Restaurant Brand Expansion: Strategies for National Success
My best advice: Don’t just sell food & drink. Build a true restaurant brand and create additional profit centers.
Wouldn’t it be incredible if you could sell a product your customers love all over the country? Well, here’s how to do it!
In this episode on the Restaurant Rockstars Podcast, I’m speaking with Gail Kurpgeweit. Gail has had great success launching over 100 restaurant brand products for scale and getting them placed in major supermarkets and famous name big box stores. Best of all she and her team handle the entire process and it’s all done for you the restaurateur.
Listen as Gail shares about expanding restaurant brands including:
The process and strategy of launching your restaurant brand item without adding employees or locations
Hot Products and categories with huge growth potential
How to build awareness for your restaurant brand product on a multi-store level
The importance of packaging and awards her company has won for packaging excellence
Your investment and timeline to in-store sales
And the really BIG Picture is the possibility of a huge national company buying your restaurant brand product. This happens more often than you think when you have a proven national big seller.
Don’t miss out on the Restaurant Profit Maximizer while it is available. It will help INCREASE your PROFIT even as you battle inflation & high labor costs. You literally have nothing to lose but your shrinking margins. Check it out here https://academy.restaurantrockstars.com/profitmaximizer
Now, go Rock YOUR Profits and YOUR Restaurant!
Roger
Connect with our Guest:
Website: https://www.pivotnorthconsulting.com/
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Ask Chef Gail
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Hey there, welcome back to the podcast. So glad you’re with me. All I can say about this episode is wow. Now, this is an opportunity to expand your business, to expand your brand, it to even take it national and it’s all done for you. This is something I explored years ago. If you’ve got a product that you think that your customers love and you suddenly think, wow, this could be in supermarkets across the country.
How do I do it? It’s so overwhelming. My guest today is great. Gail Kirpjewite, and she is the CEO, the head of a company called Pivot North Consulting Group that does just that. They have the relationships, they have the track record, they’re used to working with all kinds of products, and they do everything for you, and they have strategy sessions that determine success.
Do you have something special? Can it be amazing and set the world on fire? You’re not going to want to miss this episode. It’s powerful. You’ve also probably heard me talk about the profit maximizer. Now, restaurants are struggling with inflation. They’re struggling with high labor costs. They might be busy in filling their seats, but their margins are low, and they’re just not making enough money.
Wondering, why is my business so low? Well, you owe it to yourself. You gotta check out the Profit Maximizer. It’ll give you immediately actionable ideas on how to execute them to boost your bottom line profit. Check it out at academy.restaurantrockstars.com/profitmaximizer. Now, on with the episode.
You’re tuned in to the Restaurant Rockstars Podcast. Powerful ideas to rock your restaurant. Here’s your host, Roger Beaudoin.
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Hey, everybody. Welcome back. This is the Restaurant Rockstars podcast. I’m so glad you’re here and welcome to the show. Gail, how are you?
Thank you. I’m great. How are you?
Terrific. This is really fascinating because I’m a huge believer in not just selling food and drink when you own a restaurant or run a hospitality enterprise.
It’s really about additional profit centers. And you have an expertise in this that we’re going to dive into, but Everyone knows, my first question is usually, how did you get into this business? What was your backstory? You can take us back as far as it goes. If you were a teenager and you worked in fast food or whatever it was, everyone’s got a story.
What’s yours?
Oh, back when I was a teenager, I was a terrible cook.
Oh, did you cook?
I tried. I was terrible at it. Just terrible. But eventually, I grew up and became an adult. So I always had a passion for food and I started out in around 2009. I came from a management, consulting management services background, didn’t have anything to do with food.
And then in 2009 around that time when the economy was tanking and everybody was looking for new footings I had just went to my daughter’s, made her wedding cake. And the wedding cake was very popular. And I came home from that wedding thinking maybe this is, The next step for my career, right?
Started out as doing cakes and then it turned into catering and, my business background, it quickly. By 2012 or so, we had a full scale catering in Seattle, larger corporate events. And then it grew into frozen food manufacturing. We got a deal with Microsoft where they wanted us to make these prepared meals for their cafes.
So I got into packaging and that turned into CPG, started launching our own products. Worked on some deals with QVC, things like that. So it just grew and scaled and it was all wonderful.
Let me ask you that. That’s fascinating story. Would you say that there was a turning point or a lucky break where you had some success in catering, but then somehow you got discovered by Microsoft and I’m on the map, it’s like I’m a clothing manufacturer and Oprah bought something and now she’s telling the world, it’s you now got Microsoft as a client.
How did that come about?
I think the fact that we specialized in large events early on, and again, it was the, we’re in Seattle at the time I was in Seattle, now I’m in Arizona.
At the
time, Seattle, those are the big accounts, Microsoft, Google. And so as a caterer, I was like, I want that lunch business, right?
Those offerings. And so we would just talk to their, Admins and we’d get the business. And then pretty soon I’m looking for opportunities and how can we become a really great partner? It’s always what is, what does Microsoft need? What makes things easier for these admins to secure a caterer?
And so I started out that way and that’s where we started to learn that some of the bigger events, that’s where they were having some trouble. So we scaled and partnered with companies like Compass Group, things like that to do larger events. And then specialized in that. So that’s how it started was just the, it’s all about relationships, right?
