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ConAgra, the maker of such well-known brands like Chef Boyardee, is looking to focus on just consumer foods. 

Do just one thing, but do it well. Consumer food products giant ConAgra (NYSE:CAG) is taking that sage advice to heart and splitting into two pure play businesses: one focused on consumer brands; the other, foodservice.

There were hints ConAgra was up to something big. After its acquisition of private label food maker Ralcorp in 2013 for $5 billion failed to gain any traction, serving instead as a drag on earnings, the consumer goods company agreed last month to sell the division to Treehouse Foods (NYSE:THS) for a discounted $2.7 billion price tag. It said it was part of a transformation to "re-make ConAgra Foods into a focused, higher-margin, more contemporary and higher-performing company."

That followed a decision last year to spin off its milling operations in a complicated three-way merger involving the Horizon Milling joint venture of Cargill and CHS to create the country's biggest miller in the U.S. flour market called Ardent Mills. While ConAgra retained a 44% interest in the new mill after the merger (and will keep that interest after its current split), it was no longer involved in its day-to-day management.

Now it will form two speciality companies, each with a separate focus. The new consumer brands company, to be called Conagra Brands -- with a lower-case "a" -- will consist primarily of its consumer foods segment, which had about $7.2 billion in revenues in fiscal 2015, and will have a portfolio of name brand products that include Chef Boyardee, Manwich, and Slim Jim. It's also going to retain several side businesses, such as the one that sold branded products to foodservice companies and certain private label operations, which generated an additional $1.8 billion in revenues.

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If there's one thing ConAgra's Lamb Weston food service division knows, it's potatoes, with french fries of all stripes being the biggest component. Image source: Lamb Weston.

The foodservice company that will be created, Lamb Weston, is primarily a french fries and frozen potatoes company, along with some sweet potatoes, appetizers, and other vegetable products. That business generated revenues of approximately $2.9 billion, and accounted for the significant majority of ConAgra's commercial foods segment's operating profit, which this year totaled about $570 million.

The tax-free spinoff is expected to be completed by the fall of 2016, with the proceeds being used to pay down ConAgra's debt, which totaled more than $6.1 billion at the end of August.

Like the sale of Ralcorp before, ConAgra sees this deal as yet another transformative change. President and CEO Sean Connolly said, "The decision to separate into two pure-play companies reflects our ongoing commitment to implementing bold changes in order to deliver sustainable growth and enhanced shareholder value."

Perhaps, but it was also the realization that activist investor Jana Partners has been breathing down its neck after disclosing a 7% stake in the food company in June and gaining two seats on ConAgra's board of directors.

It's also a recognition that the industry is changing. On the one hand, consumers want healthier food choices, and companies have been pledging to remove artificial ingredients and colors from their products. On the other, there is a wave of consolidation under way in the industry. Tyson Foods, for example, bought Hillshire Brands last year, which itself had tried to acquire Pinnacle Foods. ConAgra's Connolly was at the helm of Hillshire at the time, and some analysts think Conagra Brands may make a go at it again once the separation is complete, though in an interview with The Wall Street Journal, he's quoted as saying there are good opportunities to be found in "clean label, natural, and organic foods, as well as premium and gourmet."

ConAgra is in the midst of a $300 million efficiency drive to boost profits and return value to shareholders. Last month, it announced the layoff of some 1,500 employees, or about 30% of its office workers. Yet with Lamb Weston being the source of ConAgra's strength, investors may find the new consumer brands company a little difficult to swallow, at least until clarity on where it's heading is achieved.

Rich Duprey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.