Within the last month Death Care marketing expert Glenn Gould contributed to a Funeral Director Daily article with this comment, “There are too many funeral homes.  NFDA estimated 15,500 firms in 2023; 30% do fewer than 100 cases annually’, 68% do fewer than 200.  Very small firms should be seeking mergers.”

And then about ten days ago I saw Mr. Gould co-author, with Jake Johnson, an article that appeared in NFDA’s Memorial Business Journal titled, “Why Bundling Devalues Your Exit Strategy“.  The article dealt with the realization that for many smaller firms, they may have more to the existing owner value if the real estate was sold separately from the funeral home operating business.

Glenn Gould

Gould and Johnson make several good points including this one, “Many small-volume funeral homes are in highly desirable metro business districts or along main street corridors, making their real estate valuable for various alternate uses.”  They also make this point, “. . .  small-volume firms might fall below the acquisition thresholds of major consolidators. As a result, these businesses are more likely to be acquired by local competitors or left to wind down. Unfortunately, in these cases, owners often fail to realize the true market value of their business, primarily because the value of the real estate eclipses that of the operation and the two are bundled together in one transaction.”

I think that they are exactly right in their assumptions and it is great advice for selling funeral home operators.  They go on to point out that is is also great advice for those funeral business operators buying these businesses.  Meaning that the continuing business can, more than likely, increase their profits greatly by consolidating an acquired business into their existing facility rather than operating two separate facilities.

Think about it. . . . you will save by only having one property tax payment instead of two, only one yard and facility to maintain instead of two, only one one utility bill to pay instead of two, having only one receptionist instead of two. . . and on and on.  Johnson and Gould also point out that a funeral home’s EBITDA will increase with more calls under one roof and that increase will lead to an increased value of your business.  Here’s a chart that they prepared on that based on annual calls under one roof and potential EBITDA and Sale Value:

The two also mention in their article that “The late Tom Johnson (Jake’s father), a pioneer in funeral home consolidation, drove the growth of Pierce Brothers in the 1980s by acquiring funeral businesses without the associated real estate. The goal was simple:  Increase case volume without incurring unnecessary capital tied up in property. Between 1980 and 1987, Los Angeles, California, saw a drop in the number of mortuaries from more than 220 to around 180. This model of separating operations from property contributed significantly to the creation of long-term value and scalability.”

Jake Johnson
CEO
Johnson Consulting Group

In a somewhat ironic twist to that statement, Tom Johnson was a mentor of mine and one whom I used as a consultant in my business dealings.  In 2006 I had the opportunity to buy out a competitor in my community.  When I did the math with two facilities – and the potential acquired facility was on a beautiful stoplight controlled intersection corner in the center of our community – and two staffs, I did not see a great return for the investment I was about to make.  However, when I did the pro-forma with buying only the business assets and not the real estate the potential return was enormous. . . . . .if I could continue to do the same numbers for that firm in a different (my existing)  location.

Of course, I called Tom Johnson.  Tom told me this same Pierce Brothers Los Angeles story.  He convinced me that even if I lost some of that firm’s business in a different location the numbers were still very good.

I moved forward only offering to buy the funeral business assets with the caveat that a “deed restriction” prohibiting the use for Death Care purposes, be inserted in the funeral home’s property deed.  I never had to deal with the real estate but a beautiful new bank building sits on that piece of property today.

And, you might not believe this, but Gould and Johnson are exactly correct — when I sold seven years later I believe that the investment I put into that acquisition, on its own, returned a 10x increment to me.  Going from 225 calls in our existing facility to 325 calls in that same facility overnight greatly increased the EBITDA which in turn greatly increased the business value.

Johnson and Gould also state in their article, “In 2023, NFDA predicted that half of all independent funeral home owners would either sell or retire within five years. Recent years saw acquisitions, but elevated interest rates have cooled activity. With interest rates expected to fall in the coming months, a renewed surge in consolidation is likely.”

So, I would advise, if you are a potential seller make sure you know what the “de-coupled” value of your assets are. . . . . And, if you are a buyer make sure you take a look at how a new acquisition will work out financially in its present facility and how it will work out financially if you only buy the “business assets” and choose to move the business into your existing facility.

