7 Ways to Grow Your Food Business

Action plans by Guest Blogger: Michael Adams

Editor’s note: Michael Adams is the Co-Founder of Gredio, web-based food manufacturing software for specialty food companies built to help you effortlessly run your business (and forget about Excel spreadsheets). He also runs Green Mountain Mustard, found in over 100 retailers across New England.

www.gredio.com

You’ve got your product. Sales are going well at the farmer’s market - maybe you’ve been able to create room on the shelf for your products at local retailers. A lot of food producers don’t make it as far as you have. But, you have a unique problem on your hands.

How do you grow your food business beyond just a couple of stores?

Most importantly, how do you make your food business your full-time gig and get rid of that pesky side-job. This is where, just like many small businesses, you have to get creative.

Here are 7 ways to grow your food business as well as the steps to be successful in each growth opportunity.

1. Retail/Wholesale

This is the most popular way to grow your food business. Getting your product into thousands of retailers is every producer’s dream. But, going from 10 to 100 to 1,000 retailers is tough enough. Here’s a five step action plan to grow your retail presence:

1. Ask customers where they want your product

2. Contact the store to find out who the buyer is

3. Send over samples, price sheet, and a business card

4. Follow up one week later to see about meeting the buyer

5. Promote your new retail location to your customers.

It’s a simple action plan, but that’s really how it’s done. If customers tell you where to go, they’ll at least be buying your product. Why buy where your customers aren’t? Let’s move on to the second way to grow your food business.

2. Ecommerce

Selling your product online is becoming an easy way for food producers to reach customers across the nation. Being able to buy hot sauce from Vermont, granola from Washington, and oranges from Florida not only creates a web of commerce, but helps others discover products without leaving their couch. That means if you’re a rural Virginia honey producer, your market is really the nation - not just your small-town customers. How can you take advantage of the web to grow your business? Here’s five steps to take:

1. Compare ecommerce options. (there are more than just these 10)

2. Select and build your store (you can get a designer to help you)

3. Think about what promotions and shipping you’ll offer your customers.

4. Create an experience with your product (they only have one chance to open your box)

5. Promote your store online and to your customers (especially tourists)

3. Fairs and Festivals

There’s almost nothing better than being able to interact with your customers. You get to know how much they love your product. You get to hear what recipes they’ve used your product in...and more! Here’s how to get your product into more fairs and festivals:

1.  Use festival directories FestivalNet and Craft Show Yellow Pages to find events.

2. Ask other food producers about shows (they’ll know which ones are good)

3. Try as many shows as possible (some will be good, some bad)

4. Build a beautiful display (this is no farmer’s market. You’re next to artists and craftspeople)

5. Emphasize free shipping (give tourists an incentive to buy).

4. Food Service

“Do you sell in bigger containers?” If you get that question all the time, I’d explore food service packaging - in quarts, gallons, condiment packets, etc. It’s a great way to sell a lot of product quickly. Plus, you get on the menu at some top restaurants in your area. Here’s the quick list of how to get started in food service:

1. Figure out your needs to package in larger containers

2. Determine your product cost and appropriate margins

3. Find a foodservice distributor or start knocking on doors (we find after lunch is the best time)

4. Make suggestions on how to use your product in certain dishes (do you research beforehand)

5. Follow up with restaurants directly (distributors don’t always have time to sell your product)

5. Catalog

Thought direct mail was a dying breed? It’s actually quite popular. From postcards to mail-order catalogs, more businesses are looking to use catalog sales to grow their food businesses. Here’s 5 tips to make your holiday catalog sales season a success:

1. Identify catalogs you would like to be in

2. Plan 4-6 months ahead (catalogs take a long time to plan)

3. Send samples (plus, make sure you’re including why you’re unique.)

4. Promote that you’re in the catalog - help the mail-order company drive their own sales!

5. Follow up after the catalog run to see how you can be a part of the next catalog (assuming it went well!)

6. Private Label

As one of my favorites on the list, private labeling offers other companies the opportunity to put their own label on your product. For example, when you walk into a store and it seems there’s an endless amount of food products - that’s private labeling. The store has taken other company's recipes and labeled them as their own. Here’s 5 tips to make private labeling work for you:

1. Let them create their own label art (you have better things to do)

2. Have minimum orders (10 cases of product is a good recommendation)

3. Put it on your website (don’t let it be a secret)

4. Target weddings and corporate events (they LOVE to private label everything)

5. Let it happen (many private label companies simply fall into place)

7. Daily Deal Sites

Daily deal sites are all over the place.There’s tons of them. From Groupon to Living Social, LocalvoreToday to Jumponit (a few local ones in Vermont), they offer companies a chance to build their fan base. But, there are some things you have to watch out for. Here are a couple tips:

1. Make the deal worth it (offering free shipping isn’t going to cut it)

2. Make it profitable (make sure you’re making money)

3. Run the deal on multiple deal sites - you can attract a larger crowd

4. Try your deal at different times of the year (holidays are almost always best!)

5. Learn and improve for next time (it never goes right the first time - learn and try again)

What strategies have used to grow your food business? Let’s start a discussion below in the comments and grow our food businesses together.

Do Not Fall In Love With Any Particular Space

Interview at Langosta Lounge, Asbury Park, NJ

with Marilyn Schlossbach, owner

www.kitschens.com

http://www.marilynschlossbach.com/about/

By Kathryn Gordon, Food Startup Help

Editor’s Note: Marilyn Schlossbach is a successful restaurateur whose multiple restaurants were damaged by Hurricane Sandy.

Kathryn:  Hi Marilyn, I wanted to come talk to you about the process of reopening numerous restaurants at once after Hurricane Sandy. 

Marilyn:  You have to make decisions on the fly, and based on the money situation each week.  It was a process.  You know what you need to get done, but with everyone in the area needing help as well, the people who were available to do the work – things don’t always line up together like a perfect storm.    

It takes time to get up and running, and the timeframe for reopening was never set in stone.  Our finances weren’t completely in line before the storm because we had started a construction project at Langosta.  It was very difficult to know when to say we would be opening, and when to be able to hire and start training staff again.   We got an SBA interest-bearing loan in the end, and now I’m applying for a state grant for additional funding.

Editor’s Note:  a commercial establishment is not covered under FEMA

Kathryn:  How did you go about finding replacement staff?  I imagine you didn’t keep many on board during the 7 month rebuilding hiatus. 

Marilyn:   We basically opened the weekend before Memorial Day with all new staff.  I bought into different website restaurant career sites, like “Good Food” jobs (www.goodfoodjobs.com), and did some recruiting at career schools and through Craig’s List. 

Not all people can handle our volume.  It can be a monster, depending on the shows open at The Stone Pony (right outside our door), festivals, etc. and the weather.  It’s a tough dichotomy.

Finding back of house staff (the chefs) was very difficult.  Everyone in Asbury Park along the beach reopened at the same time.  Unfortunately, New Jersey labor laws are not conducive for hiring “seasonal” employees versus year round staff.  Paying overtime when we are at our peak season becomes a financial drain on the employer.  But there’s a 12-16 week window in a seasonal situation in which everyone has to be open in order to make their money to allow them to remain open for the year.

Kathryn:  What exactly was the damage here at Langosta Lounge from the storm?  It’s located right on the boardwalk (1000 Ocean Avenue, Asbury Park, NJ).

Marilyn:  There was 8 foot of water in the basement.  All the windows got blown out.  I had to replace the kitchen equipment, chairs and moldy walls.  We had a $100,000 electric bill for rewiring – and even now, something new happens that was an effect of the storm, like a computer dying (and the inside turns out to be filled with sand). 

                                                                       Photo from Event Planners Guide to The Jersey Shore

Kathryn:  How has business been since you reopened in May? 

Marilyn:  The weekends are great.  Jersey Shore business is all driven by visitors.  We need people to come, visit and eat!

