A Cut Above
Henry Davis glides his knife through a 40-ounce tomahawk ribeye, its bone running from his fingertip down to his elbow. He cuts into the meat to check how the chef at Spencer’s steakhouse in downtown Omaha has cooked it. It’s a touch more than rare, and the cool, marbled center is exactly to his liking. Davis is more than a Spencer’s regular. He is the owner of Greater Omaha Packing, one of the top slaughterhouses in the country. The three-inch-thick steaks he and his three guests are eating were hand-delivered to the kitchen, fresh off the line of his Greater Omaha plant a few miles south.
On this hot summer night in June, Davis, a 66-yearold who wears thin-rimmed silver glasses, is in a celebratory mood. Just the day before, his 97-year-old company shipped its first box of beef to China since 2003, mere hours after the USDA finalized a new trade deal that reopened the $2.5 billion market to American butchers. His plant was one of two slaughterhouses in the U.S. initially approved to ship to China, and his beef arrived first. He celebrated by taking 30 Chinese trade representatives to Spencer’s. (Donald Trump eventually took credit for this coup in July, claiming in a speech that Davis hugged him for getting China approved. Davis, whose immigrant grandfather started Greater Omaha, says he did thank the president and shook his hand, though there was no embrace.)
China is the latest frontier for Greater Omaha, which was the first to sell U.S. beef in Japan (2008) and Saudi Arabia (May 2017). Also the biggest American seller in the European Union, it now exports to 69 countries. Despite the huge potential of these markets, Davis sets limits and is wary of selling too much to any one customer—be it a local restaurant distributor, a small supermarket chain, a hotel group or even a country. Last year, exports accounted for just 16% of its $1.4 billion in sales. “I’m very careful how I do that,” Davis says. “We don’t get overdependent on any market or any raw material or any customer.”
His thoughtful approach and decision to carefully carve out a high-end, more profitable niche has helped him grow the business tenfold since he took over in 1987. It’s been enough to turn Davis, who owns 100% of the company, into one of the country’s richest butchers, worth an estimated $1 billion. He has big plans ahead, but nothing that will compromise his high-quality beef.
“We are a country of meat eaters. It’s a spiritual experience for a lot of people, and Greater Omaha has been able to respond to the needs of the people. They want good steak,” says Bob Oros, an independent beef analyst.
Greater Omaha is intentionally lean. The nation’s top four suppliers, JBS USA Holdings, Tyson, Cargill and National Beef Packing, account for about 75% of the U.S. market in terms of revenue; Greater Omaha, the next biggest, has 2% (see chart, p. 96). It sells 700 million pounds of beef a year, a tiny slice of the 25 billion pounds processed in the U.S. annually.
Despite being one of the oldest beef packers in the country, Greater Omaha has opted not to grow too big. It operates just one plant and chooses not to sell to big chains like Costco, Wal-mart and Mcdonald’s (JBS and Cargill are the fast food giant’s hamburger-meat suppliers). It also keeps daily production to 2,400 cattle. “We don’t want gigantic customers. The big chain stores? We don’t have enough beef. If they run a sale, it would be too large of a percentage of our product. I don’t want that,” Davis says.
This approach allows Davis’ cattle buyers to be extremely choosy. Its buyers select each steer—either Angus or Hereford breeds—individually from independent ranches that feed cattle by hand. “The truth is we buy the fact that hand-fed cattle are better than machine-fed cattle,” says Angelo Fili, Greater Omaha’s 61-year-old, tobacco-chewing executive vice president. “A company
We don’t want gigantic customers. the big chain stores? We don’t have enough beef. If they run a sale, it would be too big a percentage of our product.
that does 30,000 cattle a day, they’re already going to get some cattle that are prime, and they’re gonna get some animals that are raw. We’re after the higher-end stuff.” To that point, nearly all its cattle come from Nebraska and Iowa. Nebraska, in particular, has become a preferred spot for cattle raising, thanks to its climate and excellent grassland, which sits atop the largest aquifer in the country. Greater Omaha claims that helps ranchers raise cattle superior to those from drought-prone states like Texas and California.