And, if you are not a numbers person or simply want some help in figuring this out a call to the good people at Johnson Consulting Group would probably make a lot of sense.

More news from the world of Death Care:

Enter your e-mail below to join the 3,201 others who receive Funeral Director Daily articles daily

“A servant’s attitude guided by Christ leads to a significant life”

Johnson Consulting Group’s Volume 8 of the Performance Tracker X Trends and Insights Report Now Available

[Scottsdale, Arizona]: Johnson Consulting Group (JCG) has officially released their Volume 8, 2025 Performance Tracker X Trends and Insights Report, Powered by J3Tech Solutions. 

Performance Tracker X is the complete customer service management tool that evaluates staff and financial performance by sending out surveys to families to get real-time, accurate feedback for a funeral business to make data-driven decisions. 

Each year JCG analyzes every survey that goes through their system to determine what today’s families need and where the profession is headed. Of 135,100 total contracts entered into the system in 2024, they analyzed 113,921 sales and survey data records.  

Some key takeaways from their recent findings include:

• Survey response results: 9.5% of completed surveys generate actionable leads, with an average response rate of 36.7%. This is a total of 5,433 leads generated in 2024. 

• ICPs increase revenue and satisfaction: Per the data, Incentive Compensation Programs do boost revenue and customer satisfaction.

• Cremation is gaining ground: All cremation case types have higher customer satisfaction scores than any burial case types, indicating a shift in family preferences. This could also suggest an exceptional effort being put forth by funeral professionals to enhance customer satisfaction for cremation families.

• Low NPS (Net Promoter Score) for pre-planning: Pre-planned funeral arrangements have the lowest NPS score compared to other reasons for choosing a funeral home.

The report is available to download for FREE.

“It has been said that…If you take care of the families, they will take care of you!…To this end, it’s a privilege to annually present this critical report to our profession,” says Jake Johnson, President and Chief Executive Officer of Johnson Consulting Group. “The customer experience remains central to every facet of funeral service, and this report offers invaluable insights for owners and operators, providing a comprehensive understanding of the evolving priorities of today’s families.”

About Johnson Consulting Group and Performance Tracker X: 

The JCG Performance Tracker X tool provides funeral homes, cemeteries, and cremation operations with timely, accurate measurements of customer service and sales performance. Through sending out surveys that allow for direct family feedback, the software offers comprehensive reporting that shows business owners what they are doing well and identifying the areas that need fine-tuning and improvements to increase enterprise value and profitability.

Johnson Consulting Group started its customer survey program in 2008 with continual improvement key to its success as a premier customer survey platform in the funeral space. This growing amount of survey data has proven invaluable for providing insight into customer needs and satisfaction. The company attributes its rapid growth based on its ability to offer the program with no contract to sign, a low monthly cost and accessibility to its experienced Consultants for interpretation and usefulness of the reports.

Service Corporation International (SCI) reported its 4th Quarter of 2024 as well as its 2024 Year End results last week.  Being as large a Death Care company as they are it is probably as close as one gets to an annual report on the status of Death Care in the North America when one digests their annual results.

Here is the press release from Service Corporation International on their 2024 4Q and 2024 Annual results which was released last week.

Here is what CEO Thomas Ryan said in prepared remarks in the press release, “We are pleased to report a strong finish for the year with adjusted earnings per share growth of 14% in the fourth quarter of 2024. This was driven by revenue growth in both our segments, which translated into solid gross profit performance and margin expansion. Growth in cemetery preneed sales production and higher funeral general agency revenue more than offset a decline in services performed during the quarter . . . . cash flow for the year allowed us to invest $181 million into the acquisition of 26 funeral homes and 6 cemeteries in major metropolitan markets and $62 million into real estate transactions to expand our footprint of funeral homes and cemeteries in our existing markets.”

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  There is a lot in this report and it takes some time to digest.  And, following the release of the company’s Earnings Call transcript I’ll probably provide more details and have more to say.  For the time being, here are some thoughts that I have. . .

Revenue: Total Revenue for SCI jumped from FY2023’s $4.099 billion to FY2024’s $4.186 billion — an increase of about $87 million or 2.11%.  The company probably also gained margin as the year went on because their 4Q24 revenue jumped 3.6% over the same number for 4Q23.  In my book, especially because they reported less services conducted on the year, that revenue increase is probably indicative of price increases.