Kathryn:  I see that you now have a new sushi area?

Marilyn:  That’s the construction project I’d started before the hurricane.  We’d decided to have a new format, bringing it up to over 300 seats.  The sushi bar area can either serve sushi or we can transition it to a private dining room – with a view of the ocean.

Kathryn:  I love how all your places and menus have different themes!

Marilyn:  I try to create a fun place.  I want a vacation atmosphere – and allow people to “go away from life” while they are here.

Kathryn:  To me, you’ve always been very good at self promotion.  I know you always have posters up of events at your various restaurants up and down the Jersey Shore, and postcards to mail to your customer list…  In fact, we did a macaron class and hot chocolate tasting here in February to help raise money for beach restoration and Kula Café, and you made up some fabulous postcards for that event!  

Editor’s Note:  only one of Marilyn’s restaurants and stores stayed open after Hurricane Sandy, the Dauphin Grille in the Berkeley Hotel.

Marilyn:  Early on I started collecting customer email addresses.   Word of mouth is the best PR!  So I built a grass roots database, to allow me to reach my customers.  

Kathryn:  What do you think of social media, or sites like Yelp?

Marilyn:  I prefer to display the postcards in the restaurants, and send them directly in mailings, because the people who post on review sites – the majority had a negative experience and there’s no “balance” in the reviews, and they’re superficial.  If you have a fabulous dining experience, you’re just happy.  You’re not driven to go home, open up the computer and post something on Yelp. 

Kathryn:  Can you talk about your community outreach efforts?  I know you’re very active in the local community, philanthropy, and helped found Kula Café (a community café with a youth job training program in an economically deprived area): www.kulacafe.org

Marilyn:  To me, you have to love what you do and not pursue it for the financial end.  Community based businesses support a lot of people, not just residents who need to eat.  They are the core of a community in providing a “sense of normalcy.” 

I’m financially responsible to over 100 employees.  I also believe in supporting local farmers.  We have a farm-to-table special at Langosta on Thursdays tied with cocktails.  Every Thursday evening, I started a 4:30 to sunset farm market in the old carousal in Asbury Park and encourage residents, and other restaurants, to buy local produce.

Kathryn:  You’re certainly busy!  How often do you visit each of your restaurants, since they’re scattered north and south on a 25 mile or so corridor?

Marilyn:  I try to visit each restaurant at least once a week.  The biggest storm hit was at Labrador Lounge (located in Normandy Beach, about the narrowest part of NJ with the ocean on one side and the bay on the other), so I spend most of my week at Labrador at the moment.  My staff there had on average been with me over 10 years.  Luckily, since it was a seasonal business – a lot of those employees came back, and have other jobs the rest of the year…

My husband and brother are also involved, as primary investors and managers.  And we need great, talented people to run these places and be the best they can be.

Kathryn:  What’s the biggest lesson you’ve learned, running multiple establishments?

Marilyn:  For any business venture, understand your demographics and have a firm business plan.  Do not “fall in love” with any particular space.  You need a reality check.  If there’s no foot traffic – a location is not perfect.  And be receptive to change – you always have to look ahead and see what you need to do to make things better.

Kathryn:  What’s next for you?  You seem to have no shortage of ideas!

Marilyn:  Our biggest hurdle for ourselves is we are full of ideas.   My husband looks at me and I get a certain look on my face, and he says “oh no…”  But you have to be as good an operator as an idea person to succeed.

We are reopening our retail outlets, and the Asbury Park Yacht Club (APYC) surf bar.  Pop’s Garage (in Asbury) will be open year round.  Opportunities always come my way – if they’re perfect, then I’ll decide.

We need support from everyone.  When people’s routines disappear, it adds to the general sadness and frustration regarding what happened with the hurricane, losing mementos that will never be replaced.  Come help everyone and come visit!

