Former Schwan’s delivery service, Yelloh, shutting down after 72 years as a Minnesota business

Many Minnesotans remember seeing the yellow Schwan’s trucks driving through their neighborhood to deliver ice cream and steaks, door-to-door service in an era long before Instacart and Amazon.

The memories will live on, but the fleet is retiring.

The Minnesota-born food delivery company with the famed refrigerated trucks, now known as Yelloh, will shut its doors in November after 72 years in business, the company announced Monday.

Yelloh has closed delivery depots around the country and laid off hundreds through the past year but said it still faces “insurmountable business challenges” that have forced its closure.

“The current Yelloh team has worked hard against external headwinds such as the nationwide staffing challenges and crushing food supply chain disruption caused by the pandemic,” Board Member Michael Ziebell said in a prepared statement. “These challenges, combined with changing consumer lifestyles and competitive pressures that have been building for over 20 years, made success very difficult.”

The Schwan’s name lives on through its frozen foods after a South Korean company bought that part of the business for $1.8 billion in 2019. But the Bloomington-based delivery segment the Schwan family continued as the rebranded Yelloh will soon become part of bygone state lore, much like Camp Snoopy.

Part of Yelloh’s ultimate downfall was its association with the past. The company failed to change with shoppers’ habits. Much like the milkman gave way to buying gallon jugs in grocery stores, the rise of on-demand home delivery through apps like DoorDash and Shipt rendered the route-based delivery model obsolete.

“Digital shopping has replaced the personal, at-the-door customer interaction that was the hallmark of the company,” Ziebell said.

Nearly 20% of Americans bought groceries online in 2022, according to the U.S. Department of Agriculture, a substantial set of potential customers Yelloh failed to win.

“Our concern is now for our employees and caring for them as we all come to terms with the fact that this business — that served millions of families and provided a livelihood for thousands over the decades — has regrettably run its life cycle,” Ziebell said.

In Minnesota, 176 employees will lose their jobs beginning Nov. 22 as locations across the state shut down, according to a state filing. Yelloh has about 1,100 employees nationwide.

Last year, the company closed 90 delivery centers and laid off 750 people. It followed up with more closures and layoffs this spring as it shifted to third-party delivery to stay afloat. But the food proved secondary to the experience of having your local driver drop it off, and that market evaporated with every online grocery purchase through a number of other delivery companies and retailers.

The first Schwan’s delivery took place March 18, 1952, when 23-year-old Marvin Schwan drove 14 gallons of ice cream to families around Marshall in western Minnesota. The company grew across the country in the following decades and eventually had its yellow trucks delivering to customers from Seattle to Sarasota.

Since the birth of e-commerce decades ago, however, the company’s limited offerings available for delivery and relative lack of innovation left it in the shadow of digital competitors.

It’s unclear whether the Schwan family wanted to keep the delivery business or if buyer CJ CheilJedang saw it as an unprofitable segment and passed on purchasing it five years ago. Since the acquisition, internationally owned Schwan’s has thrived selling Red Baron and Tony’s pizzas and has plans to build a $500 million plant in South Dakota to make Asian food. The locally anchored delivery business has gone the opposite direction.

When it rebranded to Yelloh in 2022, the company left behind the well-known Schwan’s name and found itself continuing in a business already on the decline.

“What initially seemed like a fresh start quickly turned into a disaster,” advertising veteran Ken Moskowitz wrote last year. “Yelloh’s messaging lacked clarity, leaving customers perplexed and disconnected from the brand.”