SCI does report in their “Consolidated Funeral Segment” that revenue per services jumped to $5,651 in FY2024 over the FY2023 number of $5,536 — an increase of 2.1%.

Service Case Volume:  In the company’s “Consolidated Funeral Segment” results, SCI reports 355,074 services perfermed in FY2024 as compared to 358,873 services performed in FY2023 — a drop of about 1.1%.  From those numbers alone we don’t know if that drop is because of a loss of market share or simply because of less deaths occuring in their market areas.

Matthews International, in their quarterly report last week, explained away a lower unit sales of casket by what they termed as “less deaths”.  That may be correct and the case with SCI’s lower volume, but one might keep an eye on market share — especially when SCI tells us of the acquisition of 26 facilities during the year whose services numbers should also be included.  When contemplating that fact, however, we do not know when during the year, or even if, those acquisitions started contributing to the financial numbers.  In my opinion, however, the reported number of “Services Performed” will be a number worth watching in the future.

In what SCI calls their “Comparable Funeral Results” which is defined by “those businesses owned for the entire period beginning January 1, 2023 and ending December 31, 2024″,  the company shows an even steeper drop in “Services Performed” for the 4th Quarter of 2024.  SCI indicates a drop of 3,366 services performed during the 4th Quarter, compared to the year prior, which translates into a 3.8% decline for the period.

Again, that number being “Same Store” results. . . . is that indicative of a loss of market share or simply a number reflective of less deaths in their market regions?  I believe it is a number worth watching in the future.

Preneed:  In July 2024, SCI announced a new Preneed agreement with Global Atlantic as you can read from this Funeral Director Daily article on the subject.  We believe, that as is common with new partners, implementation to fine-tuned operations will take some time to get to.  In fact, the SCI report offers footnotes on that subject.

However, in reporting their “Comparable Preneed Sales Production” a Total Preneed sales dollar drop of 9.2% for the 4th Quarter of 2024 as compared to the 4th Quarter of 2023 is reported.  That, too, will need to be watched over time to see if the drop is simply in the implementation of a new policy, a change in accounting in moving from trusts to insurance-based preneed, or reflects a market share trend.

It could possibly reflect a market share trend based on the seemingly growing popularity of low-cost and/or online cremation puchases.  My thought is that the drop in preneed revenue could represent lower cremation sales prices to meet growing competition or simply losing clientele to lower priced online cremation providers.  In any case, this number bears watching in future quarterly reports.

Final Thoughts:  When I read these reports with my background in funeral home ownership I realize that the numbers simply give us a “point in time” reflection of a public company.  However, I think that bringing up questions and possibilities about the numbers is how one can “see into the future” to put their funeral home in the best possible situation to win customers in the future.

Disclaimer — The author of this article for Funeral Director Daily is a shareholder of Service Corporation International.

More news from the world of Death Care:

Enter your e-mail below to join the 3,120 others who receive Funeral Director Daily articles daily:

“A servant’s attitude guided by Christ leads to a significant life”

Yesterday Funeral Director Daily’s feature article was about Matthews International and its 1st Quarter 2025 Fiscal Year results press release.  As we digested that report, which like many public company reports, is big on numbers and sometimes small on the underlying issues and causes, we were informed that Matthews International had suffered a 10.7% loss in total sales and a 8.5% percent loss in sales of their Memorialization segment.

Many of those underlying causes that might cause the declines are left to speculation.  After reading the company’s Earnings Call transcript with those that follow the company in the securities business, more information becomes available and a better total picture of what is happening within the company comes to light.

Here’s what we learned about the Memorialization segment when we read Chief Financial Officer Steve Nicola’s statements from the Earnings Call:

” . . .sales for the Memorialization segment declined for the current quarter compared to a year ago, primarily due to lower unit volumes.”

“Estimated US casketed deaths declined from the same quarter a year ago.”

“The (Memorialization segment) decrease primarily reflected lower granite memorial sales and a decline in casket unit volumes.”

” Granite sales were higher last year as, in addition to regular volume, the business was working down backlogs, which had built up during the pandemic. “

“Bronze memorial sales were also lower for the quarter.”  

