J&J Snack Foods cut its haul 40% by building three regional distribution centers
Three new distribution centers shipped 81% of sales orders a year in, cut average haul 40% and lifted on-time performance from 74% to 87%.
What was changed
In January 2023, J&J Snack Foods — the maker of Dippin' Dots, Superpretzel, Icee and Luigi's Real Italian Ice — outlined a plan to build three geographically optimized distribution centers to simplify its warehouse network, moving away from heavy reliance on third-party logistics partners. By May 2024 all three were running: Terrell, Texas opened in July 2023; Woolwich, New Jersey in January 2024; and Glendale, Arizona in May 2024, with capacity for 13,000 pallets of frozen product.
The payoff arrived within a year. On the May 7, 2024 earnings call, President and CEO Dan Fachner said 81% of sales orders were now shipping from the new network, versus 26% a year earlier. Average length of haul fell more than 40%, and on-time performance improved to 87% from 74%. He described that phase of the supply chain transformation as already 'exceeding expectations.'
The network build-out sat inside a broader operational push: six new production lines and two new frozen-novelty lines let the company make similar products in different locations, generating freight savings, while better automation at the new centers lifted output metrics. Having historically shipped much of its stock through 3PL partners, J&J planned to close additional 3PL centers within three to six months and was fine-tuning another self-owned facility for the Florida market.
Why it worked
J&J historically relied on third-party logistics partners to ship much of its stock, leaving distribution costs and service levels outside its own control.
Three regional centers put frozen inventory geographically closer to customers, cutting average length of haul by more than 40%.
Moving from 26% to 81% of orders on the new network turned distance savings into service: on-time performance rose from 74% to 87%.
The company targeted distribution costs of 10% of sales or lower, down from 12.3% in the most recent quarter.
What can be applied
Distribution is a geography problem before it is a cost problem: putting three cold-storage centers where customers actually are shortened every haul and paid off in service levels.
Aftermath
With all three centers operating by May 2024, J&J Snack Foods kept pushing distribution costs toward its 10%-of-sales goal, planned to shed additional 3PL centers within three to six months, and was fine-tuning a fourth self-owned facility for Florida. The regional distribution model became the platform for the rest of its supply chain transformation.