This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Omaha Steaks: Carving Out a 21st Century Sales Model

Omaha Steaks even created a line of pet treats, including a pet-safe jerky and a "canine cookie" treat.

"Many people will spend more money on their pets then they will on their children. We felt like we needed a couple of offerings," Simon says. "It's a novelty within our line that helps us address customer need."

What's also appealing about Omaha Steaks products is that consumers can choose their portion sizes.

"In the case of a place like Costco they're typically selling a big bulk package, whereas we can offer a very consistent individually portioned aged steak. [Our products] require a lot less work on the part of the customer," Simon says.

Right now, though, the company's biggest issue isn't the value of social media, competing against the grocery giants, catering to a more health-conscious society, or whether it should launch a wasabi-seasoned pet-safe jerky (in reality, pet jerky tends to be less seasoned, less salty.) What it can't ignore is increasing commodity prices. The severe summer drought that has caused an unprecedented increase in corn and soy prices means that no matter how good the company is at marketing and planning, the economics of the business are likely to change.

"This drought is creating some issues with supply and demand. In the near term, maybe most of 2012, we will see beef prices moderate a little bit, but as we get into 2013 we will see prices go back up. The growers will have taken a lot of their stock to market. And so supply will get tight," Technomic's Karp says.

Karp's outlook is in line with a recent report from the U.S. Department of Agriculture.

"The drought is really going to hit food prices next year," USDA economist Richard Volpe wrote. "It's already affecting corn and soybean prices, but then it has to work its way all the way through the system into feed prices and then animal prices, then wholesale prices and then finally, retail prices."

"The transmission of commodity price changes into retail prices typically takes several months to occur, and most of the impact of the drought is expected to be realized in 2013," Volpe said in a research note that accompanied the department's outlook.

The USDA expects food prices will accelerate past other consumer costs through the end of 2013. Beef prices will rise by 5%. Overall, the USDA reports food prices will rise by up to 3.5% in 2012 and by up to 4% in 2013.

Omaha Steaks intends to keep pricing the same, even as the supply of beef declines. "We intend to continue to be as selective as we always have in sourcing and producing our beef, so that we remain the 'go to' premium beef company in the market," Simon says.

Simon family's future stake

Omaha's most famous succession planning discussion may be about a man who has a healthy love for family run businesses just like Omaha Steaks: Warren Buffett, chairman and CEO of Berkshire Hathaway (BRK.B). But succession is a big discussion for Omaha Steaks as well. Today there are currently four Simon's in executive positions: Todd's father Fred, as executive vice president; his uncle Alan as chairman; and his cousin Bruce, who is the president and CEO of Omaha Steaks. The eldest of the sixth generation is just entering college.

While it is the hope that a Simon would always be a part of the 18-person senior management team, the family doesn't expect it.

"We are more interested in having the most talented people in all of the management positions of the company than we are in having family manage the business. That is just the appropriate way for a 95-year-old business to be perpetuating itself, " Simon says. "If a family member shows interest in being in the business it's not a forgone conclusion that they would ever reach a senior management level in the company. They would have to distinguish themselves the same way we would bring in somebody from the outside."

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to:

To follow Laurie Kulikowski on Twitter, go to:!/LKulikowski

>To submit a news tip, email:


Follow TheStreet on Twitter and become a fan on Facebook.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
4 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
COST $147.55 -2.60%
WMT $66.85 -0.51%
AAPL $93.06 -0.60%
FB $118.28 0.19%
GOOG $700.69 0.72%


Chart of I:DJI
DOW 17,705.19 +53.93 0.31%
S&P 500 2,057.39 +6.27 0.31%
NASDAQ 4,738.7260 +13.0870 0.28%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs