe,” he said. “Brazil is the largest distributor of meat around the world. Can you imagine the waste in exporting millions of tons from South America to 10,000 miles away? The supply chain has been challenged in coronavirus times, we need to provide food security locally.  That’s a trend that will keep increasing.”

Composed of different divisions that do slightly different types of business, Middleby doesn’t centralize its supply chain. Rather, they leverage divisional expertise and market intelligence from over 100 brands to gain critical insights and diversify and strengthen their purchasing power.

“COVID-19 made us realize that our purchasing power is very strong and diverse,” Salman said. “Prior to that we’d started doing more collaboration in the supply chain, and during the coronavirus we became extremely good at it. It’s changing our best-in-class suppliers, sourcing became a much smarter exercise. We have calls every week with about 100 participants, and we talk about our supply chain challenges, exchange ideas, and make sure that we’re about to do more with the best suppliers.”

When the pandemic affected the foodservice restaurant sector, the food processing division stepped in to help those customers shift their lines toward retail to get products on grocery store shelves and stay afloat. For example, twist-tie machinery made by Burford and equipment from bulk packaging specialists, Stewart Systems, enabled customers to redistribute large bags of QSR buns into packages of four to eight buns suitable for retail sale. That kind of flexibility enables customers to move deftly with trends as they come on the scene.

Collaborations with customers often start at the idea stage. “It could start as early as having an idea on a new product.  For instance, if you look at our sous vide technology from Armor Inox in France, there have to be feasibility studies done first to see if a certain process can be scaled up to the industrial scale,” Jongen said.

Customers co-innovate with Middleby to satisfy a range of needs, such as developing process improvements that improve yield. “We have so many different solutions that we can combine them into complete lines,” he said. “More and more we’ve become a partner to customers who have greenfield thoughts on new factories or new products, and have early discussions with them.”

Middleby’s strong presence in foodservice is an invaluable source of business intelligence for the food processing division. “We are closer to our customers’ customers than other food processor equipment manufacturers,” Salman said. “That gives us a head start in understanding emerging trends and seizing opportunities to develop solutions that will help our processors take advantage of them.”

The company’s Bakery Innovation Center outside Dallas is equipped with 35,000 square feet of industrial ovens and lines where Middleby food scientists, engineers and customers work together on developing and validating next generation technologies. A second Bakery Innovation Center is located in Bangalore, India. Chicago is home to their Protein Innovation Center, mirroring its Texas counterpart.

“Innovation is in our blood. We’re not afraid to risk, so we innovate. A lot of people are very afraid of failing in innovation. We’re not. It’s perfectly okay to develop something that doesn’t work. It’s not perfectly okay not to develop anything,” Salman stressed. “Everything that we do is about innovation and finding a way to do something that will help our customers increase yield, quality, and profitability.”

Clay Miller, president of Burford Corp., a bakery division brand which invented twist-tie technology, said the company excels at being forward thinking.

“Middleby is great about keeping their eye on the target of innovation,” he said. “That is key.  If partners are looking for companies that innovate, Middleby is that company.”

Looks like an elephant. Runs like a gazelle.

As a publicly-traded firm with over 10,000 global employees, the multi-brand behemoth may appear from a distance to be stolid and slow. Its entrepreneurial spirit demonstrates the exact opposite. “Our culture is a big elephant that runs like a gazelle,” Salman said.

The company’s strength comes from optimizing the entrepreneurial drive of its leaders, and the ability to take ownership and run each brand as they see fit.

“We have the freedom to run the company the way we need to in order to grow our success, but the real magic happens when we collaborate between the brands and where we start to build the biggest solutions where we integrate the same control philosophy and really start adding more to it,” said Jongen.

Although each brand retains their own culture, organic collaborations amongst them are common providing multiple, complete turnkey systems in most major food production categories. “It gives us stronger solutions and therefore gives us a stronger fit with what our customers need," Jongen said.

He added, “I always feel like I’m part of a very large, successful company with a winning mentality-developing strategy, and yet, when I’m in one of the companies I feel like I’m in a family-led organization. The old-fashioned way where there’s still an owner – two worlds that go very well together the way we do it here at Middleby.”

Miller, who had been with Burford for nearly two decades prior to its acquisition by Middleby, agreed. “Our biggest fear coming into a large, publicly traded conglomerate was just that – it's going to be large, it's going to be slow-moving – but it's exactly the opposite. Because our brands are empowered, we’re able to meet customer needs very quickly and then come together with that synergy across the brands and Innovation Centers to bring that extra value at a quicker pace … It’s impressive," he said.

“We're curious, ambitious, and we want to win,” Salman said. “Our team is always working toward the next big thing – striving to accomplish more and surpass past technical achievements together.”