Oberweis Dairy plans to close plant, lay off 127 workers

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Oberweis Dairy Inc. will lay off 127 workers at its North Aurora plant, it announced after filing for Chapter 11 bankruptcy.

The company, known for its ice cream stores and milk packaged in glass bottles, notified the state that the job cuts will start June 11 due to the plant’s closure, in a filing under the Illinois Worker Adjustment and Retraining Notification Act.

Oberweis Dairy did not immediately return requests for comment.

On Friday, Oberweis filed a voluntary petition for Chapter 11 bankruptcy protection in the Northern District of Illinois, court records show. The company stated it owed more than $4 million in total unsecured claims to its top 20 creditors, with its largest debt of more than $774,000 to a Hudson-based transportation company.

Oberweis employs about 1,100 people, including many part-time workers at its stores. In the summer, when ice cream demand peaks, its workforce often swells to more than 1,500. Its workforce is not unionized.

In a court filing Monday, Oberweis Dairy President Adam Karber said the company will continue to operate while seeking a buyer. That route would create the best value to creditors and preserve more than 1,000 jobs, he said in a court declaration.

Business and financial challenges led to Oberweis directors and managers Julie and Jim W. Oberweis, putting the fourth-generation family company up for sale last fall.

Oberweis Dairy is owned by the family of Republican state politician Jim Oberweis.

Talks had advanced with a suitor that could have immediately taken over the company’s full production capacity. But the unnamed buyer pulled their bid in late March, which forced Oberweis to file for bankruptcy protection last week.

Karber detailed many challenges facing the business, including a steady drop in U.S. milk consumption and growing appetite for plant-based, high-protein alternatives. Over the last 50 years, U.S. per capita milk consumption has halved; the trend accelerated even further between 2010 and 2019.

The COVID-19 pandemic and lockdown initially gave the company a boost, particularly its home delivery service. Oberweis’ annual gross revenue reached an all-time high of $116 million in 2020 from $79 million in 2019, then fell to $113 and $104 million in 2021 and 2022, respectively.

However, expenses and inefficiencies were also high and the company made many missteps, the filing said, including underinvesting in manufacturing equipment and overspending on distribution, including on trucks and equipment it did not use.

The dairy also failed to place its products in national grocery chains; fruitlessly attempted to enter markets in Asia; and transitioned to amber-colored milk bottles in retail groceries, which customers did not like; among many other things.

The business was founded in 1915 by Peter Oberweis, an Aurora dairy farmer who began selling milk from the back of his horse-drawn wagon, according to the company’s website.

It opened its first ice cream shop in Aurora in 1951. The company has 40 locations in four states, including Illinois.

It’s unclear if any of the ice cream stores will close, but a court filing on Monday asked to continue paying employees wages and benefits. Otherwise, its workforce “will find other employment, at a time when the debtors need them most,” the filing stated.