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Wednesday, Mar 22, 2023

Recipe for Success

Golden State Foods Still Growing After 75 Years

What is the key to celebrating three quarters of a century in business?

Mark Wetterau, who is only the third chief executive in the 75-year history of Golden State Foods, has a relatively simple answer.

“It’s just outstanding culture,” Wetterau told the Business Journal during an exclusive interview at the company’s Irvine headquarters.

“Culture is so important—what we represent, what we stand for. It’s the most powerful piece. Without the culture, the strategy and structure would not be as strong and as impactful.”

Golden State Foods is back in growth mode after seeing its annual sales fall from about $7 billion to around $4.5 billion in 2019 after shedding units that supplied its longtime customer McDonald’s Corp.

Golden State Foods, which employs a workforce of 6,240 globally, is Orange County’s fifth-largest private company by revenue. The Business Journal’s annual list of the county’s largest private companies estimates sales climbed 11% to $5 billion at the food manufacturer and distribution and should grow about 14% to $5.7 billion this year (see list, page 32).
It has operations in more than 50 countries on five continents. It services 125,000 stores at more than 200 well-known brands such as KFC, Taco Bell, Pizza Hut, Chick-fil-A and Wendy’s.

“You go into any of these quick-service restaurants, a lot of the products inside those restaurants, our folks have had a part in developing and creating,” Wetterau said.

The company, which helped develop famous recipes such as McDonald’s Big Mac sauce, has 11 innovation centers around the world to create new ideas for their customers’ menus.

“There are a lot of sauces that you can give us credit for but it’s not something that we want to talk about because when we develop these products exclusively for those customers, we’re behind the scenes,” Wetterau said.

“Our rewards are being able to process the products and deliver them.”


McDonald’s Handshake

Golden State Foods, often known as GSF, dates to 1947 when Bill Moore began selling meats out of his house to Los Angeles restaurants and hotels.

Business picked up in the 1960s when Moore developed a close relationship with Ray Kroc, who founded McDonald’s System Inc. in 1955 and then bought the name and operating rights to McDonald’s Corp. in 1961; he worked at McDonald’s until his death in 1984, according to the company website.

As that chain grew, so did Golden State Foods.

Besides the Big Mac sauce, it helped roll out numerous signature products, such as the Triple Thick Shake syrups, McNugget dipping sauces, McDonald’s brand ketchup, and flavored coffee syrups.

In 1976, Moore relinquished the CEO role to Jim Williams.

Wetterau started his career in 1980 with St. Louis-based Wetterau Inc., a family-owned food maker and distributor founded by his great-grandfather in 1869. He rose through the ranks to become chairman and CEO of Shop ‘N Save in 1987 and then president and chief operating officer of Wetterau Inc., which was sold for $1.1 billion in 1992 to Minneapolis-based SuperValu Stores Inc. Then he, his brother Conrad Wetterau and former Wetterau Inc. associate Mike Waitukaitis went on to form Wetterau Associates LLC to buy and manage businesses.

Their two biggest investments became Anheuser-Busch Cos.’s largest independent distributor in Massachusetts, and Golden State Foods, which the company bought in 1998 with help from Ron Burkle’s Yucaipa Cos., who was bought out in 2004.

Wetterau chose to buy Golden State Foods—which relocated from Pasadena to Irvine in 1992—because “we loved tying ourselves to one of the best in the industry.”

“McDonald’s was doing an outstanding job. That organization managed to stay focused on the customer itself.”

Golden State’s business kept growing as it expanded to other fast-food restaurants like Starbucks and new geographies such as China, Australia and the Middle East.

After McDonald’s decided to consolidate its suppliers, Golden State in 2018 sold much of its McDonald’s distribution-related businesses.

Golden State used the cash from the sale of those units to increase its investments in manufacturing and logistics such as a new liquid products plant in Texas, the expansion of a Georgia facility and a new factory in New York.

As part of its growth strategy, GSF also supports its customers in China, acknowledging ongoing supply chain woes.

“It’s extremely difficult for all of us. The time lapse for ingredients from Asian markets has increased significantly,” Wetterau said. “Stabilization is getting closer. Sometime by end of year, things will start to get better. It will take another 18 months to get back to prior levels.”


Five Main Businesses

Golden State Foods now has five main businesses: proteins such as hamburger patties; liquid products like syrups and condiments; produce; dairy such as ice cream and smoothies; and logistics.

It’s expanding into areas such as electric trucks, which is a “top priority,” Wetterau said. The company has ordered 45 Volvo electric trucks, most of which should be arriving within the year. The company’s Quality Custom Distribution unit has a fleet of 700 Class 8 tractors that make more than 1 million last-mile deliveries per year, averaging more than 35 million miles on the road annually.

“The willingness is there, but the technology is lagging,” Wetterau said. “We’re certainly going to stay on the forefront of this.”

The company is constantly evaluating whether to keep its headquarters in California, particularly when its leases are up for renewal.

While he called Orange County “fabulous” and “very special,” the state government “isn’t as business friendly as it needs to be.”

“We’ll be here as long as the state is being fair with our associates.”

Sales, which fell to around $4.5 billion after the divestiture, is now rebounding to “way north of $5 billion.”

“From a balance sheet standpoint, we’re stronger than ever,” Wetterau said. “We’re back in growth mode.”

The company has relatively low debt levels and is considering acquisitions when the time is right, he said, adding that no initial public offerings are planned. It has turned away new customers as it works on stabilization, he said.

“We’ve got to take a deep breath. We’re very cautious about taking on new customers.”

“The growth is very strong, in the double-digit range. It’s very important to make sure we’re satisfying the customers.”

Even though Wetterau has been in charge for 24 years, he doesn’t have plans to step aside any time soon.

“I love what I do, and if I can get in a few more years, that’d be fantastic,” he said.

“I’ll never disconnect from this company.”


The Golden State Foods’ Timeline


Bill Moore founds Golden State Foods as a beef supplier to Los Angeles restaurants and hotels.


Gets McDonald’s business on a handshake with Ray Kroc. Reaches
$2M in annual sales.


Earns new customers like In-N-Out, Disneyland; begins exporting to McDonald’s in Asia, South America and the Caribbean. Annual sales top $20M.


Sales grow to more than $337M annually. Helps refine McDonald’s famous sauces for Big Mac and Filet-O-Fish. First to implement “one-stop shopping” into quick-service restaurant format, revolutionizing the industry. Becomes exclusive supplier to McDonald’s. Jim Williams becomes company’s second CEO in 1976. Founder Moore dies in 1978.


Williams focuses on McDonald’s. Begins to make McDonald’s ketchup, McRib patties and sauce, McNugget sauces, and dressings for new salads. Sales surpass $1B in 1989.


Moves HQ to Irvine in 1992. Expands to Australia and Middle East with processing plant in Cairo in 1994. Sales reach $1.7B. Wetterau Associates and The Yucaipa Companies buy Golden State Foods in 1998. Expands to other fast-food restaurant chains.


Forms logistics unit. Starts charity that since has raised more than $60M for 600 nonprofits. Yucaipa bought out in 2004. Sales reach $4B in 2009.


Buys KanPak China in 2012 to expand into China and KanPak U.S. in 2013. Buys Groenz in 2013 and Snap Fresh Foods in 2014 to expand into New Zealand. Sales top $7B before selling nine of its dedicated distribution centers that catered to McDonald’s. Sales drop to $4.5B annually. Uses cash to further invest into other logistics and manufacturing areas of the business.


Sales growing at double digits, “way north” of $5B annually.


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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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