Muller’s UK foodservice arm may be facing cuts, after the dairy company announced that they are making a review of this “loss-making” area of the business.
There are up to 250 jobs which may be at risk, should the review find that the company is better off without them.
Muller has announced that they are launching a 45-day review and consultation period, in which they will take a closer look at the delivery business. Although it supplies fresh milk and other dairy products to around 3,000 business customers across England and Wales, it has been suffering around £5 million in losses year on year.
The review time will be spent on figuring out whether the foodservice customers will be better off served by another part of the Muller empire, or whether they should be looking for alternative providers. If they decide on shutting down this delivery arm, it could mean 250 food jobs are lost.
“While the Müller Milk & Ingredients food service operation is a very small part of our overall business, it is vital that it is profitable and viable. It is clearly unsustainable in its current format,” said Andrew McInnes, who serves as the current Managing Director at Muller Milk and Ingredients. “We would therefore like to take this time to assess the role and fit of this part of our business within our wider strategy for the future, and determine whether there are better and more sustainable ways to supply the needs of our smaller foodservice customers.”
The operation certainly does represent only a small part of their overall business: just 2% of Muller’s turnover comes from it. It was acquired just two years ago, as part of the Dairy Crest business, and it seems that Muller simply haven’t been able to get it to work since then.
The company has stated it will work hard to evaluate the business and figure out what will be the best possible course of action for everyone. They have pledged to think about not just the foodservice business, but also their customers and their employees. They do not have any indication of what their next steps will be, and will not release any further information until the review has been completed.
They also wanted to make it clear that their household and education business will not be affected by the review and consultation. This is managed by sister company Milk & More, and operates under different conditions, separate to the delivery service.
It seems likely at this point that they will decide there is no way to save their foodservice arm. If this is the case, then there will be a sudden need for food recruitment for a large number of people. The good news is that the consultation is likely to focus around ways to compensate workers for the sudden demise of the business, and also that there are a number of other food companies that are currently looking to expand.
It is not clear at this stage what exactly it is that has caused Muller to fail with their foodservice business. While their products may be selling well in stores, it’s clear that they have not been able to generate enough profit from their delivery service to cover the costs of running it. The margin is not a slim one, and efforts will need to be made to understand exactly what went wrong.
There is a small sliver of hope, of course, that the review will uncover the root of the problem – and offer a way to solve it.