By Jennifer Williams

Mama's Creations, a food supplier that delivers to giant retailers like Costco Wholesale and Walmart, has been on the hunt for deals. It completed one this month that brings the potential for more customers and the ability to make meatballs and other items faster and at a lower cost.

While companies in the food and beverage space are breaking up, Mama's sees dealmaking as the key to hitting its goal of $1 billion in revenue by 2030. The company has been on the lookout for potential targets, but a challenging market and the splintered fresh food space made it hard to find the right ones, according to Chief Financial Officer Anthony Gruber.

"It's so fragmented in this business that we were having difficulty finding some of those [deals] that are meaningful to us," Gruber said. Smaller businesses are less appealing as the company grows and looks for acquisitions that meaningfully add revenue and sales, he said. "But we want to be the one-stop shop."

A $17.5 million deal to buy ready-to-eat meal manufacturer Crown I Enterprises from food service distributor Sysco is a step in that direction, he said, noting that an opening surfaced between six and nine months ago to pursue it. The tie-up includes Crown's 42,000-square-foot facility in Bay Shore, N.Y.

Shoppers are choosing fresh deli prepared food items as they look to cut their spending on eating out. For the 52 weeks ended Sept. 7, deli department sales in dollars and units grew by a larger percentage compared with a year earlier than other grocery departments, including frozen, general foods and bakery, according to market-research firm Circana.

It's also a fractured space. Retailers often have a slew of suppliers to satisfy their fresh food needs, using for instance one supplier for soup, another for grilled chicken products and a third for potato salad, analysts said. East Rutherford, N.J.-based Mama's aims to expand its offerings in the fresh food space and to increase its 2025 fiscal year revenue of $123.3 million by more than eightfold in the next roughly five years. Before the Crown deal, the company last expanded in 2021 with the acquisition of olive products and prepared salads and meats companies.

Crown adds around $56 million in annual revenue from sales of ready-to-eat meals and meat options, according to Mama's.

The deal also solves some equipment challenges. This time last year, for example, making Mama's cheese-filled chicken meatballs often meant loading the needed machinery onto a truck for a more than 90-minute commute between factories in New York and New Jersey. As the company weighed buying an additional meatball stuffer, which speeds up the process of filling the meatball, another option emerged in Crown. The deal adds a third filler to the existing two, which the company hopes will eliminate the need to cart machinery back and forth between the company's facilities.

The purchase of Crown also includes a meat shredder, a machine used to cut up cooked chicken. Mama's had plans to buy another, which executives have said is costly and time-consuming, but those were put on hold because of the deal, Gruber said.

"As we advanced in the deal and saw the list of equipment, we decided to put those investments off to use their machinery," according to the CFO. The machinery saves "hundreds of thousands to single millions of dollars, " he said, declining to provide specific figures.

There is also the potential for new customers. Crown's top three or four retail customers have historically been impossible for Mama's to penetrate. "They're very difficult to get into," Gruber said. "We couldn't get appointments before to actually speak with them. Now we have a way into that channel, into those retailers."

The deal doesn't guarantee that Mama's will supply to this handful of retailers, which Gruber declined to name, but there's now an opening that didn't previously exist. Mama's expects the deal to broaden its sales base by nearly 40%.

Because the fresh deli prepared foods space is so fragmented, "the path of least resistance" for growth is to consolidate, even as others in the food space are divorcing, said Eric Des Lauriers, a senior research analyst at investment firm Craig-Hallum. For the analyst, the Crown deal misses on two of the company's goals. Executives have been aiming to move farther west to cut down on freight costs to certain locations and have talked about moving into new food categories such as sushi, pizza and soup.

But the tie-up strengthens the existing business before Mama's expands into those areas, according to Des Lauriers. "It wasn't on the West Coast, but it's actually right next door" to where the company now operates, he said. "You didn't get sushi, but you doubled down on your existing food portfolio and are now able to offer more premium offerings."

Write to Jennifer Williams at jennifer.williams@wsj.com

(END) Dow Jones Newswires

September 30, 2025 06:00 ET (10:00 GMT)

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