Sunday, August 19, 2012

Don’t Work So Much "In the Business" That You Can’t Work "On the Business"

Don’t Work So Much "In the Business" That You Can’t Work "On the Business"

Interview with Joan Coukos
Owner/CEO Chocolat Moderne

Interview with Kathryn Gordon and Jeff Yoskowitz

Kathryn:  Congratulations Joan!  You’ve come such a long way from when I helped you a bit with your launch years ago of Chocolat Moderne!  

Joan:  Yes, we just won the NASFT (National Association for the Specialty Food Trade) gold award for their overall chocolate category, Outstanding Chocolate, and silver award for our hot beverage, Kama Sutra.

Jeff:  Why did you choose chocolate?

Joan:   Chocolate may have chosen me!  I always was into food, being of a Greek background.  I was a banker and my vacations were always food-focused.  As a lay person, I tried to educate myself on the latest culinary trends. 

I visited Belgium in late 2000 and was fantasizing about something other than banking.  In November I had seen the movie Chocolat, which gave me a general good feeling, and the idea to possibly be a proprietress of my own business.

On the plane to Brussels, I read an article about Pierre Marcolini and new trends in chocolate.  I had always revered chefs and the article let me connect that.  Pierre Marcolini was a chef, and a creative human being who could take chocolate and make artisan flavors with natural ingredients and custom designed packaging.    

I decided to check out the chocolate scene in Brussels and I came across an outside antique market with metal chocolate molds.  I couldn’t put them down and I bought 2 of them, with the idea to be able to teach myself chocolate.  I knew I had the guts being that I had lived as a single woman banker in Moscow for years.  I came home and Googled truffles, bought some Valhrona (chocolate) at NY Cake & Baking, and read for the first time about tempering chocolate on a website.  I started experimenting at home to teach myself how to mold chocolates, and brought in samples to the bank where I worked. 

Kathryn: Somewhere in this timeframe, I met you, right?  I know I helped you with the production for the NY Chocolate Show that year…

Joan:  One weekend a month, all I would do was to make chocolates at my apartment.   I picked the brains of everyone at J.B. Prince, met the owners of Chocolatier magazine at the NY Chocolate Show and then I took a chocolate bon bon course where I met Kathryn (with Pascal Brunstein, MOF).   I just bought some chef clothes and showed up.

After 9/11, I was laid off and I started to form the ideas for my own business.  I started out of my kitchen but I signed a 5 year, renewable lease for this location in August, 2003.  I figured I would start without a lot of staff, and I didn’t mind working alone because I live in the neighborhood.   I started with around 1,000 square feet, and 2 years later expanded the office space by adding another 500 square feet. 

Jeff:  Is this still enough space for you?

Joan:  It is except in the height of the winter production season, when we could use more table space to spread out on.

Our business is growing and it seems to have doubled since this time last year.  We are getting ready to re-sign the lease here, because we’re maximizing the opportunity for retail.  We’re in between 2 major shopping streets, and continuously invite in bloggers for free press.  I use the web for internet marketing and we’ve added a retail counter here.  By using our production space as our retail location, I can get a higher profit margin on sales without having to carry more overhead.  We use the Square credit card system for retail sales.

Jeff:  What’s your life like?  Is it 7 days a week since you live nearby?

Joan:  Yes, it is.  We’re getting to the point this summer that we want to take off more time.  My husband works here with me, so I’m able to see him while we’re working. 

Kathryn:  What are you working on now?

Joan:  There are lots of “business things” we still have to fix.  One goal is for margin improvement.  I’m a purist, using only Valrhona and other expensive ingredients.  I also have very high end, beautiful packaging.  But I believe that packaging is my PR and it has gotten me into Barneys, Bendels and Dean and Deluca.

Jeff:  Have you experienced any shelf life issues?

