Oberweis Dairy is going through a rocky situation as it is laying off staff and going through bankruptcy. Here’s a closer look at the brand’s financial struggles.

The dairy company started over a century ago in 1915 according to its website. Its founder, Peter Oberweis, started by selling excess milk from a horse-drawn wagon. He officially named it Oberweis Dairy in 1930 and business boomed for several years. Today, they have over 40 locations in the country. Peter’s son, Jim took over from his father and his own son, Joe also took over from him in 2007.

Oberweis Dairy used to be the go-to brand in Midwest homes and a consumer favorite. However, the brand is currently going through Chapter 11 bankruptcy. According to various sources, the ice cream and dairy products brand owes over $4 million to its top 20 creditors. This is no small debt, as the company has no choice but to file bankruptcy now.

The company’s huge debt is shared across 20 creditors. Of these 20, Greco & Sons is the largest unsecured creditor. The brand owes them over $721,000! However, the ice cream comment does not only owe creditors. It also owes a lot of local taxes. According to reports, Oberweis Dairy owes the Cook County treasurer more than $173,000 in taxes.

The dairy company’s financial struggles have been piling up for years. As of 2024, Oberweis has secured a bank debt of approximately $14 million dollars. Before this, the president of the company, Adam Kraber, gave a brief speech in which he noted that the company was facing “increasing financial challenges.” Now, people wonder how exactly the company found itself in this tough position.

Oberweis Dairy’s decline started from the implementation of flawed strategies that were intended to help the company. For example, a report by The Chicago Tribune showed the company’s shift into Asian markets and a change to amber-colored milk bottles. However, these did not have the desired effects and backfired. The customers started to prioritize other products, leading to a huge setback for the company.

As their sales declined, the company tried to implement a couple of strategies to save them from possible bankruptcy. They cut costs by millions, but this did not help matters. Eventually, the owners of the company, Jim and Julie Oberweis, had to consider selling off the company. With heavy hearts, they began to search for someone to buy their company and save it.

A lot of things were happening even as they were searching for a new buyer. Joe Oberweis, who has been in charge for over a decade, decided to step down in May 2023. He confirmed this almost a year after saying, “I left about a year ago and am not involved.” The company also collaborated with Livingstone Partners to try to find buyers, but to no avail.

There is a huge gap between the state of the company during and after the COVID-19 pandemic. Sources say that the home delay service boomed during the pandemic which made the company’s revenue peak at $116 million that year. However, the post-pandemic years have been harsh and revenue has dropped significantly. In 2023, the company’s revenue fell to $95 million.

Without a doubt, the company’s currentl financial status is going to affect a lot of people. The Daily Herald reports that Oberweis Dairy plans to lay off 127 employees at the North Aurora facility. This will go into effect on June 11th, later this year, showing the significant changes that the company has to make to try to keep the company afloat.

The changes in Oberweis Dairy’s operations will inevitably lead to store closures and loss of jobs. At the company’s main facility in North Aurora, layoffs and reduced business activity will also have a huge impact on the economy. This will also affect local businesses and services as Oberweis has been their economic anchor for years, keeping their sales running as well.

Since the company has filed a Chapter 11 bankruptcy, the U.S. court allows Oberweis Dairy to try to reorganize itself and try to regain its financial stance without total cessation of operations. This way, the business can continue to run while the creditors that they owe wait for them to start making profits to pay them off little by little.

The company has no choice but to go back to the drawing board now. To help the business get back on a good track, it needs to invest in financial management, restructuring, and product innovation and make significant strategy adjustments. It may embrace new trends like producing new flavors and products to try to increase sales and improve its marketing tactics as well. Therefore, the only question is, can it make it work?