W. H. Braum, Inc.

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W. H. Braum, Inc.

3000 N.E. 63rd Street
Oklahoma City, Oklahoma 73121
U.S.A.
Telephone: (405) 478-1656
Fax: (405) 475-2460
Web site: http://www.braums.com

Private Company
Incorporated: 1968
Employees: 100
Sales: $328.1 million (2004)
NAIC: 311511 Fluid Milk Manufacturing; 311520 Ice Cream and Frozen Dessert Manufacturing

W. H. Braum, Inc., is a family-owned company based in Oklahoma City, which operates a chain of more than 280 Braum's Ice Cream and Dairy Store outlets located in Oklahoma, Arkansas, Kansas, Missouri, and Texas. The stores are all within 300 miles of the company's farms to ensure freshness. The company is vertically integrated, controlling all phases of dairy production, store construction, and distribution of products. Braum grows its own corn and alfalfa, mixed with grain, to feed a herd of more than 10,000 dairy cows on seven farms comprised of some 40,000 acres. The Holstein cows are milked three times a day at a sprawling 35-acre complex, and the milk is processed at a nearby, massive state-of-the art processing plant into finished products: four kinds of milk, ice cream, sherbet, frozen snacks, sour cream, cottage cheese, and dips. The company produces 90 flavors of ice cream, and each store offers 27 regular flavors and a rotating mix of another 50 flavors. Braum refuses to inject the dairy herd with hormones or feed it antibiotics to increase milk production, preferring instead to control the feed mixture and other variables. Manure and other waste products from the herd are treated and used to naturally fertilize the crops, reducing the need for chemicals. A second farm houses a support herd where all the calves are born and housed in 3,000 individual hutches, and raised to maturity. They then join the milking herd and return to the support herd when they are ready to calve.

Braum also makes its own plastic containers for milk and cartons for ice cream; operates its own construction unit, which has built private roads and even a bridge; a cabinet shop to make furniture for the stores; and an in-house design unit, which produced the company's award-winning logo. In addition, Braum operates its own bakery, producing bread, buns, cookies, muffins, and other baked goods as well as ice cream cones and roasted almonds and pecans for sundae toppings. The company operates its own fleet of trucks, meeting all store needs with trailers that feature three temperature controlled zones—frozen, chilled, and dry—suitable for milk, frozen products, and fresh produce, meat, and baked goods. The retail units are part convenience store, part ice cream shop, part fast food restaurant. The fountain serves ice cream cones, sundaes, milk shakes, frozen yogurt, and other treats, while the grill offers breakfast items, hamburgers and other sandwiches, and salads. The stores' Fresh Market section offers milk and bakery products, as well as fresh produce and meat—a more recent addition. In the mid-2000s the company began building a beef herd to produce its own high-quality beef products.

1933 ORIGINS

The W. H. Braum company traces its heritage to Henry H. Braum, who in 1933 traded his farm for a small butter and milk processing plant in Emporia, Kansas. He soon began bottling his own milk and in 1940 added ice cream-making equipment. In 1949 he was joined by his son, William H. Braum, whose name the company would one day take. The younger Braum was well familiar with the operation by this time. "I started working for my father when I was 12 years old, helping with curb service," he told Dairy Field, in a 2001 profile. He continued to work for his father during high school in the early 1940s. Bill Braum then left home to attend the University of Kansas. He graduated in 1949 with a degree in Business Administration, prepared to play a more significant role in the running of the family business.

Henry Braum sold his wholesale dairy operation in 1952, deciding to focus on the retail ice cream business, which showed promise. A large number of local ice cream parlors and small chains sprouted up in the post-World War II years, as the parents of the baby boom generation looked for wholesome family activities. Braum launched a chain of Kansas ice cream shops under the Peter Pan name. His son Bill would take the company to the next level.

In 1957 Bill Braum bought out his father and took complete charge of the Peter Pan chain and the Emporia processing plant. Over the next ten years he expanded the chain to 61 stores and began the process of vertical integration by establishing a 1,000-cow dairy farm. He also built a new processing plant. The Peter Pan part of the business was so prosperous that it attracted the attention of a large wholesaler, who bought the retail operation in 1967.

TUTTLE MILKING FACILITY READY IN 1975

As part of the sale agreement, Braum was not allowed to sell ice cream in Kansas for the next ten years. He was not prevented, however, from operating in neighboring Oklahoma. Moreover, Braum kept his dairy herd and processing plant. Shortly after the Peter Pan sale, in 1968 Braum launched a chain of Braum's Ice Cream and Dairy Stores in Oklahoma. He wasted little time in establishing a strong base of operations, opening 24 stores in the first year alone. The stores were supplied with dairy products, ice cream, and other supplies from the Emporia facilities. It was not the most efficient way to do business, and after three years Braum opened a new processing plant in Oklahoma City in 1971. The dairy herd remained in Kansas for another four years, however. Then in 1975 a new milking facility was ready in Tuttle, Oklahoma, and the cows were relocated. Further vertical integration took place in 1978 when Braum opened a high-volume bakery in Oklahoma City. It would not only supply the retail stores with cones for ice cream, but other baked goods as well, including hamburger and hot dog buns for use in the grill and resale, and bread, cookies, cinnamon rolls, and muffins.

Braum continued to grow into the 1980s and expand its operation. Over the years it bought additional land near the Tuttle farm, on both sides of the South Canadian River, until the company owned property that was 15 square miles in size. Much of it was waste land and not fully developed when Braum acquired it. The Braum construction unit, when it wasn't building the milk barns and free stall barns, water treatment and waste treatment plants, and other farm facilities, made numerous improvements to the land, such as jetties on the river banks to stabilize the sandy banks during seasonal flooding. The unit also helped to construct a 200-yard private bridge across the South Canadian River, providing the company with access to fields and operations separated by the water. Moreover, the bridge relieved the public roads of Braum's large farm machinery and other vehicles.