And finding and listening to the client and finding out what do they, what’s really important to them? What need is not being resolved, served right now? And How can we help?
Excellent. That’s terrific. So that pretty much launched everything. And then you had partnerships I heard along the way.
And did you specialize in any particular type of product or did you have the expertise to do just about anything that was food related? Tell me about that.
From catering, we really focused on, so I did, at the beginning when I started this food business, I thought I need to really learn how to cook professionally because I was, Not a great cook.
So I went to culinary school in the mornings, and then during the day, I would build my catering business. So at a culinary school, I really grew a passion for French cooking and things like that. And so in catering, we focused on really amazing sauces and things like that. That’s where it you and if I could just say, we did a lot of Indian food.
And I would hire on specialty chefs, because in that Seattle area, there’s a lot of people who really enjoy Indian cuisine. So, focused on that quite a bit. But I would say that the majority of that growth just came from the, on the CPG side was frozen food. Really becoming an expert in frozen food because It was how we could get meals and prepared meals in these specialty products that Microsoft wanted for the cafes.
We could get them to grow. And the first product line we did for them was gluten free because that was back in the day when that was becoming a thing. They needed gluten free options in the cafe. They didn’t have any. That’s the market we served. We came up with this line of gluten free. But I had to learn it like at the time I didn’t, Know anything about gluten free?
What I knew was that I wanted the food to taste as good for gluten free as it did for our regular clients. And that’s what we did. So that was the engineering behind it.
Interesting. Now, I think back on my own experience, because I had a very successful restaurant, and our primary product was pizza.
And it was so popular, this pizza. And we decided to freeze them, and anyone who enjoyed our pizza could take a pizza home. But then the next level was so much more complicated, because first I think we had to explore food testing and calorie information and ingredients and legalities. And then we had to figure out how do we par bake this thing so that it can just be popped in the oven and how do we shrink wrap it and package it properly.
And then when you start talking to supermarkets or distribution, now suddenly you’re looking at some hurdles to jump like slotting fees. And yeah, that’s going to be 50, 000 to put your product on our shelf. Just to see if it works. And some of these things can be daunting to some of our audience that say, Hey, I got a spaghetti sauce.
That’ll set the world on fire. You know what I mean? What’s your advice in how do you jump some of those hurdles? Do you help with that now? Are you a consultant? You help people bring a product to market.
Exactly what we do. That’s exactly what we do. So after COVID, of course killed catering, right?
So as I was coming back from from COVID. And I really wanted to reinvent my business to be more kind of bulletproof, I wanted to make sure that we could shut down on a whim and we couldn’t and that, the, if the economy shifted, how can we do a better job? So I really looked at what we had done successfully with CPG is for our own products before COVID.
I just really, and I also have a passion for restaurants. I, restaurant brands and things like that, everybody in this hospitality industry. So I said, how can we serve the restaurant community Give them something of value and take all these skills and everything that we have and do something great for all of us.
So developed menu to market. And menu to market is a program that’s completely all inclusive services. So our rest, our clients stay restaurant owners and our team does everything else. And we literally take all that R and D. What is it going to take to get this product to be successfully packaged and legally compliant?
Get it into manufacturing. And then once it’s a product then it baton passes to our brokerage division where we sell it into grocery stores. And we handle all the distribution because one of the things you just touched on was how difficult this is for new brands and one of the biggest hurdles for new brands is distribution because the big distributors And I won’t mention their names, but there’s the big ones that serve the whole country for grocery store distribution make it nearly impossible for a new and emerging brand because they’re so expensive.
And it just takes people out of the game before they even got in it. So we have established our own distribution networks that allows us to keep distribution costs really low for our clients and we literally handle everything. Because our clients do not know this industry, number one. And two, they’re still running successful restaurants.
That answers the question of not increasing your head count. I guess I, before I talked to you, I had this impression like somehow, you need a ghost kitchen or you need a commissary kitchen and you need extra people to start producing this stuff. If you even prove that you have a market.
So I’m completely wrong in that regard. So thanks for clarifying. Do you, so you obviously evaluate someone’s product and say, yeah, I believe this has potential or you know what, you’re way off base here. This will never sell. You have to have those hard conversations.
Yes. Yes. That’s phase one. We call it.
All right. Take us through the validation phase. So phase one is, yes, phase one is validation where we do a really deep dive into their product their menu. Like what products on their menu really have. Legs for CPG. And then we look at their brand. Can their brand survive outside of their city, outside of their community?
And if not, like if currently their brand is very small, what would that look like on a national scale? A good example of that is Fancy Freeze. Fancy Freeze is our milkshake product. Number one seller in its category. It’s a fantastic product. It’s a small brand out of Boise, Idaho. They have two restaurants.
They’re a great brand. Very modern thinking when it comes to marketing and things like that, but it’s still two rest, two locations. You wouldn’t look at them and think, Oh, they’re ready for a national expansion, but they were very open to being coached into this new marketing and the way that we’ve built their product.
They’re on. Getting on national shelves here as we speak. They’ve got, even though it’s a local Boise brand, the brand has legs for national distribution and expansion because of how it was set up. So it’s a very successful launch. But we look at that and say, is this business able and willing to update their and scale up their branding so that they’re able to, to position?
Otherwise, we don’t want the local deals. We’re not going to just take a product that we can only sell in their local grocery.