Greater Omaha also tailors cuts directly to a customer’s specifications, sending them pounds of just one cut, such as Porterhouse, or having a Muslim imam bless steer to meet halal standards. Its steaks are served at some of the nation’s top eateries, including Peter Luger, Minetta Tavern and Marea in New York City, French Laundry in Napa Valley, Ruth’s Chris Steak Houses and Wolfgang Puck restaurants. These prime cuts help fatten the company’s bottom line, giving it an operating margin estimated to be 6% (Davis won’t comment). That’s much higher than the industry average of 3% and better than that of JBS, Tyson and National Beef’s meat businesses (privately held Cargill also won’t confirm). “The big packers have to compete with us. We are agile,” Davis says.
Greater Omaha’s story starts with an immigrant in search of a better life. Davis’ grandfather, Herman Cohen, fled the Russian empire to America in 1905 at age 11 to escape discrimination and pogroms. Cohen served in the U.S. infantry in World War I and reentered civilian life with $100 in his pocket. In 1920, he moved to Omaha, keen on investing in beef. At the stockyards, Cohen would pick a single steer every day, butcher it himself and then sell the beef, while a partner sold the hides. The small operation grew slowly to a few animals a day. Cohen’s youngest daughter, Florence, married Davis’ father, Pennie, who joined his father-in-law’s business in 1945 and soon became president. They kept it simple, butchering the meat into hindquarters and forequarters
sections only, which would be sold to a butcher who would cut the meat into ready-to-cook sizes. It was a good time to be in the business, as America doubled its beef consumption in the prosperous years following World War II. Families spent nearly one fourth of their food budget on meat in 1950, according to the American Meat Institute.
Davis was born in 1951 and witnessed the glory years of Omaha’s beef industry. He grew up walking through the livestock auctions on the exchange floor and attending meetings with his father and other Omaha slaughterhouse managers. When he was 4 years old, Omaha beat out Chicago to become the nation’s top spot for beef processing. He later spent summers at the plant doing everything from buying cattle to butchering meat on the assembly line.
By the 1970s, Omaha had lost its edge. Slaughterhouses hightailed it out of the city to be closer to rural feedlots. Davis joined the business full-time in 1973 after graduating from the University of Denver with a degree in business and a minor in computer science. At the time, Greater Omaha had 40 employees and processed 232 steer a day. “We were too small to have roles. Everybody did everything,” Davis recalls.
As a young exec, Davis had big ideas. He purchased the company’s first computer, a Polymorphic System 8813, for $5,870 in 1980. There was no software available to help the slaughterhouse track receivables and project future sales, so he wrote it himself. “We had a good business model back then, and I wasn’t going to change my business to fit the software,” Davis says.
As he started to write the code in a Unix shell script, which the company still uses today, Davis focused first on building software that would analyze data such as how many pounds of meat were shipped and what percentage of fat each animal had. For the first time, the company could predict the number of cattle needed for the next week, how much each truckload cost the company to process and how much it would make from a sale to a meat purveyor.
Davis took over as president in 1987, when Greater Omaha was bringing in $130 million in sales a year from about 650 cattle a day. He soon revolutionized the company by jumping on a trend Iowa Beef Packers had started. IBP (acquired by Tyson for $3.2 billion in 2001) had invented boxed beef, in which one cut of beef, like loin or rib, was packed in vacuum-sealed packages and shipped in boxes that were more manageable for a grocer or a restaurant distributor. Previously, packers sold only larger hindquarters and forequarter cuts. More butchering meant higher prices, and Davis launched a production line for boxed beef in 1992. “Most of the industry followed along. Those that didn’t are no longer in business,” Davis says.
Demonstrating his own agility, the lean, 5-foot8 Davis whips his Mercedes Benz S550 Coupe onto L Street, just a few blocks from Omaha’s historic ten-story Livestock Exchange Building. Davis drives this car to work most days but also owns a 1965
We are a country of meat eaters. It’s a spiritual experience for a lot of people, and Greater Omaha has been able to respond to their needs. they want a good steak.