A Wright City food distribution center will close in September as part of US Foods’ decision to acquire Hawkeye Foodservice Distribution.
Both companies last week announced an agreement was in place on the pending sale.
Karen Girondo, Wright City economic development director/treasurer, said the last shipment out of the local distribution center will be Sept. 28.
Hawkeye Foodservice has had a distribution center in Wright City since 2008 when it began occupying the former ALDI warehouse located at 401 E.S. First St. The existing warehouse, which was 24,000 square feet, was renovated and expanded to 70,000 square feet prior to Hawkeye Foodservice beginning its local operations.
Hawkeye has employed around 20 people at the Wright City facility. Girondo said some of the local Hawkeye Foodservice employees will be offered jobs at US Foods’ St. Louis facility.
US Foods will also be closing a distribution center in Danville, Ill.
Both companies supply dry, refrigerated and frozen food products to a variety of customers, including schools, restaurants and health care facilities.
The announcement of the upcoming closure of the Wright City facility came as a shock to city officials.
Girondo said she knew about the possibility of Hawkeye Foodservice being sold, but didn’t learn until last Wednesday that the local distribution center would close.
“They have no need for this one here,” Girondo said. “That is bad news. We always hate to lose something like that.”
Mayor David Heiliger said he was disappointed to learn of the pending closure.
“We are going to miss that company very much,” he said. “They are outstanding people. We knew they might be bought, but to be shut down, that was unforeseen.”
In March 2007, Wright City issued $7.5 million in Chapter 100 bonds to Hawkeye Foodservice and agreed to a 10-year tax abatement to entice the company to open a local distribution center. The tax abatement started at 50 percent in 2008 and then decreased by 5 percent by each year thereafter, according to city officials.
Girondo said the previous property owner, Clayton-based Frigid Joint Ventures LLC, has sent the city a letter of intent to purchase the building back from the city and redeem the bonds.
The city will sell the building to Frigid Joint Ventures for $1, Girondo said, as part of the agreement reached in 2007.
Though disappointed in last week’s announcement, Girondo did mention that she has talked to multiple food industry companies interested in a FDA food-approved building. Aside from the Wright City building, the only other similar facility in the region is the Tyson plant in Montgomery County, she said.
Based in Iowa City, Hawkeye Foodservice is a family-owned company with more than 4,000 customers and annual sales in excess of $200 million.
Meanwhile, Rosemont, Ill.-based US Foods is one of the leading national food distributors and is the 10th largest private company in the United States. According to a press release, it has more than 250,000 customers and offers more than 350,000 products.
The purchase will allow US Foods to expand its presence in the region. The Hawkeye Foodservice facility in Iowa City will be the company’s first distribution center in the state.
The transaction between US Foods and Hawkeye Foodservice is expected to close in Augusta. Terms of the deal were not disclosed.