Russell-Hendrix Merger Puts Company at the Top of the Supplier Food Chain

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Two leaders in the Canadian foodservice sector — Hendrix Hotel & Restaurant Equipment and Supplies and Russell Food Equipment — have merged to create a powerhouse in the industry. Under the banner of Russell Hendrix Foodservice Equipment, the new company is set to become the largest foodservice and supplies company in Canada, with a virtual monopoly in the business.

In 2015, Blue Point Capital Partners, a private-equity firm that partners with entrepreneurs and management teams investing in and growing lower middle-market companies, took ownership of Russell Food Equipment. Blue Point also acquired a controlling interest in Hendrix and recently announced the merger of Canada’s two main foodservice equipment dealers.

THE PLAYERS
Russell Food Equipment, based in Vancouver, B.C., has been offering equipment, supplies, parts and services to more than 20,000 foodservice operators across the country since 1938. It currently operates 14 distribution and three manufacturing facilities in Canada. Founded in 1981, Hendrix Hotel & Restaurant Equipment and Supplies is based in Brockville, Ont. Since its inception, the company has expanded nationwide with nine locations and three distribution centres, earning a reputation as one of the leading foodservice providers in Canada. The national headquarters for the newly merged company will be housed at Hendrix’s 93,000-sq.-ft. distribution centre on highway 401 in Brockville, between Toronto and Montreal, and with easy access to Ottawa and northern New York State. While some duplicate warehouses may need to be consolidated in some cities, it’s too early in the merger to say how staffing, logistics and operations will change.

A NATURAL FIT
The Russell-Hendrix deal was driven by a natural fit, according to Russell Hendrix CEO Larry Vander Baaren (who founded Hendrix with his father Hendrik). He says since Russell and Hendrix did not frequently compete with each other, the merger will double the new company’s customer base.

Vander Baaren believes the two companies have a synergistic relationship and the merger enables both companies to capitalize on its strengths. “Russell has developed many strong customer relationships over the years,” says Vander Baaren. “Its parts-and-service division has a presence across the country and its manufacturing division, Quest Food Equipment, builds high-quality cooking equipment and custom stainless-steel products. Also, over its 35 years, Hendrix has grown to become the largest commercial foodservice-equipment distributor in Canada in terms of sales volume. This merger was about seizing the opportunity to combine Russell’s attributes and its sales force with the growing Hendrix sales force.”

The merger also accelerates the combined company’s ongoing expansion strategy and further establishes it as the premier food equipment and services dealer in Canada’s top metro markets. “The combination of Russell and Hendrix is a highly strategic, value-enhancing step that brings together the unique strengths of two great companies to deliver best in-class capabilities,” adds Vander Baaren.

According to Blue Point spokesperson Mark Morris, a partner with the company, the combined company will be positioned as a market leader in the Canadian food equipment and service industry — more than four times larger than the next biggest competitor. “We expect this merger to be transformative for both companies, as it will position the combined, seasoned management team to considerably expand capabilities and achieve greater growth,” he says in a statement.

When asked about the impact of the merger on the Canadian restaurant industry, Vander Baaren says the Russell Hendrix merger will influence the market in a number of ways. “First, the increased regional presence (17 showrooms and four distribution warehouses) will give customers better access to Russell Hendrix’s services across Canada. Almost all of its showrooms have demo kitchens where chefs can test equipment or see live presentations of new equipment,” he says.

The merger also enables the new company to offer next-day service to 90 per cent of its customers across Canada — from Victoria B.C. to Halifax N.S.

The purchasing power of the new company ensures its entire product line will be competitively priced in every market.

“The Hendrix website and online-ordering capability already [made it] a leading site for the industry. This merger enables Russell Hendrix to invest significantly more to make the site even better as we anticipate website use will continue to grow dramatically as a way for customers to research products and place orders,” says Vander Baaren.

In addition, customers now have access to Russell’s line of large restaurant equipment, such as ranges and ventilation systems, not previously found with Hendrix. The two companies bring not just a wealth of resources, but also tried-and-tested approaches to business. “Russell and Hendrix have provided services to clients within the Canadian commercial foodservice industry. Both companies have a long history of providing equipment and supplies to any facility which prepares and serves food to the public — independent restaurants, caterers, multi-unit chains, stadiums, healthcare and delis,” says Vander Baaren. We are thrilled about the opportunities this merger will create for our customers, as well as our combined 600-plus employees and business partners.”

Volume 49, Number 12
Written by Sherene Chen-See

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