Let me ask you a question. With that said, taking the brand to the next level, maybe they got an established clientele in Boise, Idaho, or wherever it is. And they got two restaurants and they got a loyal following and all that.
But again, do you evaluate the graphics, the logos, the fonts, the colors, the image, the aura? It’s or do you develop that? Do you have a team that says you got something here, but you need to take your marketing next level before we can do anything with it. And that’s part of the package too? In
the validation phase, we’re analyzing if they’re willing to do that.
And then we know what, and we have design partners that we work with and we trust. We delegate that piece to them, but we budget that in. In phase one, we’re doing the financial proformas for 24 months. We’re saying, if we move forward, this is likely what it’s going to cost you over the course of 24 months.
24 months.
Okay.
And it’s realistic. Like I’m not trying to talk them into this. This is something that this is the reality. It costs money to do this. So we evaluate number one, what it’s going to cost. Number two, are they, do they have the mindset of somebody that can expand outside their region? Number three, what does our category tell us?
So we pulled Nielsen data, which tells us how much, what’s the category of velocity. So how many products are actually selling off of those shelves right now? And who are they going to be competing against?
Because
that matters, right? Some shelves have a negative velocity where sales are really trending downward.
That’s not good. We don’t want to go into that area. We would look for a different product on their menu.
Wow. Okay.
Other we know that categories have really high velocity. They’re strong. We know we can move 30, 40 units a week, 50 units a week. Whatever that number is, and we’re going to be really confident that the category can support this product, right?
Then we would give it the green light and say, yeah, this makes sense. In Phase 1, it’s all about the analysis. And we dive deep into the numbers, we dive deep into the category, the product, the formula. So we actually have an R& D team who will take their menu item and we figure out, is it even possible to make that manufacturable?
And sometimes it is, and sometimes it’s just not realistic. Sometimes we have to invent things. We do hit that up sometimes, or we have to come up with We know that the North Star target is that product has to be an exact match of what’s happening at the restaurant. Because we’re going to leverage that restaurant brand, and it has to be the same.
Customers will skewer you on social media if your product doesn’t match.
You mentioned the word invent, which my gears just turned and I’m thinking, how often or is it really rare that you find a brand new category that gets pioneered by virtue of a unique product that’s so unique that there is no competition and you see the potential in it, but yet it’s not proven in any category?
How often does that happen?
We innovate on every product, but we’re not going to develop new categories. And there’s a reason for that, because what we want is when we get to a retailer conversation, if they have to try to figure out where this is going to fit, then we’re out of the game. So we’re going to make it real easy for that retailer to say yes to us.
Hey, this is the shelf we want. This is where the product fits. This is the velocity. This is why we think we’re going to be great. This is why we’ve chosen this MSRP. Like we go in fully armed. To get to that point though, once we sit on a shelf, we want to stand out. It’s important to have innovation. So in that case, every product we develop, we’re looking at how are we going to make this thing very unique and innovative.
So that milkshake behind me is another good example. We had to develop that product because milkshakes didn’t exist. You can’t freeze a soft serve milkshake. So we had to develop this patent pending pouch that allows us to freeze it. That was first hurdle. Second hurdle was, we had to say, how can we make this fit on a shelf at the retailer level?
We wanted it to fit in the handheld ice cream category. Because that had the highest velocity, number one. And number two, it gave room on the shelf for the retailer to say, yes, we could have gone with frozen beverage and then we had a lower velocity. So we know we’re going to make this handheld ice cream.
Everything is about knowing what’s coming, going, what’s around the corner and how can we be prepared for that and how can we, engineer this product so we have a smooth transition into retail. We start in the very beginning because that doesn’t happen by chance.
How involved you’re a passionate lady, I can tell, and you’ve had so much success and so much experience doing this.
Is your role still day to day right in the trenches, like evaluating products and viability and being part of all these phases?
I’m very involved in every single day of this product. Yes, we have a strong and growing team, but I’m still very involved. So I’m at the higher level of involvement, like I’m Making these decisions about strategy and so forth, but the team executes,
obviously we can’t, we
can’t, we have a lot of products in either in development or on shelf.
So there’s a lot happening, but but yeah, I’m very involved and I love it. So I can work all the time and I’m real happy about it.
How long has this company, Pivot North Consulting, been doing what we’re talking about, and obviously you’ve got connections that keep expanding based on your longevity in business and your track record, but has it been several years?
Since 2021.
Okay.
So right after COVID, we started this division.
And just in the United States, you’re in Canada as well?
So we’re only selling on retail shelves in the United States, and that’s on purpose. We’re keeping it that way.
Sure.
The only exception is a few products on Amazon. Of course, that always automatically takes you outside the country.
Yeah. But we are producing outside of the US so we have one of our products being produced, two of our products now being produced in Mexico. So we’re back and forth across the border with ingredients and with finished goods. And we’re actually looking at producing in Sri Lanka. So those are, there’s opportunities outside of the U S for manufacturing that we really like.
I guess the next thing that comes to mind is logistics and lead times and volume of work. Purchases to have this stuff manufactured before you’ve actually do you start out small and test the market in certain regions and then expand and roll out from there? Tell us about, maybe I’m getting ahead of myself because you started talking about the phases.
We started talking about validation and then I just took you off track and led you down a couple of roads. I don’t want to tell you a story, but all these things are fascinating to our audience who wants to, who might be interested in doing this.
