Yelloh, the frozen food delivery service formerly called Schwan’s Home Delivery, which had once been known for its reach with rural Americans and its direct-to-consumer business model, is closing its doors on Friday after decades of decline.
Minnesota-based Yelloh was born on March 18, 1952 when its founder, Marvin Schwan, delivered 14 gallons of ice cream. The service’s popularity exploded over the years and later foods frozen at their peak made it onto the menu. At its peak, the company delivered meals and ice cream across 48 states, but critics and experts said the company became frozen in time, ceding ground to competitors and modernity.
The Schwan’s name lives on in frozen foods (Red Baron, Freschetta, and Mrs. Smith’s are among their many brands) — that side of the business was sold to CJ CheilJedan, a South Korean company, in 2019. But on Nov. 8, Yelloh permanently parked its fleet of refrigerated trucks that, with their yellow décor, were once instantly recognizable in small towns across America. Friday’s closure means that about 1,100 people across 13 states will be out of a job.
In a statement, the company said it made its decision because of “multiple insurmountable business challenges,” including “economic and market forces, as well as changing consumer lifestyles.”
Michael Ziebell, a Yelloh board member who spent 22 years with the company and previously held leadership roles, said the shuttering was devastating, calling it a very hard and very emotional decision.
But, he said, it was not sudden.
In an interview with The New York Times, Mr. Ziebell said demographic and market issues began plaguing the company in the late 1980s and early ’90s; with fewer people home as drivers came, the relationships between drivers and customers that had been built over decades began to diminish. Then came membership stores like Costco, which could compete on frozen food price and quality, and on top of that regulatory changes added restrictions to their truck operations. It was “the perfect storm,” he said.
A rebrand severs bonds with customers
Ayla Brave Crow, 37, said Schwan’s Home Delivery was a keystone brand for them growing up in central Iowa. Their family got deliveries from 1990 until 2010, and their grandmother “maybe used them even longer.” They enjoyed the “little ice cream sundae cups,” and when Mx. Crow experimented with a vegetarian diet in high school, their mother “ordered lots of vegetarian foods from Schwan’s when she didn’t know how to feed me.”
“I specifically loved the spinach mushroom pizzas after school and dance class,” they said.
When Mx. Crow and their wife moved back to a rural area in the Midwest this spring, they considered subscribing but then they learned about the 2022 rebranding.
“I wasn’t confident that everything would taste the same,” they said. “My loyalty was to ‘the Schwan’s man.’”
The new name erased the nostalgia associated with Schwan’s, they said, and was a turnoff.
Mx. Crow also noted that part of Yelloh’s draw was its reach. The company delivered to areas that were too far from proper grocery stores to get deliveries by other means, like DoorDash, and that only Amazon would make it out to those places, they said, calling the regions “an underserved food desert.”
“I think in some cases that would mean someone might go hungry in certain circumstances,” they said.
The 2022 rebranding was a failure on multiple levels, said Ken Moskowitz, who is the founder of Ad Zombies and has been a marketer for 40 years.
By changing the company’s name, decision-makers “threw away all that history,” Mr. Moskowtiz said.
Mr. Ziebell conceded that the rebranding did indeed hurt the business, that by changing the name to Yelloh the company had “lost the heritage of the Schwan’s name.”
But the company had no choice. The Schwan’s name was a part of the transaction with CJCJ.
The sale of that part of the business also meant that Yelloh had to find other suppliers for its food. The home delivery service carried Schwan’s items until early 2024, but soon enough customers lost access to many of their favorite entrees, snacks and desserts, including the Schwan’s ice cream that had made the company famous.
“Schwan’s products are extraordinarily good, and to find other suppliers that could match that quality was difficult,” Mr. Ziebell said.
No place for the yellow trucks
Yelloh’s shuttering was largely inevitable, said George John, a marketing professor at the University of Minnesota.
Changing consumer behaviors coupled with growing competition, which only intensified when the coronavirus pandemic drove shoppers online, left the company unable to cope with its attrition rates — the speed at which it must replace customers who leave. Yelloh’s delivery and route sales model doesn’t work in 2024 when truck drivers knock on doors but everyone is at work or busy with other things, Mr. John said.
“You should be where the customer is going to be, not following the customer,” he said. “Sometimes that’s just not possible.”
In order for Yelloh to compete with the likes of Instacart, Blue Apron, Fresh Direct and other food delivery platforms, it needed to radically change its business model to try to replicate those companies’ success — a costly gamble that requires deep pockets, Mr. John said.
“It’s a huge dilemma because you have to make the change before you start declining,” he said.
Having lived in Minnesota for almost 40 years, Mr. John said Schwan’s was always a part of the landscape, the famous yellow trucks dotting roadways all over the region. But over time he noticed they had became less relevant.
Ed Johnson, a partner at Deloitte Consulting focused on retail and consumer products, said he could not speak directly to what exactly caused Yelloh’s demise, but that it’s “very hard to sustain that business in a world where there’s more choice.” Mr. Johnson said he’s seen other frozen food companies that operated on a similar model change their practices to fit changing consumer demands.
Without innovation in both the product and business model, he said, a rebrand like the one Yelloh underwent was just a “fresh look or a fresh name for maybe a dusty business.”
“This morning I sat down to start working at 8:30, I ordered my Whole Foods delivery and it just arrived three hours later,” Mr. Johnson said. “It included a couple of frozen pizzas and some other foods and some frozen chicken nuggets for my kids. I can’t imagine a world where there is also a frozen food truck delivering to my house.”
An expired business model
Mr. Ziebell disagreed with the notion that the company had stagnated as it aged, adding that it was among the first to launch a retail website. The company experimented with different strategies, including by adding a direct ship option. It added health-conscious options and leaned heavily into digital marketing, but it still wasn’t enough.
“I don’t think there’s anything else we could have done,” he said.
David Hall, a regional vice president for Yelloh who worked for the company for 29 years, agreed with Mr. Ziebell’s assessment, adding that the company had simply “outran the business model.”
“The business model with the equipment that we had was not sustainable,” he said
“We took the milkman route and we innovated it better with the home delivery route with frozen food,” he said. “Uber Eats, Instacart have taken it to another level of delivery.”
A family affair
Kirby Schmidt, 33, would not exist if not for Schwan’s. His parents met while working there: As he tells it, “freezer guy meets the secretary.” His father, who happened to be born on the day the company was founded, would go on to work for Schwan’s for over 40 years. The Schmidt kids were raised on a diet of home-cooked meals with an added dose of Schwan’s treats. Mr. Schmidt can still taste the delectable flavors of a bagel dog (a cheese-filled beef frank wrapped in a poppy seed bagel) and feel the burn on the roof of his mouth when its filling would burst out like molten lava.
Yelloh’s closing was “the loss of an icon,” Mr. Schmidt said, calling it the “epicenter for community and economic development in southwestern Minnesota.”
His parents, Dale and Lila Schmidt, ordered from Yelloh until they couldn’t anymore. Their last delivery came right around Halloween. The couple said they stocked up ahead of the company’s closing.
Mrs. Schmidt, who grew up eating Schwan’s ice cream, said she fondly remembers when the truck made it out to the farm where she was raised. She and her family would tuck into a can of vanilla ice cream with a fork, dishing it into bowls and smothering it in Hershey’s syrup — “that was heaven on Earth.”
“They gave us so much as a family,” Mr. Schmidt said. “They gave so much to the community.”
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