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Breaking NewsBreakfast, Cereals & BarsMeat, Poultry & Seafood

Bob Evans Cutting Texas Ties

Bob Evans Farms’ ties to Texas and its long-ago purchase of the Owens restaurant chain are loosening.

October 8, 2013

October 7/Richardson, Texas/Press Release -- Bob Evans Farms’ ties to Texas and its long-ago purchase of the Owens restaurant chain are loosening.

The Columbus-based restaurant and food-production company is closing its Richardson, Texas, plant, transferring some sausage production from there to its plant in Xenia, Ohio, and investing millions in its Ohio plant through April 2015.

Bob Evans plans to spend a total of $14 million to equip its sausage plants in Xenia and Hillsdale, Mich., to absorb the Texas plant’s production, according to a regulatory filing.

“We are currently in the process of evaluating how best and in what amounts we will need to invest in our Xenia and Hillsdale, Mich., plants,” said spokeswoman Margaret Standing in an email. “ We are not currently in a position to know what additional jobs, if any, may be created at Xenia or Hillsdale.”

Bob Evans, which plans to move its corporate staff to a new headquarters building in New Albany later this month, has been investing in both its restaurant and food-processing businesses to make them more productive. The company hopes to complete an aggressive remodeling program of its 560 namesake restaurants by April, the end of its fiscal year.

The food-processing business, called BEF Foods, makes refrigerated and frozen sausage, soups, gravies and side dishes for retail and foodservice channels. Bob Evans has invested $40 million to expand its plant in Sulphur Springs, Texas, and sold Ohio plants -- in Bidwell and Springfield -- this year.

Last year, Bob Evans paid $50 million to acquire Kettle Creations, which had been making side dishes such as mashed potatoes and macaroni and cheese for the company. Bob Evans is expanding the production capability of the Kettle Creations plant, at a cost of $30 million.

Although food-processing sales represented only 35% of Bob Evans’ sales in fiscal 2013, the business grew 11% in the year that ended in April over the previous year. Sales at restaurants open at least a year grew less than 1% in the most-recent fiscal year.

Activist shareholder Sandell Asset Management called on Bob Evans a week ago to split up its restaurant and food-processing businesses, and to sell and lease back its real estate, saying investors undervalue the company’s assets.

”The best way to create value is to sell BEF Foods,” said Thomas Sandell, the asset manager’s CEO.

The Richardson plant was closed on September 27 “to better manage production capacity within our foods business,” said Mike Townsley, president of the business, in a statement.

The Texas plant closure and the planned early November closure of Owens Spring Creek Farm, a related farm park in Richardson, will result in the loss of 113 jobs, according to the Texas Workforce Commission.

The closures will cut Bob Evans’ ties to Richardson, which has been the home of the Owens Country Sausage plant since 1963, the Dallas Morning News said.

KEYWORDS: facility restaurant sausage

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