“Memorialization (segment) sales for the current quarter were unfavorably impacted by the disposal of the company’s unprofitable European cremation and incineration equipment operations.”

“. . . decreases were partially offset by higher price realization and incremental sales from the acquisition of a casket distributor in January 2024.”

In order to bring the sales decline into more focus, CEO Nicola made this comment in the Q & A portion of the Earnings Call transcript, “So the decline in (Memorialization) revenues was actually more weighted to the granite. . . . . .But again, the European cremation and incineration business, which was an unprofitable business for us, also was a significant contributor to that decline. So those two were the more significant pieces.”

You can read the entire Earnings Call transcript here.

You can read a summery of the Earnings Call here.

Funeral Director Daily take:  According to the latest Quarterly results for Matthews International the Memorialization segment contributed 47.4% of the total 1st Quarter revenue to the company.  ($190.5 million of revenue out of a total of $401.8 million total revenue).

Enter your e-mail below to join the 3,120 others who receive Funeral Director Daily articles daily:

“A servant’s attitude guided by Christ leads to a significant life”

Funeral Director Daily published an article last Friday about the number of, or lack of,  funeral directors in the field and one of our thought processes during that article was that it is apparent that many rural funeral homes have a difficult time in acquiring the professional help necessary to operate their businesses.  Part of the reasoning behind that is that it appears that younger funeral directors are somewhat more  reluctant to have a heavy “on call” schedule than older and more experienced funeral directors have been in the past.

It was also suggested that consolidation of the rural operating funeral homes may help with that situation.

One of the growing trends that I have seen over the past couple of years is that one funeral home in a rural community acquires its competitor when that competitor wants to retire.  To be fair, I’ve also seen two funeral homes simply merge into one funeral home or at least announce that situation while not elaborating on the ownership of the “new” company.

This recent article from the Merrill Foto News of Wisconsin is the latest article that I’ve seen announcing two local funeral homes joining forces.  It provides news of Waid Funeral and Cremation Service and Taylor-Stine Funeral & Cremation uniting under a regional ownership group and being rebranded as Taylor-Stine-Waid Funeral & Cremation.

In this case, according to the article, the company will operate from both current facilities giving consumers a choice of where they prefer to be served.  According to the news article, “The combined staff will work across both locations, ensuring continuity and support for families at every step. This collaborative approach enhances service options while upholding the personal and compassionate care that has defined both businesses for many years”.

Here is the website for Taylor-Stine-Waid Funeral & Cremation

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  According to data from the National Funeral Directors Association (NFDA) this article from the Carolina News & Reporter states that more than 60% of current United States funeral home owners have plans to retire by 2029.  If that is truly the case there is a window for these types of “same market” acquisitions to be consummated.

Some times competitor acquisitions are tough to approach because of the competitive nature that some funeral home owners have about their business.  However, if you can look by that competitive nature to have a discussion with a competitor it could work out best for both of you.

For the acquiring owner you now have two facilities and more staff to cover nights and weekends. . . meaning that each staff member probably has to do that duty less.  i.e. if the two funeral homes had 3 funeral directors each they were each on call every 3rd night.  After an acquisition, if you kept the same number of staff they would be on call, theoretically. only every 6th night.  That should help in retaining staff.

Or, it could be that one director leaves or retires and you have only five directors — which you deem acceptable to cover the business of the combined firms.  The directors come out better with being on every 5th night instead of every 3rd night and the new ownership is now paying salary and benefits for 5 funeral directors instead of 6 funeral directors. . . . bringing the additional salary to the bottom line which can help with acquisition costs.

Finally, the selling or retiring owner may come out better as well because a “same market” buyer has the ability to make use of the economies-of -scale as suggested in the salary savings from the preceding paragraph.  Dependent on the situation, the acquiring funeral home may be able to get economies-of-scale savings on facilities, auto fleet, contracted services such as accounting, and clerical help as well.  That potential savings may allow the acquiring funeral director to offer a higher price to the selling owner than an out-of-market buyer could pay.

