"When you look at the Black Enterprise 100, you see exciting things happening all over the country," said Warren Anderson, president and sole owner of Anderson-DuBose Co."The challenge is that there isn't enough happening on a larger scale more often, so that a deal like this doesn't stand out."
LORDSTOWN, Ohio -- Anderson-DuBose Co., Ohio's largest minority-owned business, just got significantly bigger.
The Lordstown-based supplier of nearly everything you could order at about 500 McDonald's - as well as the paper products it's served in and the drinks to wash it down - has just bought the Rochester, N.Y.-area distribution center that serves 220 McDonald's on the western half of New York.
That deal has the potential to add another $170 million in annual sales on top of the $456 million in sales it raked in 2012.
Terms of the sale to Golden State Foods of Irvine, Calif., were not disclosed.
The transaction also may put Anderson-DuBose higher on Black Enterprise magazine's 2013 ranking of the nation's 100 largest black-owned businesses, coming out next week.
The company was No. 9 on last year's list, based on the $372.9 million in revenues it reported in 2011, and this year's winners were determined before the Rochester deal.
"When you look at the BE 100, you see exciting things happening all over the country," said Warren Anderson, president and sole owner of Anderson-DuBose, via telephone from the Lordstown facility he opened last June with plans to expand.
"The challenge is that there isn't enough happening on a larger scale more often, so that a deal like this doesn't stand out."
Not only does Anderson-DuBose supply nearly 720 McDonald's and 70 Chipotle restaurants in Ohio, Western Pennsylvania, West Virginia and Upstate New York, it also ranks as McDonald's third-largest U.S. operator in terms of geographic territory, revenues and number of eateries served.
Anderson said he is also the company's largest minority distributor in North America.
"McDonald's has been a leader among American companies that develop African-American business people on the franchise side, the supply side and within the corporate roles, as evidenced by the fact that the CEO of McDonald's is an African-American man, Don Thompson," he said. "McDonald's has been very aggressive in developing a diverse supply chain."
Tom Covelli, senior director of distribution and logistics at McDonald's Corp. said via email on Tuesday that "For more than 20 years, Anderson-DuBose has been a valuable partner to McDonald's USA."
"This acquisition gives McDonald's the opportunity to expand our business through a distributor that has consistently exceeded our expectations in food safety and service to our restaurants, allowing us to continue to extend fast, quality food to our customers."
The Anderson-DuBose Co.
Business: Supplies food, paper products, cleaning supplies and other necessities to more than 700 McDonald's in Ohio, Pennsylvania, West Virginia and Upstate New York.
Founded: 1991, by Warren Anderson and his college friend, Steve DuBose.
Headquarters: Combined Pittsburgh and Greater Cleveland distributorships into one $30 million facility at 5300 Tod Avenue SW, Lordstown.
Employees: 185 (not including 90 in Henrietta, N.Y.)
2012 Revenues: $456 million (not including New York acquisition)
Website: Anderson-DuBose.com
Anderson's company supplies restaurants with more than 800 items, from straws, mustard and ketchup packets to Coca-Cola syrup canisters and grill squeegees.
Just about the only things it doesn't supply are the grills, fryers and heavy kitchen equipment, and the McDonald's sandwich buns and English muffins, which are baked by New Horizons Baking Co. of Norwalk.
The company's total revenues also include income from Capital Beverage, an unrelated beer distribution business in Oklahoma City in which Anderson is a shareholder.
Tony Peebles, president of the Northern Ohio Minority Supplier Development Council, said beyond the impressive dollar figures, the bigger lesson for minority business owners and entrepreneurs is understanding how Anderson became the state's largest minority-owned business.
For black, Asian, Hispanic or Native American business owners, Anderson's story proves that having a solid business plan, a clearly identified market, and the ability to run a business in a focused and efficient way can pay off.
"He's got a good relationship with McDonald's because he executes and he delivers, no pun intended," Peebles said.
Anderson said he has spent years eyeing the Western New York territory, which includes Buffalo, Rochester, Syracuse, Ithaca and Binghamton, because it was adjacent to his own, but that "the owner of that business never had a reason to sell."
When Golden State bought another market in St. Louis that better fit the markets it already owned, the company approached him about buying the Rochester distribution center and territory.
The facility, at 41 Cook Dr., is actually located in the Town of Henrietta, a Rochester suburb. The general manager and about 90 employees are expected to stay, and Anderson isn't planning to consolidate operations in Lordstown.
"Rochester is a very well-run and high-performing distribution center within the McDonald's system, and the area has been and continues to be a very strong McDonald's market," he said.
Outside of the major cities, the New York region doesn't have the same density of McDonald's restaurants as Northeast Ohio or Pittsburgh.
Anderson-DuBose's success demonstrates why the State of Ohio was smart to invest in the business and its potential to grow, said Raland Hatchett, executive director of the Minority Business Development Agency Business Center in Cleveland, of the Greater Cleveland Partnership.
"That's a very, very positive outcome, not only for the state, but also for the job creation that was a stipulation of some of those tax credits," he said. "We're now starting to see some of the return" on the state's investments.
As an incentive to move to and consolidate in Lordstown, the company received a 75-percent tax break on its construction costs for the first 10 years, as well as $124,000 in job training grants and several million dollars in low-interest loans for creating 160 jobs.
Warren Anderson said he has already fulfilled the job creation part of those incentives.
Barbara Danforth, senior vice president of Ratliffe & Taylor, a human resources and executive search consulting firm in Independence, said that she is both thrilled for Anderson's success and sad that more minority businesses aren't similarly flourishing.
"The sad reality of Northeast Ohio is that because of unconscious biases, it is very difficult for minorities and women to advance significantly, whether inside a company or within an industry, because people tend to do business with people they know well or who look like them," she said.
"You can go to Chicago, you can go to Atlanta, or you can go to New York, and you will find many more stories like his," but that's not the case in Northeast Ohio, she added.
"So when anybody succeeds here, it is truly success against very many odds," Danforth said. "I am so proud of his success, but there should be more businesses that are growing at this rate," so his story becomes the expectation instead of the exception.
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