WINNETKA, IL — Winnetka’s largest property owner is set to take over the bankrupt Oberweis Dairy and its chain of ice cream stores.
Family-owned Winnetka private equity firm the Hoffmann Family of Companies, through its Wilmette-based investment arm Osprey Capital, was the top bidder for the west suburban family-owned dairy at bankruptcy auction Wednesday.
The undisclosed, winning bid, which now requires a sign-off from a bankruptcy judge to be complete, was somewhere north of $20 million.
Hoffmann was founded by billionaire David Hoffmann, who spent time on a dairy farm and whose father drove a milk truck when he was a child in Missouri. He stepped down as CEO in 2022 and named his two sons, Geoff and Greg, as co-CEOs.
“We are thrilled to write the next chapter of the company’s story with the wonderful employees at Oberweis Dairy,” Geoff Hoffmann said in a statement. “Their dedication and passion for delivering exceptional dairy products align perfectly with our values.”
Oberweis Dairy was founded in 1927 and opened its first ice cream shop in Aurora in 1951. It opened its North Aurora headquarters and plant in 1996.
In 2007, Illinois Republican politician Jim Oberweis turned the company over to his son Joe, the fourth generation of Oberweis to lead the dairy. He resigned in May 2023 and the family hired a firm to manage the sale of the business in October 2023. Last month, the company filed for Chapter 11 bankruptcy protection.
“At Oberweis, we, like many companies, have been forced to make some very difficult decisions related to the structure of our company,” company officials said in a statement. “These difficult decisions are always made with full consideration of other options and with an eye towards the best future of our company.”
Adam Klaber, who was promoted from Oberweis’s chief operating officer to president earlier this year, detailed the various challenges and missteps that brought down the dairy in a declaration in support of the bankruptcy petition.
They include an ill-fated expansion into Asian markets, ineffective marketing, inexperienced managers, inadequate investment and underutilization of its manufacturing facilities, poor cost management, unpopular amber bottles and a failure to respond quickly enough to the increasing popularity of organic milk and plant-based dairy alternatives.
Kraber said the dairy’s move into home delivery during the COVID-19 pandemic led to an increase in revenue from $79 million in 2019 to a record $116 million in 2020. The company received a $5.67 million federal coronavirus relief loan that year, which was forgiven in 2021.
The dairy then invested in expanding its delivery business into steaks and seafood and spent heavily to try to gain new business in Texas, buying a fleet of delivery trucks and a new production line to produce milk in smaller, quart-sized glass bottles in addition to the company’s signature half-gallon glass offerings, according to Klaber.
“Unfortunately, many of these uses of capital proved to be ineffective,” Klaber said in the April 15 declaration.
“Instead of boosting sales, the expansion of the Home Delivery Segment’s product line diluted the [Oberweis Dairy’s] reputation as a seller of premium dairy products,” he said, “the new delivery routes did not add nearly as many customers as expected; and many of the new delivery trucks, milk crates, and bottles sat underutilized, including many of the new quart-size bottles—approximately $100,000 of which still have not been used.”
Hoffmann, which is known for acquiring family-owned businesses, is expected to keep Oberweis’s current management team in place.
Company officials said they planned to make “strategic investments” throughout the dairy, including efforts to streamline operations and expand capabilities of its North Aurora plant.
In a statement after Wednesday’s auction, Klaber said company officials looked forward to the future with Hoffmann.
“Our exceptional product set, accompanied by a brand that stands for quality that is second to none, is the foundation for our team members and company to write its next chapter,” the company president said.
In addition to the North Aurora production facility, the dairy operates 40 stores across four states. Nine of those ice cream shops also include a “That Burger Joint” or “Woodgrain Pizzeria” store inside the same buildings.
As part of its bankruptcy filing, Oberweis had to issue a notice of possible plant closure to its employees at its plant.
“A heartfelt thank you to the team members at Oberweis who stuck with the company through this difficult period,” said Geoff Hoffmann, who intends to keep the plant running. “Together, we will build a stronger, more resilient future for Oberweis Dairy.”
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