No More Free Cheese Sticks for Kraft Employees in Cost Crackdown

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Photographer: Michael Nagle/Bloomberg

The days of free Jell-O and cheese sticks are over for employees at Kraft’s headquarters.

After merging this month with Heinz, the combined company rolled out policies aimed at curbing expenses such as travel, electricity and office supplies, according to the contents of a memo reviewed by Bloomberg News.

The foodmaker has also begun cutting jobs -- and even yanked the free snacks, according to people familiar with the matter who asked not to be identified because the decisions are private. Refrigerators that used to be stocked with Kraft treats were removed this month from the headquarters outside Chicago, the people said.

The changes echo an overhaul that Chief Executive Officer Bernardo Hees led at Heinz two years ago after Warren Buffett’s Berkshire Hathaway Inc. and investment firm 3G Capital took over the ketchup maker. Within weeks of that deal’s completion, top executives departed and the new management team went to work cutting costs and thousands of employees from corporate headquarters to the factory floor.

“The provisions we recently shared across our business -- such as leveraging technology and ensuring the judicious use of outside resources -- are consistent with many practices already in place,” Michael Mullen, a spokesman for Kraft Heinz Co., said in a statement Thursday. “These provisions reflect our drive for increased accountability and efficiency that will enable reinvestment in our people, products and brands.”

Heinz issued a similar set of proclamations to employees when 3G took over, setting limits on how many pages they could print per month and outlawing mini-fridges at the office.

New Managers

The belt-tightening and job cuts helped Heinz produce some of the best margins among large U.S. food companies. They also created a windfall for Berkshire and 3G, which are banking on a similar result from the combination with Kraft.

Hees has plans to take $1.5 billion of annual costs out of the business by the end of 2017. To help achieve that goal, he announced a new senior management team on June 29 and the departures of several top Kraft executives, including Chief Financial Officer James Kehoe. Additional cuts are under way at more junior levels of management, one of the people familiar with the matter said.

Kraft Foods Inc.'s Macaroni & Cheese.
Kraft Foods Inc.'s Macaroni & Cheese.
Tim Boyle/Bloomberg

Kraft Heinz also said this month that it was moving its headquarters from the suburbs to a smaller space in a Chicago office tower early next year. The company hasn’t said how many of the roughly 1,900 employees at the facility will make the move. It also maintains a headquarters in Pittsburgh, the home of Heinz. Mullen, the spokesman, declined to comment on the job cuts.

Copy Paper

The memo outlined new guidelines that cap spending on meals during travel to $50 a day, except in some higher-priced cities. There are also new limits on hotel rates. Employees were asked to reduce trips, limit their reliance on courier services, and save on electricity where possible. The default setting on office printers should double-sided with black toner, according to the memo.

Not all new rules are about cost savings. Employees were also told that they can no longer bring rival companies’ food to work, except when it’s being sampled for competitive purposes. Doing so wouldn’t show the proper respect for Kraft Heinz products, such as Weight Watchers Smart Ones frozen meals. So leave that Nestle SA-made Lean Cuisine at home.