Nestle SA’s U.S. unit will lay off about 4,000 workers as it stops delivering frozen pizza and ice cream directly to stores and instead transitions to a warehouse model that’s becoming an industry standard for major food companies looking to trim costs.
The company said May 7 that it is shutting down its direct-to-store delivery network for products such as DiGiorno and Skinny Cow, beginning in the third quarter. The change, announced at a shareholder event in Arlington, Va., means the elimination of an operation that now includes 230 facilities, 1,400 trucks and 2,000 different routes.
The unit was able to reduce costs but, ultimately, the direct-to-store model was too expensive even once the company “reached the maximum point of efficiency,” Steve Presley, CEO of Nestle USA, said. “You can’t have that duplicative cost in the structure.”
The U.S. unit employs about 48,000 people, according to a spokeswoman. So the cuts represent about 8.3% of the workforce.