Last updated on June 13th, 2024
Thom Lipari is president and CEO of Warren-based Lipari Foods. His father, Jim, started the company in the 1950s by distributing unique products from the back of his Ford station wagon. Thom came on board in 1971. Today, Lipari Foods operates a central distribution center in Warren, the largest suburb of Detroit. From that facility, the company’s 530 trucks deliver to 14 states—from Michigan’s Upper Peninsula down to the Florida peninsula. Lipari spoke to The Shelby Report about Michigan, Detroit and recent developments at Lipari Foods. The Q&A has been edited for content, clarity and space.
The Shelby Report: Tell us about your operation. Lipari “owns the perimeter” of the store, and that’s certainly popular these days. You were maybe ahead of the curve on that.
Thom Lipari: We’re fortunate. We’ve been in it a long time, and that’s been our model for a lot of years. Now, with the Millennials and the younger generations looking more for fresh and natural products, it seems like the new consumers coming into the market are really moving more toward the perimeter of the store. We’re fortunate we are in the right place and we’ve got a lot of expertise in it. It’s working out really well.
Tell us about the state of your company today.
Lipari: We’re in a pretty fast growth mode. The advantage we have over others in the grocery industry is that we are sales-focused, with 300 to 350 salespeople on the street every day. We’re constantly knocking on doors.
How do acquisitions fit into your business plan? The company has made several lately (to name a few: Dairy Fresh Foods, Taylor, Michigan; the specialty and gourmet business of Leo A. Dick & Sons Co., Canton, Ohio; and Jim’s Cheese, Waterloo, Wisconsin).
Lipari: Acquisitions are a pretty big part of our strategy. There are different reasons why we acquire companies. Sometimes it’s to take us into a new geography. Sometimes it is to take us into a new category that we’re not currently selling. Sometimes it’s to take out the competition. But each acquisition has a purpose and a plan. We’ve been able to find acquisition targets that fit. It can be a situation where the owners are looking for an exit strategy, who maybe don’t have a succession plan or don’t want to continue in the business. So, instead of just closing the doors, we give them a way to get out with good terms. Most have worked out really well for the owners, which is a good thing. And it’s worked out well for us because it helps us grow our business.
Your distribution model is unique. Tell us how it operates.
Lipari: Our model is that everything ships out of one location here in Warren to 14 states. It is built around being able to take an order until about 3 (p.m.) and then to deliver to all of those states by the next morning. Most of our deliveries are next-day, so we have a fairly elaborate logistics system in addition to being a sales company. The trucks leave here during the night and the trailers are taken to local depots throughout the different states. We have people that live right in that area—the salespeople and the drivers live right in that market, so then they do the local delivery and the local selling. We’re feeding everything out of the one location, which really works well for us because we deal in a lot of perishable products.
Why does one location work so well?
Lipari: Instead of having multiple warehouses and product sitting in them, we can offer a lot more products—we’re stocking about 25,000 items now—to all of our customers at any time. And with the perishability of a lot of the products, it gives us the ability to really turn it quite a bit with that kind of volume running through here, so we can keep it really fresh.
Tell us about the new national brand, Inspired Organics.
Lipari: We’re pretty excited about Inspired Organics. The brand rolled out at our show in April and we just started shipping it in June. It’s really catching on fire. The Inspired Organics team has done a great job of developing the label and the packaging for the products.
Was this in response to independent grocers wanting to offer these types of products to their customers?
Lipari: The brand was developed so that an independent can have a brand of product that’s high-end, high quality and can be merchandised throughout a lot of the departments across the entire store. Many brands will either bring new products to the dry shelf or they’ll be in the dairy case or in the deli. Inspired Organics has products across five or six different categories. And the response has been tremendous from our customers at this point.
How many products are now in the line?
Lipari: The brand rolled out about 70 to 80 items initially. The challenge now is making sure that we’re getting all the new items in. The plan is to have about 140 items by the end of next year. The ultimate goal is to have about 300 items total in the line when they’re all developed and rolled out.
Tell us about developments down in Florida. How long have you been delivering product there?
Lipari: We’ve been in Florida a few years now. We just this year decided to really make a big effort down there. We’ve got three or four salespeople in the Florida market now. We’re hoping to find an acquisition down there that we can use as a base. Right now, we are shipping out of the Warren facility. The plan is to build up that southern market, as it is a little bit out of the reach of our current model. We can make it work and it’s working fairly well now, but we’re not able to do that next-day delivery. It is a two-, two-and-a-half-day lead time. Once we can build up enough business, we’ll put a facility there and basically run it off the same model. But our plan is to hopefully develop the operation down in the South similar to what we’re doing here in the Midwest—to have one warehouse servicing multiple states with our perimeter-type products.
Give us your impression of the economy in Michigan and in your area, around Detroit.
Lipari: Michigan is on fire. On fire. Detroit is back. No matter what they tell you, Detroit is back. I’m going to tell you a funny story. I had some friends/business associates who came in from Atlanta. I had them in downtown Detroit and we went to dinner. All they could talk about was how they couldn’t believe what it is like in downtown Detroit—how much life there is, how many people walking around, all the activity—and how it’s so different than what they hear from the national media and everybody’s perception of Detroit.
And you were there, standing your ground, watching all of this happen.
Lipari: Downtown Detroit has really come back. It’s just amazing. There’s all kinds of construction. Young kids are moving down there. It’s coming back to the great city it was at one time. And that just carries over through Michigan. I think we’ve gotten past the auto industry issues that we’ve dealt with. The economy has changed, and business is doing really great here. Our customers are doing well. As long as the economy keeps plugging along the way it is, I think we’ll be in really good shape.
Anything else you wanted to say about the economy in your area?
Lipari: You’ve got to vacation in Detroit. We’ve got to get people coming to Detroit for a vacation, then we really turn the corner.
We saw that you are planning to turn Jim’s Cheese, a retail store in Waterloo, Wisconsin, that Lipari Foods recently acquired, into a production facility.
Lipari: Yes, part of our model is to have manufacturing that supports the distribution network. Jim’s Cheese was an opportunity that came about and we were able to acquire it. The idea is that it will be supplying Lipari Foods and we’ll also be supplying other customers. They had the production space and they also had a neighborhood store and a little restaurant there. Our plan is really to increase the production out of that facility, so we’re in the process of doing that.
What else is happening with Lipari Foods that you can share?
Lipari: Everything is going well. At the end of last year, we opened an addition on our current campus. We had about 250,000 s.f. in our original building, and as we were growing, we were leasing space in different places. We’ve built on our campus a separate building, a 260,000-s.f. freezer building, so we now run out of a little bit over 500,000 s.f., and then we’ve got another couple hundred thousand square feet that we use for our manufacturing division. Besides selling fresh products, we also make fresh products. We’ve got a sandwich operation for c-stores where we make about 100,000 fresh sandwiches a week. We’re all about fresh.
Not too bad for a company that got its start in a Ford station wagon.
Lipari: That’s right. My dad had a great idea, and I’ve got tremendous people around me. We’ve had a really good run over the years. I can’t complain. And, just in closing, tell anybody who wants a great vacation to come to Detroit. It’s the place to be.
—Terrie Ellerbee, editor-Midwest
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