Yeah. So phase one, we do develop a generalized roadmap of where do we think this product is going to go?
What retail partners, what is distribution going to look like?
Okay.
So once, once we’re done with phase one, we’ve have that report the client’s happy to move forward or they’re, sometimes we say no, 50 percent of the time I say no to a product because it’s not. Fit for us. But when we all move forward into phase two, which is getting that product ready, that’s the R& D getting the product packaged and designed and everything that’s involved that’s phase two.
Phase three is brokerage and distribution. So when it comes to the logistics of all of that, of course, there’s ingredients going, sometimes we’re sourcing ingredients and getting them to the manufacturer. Sometimes the manufacturer sources those things. Every product is different. Can I
ask you a question with that said?
We talked about the importance of consistency with the product as it’s sold in the restaurant now. And now suddenly you need a volume of a certain product that they might be using. Now you have to find alternatives in some cases that have the same flavor profile and the same quality and the same cost effectiveness and all these things go into that equation, right?
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Yes, so how we approach that is again through the R& D team does a lot of this. But so for example our huckleberry syrup and huckleberry jam, okay? That is based on a restaurant concept out of California and Texas and Arizona. They’re very fast growing brand Huckleberry restaurants, so they’re Product when we, it came to us, they didn’t own their own formula, so we had to come up with their formula.
We had to take their product and match it, and then come up with this formula.
Okay. So
We did that part of it. And then part of the challenge was some of these, like another product that we have that we’re producing in Mexico that. Some of those ingredients you can’t get in Mexico. So sometimes we have to take an ingredient and match that because it’s not available in bulk.
So then we’ll, our R& D teams will, R& D teams will create that ingredient itself and then say, okay, Now here, make this ingredient along with the rest of the product. So we’re always figuring out a way to get it done because sometimes really common in restaurants, they’ll be using some kind of a spice blend and it comes in a six ounce jar and you’re never going to, that’s not going to happen to get it in bulk.
So we have to engineer it. That’s what we do.
Wow. This is a fascinating process. It’s a science thing, right? Yeah. Oh, it is. Yeah. Yeah. It’s like you’re in the laboratory in some cases, too. And there’s got to be lots of tasting and all that sort of thing and yeah. Wow. This is a really fascinating topic.
It really is.
Sometimes hundreds of variations before we hit where we want to hit. I
probably took you off track. We’re talking about phases and I definitely want to lay out that roadmap for someone that is really interested in doing this. So I’m going to stop interrupting. I’m just going to listen to you.
Tell us a story.
That’s the, so phase two is getting the product ready, right? So now we have these design partners that we really like, and I don’t know if you can see behind me, there’s a, We just won a big award for the national, it’s an international food award called the Sophie Award for Packaging Design, Innovation in Packaging.
And that came, one of our design partners, like they worked with us on that packaging to make it really stand out and make it beautiful. So phase two is all about really engineering a product that’s going to get attention. My North Star goal for these projects is that it has to, I want that consumer to walk down the aisle and I want fireworks to go off.
I want so much attention on that product that they have to see it. They have to stop and look at it. And that gets us our first purchase. And then the taste and the quality and the texture and all those, the flavor profiles, all of that is what gets us those continued to, the second buy, the third buy, the repeat purchases.
And that’s where the restaurant brands are so strong is they’ve had all these years to develop products that we know consumers like, right? Customers are coming in Every week to buy, to dine at that restaurant. It’s a proven concept. So as long as we match to that what they’re doing, then we know we have a winner on the shelf
because it’s a proven concept. We’re not guessing.
Of course. This, it must be. Very dramatically from product to product. But is there an average timeline from you’re sitting down with a client and you’re saying this is how the process works. And then they say, yep, sign me up and this is what I’ve got.
And you agree, yes, I think this has potential. What is an average timeline before that product actually hits the market in stores and, gets distribution? Yeah, I would say nine
months to a year. So first going phase one takes us about four to six weeks. So and then if we move forward into phase two, I usually say six to nine months is reasonable.
If R& D becomes really difficult, like our Tacotarian product took a year, but it’s an amazing product. It’s shelf stable. It’s based, Tacotarian is a vegan, number one vegan tecuria in the country. They were voted number one. They’re a fantastic brand, very fast growing, and that product Took a lot of development to get it right and it is fantastic, but so it’s worth it, but sometimes it takes a little bit longer.
The, so that I say six months, nine months, somewhere in that range is reasonable. As soon as we have a co packer and we know we’re going to move forward, we start the sales process. So by the time we go into first full batch production, we want to have that batch usually around a third sold. So we’re already have been, we’ve been pre pitching all along to retail partners to get that product going.
The other thing, if we have a shelf stable product, we’re always going to want to put it on Amazon or TikTok shop or anything like that DTC to get it in consumers hands, get revenue coming in a little more quickly. So we can be DTC much quicker than we can get into a retail store.
Let’s go back to the actual supermarket placement, which is so important, right?
To make something stand out. So you mentioned that the milkshake product was with the handheld ice cream product and all that, and that makes perfect sense because you need freezer space for that, but there are shelf stable products that Maybe on an end talker, just to introduce it, but then it gets moved to an interior shelf once it proves itself.