Joan:  For chocolates without preservatives, shelf life is generally not very long.  My recipes are reviewed by an experienced food chemist.  Most of my bon bon fillings are ganache, praline and caramel so I always go by the shortest shelf life, which is the ganache.  If you store our chocolates at 68F or below, the shelf life is 3 months.  Moderne Bars have an 8 month shelf life, so that has been more appealing to small stores. 

Kathryn:  What have you learned, 9 years into the business?

  • I was naïve about how hard it was to sell a good product.  A lot of things were going on and Chocolate was suddenly a hot thing.  Major specialty retailers, gourmet markets and department stores wanted to carry it.  Sales have been the bane of my existence though.  We haven’t had a consistent sales effort.  Doing trade shows, we get good sales leads and have picked up new accounts that way.  Off and on, commission based sales people have helped with our sales.  When you’re wholesaling, you can’t become dependent on one primary store – you have to supplement with orders from multiple, smaller stores.
  • Buyers’ tastes are often more sophisticated than their clientele.  We’re growing now because the public’s taste has caught up to our product. I’ve often been the first with my brand to differentiate myself and the market has had to come up to us.
  •  We’re really small in terms of production and administrative people resources.  I have 2 full time production employees, one of whom has been here 6 years, and I also take on seasonal help.  Doing the in-store sampling and demoing is an enormous time drain, and I lost some stores because I just couldn't keep up with that.  
  • I've never had a PR budget, but the Top of the “O” list, Sofi Gold/Silver awards and random citations around the country have given us press and fueled our current growth. Perhaps now an active social media strategy makes this a little less important, but when I was starting out a big PR endorsement would have been a nice initial boost.
  • This has been a really good year, but our success up on the 9th floor leads me to believe that I would have done even better from day one with a retail store.  I know retail is tough and there are a lot of ‘dark doors’ out there, but if I compare myself to my successful peers, they all have retail shops!  It makes it easy for journalists to find you and write about you.  My strategy was to take this space and start off wholesale, because Manhattan retail is so expensive.  I thought it wasn't worth the tradeoff to me for the smaller production space I would have been able to afford if I had opened with a retail outlet.   I could build brand awareness through the web, but I had low margins because I was always selling wholesale. 
  • A year and a half ago we started opening the factory on weekends more often by allocating more space from the production area so we could sell our products at a higher margin 
Jeff:  Have you experienced any problems producing and selling out of an office loft building?

Joan:  No, surprisingly not.  We’re licensed by the NY Department of Agriculture, and I've been lucky with inspections.  We were the first food business for the  building management company who owns this building, and they've been pretty lenient.

It would make sense now to have our own delivery van for local deliveries, but we ship Fed Ex and UPS throughout the year. Even when it’s hot, we ship Fed Ex ground in the tri-state area and overnight second day to the rest of the country with freezer gel packs and padded insulation. 

Jeff:  At what point into it were you able to say that you were happy with your progress? 

Joan:  Things were going gangbusters after the second full year in 2006 but businesses are cyclical and progress comes and goes.   For example, I think now that I took on the additional office space a little too early, but it was better to do that than to outgrow the production space.  I wanted to create a brand rather than just be a little store, and I felt that I had established “the brand” in the first year or two. 

Additionally, chocolate has evolved as a product in the last 6 years.   Bonbon shelf life is short for artisan chocolates and only sell well around the holidays so most chocolatiers moved into solid bars. But I wanted to have a filled one, with a longer shelf life than the bon bons.  

Jeff:  Is there anything you would have done differently over these 9 years?

Joan:  It would have been good if I had paid someone to do sales, but paying a salary made me nervous.  Now I feel that decision might have been a mistake.  I've spent all my time and energy on creating the best product I can, but it’s taking longer to pay off because I can’t do everything. 

So what do you do?  I should have gone out and gotten more money sooner for a retail space and more PR and sales help.  Someone told me once:   Don’t work so much “in the business” that you can’t work “on the business” – and yet, I totally did that.  It doesn't work to make chocolate all day and then work on the business aspects at night.

Jeff: Thanks Joan!

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