I made a “same-market” acquisition at one time that worked out very well for me and I believe it worked out very well for the seller as well.  I was competitive back in my funeral home days and over the years when I approached the potential seller it did not get very far.  However, a 3rd party eventually approached him also and then brought the deal to me which got worked out with the seller’s blessing.

If you are in this type of acquisition mode and don’t think you can approach your competitor, do you have a 3rd party that might be able to do it for you?

Here’s another acquisition report — “Olney, Foust purchase Switzer Funeral Home”.  The Bradford Era (PA)

Olney-Foust Funeral Homes & Crematory website

More news from the world of Death Care:

Enter your e-mail below to join the 3,120 others who receive Funeral Director Daily articles daily:

“A servant’s attitude guided by Christ leads to a significant life”

Last week Netflix co-CEO Ted Sarandos told reporters in this article that Netflix has no plans to pursue mergers and acquisitions next year. . . . .what is interesting about his comments is that he also said, “We are better builders than buyers”.

I found that a really interesting statement from a company that has grown its subscriber base from 34 million subscribers in 2013 to approximately 283 million subscribers this year.  In the article, Sarandos states that Netflix has done small acquisitions but re-iteretated, historically (we’ve) “. . . been a better builder”.

It made me think, “What about funeral homes?”  What are the options. . . and what works better — expanding and growing services organically or taking on debt to build or grow through acquisition?

It is an interesting question. . . and there is no right or wrong answer.  Growing organically by gaining more market share or expanding a geographic reach of a single location through marketing may be more profitable in a more immediate sense, but large gains in volume and profitability probably only come from acquisitions of other locations.

Yet, growing organically poses little downside, especially in the thought of long-term debt, whereas a purchase puts long-term debt on the table, which if all does not go as planned leaves a funeral home servicing debt from its present location.  i.e. acquisitions carry more risk. . . . and, you even see the large public companies sometimes talk about having too much debt.

Netflix and the streaming industry also has the idea of what I call “service flux” in common with funeral establishments.  While an acquisition by Netflix of a legacy media company such as a cable company creates risk in the possibility of many of those customers leaving cable (cutting the cable cord) for a streaming service that may not be Netflix should an acquisition happen.  In essence, it is a lot like a funeral home acquisition — there is no guarantee consumer families may continue to use the acquired funeral home (or the acquired cable firm).

That’s somewhat like purchasing a funeral home in a 50% cremation market that over the next few years might become a 70-80% cremation market.  i.e. a funeral home purchaser needs to almost have a crystal ball to know going forward the cremation percentage of his future business much like Netflix needs that crystal ball to know how many customers it will keep from an acquired company. . . . So that risk to a funeral home acquisition, in my opinion, is somewhat akin to the risk a streaming company might have when buying a legacy media company.

So, what if you want to grow your funeral business and are somewhat averse to the risk of long-term debt?  I was fortunate in my business that at times I stressed both ways of growth— at one time we put a strategy together to raise our market share organically and at another time we took on some debt to buy out a competitor.

Tom Anderson
Funeral Director Daily

Both strategies worked for us. . . . . but before you go after one of them you need to know and plan how you will implement your strategy.  In the case of organic market share we did it with a highly-defined strategy and maximum effort in preneed marketing and  sales.  Interestingly enough, we found that our additional marketing dollars put into our preneed campaign also brought benefits in the area of “Top of Mind” awareness by consumers at the time of At-Need deaths.

We also worked very hard to be the funeral home that could get the job done in the fashion that pleased the family.  Concentrating on satisfying families always played a role in building market share. . . . because to first build market share I contend that you have to retain market share of existing clientele.

We gained both in the At-Need death market share at the time of the campaign and the preneed effort solidified that market share expansion over time.

And in the case of acquisition expansion, I always made sure that I had a way to fund the on-going debt service in case that the acquisition plan didn’t materialize exactly as I thought it would.

Every week or so Funeral Director Daily has an article about an acquisition.  But don’t be fooled by that . . . . like Netflix does, the really good funeral homes are also building their location market share organically every single day. . . .That’s one of the best kept secrets that legacy funeral homes know and understand.

More news from the world of Death Care:

Enter your e-mail below to join the 3,124 others who receive Funeral Director Daily articles daily:

“A servant’s attitude guided by Christ leads to a significant life”