Is that always the case? Or there’s certain expenses that go with that, because you’re giving someone premier placement just to introduce it before it gets put in its natural place once it’s established. I’m just guessing. Everyone goes into a supermarket and we see the end talkers and we see the products that are right at the cashier for the impulse purchases as people are cashing out and all of this has a strategy to it.
I know, and you’re an expert in what that strategy is. How does that work?
So we approach this with, first of all, we always want to start regionally and then go locally or nationally. So regionally is that first year of really getting intense focus in the region.
Okay.
And because of that, we’re going to go to these retailers that have a strong local presence, and we’re going to really amp up the side of, hey, this is a restaurant, it’s a proven concept, you have customers that are in these restaurants that are going out, we’re going to bring to you, so we’re showing them how we’re going to be a great partner, and we can get Often, knock on wood we get a lot of these deals.
We don’t pay slotting most of the time for these initial cut in deals, or we call it an in and out deal, where we’re just going to come in, let’s test the market, see how it goes and let, and give them a chance to try it. And sometimes that looks like an out of aisle display. They call it a shipper, and you put your product in the aisle, and it stands in, in a nice display piece.
Sometimes it’s an end cap deal, where we’re just going to fill up the end cap and see how it plays. Even when, even if we, they give us this little bit of space, what we do then is we immediately go into the retailer side marketing. So we’re going to have in store demo events where we’re sampling the product with branded beautiful tables where the, and everybody in uniform, it’s sharp and that brand is on display.
And then we have dedicated merchandisers in every door we’re in, where that means every week one of our personal employees is going to walk into that store, make sure the shelf is set, or the display is set, that it’s fully stocked. They’re going to be talking to the employees there to make sure that our products stay stocked.
We just don’t rely on anyone else. This is all of our internal teams saying, We’re going to make sure our displays are perfect and that we look, our products are going to stand out. And that takes a considerable amount of investment and dedication because that’s what makes our products number one sellers.
Like Fancy Freeze has been on the shelf 56 weeks now. It is the number one seller in almost every door. We’ve never been in 50, 56 weeks span, we’ve never been less than fourth position and we’re competing against Klondike, Tillamook all of the major ice cream brands. And we’ve never been less than fourth position in hundreds of brands in that category.
Yeah,
it’s a very successful product, which is why it’s being picked up for national distribution now. But the point is that there’s. There’s an commitment to these products. It doesn’t, and the re, and the retailers know that. So they’ll, we often will get away with not having to pay huge. Slotting fees, even if we do get slotted or when we get slotted because they understand these are new and emerging brands.
They don’t have the margin for all of that, but they know we’re going to perform and they know we’re going to bring them customers and they know we’re going to participate in their promo programs and we’re going to put coupons on Instacart and on their shopping apps and we’re going to be a great partner.
So we can come to the table with other things besides the slotting fee. And sometimes you pay slotting fees. Sometimes we do, but when we do it’s after we’ve already really shown they’re not as much as other, I mean there are companies that will just come in, that’s their strategy is to just pay for the show.
And I, that’s, my clients don’t have that kind of money, most of them.
I’m hearing competitive advantage in your entire approach from start to finish, and the relationships, and the trust that you’ve established with the client. The partners that you work with, and the distribution channels and all. The award you talked about, is that for the milkshake product?
The packaging award? It
is. It is. That’s the Sophie Award. It’s given out by the Specialty Food Association. Just went to New York a couple weeks ago to receive that. It was pretty fun and exciting.
That’s fantastic.
But that product has won multiple awards for the packaging because there’s a lot of There’s so much strategy that goes into the packaging design.
And that’s one of the pills that are a little harder to swallow for some of our clients in the beginning, is they don’t understand how much that’s going to cost. Because they can’t just use their designer who did their menus, and the designer who might, their brother in law who does, did their logo.
That’s not, no, that’s going to give you a community reach, but that’s not going to get you national legs.
Does research play into this and focus groups and all this other kind of stuff? And that’s just the tip of the iceberg. I guess where I’m really going into this is taste tastes in different parts of the country.
This may fly in the Northeast and it may bomb in the Southwest. It’s you must have all that data that says, we believe this is the strongest market and we won’t even take it to this market because we just don’t think it’ll do well. You make these hard decisions.
Yes, so that’s one of the reasons we pulled Nelson Data, because Nelson Data is going to tell us how that category is performing and who our competitors are.
That’s right, you said that. And
We always want to be innovative, like we don’t want to be we’re not coming into the market with the same product that’s already on the shelf. We have to really make it stand out. So a good example of this We have a new steak sauce coming out from a restaurant concept in Virginia, 1799.
That is an amazing product, amazing brand, they have a great story, absolutely fantastic. But this sauce For their product, it’s a very premium product. It takes months to get on a reservation at their restaurant. It’s a very nice restaurant. We want that product to reflect their brand, right? So it has to be premium and beautiful.
So we’re doing a custom bottle. It’s so beautiful. That bottle was designed to match their brand, reflect their brand, their position, all that. When that product sits on a shelf in the grocery store, there’s no question it’s going to stand out. It’s going to look very different. It’s going to get attention.
And that’s what is absolutely critical to the success of these products is they can’t look like everything else on the shelf. There has to be strategy behind how do we innovate. We have a soup product coming out. I’m not going to tell too many things cause I don’t want any of our competitors to grab it, but I will tell you that the soup product is super noisy, right?
