The Final Cost

In the funeral home business, territory is everything.

“It’s not like owning a restaurant where you can make a good meal and get people to come from Albany or far distances because of word of mouth,” said Brian Mackey, the owner of Northville Funeral Service and Gloversville Funeral Service. “The only way to grow your business is to expand into other markets.”

Or it can go the other way: Large corporate entities from far away can buy independent funeral homes, capturing pieces of the local market.

That’s what happened in December, when the six funeral homes owned by the Betz, Rossi, Bellinger & Stewart Family Funeral Homes partnership – by far the biggest local funeral home business with territory encompassing Gloversville, Amsterdam, Broadalbin, Canajoharie and Fultonville – was purchased by Foundation Partners Group, a portfolio company of Chicago-based private equity firm Sterling Partners. The sale was for an undisclosed sum.

The Foundation Partners website, www.foundationpartners.com, includes a news release describing the deal as well as a downloadable “Owners Guide for Selling.” According to Foundation Partners, BRBS performed more than 600 funerals in 2012, and Foundation hopes to add that total to the approximately 7,000 funerals its company performs annually at its expanding roster of 43 funeral homes in 13 states.

John Stewart, who was retained by Foundation as general manager of the BRBS funeral homes, said the retirement of one of the BRBS partners prompted the group to sell to Foundation. He said the BRBS model, which had been established when he joined forces with Betz, Rossi and Bellinger of Amsterdam in 2004, was not sustainable if any more of the partners wanted to retire. He said Foundation made a complete purchase of all of the equity in BRBS as well as the five funeral home buildings owned by the partnership.

“This is the future,” Stewart said. “It’s very, very difficult for a small funeral home to operate in the business environment we have now. The overhead is so high with the building, insurance, personnel, vehicles, and, by merging, we were able to spread those costs out and are able to keep the costs down to the public and still provide the best in quality and services.”

New York state law requires funeral homes to publish general price lists that itemize all of the charges associated with the funeral business. A Leader-Herald analysis of the core costs of a typical funeral at local funeral homes shows the BRBS funeral homes typically charge about $4,965 for core costs. Core costs do not include casket or vault costs.

Everest Funeral Package, a company that offers funeral planning services and claims on its website, www.everestfuneral.com, to have price comparison data for more than 22,000 funeral homes in the U.S. and Canada, estimates the total average funeral cost for independently owned funeral homes in the United States is $4,405.

Mackey, who expanded his Northville-based funeral business into Gloversville four years ago when he purchased the former Hollenbeck Funeral Home, has been drawing the contrast between his independently owned funeral home and his corporate competitor in a series of advertisements that invite customers to send for a free brochure to explain to them the differences between a family-owned funeral home and a “huge consolidator.”

“Part of the corporate model when they purchase the independents is to retain everybody; they don’t want anybody to know anything has changed at all,” Mackey said.

Mackey said he believes he can offer more competitive prices than his corporate competitors because he has the discretion to waive fees and make decisions without approval from a corporate hierarchy.

“When you go to the True Value, you get a lot better service than at Walmart because the guy at True Value owns the place,” he said. “That’s the message I try to get through to people: When you go to the big conglomerate funeral homes, you’re not only going to pay more, they’re going to do less for you.”

Stewart said Foundation has retained all of the staff at the BRBS funeral homes and has not increased prices from where he and his partners had planned to set them in January.

He said Foundation has changed the prepaid funeral policy to guarantee customers won’t face cost increases above what they had agreed to.

“We now guarantee our prepaid funerals. We did not do that previously,” Stewart said. “If you prepay 100 percent of the costs and never withdraw any of the funds, because you do have the right to withdraw them, we will guarantee at the time of death to accept what’s in there. We just started that recently.”

Stewart said another advantage of being owned by Foundation is access to a larger advertising budget. He said that in the coming years, he expects Foundation to help the BRBS upgrade with the use of new technology and modernized funeral services that will cater to the tastes of the Baby Boomer generation.

Mark Amico, the owner of Amico Funeral Home in Gloversville, said his small operation, with core funeral costs of about $3,740, does about 40 funerals a year and can’t compete with the advertising budget of BRBS. But, he said he believes he can still offer price advantages because of his low overhead.

“I don’t have any employees. I do everything myself,” he said. “I’m just a small, little guy just trying to survive. This is a high-welfare area; the economy is not good. … My theory is, I work with what [the customers] have,” Amico said.

The New York State Funeral Directors Association estimates 90 percent of the funeral homes in New York state are still independently owned.

The National Funeral Directors Association estimates 86 percent of funeral homes in the United States are either independently owned or owned by closely held private corporations, with the remaining 14 percent owned by publicly traded companies.

Jason Subik can be reached at jsubik@leaderherald.com.