How Schwan’s frozen food delivery service rebranded as Yelloh and struggled to evolve — leading to its closure

Former employees and retail analysts said the company failed to adapt its business model, which was long focused on door-to-door sales, to compete in the more crowded food delivery landscape. The closure came after the company invested in reinventing its brand, changing its name in 2022 from its well-known Schwan’s Home Delivery name to Yelloh. Schwan’s hoped to become a more modern mobile retailer and made upgrades to its technology as it rebranded to Yelloh, with a new back-end powered by Amazon Web Services. But in 2023, following new investment from a private equity group, the company cut its once-nationwide footprint down to 18 states and laid off hundreds of people before shutting down for good this year.

Schwan’s Co., the family business of founder Marvin Schwan that was founded in 1952, had owned the delivery truck business as well as frozen-food brands like Red Baron, Tony’s, Pagoda and Schwan’s frozen foods. The Schwan’s truck business made a name for itself as a more old fashioned grocery delivery service where drivers would follow long routes to make home or neighborhood deliveries. But as other grocers began offering more modernized services and platforms like Instacart rose to prominence, Schwan’s business failed to adapt.

Over the past few years, the historically family-run company has had to find its footing as a standalone company after the family’s other businesses changed hands while also competing with newer delivery services.

In 2018, Schwan’s Co. sold an 80% stake to South Korean food company CJ CheilJedang for $1.8 billion, but the deal excluded the home delivery business. The family retained complete ownership of Schwan’s Home Delivery/Yelloh until New York-based investment firm 4×4 Capital invested in February 2023.

Terms of the deal with 4×4 Capital were not disclosed, but its influence at least showed through executive appointments. Alex Medicis, co-founder of 4×4 Capital, took on the role of interim CEO following former CEO Joe Kirby’s departure in late 2022, while Paul Schwan, Marvin Schwan’s son, stayed on as chairman. Bernando Santana joined Yelloh as chief customer officer in May 2023 and became CEO in December, according to LinkedIn. He was previously vp of Mexican retail for Anheuser-Busch InBev, where Medicis worked for more than 13 years.

Several years of big changes

A Yelloh spokesperson declined Modern Retail’s request for interviews, and it remains unclear what exactly caused this year’s closure, but former employees point to changes that may have harmed the business.

According to one telling, the decision to rebrand was a contentious issue. One former executive said chairman Paul Schwan was adamant about changing the name and updating its packaging over other improvements that would have been less expensive. Per this source, the company paid $15 million to change its name on the packaging, hundreds of buildings and thousands of trucks in 2022. The former executive said the Schwan’s brand was a well-known, trusted name — even if it may be confused with the acquired frozen foods business — but that Schwan wanted to change it to something aspirational and contemporary to attract new customers.

For decades, Schwann’s was known for its old-school delivery methods, especially for a route sales model where drivers would go door to door, often making long journeys in rural areas. Customers would place orders by phone or online, and the freezer trucks would show up in designated neighborhoods on certain days and times. It also offered a direct shipping service, which the former executive said the company should have focused on growing along with modernizing the route-sales model.

“There easily could have been close to a billion-dollar route-sales business and a $500 million mail-order business,” they said. “You had to evolve the model from the 1950s fully to the 2020s.”

More recently, Eric Buikema worked as a sales representative for a plant in Des Moines, Iowa, for just over a year until it shut down in July. He told Modern Retail in a message he was initially drawn to the company’s history and goal of creating long-term relationships with customers. But he said as the company made changes and closed locations nationwide, he grew more uncertain about the security of his jobs. He said customers would often complain that prices were higher and portions were smaller. Additionally, he said, more and more popular items would be discontinued, further impacting sales.

“They failed to adapt their business model to modern-day times and consumer behavior and demand,” Buikema said, adding his own thoughts on the business strategy. “I think that the route system needs to become more of a territory system where the driver runs a territory and not a route. That way, customers can order when they need something, which is the way modern consumer trends have gone.”

‘It’s just part of the changing landscape’

Brad Jashinsky, a retail analyst for Gartner, said rebranding an iconic name is always a challenge, especially as nostalgia has become a bigger part of culture. “But also, I think the nostalgia for that brand is probably a little further back than the kind of late ’80s, ’90s nostalgia that we see that’s so in vogue right now,” he said.

George John, a marketing professor at the University of Minnesota’s Carlson School of Management who has been at the university since 1987, said he remembers the trucks being more ubiquitous around Minneapolis until the past 10 or 15 years. “It’s kind of sad to see it go,” John said. “It was unique here, but I think it’s just part of the changing landscape.”

He said he didn’t know they rebranded to Yelloh until he read in the newspapers it was going out of business. John said he didn’t notice any advertising and assumed the company was relying on loyal longtime customers. “I don’t believe they were attracting new clients, younger families.”

The home delivery space has become more competitive, especially since the pandemic, from online businesses such as Instacart, DoorDash and Amazon Fresh, as well as delivery options from most grocery stores. 

Meanwhile, Yelloh was disadvantaged because it had a limited scope in what it sold, John said.

“When they’re trying to compete against a grocery store that signed up with Instacart, they’re going to lose every time on the breadth of items,” John said. “I think the competitive disadvantages were just so severe that they had to be much bigger or offer a much broader set of products; I just don’t think that was in the cards.”