You walk through that cat and I can tell you that we have found a way to innovate on that. That’s our focus is making sure that once we’re on the shelf, we really stand out and we look different. But so that’s one thing. And then we really look into that Nelson data to see what stores sell the most of that kind of a product, because not every store is a good candidate.
I can tell you there’s zero products that we would put in a discount store. Like one of these, super cheap dollars, general, that’s not our, that’s not our product. General dollar
or whatever it’s called. None of those. No, I get it. Okay. We
avoid those at all costs. So we’re most of the time looking for more premium markets, central markets, Wegmans, Whole Foods, those kinds of brands for more premium products.
So we’re definitely, there is a strategy to what stores we go after. One. Which is interesting. If you talk to somebody who’s bringing out a food product, let’s say that they’re doing it on their own and they talk to a broker, most brokers who sell food products into restaurant, into retail stores, have certain retailers that they’re strong with.
Like they’ll say, Hey, we can get you into Walmart or, Hey, we can get you into target, or we can get you into, um, Whole Foods, whatever that is, we take a different approach and we say, what’s the right partner for your brand? What’s the right banner for this product? And then if we don’t already have a relationship with those banners, we go aggressively pursue those relationships.
And sometimes we’ll partner with another broker who already has the relationships, we can get in there and get it started and we’ll split our commission with them to get us in that door. Because we’re targeting the retailer that’s the right fit, not whatever retailers we already have relationships.
So it’s a different
approach, but it’s working.
Okay, that makes sense. How are you finding most of your clients?
LinkedIn and referrals. Oh, .
Okay. Alright. We do
get a lot of referrals. So my va has a LinkedIn sales navigator thing. They, you’ll search for restaurant owners with certain amount of size to them. We know that they need to be a certain size to be able to make this work generally, and then they, he has this little.
Quick paragraph blurb that he sends them, and once they’ve connected, and if they respond to that, then we invite them to a webinar that’s on the website, and if they listen to the webinar, and they’re interested, then they’ll get time on my calendar. It used to be that they would just go straight from, hey, I’m a little interested, and they’d book on my calendar, and then I would talk to them, and then I realized, Eight out of ten of these are not good candidates, or they’re going to take forever to make a decision, and I just don’t have the time to chase them anymore because we’re so busy.
So this,
having the webinar now, it really helps people sort it for themselves that they’re a good fit for what we do, and then now I only really talk to people that are serious.
Beyond serious, let’s talk about margins that are so important because if you go through all this effort and all this time and even though someone else is paying that bill, it’s like there needs to be a certain margin that makes sense for it to make sense for everybody involved and every product is so different and you got to be able to figure out what’s everybody going to take a piece of this, and what’s the end the person that you first partner with going to make on this when all is said and done, and how much volume are they going to have to do for it to make sense?
It’s a whole financial equation, right?
Yes, that is part of the phase one proforma that we do that 24 month proforma is we’re going to take our estimated cost of goods sold. And plus distribution, we know what distribution costs.
Yes,
we know what our commission is going to be. We know, we just know most of these variables, most of these numbers.
How we approach That piece is we start at the end. So reverse engineer back. We know the retailer is going to have 40 percent, 38 to 40 percent or you’re not going to get on the shelf. They’re not going to talk to you. So we know we have to hit that margin for the retailer. Then we know that our client needs to make money at this or what’s the point.
So we know we want to have our client in that 18 to 25 percent range from those initial projections. So we look at that number. Then we know what the other distribution, what we know brokerage commission is going to look like. So now we know, okay, this is how much money we have. We know what MSRP needs to be.
We know that because of the Nelson data. So then we go and engineer the product. And sometimes that means, hey, we can’t do 12 ounces. We need to do eight. Or, hey, we can’t do a glass bottle. This needs to be plastic. We are going to engineer what the variables that we can control is that. Cost a good sold side of it.
And the ingredients and all of that. So now we’re looking at what, how can we make this product fit? over here so that we get, we hit all those other margin targets that we set out from at the beginning.
Besides the margin, though, there’s also a strategy of what is the competition selling their product for and is ours a more premium product or is there a penetration strategy of charging a lesser price than the competition to steal their market share and it’s like this can go on all day having these type of strategies and making the right decision is critical.
Absolutely, so
that’s where MSRP comes
in. Okay, tell us about that.
So the MSRP side of it is, we’re going to look at MSRPs in that category, and see what is the competition selling for. And 0 percent of the time are we going to try to compete on price. We’re never going to be the lowest cost, Product in that category.
’cause that’s for the national brands. You’ll never win that battle. So don’t bother. No. Based on that
volume. Sure. Yeah.
So we’re looking at what are the premium products charging, and we don’t wanna be the most expensive, but we’re also not gonna be the cheapest. So we’re somewhere in that middle range of premium products.
What is the. What’s going to keep our velocity where we need it to be, but also be able to have a product that people are going to purchase. So that’s, again, that MSRP strategy is something we engineered from date from the beginning before we even looked at cost of goods sold. And then some clients I will say that once it’s all in and said and done in the beginning, your first couple of launches, first couple of production runs, you’re not going to make much money.
Usually it’s a break even deal because you’re, Investing more in the bulk packaging purchases and all the things that you have to do to get going. So we make sure the client’s fully prepared for the realities of how that cash flow is going to work. But MSRP is an absolutely critical thing and we change that sometimes like sometimes by the time you get to market MSRP can be a little higher.
