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The Growth of OSI Group

OSI Group is one of the largest food providers with 65 food preparation locations in 17 countries. It employs 20,000 workers and supplies the foods many of us eat every day: Subway, Pizza Hut, McDonald’s, Papa John’s Pizza and Starbucks. OSI started from very humble beginnings with the efforts of a German immigrant named Otto Kolschowsky. Kolschowsky arrived in Chicago, Illinois in 1914 and opened a butcher shop in his community.

He expanded that small shop to include his sons and called it Otto & Sons in 1928. The partnership that started the exponential growth of OSI Group came about when Ray Kroc, then the McDonald’s franchise agent entered into a handshake agreement with the Kolschowsky Sons, Arthur and Harry before opening the first McDonald’s franchise in 1955. The Kolschowsky Sons agreed to supply McDonald’s, owned by Ralph and Harry McDonald with fresh ground beef.

Years later, Ray Kroc bought the McDonald’s franchise from the brothers and his relationship with OSI was firmly in place as the franchise grew so did OSI. OSI, once simply a regional supplier grew to the demand and became a worldwide provider of prepared foods in the two decades after WWII. Otto & Sons focused its energies on producing a consistent product that was consumer driven and could be transported long distances maintaining its freshness.

Technological advances made it possible for Otto & Sons to transport their product over long distances and remain fresh. That technological advance was flash freezing. Liquid nitrogen made it possible to quickly freeze foods. This led to cost reductions and product expansions.

In 1973, Otto & Sons built a plant in West Chicago dedicated solely to producing food for McDonald’s. From that model, Otto & Sons expanded into the Glenmark brand which supplied food for local retail markets and restaurant chains. In 1975, Otto & Sons became OSI Group and branched out from being a local and Midwest food supplier to an international supplier. Harry and Arthur Kolschowsky were approaching retirement years and for the first time the reigns of the company were handed to someone outside the family.

Sheldon Lavin joined the company and became a partner in 1975. OSI opened its first plant outside of Chicago in West Jordan, Utah in 1977. It continued to open additional North American facilities and when McDonald’s went overseas, OSI followed suit. They expanded into Germany in 1978 and Spain in 1980 along side McDonald’s. Sheldon Lavin officially became the CEO and chairman in the early ’80s. Under his leadership OSI Group has seen the acquisition of other large food suppliers worldwide and growth. OSI is now one of the largest privately owned companies in the world with sales of $6.1 billion annually.

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