COMPANY PERSPECTIVES

Braum's is unique in the dairy industry because it is vertically integrated. Braum's "cuts out the middleman" by owning its dairy herd, farms and ranches, processing plant, bakery, retail stores, and delivery trucks. Braum's can offer its customers the highest quality products at the lowest possible prices.

In 1987 to accommodate increasing demand for Braum's dairy products, the construction crews built a new state-of-the-art processing center, 260,000 square feet in size. Here the company was able to control all facets of milk processing and dairy product making. Milk was shipped in tankers from the milking barns, where cows were milked around the clock, seven days a week, 400 at a time. The milk was processed and bottled, the half-gallon and gallon containers made on the premises, then made ready for shipment. All told, milk went from the udder to store coolers in about 36 hours. In the 1990s skim milk became Braum's specialty, processed through a mechanical vapor recompression system that removed water to increase solids. As a result the milk had more body and flavor and contained more calcium and other nutrients than most skim milk. The plant also produced ice cream and the containers in which it was sold to consumers as well as the 3.5 gallon boxes that held the ice cream served at the stores' soda fountain. In addition, an on-site bacteriological lab handled all product testing. The company's desire to control as many aspects of quality was also demonstrated by the incorporation of a banana ripening room: The bananas were brought in once a week and ripening was controlled with ethylene gas.

The new plant also took measures to maintain sanitary conditions. Because overhead pipes and conduit collect dust, in the new facility the lines for utilities, steam, water, ammonia, and compressed air were all placed under the plant floors. Moreover, an air filtration system was installed as a further way to keep the air fresh and prevent contamination of ice cream and other products exposed to the air. The processing rooms were sloped from the middle to allow water to drain better when equipment was cleaned. It was then recycled to irrigate the fields, just as the manure from the cow barns was processed for use on the fields. Making sure that nothing went to waste was a hallmark of Braum. Controlling quality at every level, from cow to consumer, was another. As company spokesperson Andie Schwab encapsulated it for Dairy Field, "We milk the cows to make the milk to put in the ice cream we place on the cones we make in our bakery to put in our trucks to ship to our stores."

In 1989 the processing plant was expanded, adding 60,000 more square feet of warehouse space, and the processing area was expanded further in 1991. The facility was capable of accommodating 500 stores, meaning that Braum had built in extra capacity to accommodate future expansion of the retail chain. All of these additions to the operation were privately funded, the Braum family priding itself on not accepting government financing, including farm subsidies.

In 1993 the Braum construction unit added a new 35-acre milking complex; according to the company, this was the largest of its kind in the world. It included 17 free-stall barns, in which each animal of the 10,000-cow herd was provided with a four-foot by eight-foot cubicle and a bedding of straw on which it could lie down. The stalls were elevated so that flush water could keep the facility clean, and the barns were built on a three-percent grade to assist in regular flushing and cleaning. The manure was then flushed to on-site waste treatment plants and eventually made it to the fields where the cattle feed was raised. Again allowing for future growth of the company, the complex was built to be capable of milking 15,000 cows if necessary.

As Bill Braum passed retirement age in the 1990s, a third generation of the Braum family, son Drew along with his sisters, became involved in the running of the business. Drew rose to the presidency, although his father continued to serve as chief executive officer well into his 70s. The younger Braum, like his father, grew up in the business, learning it from the lowest ranks. In an interview with the Daily Oklahoman, he recalled, "I guess my first job was painting (cattle) feeders and fence in sixth grade, as a summer job. Forty dollars was what I made that summer. My first regular job was in eighth grade here in Oklahoma City, working at the store on Britton Road. I worked behind the counter dipping ice cream. You'd make $1 an hour dipping ice cream. Then I got to go to the loading dock, where you'd make $1. 60, so that was a pretty good pay increase."

KEY DATES

1933:: Henry Braum trades his Kansas farm for a milk processing facility.
1940:: Braum begins making ice cream to sell to milk customers.
1952:: Braum opens a chain of Peter Pan Ice Cream Stores.
1957:: Son William Braum buys out his father.
1967:: The Peter Pan chain is sold.
1968:: The first Braum's Ice Cream and Dairy Store opens in Oklahoma.
1975:: The Braum dairy herd moves from Kansas to Tuttle, Oklahoma.
1987:: A new Braum milk processing plant opens.
1993:: The company builds a new milking complex with capacity for growth.
2005:: Braum stores begin carrying fresh meat and produce.

NEW CENTURY, SAME PLAN

As Braum entered the new century it continued to grow at its own pace, refusing to locate stores more than 300 miles from its farms to maintain high quality. All revenues came from the stores. Over the years, wholesalers and supermarkets approached the company about carrying their products, but the Braum family was not interested in selling outside of their retail operations. Moreover, people occasionally asked if they could buy stock in the company, but going public was not in the family plan. "I'd hate to go to stockholders and say I spent this much money and here's my return on investment," Drew Braum joked to a group of Oklahoma City Rotary Club members in a 2005 presentation. "I would be unemployed." He did admit, however, that there was some talk of franchising. Nevertheless there were no franchising plans in the works. Instead, the company was looking to expand its store offerings. In 2005 Braum introduced its "Fresh Market" concept, adding fresh meats, fruits, and vegetables to its store. It was a natural progression for the company, and as in the past, Braum moved to gradually assume control of production as much as possible. To that end, the company began to build up a beef herd to supply the stores with its own beef.