Yeah, is there an average typical investment over all your experience of rolling out all these products and if you can just give us an idea?
Yes, I would say that kind of on the lower end over the course of 24 months It’s not doesn’t all come to me and it doesn’t all happen at day one But over the course of that 24 months For inventory and all that, we’ve seen very successful launches in that 150 range, 100 to 150, 000.
We can usually make that work. It means that we’re going to, yeah, we’re going to stay in that region to begin with while they get the cash flowing, and then we can expand using reinvesting those earnings. If a client has more money to put into inventory, then we’re going to want to put them into a Walmart deal where they’re getting three 3, 800 doors day one, right?
Like pretty quickly, which can be a really good strategy, but they need a lot more money. Then we’re talking about millions of money. Cause you’ll be carrying that inventory for several months before you get paid on it. So we look at every client’s a little bit different. Every client up until Just recently I have a client who has a much larger budget.
We’re able to expand them much quicker. But everybody else, we’re trying to keep them in that 100 150 range to make this a stable, secure rollout that they’re going to be able to manage for cash flow. We get into the local distribution, regional distribution, and just take it as we go. So we’re in this together, but I don’t have, especially in the beginning, we didn’t have a lot of clients who could just put half a million dollars on the table.
They didn’t have it. And so how can we make this profitable and make it work? But we’re very careful with their money. Like we are, we look at this and say if we’re doing this in a conservative rollout and managing the number of doors that we’re going to go into, then it’s, then we can usually keep those budgets pretty tight.
You mentioned payment terms, and that must vary from company to company. Does your company have any leverage with your best relationships for a quicker payment, or is it all pretty much set in stone, and if you want to get into Walmart or Target or any of these bigger Whole Foods, it’s this is what the payment terms are, and there’s no negotiation.
Does it vary in every case, or is it no negotiation?
There’s not usually a lot of negotiation with the retailers. They have their systems in place, and they’re going to Pay at a certain timeline. I think one thing that we do for our clients is we stand on those receivables. If
we’re not
paid on a certain day, then there’s phone calls and emails, Hey, we’re checking in.
Because I’ve seen it go from where you’re told it’s a 30 day pay, and then it turns into 90 real quick that my clients can’t sustain that. So We have people on our team that stand on those receivables pretty carefully and making sure that their clients are getting paid, and we’ve been able to make sure, I don’t think we’ve had any of them yet that I’ve gone over two weeks longer than expected just because we have somebody standing on him.
The budget that you just laid out, just the rough estimate, does that include your fees or that’s just the cost of doing business?
That’s the cost of our fees, marketing, warehousing, distribution, cost of goods sold, all your packaging. It just depends on the product. If you’re doing a meat product, you need about 300,
000.
Okay. That’s helpful to
know. If you’re doing something a little more simple like a sauce or a plant based product or, something that doesn’t have heavy food costs, then we can usually make it work. 100, 150, 200. 200 range,
reasonably,
like successfully. Yeah,
That’s good news. That’s great.
Are there certain products that lend themselves best to this strategy? What is, we talked about a milkshake product, which was a pioneer in the category. And we’re talking about meats and we’re talking about sauces. We’re talking about, this taqueria, it’s that’s a pretty broad spectrum of product, but over your experience, is there one category that’s just a no brainer?
It’s we’re going to look at it, no questions about it, and we’re going to make this work because we know this category works. So these products work best in, within that strategy.
I want innovation in a category. I want to change a category. I want to take a category and bring something that is new and exciting and fresh to that category.
So I don’t really care what category it is. I will not do refrigerated. So we don’t do anything that is refrigerated because the shelf life sucks. So we only do frozen. We only do shelf stable. That’s it.
Makes perfect sense. So if it has
to be, and we engineer products every day to make them shelf stable, it’s Where normally it might be refrigerated, we find a way to make it shelf stable.
Okay.
Because we just won’t touch it. The other side of that is if it’s a super noisy category, then sometimes it’s a heavier financial lift to be competitive. Sauces, condiments, super, super noisy. So it’s gonna be, you’re gonna have to really drive innovation to get attention on that particular shelf and to even get the space, because these are.
Like I said noisy categories with a lot of competition. So I, what I care about, I guess my Northstar thing that I focus on with a new client, what are they known for? And that’s where the milkshakes came in. They were known for milkshakes. Tacotarian is known for their plant based taco fillings, right?
Like these are important. It’s important to align to the restaurant brand because that’s what we’re going to leverage. That’s what we’re going to say. Hey, look at this. These restaurants, these clients you can get this at home now, or you love this restaurant when you visited Las Vegas. Now you’re going to go home to Missouri.
You’d want this product, right? It’s, I think that the. Biggest, most important question first is, what is this brand known for? What, what’s going to resonate with their fan base? And then let’s bring that product to market and let’s figure out the best way to do it.
This is so fascinating to me and it brings me back.
When I was in graduate school, I had to write a paper on an entrepreneur and I was in the Boston area and there was a company back then, you may have heard of, that went national and it was bought out by Frito Lay and the product was smart food and it was pop Popcorn in a bag with the cheddar cheese and all that kind of stuff.
And I’m interviewing this person who’s the CEO and the founder of the company. And I think he just experimented in his kitchen and he came up with this product and now he’s got distribution and tractor trailer trucks with a smart food on the side and all this kind of stuff. And then he gets to the point of selling it to Frito Lay.
