About Lancaster Colony

Lancaster Colony Corporation operates as a manufacturer and marketer of specialty food products for the retail and foodservice channels. Strategy The key elements of the company’s strategy are to accelerate its base business growth; simplify its supply chain; and expand its core business with its Retail licensing program and complementary mergers and acquisitions. Segments The company operates through two segments, Retail and Foodservice. Retail This segment manufactures and sells other products pursuant to brand license agreements, including Chick-fil-A sauces and dressings, Olive Garden dressings and Buffalo Wild Wings sauces. Additionally, a small portion of the company’s Retail sales are products sold under private label to retailers. The vast majority of the products the company sells in the Retail segment are sold through sales personnel, food brokers and distributors in the United States. The company has placement of products in grocery produce departments through its refrigerated salad dressings, vegetable dips and fruit dips. The company also has products typically marketed in the shelf-stable section of the grocery store, which include salad dressings, slaw dressing, sauces and croutons. Within the frozen food section of the grocery store, the company sells yeast rolls and garlic breads. The company continues to rely upon its strong retail brands, innovation expertise, geographic and channel expansion and customer relationships for future growth. The company has also expanded Retail segment growth by leveraging its strong Foodservice customer relationships to establish exclusive licensing agreements for the retail channel. The company’s quarterly Retail sales are affected by seasonal fluctuations, primarily in the fiscal second quarter (year ended June 30, 2023) and the Easter holiday season when sales of certain frozen retail products tend to be most pronounced. Foodservice This segment offers dressings and sauces (salad dressings); and frozen breads and other, such as frozen garlic breads, frozen parkerhouse style yeast rolls and dinner rolls, and frozen pasta. The majority of the company’s Foodservice sales are products sold under private label to restaurants. The company also manufactures and sells various branded Foodservice products to distributors. The vast majority of the products the company sells in the Foodservice segment are sold through sales personnel, food brokers and distributors in the United States. Most of the products the company sells in the Foodservice segment are custom-formulated and include salad dressings, sandwich and dipping sauces, frozen breads and yeast rolls. The company’s top five Foodservice direct customers accounted for 58% of this segment’s total net sales in 2023 (year ended June 30, 2023). Within its Foodservice segment, typically the company’s largest direct customers are distributors that distribute its products primarily to foodservice national chain restaurant accounts. In the Foodservice segment, sales growth results from general volume gains or geographic expansion of the company’s established customer base, and it also grows its business with existing and new customers by leveraging its culinary skills and experience to support the development of new products and menu offerings. Strategic acquisitions are also part of its future growth plans, with a focus on fit and value. Net Sales Attributed to Significant Customer Relationships Net sales attributed to Walmart Inc. (Walmart) totaled 18% of consolidated net sales for 2023. Net sales attributed to McLane Company, Inc. (McLane), a wholesale distribution subsidiary of Berkshire Hathaway, Inc., totaled 11%. McLane is a large, national distributor that sells and distributes the company’s products to several of its foodservice national chain restaurant accounts, principally in the quick service, fast casual and casual dining channels. In general, these national chain restaurants have direct relationships with the company for culinary research and development, menu development and production needs, but choose to buy its products through McLane, who acts as their distributor. McLane orders its products on behalf of these national chain restaurants, and it invoices McLane for these sales. The company’s relationship with Chick-fil-A, Inc. (Chick-fil-A), one of its national chain restaurant accounts, also represents a significant portion of its consolidated net sales. In Foodservice, the company primarily supplies Chick-fil-A indirectly through distributors, including McLane. A portion of its Foodservice sales represent direct sales to Chick-fil-A. Chick-fil-A is also a significant contributor to its Retail sales as it sells their sauce and dressing products into the retail channel through an exclusive license agreement. Total net sales attributed to Chick-fil-A, including the Retail sales resulting from the exclusive license agreement and the Foodservice sales, totaled 26% of consolidated net sales for 2023. Government Regulation As a producer of food products for human consumption, the company’s operations are subject to stringent production, packaging, quality, labeling and distribution standards, including regulations promulgated under the Federal Food, Drug and Cosmetic Act and the Food Safety Modernization Act. History Lancaster Colony Corporation was founded in 1961. The company was incorporated in 1961. In 1992, the company was reincorporated as an Ohio corporation.