Wood cat that drifted into Langosta Lounge in the storm, on display -- hoping its owner comes to eat at the restaurant one day and claims the cat to take it home

Pay More For Smarter Workers

Interview with Ernest Lepore

Chef/Co-Owner Ferrara’s Bakery

With Jeff Yoskowitz, Jessie Riley and Kathryn Gordon of Food Startup Help

Kathryn:  Hi Ernest!  I met you a few years ago when you came to my French macaron class at ICE (Institute of Culinary Education), to be able to help train your staff on macaron baking consistency. 

I thought it would be interesting for our readers to talk to you, since you’re the steward of a bakery that’s been successful in NYC for 121 years.   It’s also fairly unusual, in my experience, for an established bakery owner to take classes!

Ernest:  I see myself as someone who teaches cooking, to my staff.  We have 30 people in our NY kitchen, and 30 in our NJ kitchen.  In NY, I oversee 2 production shifts a day.

I try to stay current and take baking and other classes.  I have to help our product evolve with the market, too.

Note:  Ernest has French style macarons on a red velvet cake slice – neither of which would have been featured when the bakery originally opened.

                                                   1926 Hobart mixer still going strong!

Jessie:  How long has your staff been with you?

Ernest:  Our bakers in the key positions don’t turnover.  We are on our 5^th head baker in 120 years.  The production manager has 44 years in production, and will be retiring soon. 

Jeff:  What do you attribute to your low staff turnover?

Ernest:  I pay more for smarter workers.  If they get their health department certification, they get $1 more an hour.  I want people who know not to put the eggs in the wrong spot – and others who if they see the eggs in the wrong spot, identify the issue and know to move the eggs.

Kathryn:  How else do you keep a business going for so many generations?

Ernest:  Well, I have a great uncle and an aunt who will critique me if they think the honey syrup on the struffolli was cooked too long – even at a family funeral!

Each generation has to figure out how to “pass it along.”  I see myself as a steward of our retail bakery in Manhattan, our import/export business, and our wholesale manufacturing facility for sfogliatelle and cannolis (in NJ).  That takes several family members to act as “business men” – not all have to cook.  But everyone has to decide who wants “to be in” and the others buy out the shares of the family members who don’t want to work in the business. 

Jessie:  You sell breads and traditional Italian pastries, and you have added to your product line over time.  Do you know your food costs for each item?

Ernest:  You have to know your food costs, the price of flour and everything else.  Nobody taught me, I’m self taught.  But every Wednesday, before pay day on every Thursday – I know every dime I owe everybody.

Pastry shops used to make a lot of money.   The margin on pastry is good – and 50% of our sales are gelato, which is great (it has a higher profit margin).  But generally there is more competition now for good Italian and French pastry. 

I know not to overprice the café.  A café experience is not a steak dinner.  It has to be priced to ride out economic downturns – our traffic should stay constant.  And people like to come back to what they know – you can’t always change everything.  Keep to the matrix – it’s the experience people come back for.

Jeff:  What one factor do you attribute that keep your customers returning?

Ernest:  You have to be primarily service oriented. People want to have a good time.  Your front of the house staff are more important than the product – they have to first say good morning and then good bye to everyone. 

Kathryn:  Ernest, you keep just throwing out “keys for success.”  I’m just going to list them for our readers! 

·      You have to earn an “A” every day – performance grades are not a “given”

·      Cooking is a business, not just what you love

·      Pay and feed your staff well.  To be paid fairly is a reasonable request.  Family meal is served here daily from 12:30-1:30 and everyone takes a break

Jeff:  Do you have any other advice from your work in the 121 year old family run business that you would share with new entrepreneurs?

Ernest:  Owning your  real estate versus just renting helps balance out a bad food year.  It would be too much for us to rent now – it’s very good we own the (5 story) building.  It’s a difficult business to start in, and 90% of new businesses fail because they are undercapitalized.  I have heard that 70% of the remaining 10% who make it through their first year fail in their second year.

You need a business plan, and to be prepared for a weak (not great) economy.  Be conservative with your business financing and decision making.

Jessie:  Thank you Ernest so much for giving us a tour and for all of your valuable insight.