How often do any of your brands or in this, in general idea, get an exit strategy where a national company just buys them for a boatload of money?
Unfortunately. It happened to us early on to the point where now we’ve added, we’ve built verbiage into our brokerage agreement that says if that happens, we get our, we get paid a portion
because it
happens.
It’s really common.
For
the large food brands, that’s how they innovate. They don’t have their own innovation divisions. They, that’s how they do it. Yep. They find somebody that did the innovation and they say, Oh, let’s take that. And it happened. We had just launched in California, beautiful launch, lots of doors.
I was we were all pretty excited about this product and and they got bought out and it happened. My client took care of us. He said, I’m going to make sure that you’re, it’s fair for you guys. At the end of the day, I’m like, I’m not going to count on that moving forward. We have to build this into our brokerage agreements now because
I was thinking that.
That was going to be a next question, but you’re answering it. And I was going to ask you, do you ever take equity stakes in products that you really believe in? And that’s part of the deal. And if it goes huge, it’s like you guys made it happen.
I don’t. And I get asked that quite a bit. I really believe that we have to earn the business.
So what we do is we take a five year brokerage agreement. And I’m, we’re going to earn that business. We’re going to perform at a level where that client, there’s not going to be a question mark if they’re going to renew it the end of five years. But I don’t want a client with me out of obligation or because they have, because I have a stake in their business or anything like that.
Let’s earn their business. We do a, we do what we do and we do. Really cool things here. And we, it’s all about taking care of the client and we’re going to be, we hand select these clients. Like we’re not going to take everyone that’s not our model, but when we’re in with these clients are like family, like we are in this together.
And and I think they feel that connection with us, with me, especially I got, these are. We’re in this together. I’m getting trust and
transparency here in this relationship
and
it’s a win or it’s not going to win for anyone. I’m getting that.
And we literally, when it comes to phase three, we are a hundred percent commission based.
So if my client’s not getting paid, I’m not getting paid. And I’m still spending money on these merchandisers and all these demo events and we’re spending the money and I’m investing right along with them. If they’re not making money, I’m not making money and that’s just fair. So I’m willing to earn the business.
I don’t need to and I don’t take a piece of it because we’re dealing with in the beginning, Especially it’s hard to get the margin they need to be successful as it is, let alone someone taking more. So I get my brokerage commission and it’s fair and everybody’s wins and everybody’s happy about it.
And and I’ll just keep earning it.
Wow, you’ve given us a real deep dive into this whole process of opportunity and expanding your business and growing without adding employees and what the potential is. And I think every restaurant owner that has a product believes, wow, it can go so much farther than just my restaurant, and you’re giving them an opportunity to do that.
Have we missed anything? We’ve covered some ground today.
I don’t think we’ve missed anything. I would say that one of the things that I, Think is valuable to these brands that do this, these restaurant brands. Because a lot of ’em are like, why should we do this? Is it, are we really gonna make money?
’cause you’re not gonna make money for probably a year, maybe two. Usually by the end of year two you’re making good money because it’s Yes. Nice. Sure. It’s investment
and opportunity.
But I think one of the things that I love about, so yesterday I was on with a major re, I can’t say the name, but it’s a major retailer that has every, all.
This country and many others covered. And we had a meeting yesterday and we were talking about one of our products. And he was like, what I really like about this is that I don’t really need to know that restaurant exists in that town. This product could stand alone. And I’m like, exactly. That’s how we decide that was on purpose.
I don’t say it like that, duh. But that’s what I was thinking. I was like, that’s how we engineered that. But maybe I wasn’t clear. But it gives these restaurant brands a chance to build a brand that’s national brand, have a footprint so much credibility for their brand. That’s adding value to their business.
The value of their business overall makes them much more fundable if they have this, if they want to open another location, here you have another profitable revenue stream feeding, feeding money into your business. I think there’s a lot of benefits to restaurant owners that they might not always.
Kind of consider, they’re just thinking should I open another restaurant or should I do CPG? ’cause it’s a similar investment, right? This one has the chance to scale scale. Thank you. Don’t hit the ceiling.
Thank you. There’s the word. Every
time you, yeah. Every time you hit a new location, you’re gonna hit seating count, you’re gonna max out on seating count, you’re gonna max out on, if you drive up, whatever those things are.
And you’re gonna have all those employee issues and hiring and firing and logistics and investment. Yep. And yeah. Yep. So this
one,
similar
investment, but you have a chance to scale, and there’s really no limit.
No, there isn’t. No. It could absolutely explode. The right product, the right timing, the right marketing, the right packaging, and all the things you talked about
can
absolutely put this company as small as two locations on the map.
And suddenly. Absolutely. Wow. That’s incredible. This has been fascinating, Gail. I really appreciate you being on the podcast. Thank you. Wow. What an eye opener for our audience. So thank you so much for sharing. I’ve
enjoyed chatting.
I could talk shop
all day long.
I can too. I really enjoy that. But you’re delivering a tremendous service for our industry.
Thank you. Thanks for sharing.
Absolutely.
That was the Restaurant Rockstars podcast. Thank you so much. to our audience for tuning in. Thank you so much, Gail, for being a great guest, and thanks to our sponsors for supporting our show. Can’t wait to see you all in the next episode. Stay well, stay tuned, and we will see you then.
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