Cereal giant Kellogg Co. announced this week that it would alter its grocery delivery process and shutter 39 distribution centers across the U.S.
The Battle Creek, Mich., company did not divulge how many jobs would be cut as a result, but the Battle Creek Enquirer reported that the warehouses employ about 30 full-time workers on average — which meant that about 1,170 jobs could be in jeopardy.
Kellogg currently distributes its cereals and snacks through its own warehouse network, but the majority of its operations — including its Pringles, Frozen Foods and Morning Foods businesses — utilize grocers' warehouses instead.
The decision announced Wednesday would shift entirely to the warehouse model and exit the direct store delivery system. The transition is expected to be completed by the end of the year.
Officials said that the change would simplify its operations and reduce costs; resources could then be directed toward targeting consumers that increasingly shop online and at a wider variety of retail locations.
"Because our customers' and our own warehouse distribution systems have become more efficient and effective, we can now redeploy resources previously tied to DSD and direct them to the kinds of brand investments that drive greater demand with today's consumers," Kellogg chief executive John Bryant said in a statement.
Cereal and other packaged foods struggled amid changing consumer preferences in recent years. Kellogg reported a fourth-quarter loss of $53 million this week but its adjusted profit beat analysts' expectations.
Company officials told the Enquirer that the cuts "will not have a sizable impact on any one community."
"While this is the right move for the future of the company, it was a difficult decision because of the impact on affected employees," Bryant said. "We are doing everything we can to help our employees manage through this transition."
