Schwan’s won customers with its ice cream delivery. A new name and layoffs challenge its legacy
Schwan’s won customers with its ice cream delivery. A new name and layoffs challenge its legacy
Mary Bartels looks forward to seeing the yellow Schwan’s truck pull up outside her apartment building in Vermillion, South Dakota. She’s been getting frozen food deliveries — including ice cream, meat and meals — for nearly 60 years.
The company’s customer service is at the heart of her loyalty.
“It’s always been just unbelievable,” she said. “I trust them so much, I would hide a key outside for them if I wasn’t going to be home.”
On this day, driver Nate O’Grady rings the doorbell and takes a seat at Mary’s kitchen table. As a child, the yellow trucks came to his grandparent’s house. Now, he said getting to know the customers, kids and pets along his route is a highlight of his day.
“You have much more connections with customers than with Amazon, where they ring your doorbell and leave. We have time to sit and talk with people,” O’Grady said.
He knows what customers will order before they ask. For Mary, every order needs a box of peanut butter cup ice cream minis.
Schwan’s started in 1952, when a 23-year-old Marvin Schwan went door to door delivering 14 gallons of his family’s ice cream to homes in rural western Minnesota. Over the next 70 years, the company became beloved for its yellow trucks, friendly delivery people and frozen food.
In 2018, South Korean food manufacturer CJ CheilJedang agreed to pay $1.8 billion for a majority stake in Schwan’s. The Schwan family spun off the home-delivery business and kept 100% ownership.
Schwan’s Home Delivery changed its name to Yelloh in 2022 in an effort to appeal to a broader customer base in what is now a crowded food delivery space. The following year, it cut 750 employees and closed around 90 delivery centers.
21st century competition
Today, customers in all but 18 states rely on UPS to deliver their Yelloh frozen products instead of the familiar yellow trucks.
Yelloh is contending with a much more competitive market. Danny Edsall, a co-leader for Deloitte’s global grocery practice, said the food space has gone through several phases of evolution in the last few decades.
“Everyone got this idea that grocery is an incredibly important category,” he said. “And so there are a whole new wave of entrants chasing the grocery dollar.”
Yelloh’s major competition was once local, family-owned markets. Now, it’s facing big box stores like Walmart, Target and Costco. Amazon, Grubhub and others will even bring your groceries straight to your door.
“I think we’re right in the heat of that battle, it’s yet to be decided who wins,” Edsall said. “The people who are doing it right are the ones who genuinely try and get to know their customer and tailor services to meet their customer’s needs.”
It’s not unusual for a legacy company like Yelloh to shift strategies as it reckons with a more crowded market and changing customer preferences, Edsall said.
“The art of retail is to reinvent yourself for a new consumer,” he said. “You always have to reinvent your brand while staying relevant. The companies who pull it off are the ones still around in 100 years.”
O’Grady, the delivery driver, said he’s seeing the new brand name Yelloh slowly catch on with his customers — but not with Mary.
“They changed the name of it?” she asked O’Grady. “I didn’t know that, when did they do that?”
A nostalgic rebrand or the end of an era?
The new name is inspired by customers’ memories of the yellow trucks, according to CEO Bernardo Santana.
“It’s really common for us to hear, ‘I remember when I was a child in my grandma’s house, seeing the yellow truck with the ice cream,’” he said. “The strongest brand we have is our yellow truck, so we wanted to bring back and keep this connection with our customers.”
But Akshay Rao, a marketing professor at the University of Minnesota, is concerned that Yelloh’s new name moves away from a 70-year-old brand and confuses its devoted customers.
“They may think, ‘Who are these people? Are they the same friendly people with my ice cream?’” he said. “So Schwan’s had a monopoly that it has said — to the best of my understanding — goodbye to.”
Rao said he hasn’t seen the company’s research, but he suspects Yelloh’s new rebranding and cuts are part of a strategic shift, emphasizing costs rather than customers. He said only time will tell if the move is successful, but he’s skeptical.
“Schwan’s had an intimate relationship with its customers,” he said. “It’s now stepping back from that relationship, and customers are going to start looking at other options.”
Deb Kuwamoto is one of those customers. The Lincoln, Nebraska resident can no longer receive deliveries straight from a Yelloh truck. She loved chatting with the delivery men and can name all her drivers going back 10 years.
Now, Kuwamoto said she’ll just go to the grocery store instead of ordering from UPS.
“It makes me a little sad,” she said. “I think it’s the end of an era. I miss the drivers.”
And she’s not fond of the new name. Kuwamoto said ordering from Schwan’s felt like stepping back into her childhood in rural Nebraska. “It’s really kind of ironic, because Schwan’s was kind of like the first grocery delivery,” she said. “And now everybody has caught up to them.”
Yelloh CEO Santana said customers are still the company’s priority, even as it scales back its delivery footprint.
“We are trying to deliver for customers in an efficient way and keep up with all the changes in logistics. We didn’t have the internet when Schwan’s started,” he said. “And there’s all the changes in the market environment — 20 years ago, there was no Amazon. Now, it’s this stronghold.”
Plus, Santana said, some customers prefer a quick drop off over small talk with a driver.
“Some people just ask, ‘Leave my product in a bag outside the door,’ and then others are happy to chat with our drivers,” he said. “It will take time, but we are building a new brand that can attract all of the customers we can get.”
A family tradition
Back in Mary’s apartment, she remembers when she started ordering from the company nearly 60 years ago. Her nine kids would rush up the farmhouse driveway to meet the delivery man and climb all over his yellow truck.
“They’d all come in with an ice cream bar or something. And now I realize he was giving those to the kids out of his pocket,” Mary said. “Because I wasn’t paying for them.”
At one point, she was ordering to feed a family of 11, and she kept ordering from Schwan’s through her kids leaving for college, through moving into town from the farm and through her husband’s death.
As she sits in her chair with her memories, driver Nate O’Grady checks her freezer for what she needs, grabs the peanut butter ice cream cups, fantail shrimp and chicken pot pies from his truck and packs them onto the freezer shelves. She’s done her grocery shopping without standing up.
O’Grady tells her goodbye and climbs into the yellow truck idling outside of her apartment — still stamped with the Schwan’s logo.
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