In 2025, Hy-Vee, one of the Midwest’s largest grocery chains, began a major restructuring effort that reshaped its food production model and workforce strategy. The company’s decision to close two major food preparation facilities marks a pivotal shift in how it manages freshness, efficiency, and local engagement within its stores.
This comprehensive breakdown explores what’s changing, why it matters, and how this move fits into broader retail and food industry trends in the U.S.
What’s Happening: A Strategic Shift Toward Localized Food Prep
In April 2025, Hy-Vee announced it will close two centralized food preparation facilities one in Ankeny and another in Chariton, Iowa by June 24, 2025. These facilities were responsible for producing sandwiches, salads, bakery goods, pizzas, and fresh-cut fruits and vegetables that were distributed across Hy-Vee stores statewide.
According to Tina Potthoff, Hy-Vee’s Senior Vice President of Communications, the move is part of a long-term plan to return food preparation to individual stores. She stated:
“This move gets us back to being an even stronger grocer.”
By decentralizing production, Hy-Vee aims to boost in-store freshness, cut logistics costs, and empower store teams to deliver higher-quality, made-on-site items.
Why Hy-Vee Is Closing Centralized Kitchens
The closures reflect a strategic refocus on in-store food experiences. Over recent years, grocery customers have increasingly prioritized fresh, locally prepared meals over pre-packaged items.
Key reasons for the transition include:
| Factor | Impact on Operations | Customer Benefit |
| Freshness Priority | Moving sandwich and salad prep back to stores | Fresher, more customizable meals |
| Supply Chain Efficiency | Reduces transportation and packaging steps | Lower carbon footprint, faster restocking |
| Labor Reallocation | Redeploys affected employees into stores | Retains workforce, improves service quality |
| Customer Experience | In-store prep allows menu flexibility | Adds variety and real-time ingredient control |
Potthoff emphasized that sandwiches made in stores can now include fresh ingredients like tomato, lettuce, and onion, something not possible when everything was shipped from a commissary.
Impact on Workers and Communities
The restructuring impacts approximately 461 workers at the Ankeny and Chariton sites, plus around 60 bakery employees in Cedar Rapids, where a regional bakery is also being closed.
Hy-Vee has filed a Worker Adjustment and Retraining Notification (WARN), as required by Iowa state law, and is actively helping employees transition into new roles.
The company has organized “hiring events” at affected locations and is prioritizing internal placement wherever possible. Hy-Vee also confirmed that the closed facilities will remain under its ownership for potential future use, such as manufacturing shelf-stable or packaged products.
“We’re committed to assisting all impacted employees during this transition,” said Potthoff.
Broader Strategy: Refocusing on Core Grocery Strengths
This decision isn’t an isolated cost-cutting measure it’s part of a larger operational overhaul. Earlier in 2025, Hy-Vee announced it would end bar service and eliminate waitstaff at select Market Grille in-store restaurants. Employees from these locations were also offered new positions within Hy-Vee stores.
These steps signal a clear pivot: the company is moving away from peripheral operations like restaurant-style dining and central production, doubling down on its core grocery and prepared-food strengths.
Industry analysts suggest this mirrors a national pattern many U.S. grocers are streamlining to balance labor costs, food waste, and consumer expectations in a post-pandemic retail environment.
Industry Context: The Fresh-Food Revolution
The trend toward localized food prep isn’t unique to Hy-Vee. Across the U.S., major retailers such as Kroger, Whole Foods, and Wegmans have restructured supply chains to prioritize in-store kitchens and bakeries.
According to a 2025 report from Supermarket News, 68% of grocery shoppers now say they prefer stores that prepare fresh food on-site rather than selling pre-packaged or commissary-made items.
This reflects a growing “fresh food economy” where convenience meets transparency consumers want to see, smell, and trust what they’re buying.
Expert Insight: Balancing Efficiency and Freshness
Food retail experts note that while centralized production offers consistency, it often compromises on freshness and flexibility.
Dr. Melissa Raines, a retail operations analyst at the University of Illinois, notes:
“Hy-Vee’s decision to move food prep back into stores is an investment in customer experience. It’s a move that aligns with how shoppers define value today freshness, customization, and trust.”
By localizing production, Hy-Vee can respond to local tastes and seasonal availability, strengthening community ties and reducing excess inventory.
What This Means for Shoppers
For customers, these changes could result in:
- Fresher sandwiches, salads, and deli items made directly in-store.
- Shorter supply chains, leading to faster restocks and fewer shortages.
- More personalized service from staff who understand local preferences.
- New in-store offerings as Hy-Vee experiments with fresh-prep innovation.
While short-term disruptions are possible during the transition, the long-term outcome promises a more dynamic and community-centered shopping experience.
Looking Ahead: What’s Next for Hy-Vee
The company has not announced any layoffs beyond the reported facilities and bakery. However, its continued exploration of new product manufacturing especially in shelf-stable categories suggests that Hy-Vee is repositioning itself for future growth in both fresh and packaged food sectors.
The closures also reflect a growing emphasis on sustainability and operational flexibility, critical factors in the competitive U.S. grocery landscape.
FAQs
Why is Hy-Vee closing its food preparation facilities?
To decentralize food production, improve freshness, and strengthen in-store operations.
How many employees are affected?
Around 521 employees across Iowa (461 in food prep facilities and 60 in the Cedar Rapids bakery).
Will employees lose their jobs?
Hy-Vee is working to reassign impacted workers to other store positions through hiring events and retraining.
When will the closures take effect?
Both the Ankeny and Chariton facilities will close by June 24, 2025.
How will this affect Hy-Vee customers?
Customers can expect fresher, more customizable food options prepared in their local stores.
James Jay is a professional chef based in Suffolk with over 6 years of hands-on culinary experience. Specializing in private dining, pop-up events, and bespoke menus, he’s known for delivering high-quality, memorable food experiences. James has built a trusted name by focusing on fresh ingredients, refined techniques, and personalized service.