Summary of Cooking Up a Business by Rachel Hofstetter

BookSummaryClub Blog Summary of Cooking Up a Business by Rachel Hofstetter

Has food always been a passion of yours? If you love food, you know the joy of tasting something new or the immense pride you feel when someone compliments one of your edible creations. But have you ever dreamed of turning your love of food into a business? 

It may seem scary, but if you are truly passionate about something, isn’t it worth a shot?

The best part about starting a business in the food industry is that you can learn from all the other successful entrepreneurs out there. This is exactly what Cooking Up a Business aims to do. There are many challenges that you will have to face when starting your own food business but if you know what to look out for, you’ve got a great chance of succeeding.

In this summary readers will discover:

  • Don’t use lack of funding as an excuse not to start
  • Getting your product right
  • The challenges of scaling
  • How to create a buzz around your products

Key lesson one: Don’t use lack of funding as an excuse not to start

Starting a food business requires money. But there’s no need to be anxious if you don’t have the cash! It’s just time to dig deep and get resourceful. 

The founders of Love Grown Foods Maddy D’Amato and Alex Hasulak can vouch for this fact as they have the experience to back it up. They decided to start a business using Maddy’s family recipe for granola. They were still in college at the time and did not have much money to start with. However, they dedicated their nights to watching movies and cooking up batches of granola to supply two of their local coffee shops. It was through this dedication and relentless hard working nature, that they ended up with an opportunity to supply the Aspen City market. Not soon after, they added supermarket chain King Soopers to their repertoire. They had their granola stocked in 80 King Sooper Stores and tt was only then that D’Amato and Hasulak realised they could start working on Love Grown Foods full time. Their hard work and determination enable them to persevere.

But sometimes, food businesses can have much higher manufacturing costs and issues with shelf-life. And whilst D’Amato and Hasulak started with local stores, other food businesses have to consider the search for suppliers and transport costs. These costs can put a huge strain on startup businesses and there can be a huge time lapse before profits can be made. So, how do you work through this? Well, there are two things you can consider. Firstly, you can sell your products to retailers before you purchase any supplies. This carries some risk as you are committing to delivery of goods that you have yet to purchase. An example of this comes from Cameron Hughes Wine. The main clients for their wine are bulk retailers who provide Cameron Hughes a short-term line of credit. This credit is used to buy the wine and once Cameron Hughes deliver the stock, the credit is then paid back. In terms of income, this does not yield much at first. However, it is a great way to grow your business in the beginning when you have little to no money on hand. 

The second approach is through equity. With this method, if you initially lack capital, you can offer shares of your company in lieu of payment. This is exactly what happened when owner of Justin’s Nut Butters, Justin Gold needed a skilled businessman to grow his business. At the time, he could not afford the services of renowned businessman Lance Gentry and instead, offered him shares in his company as payment. Gentry accepted the offer and they both went on to gather more investors for the company in the same way. They distributed the remaining shares between investors whilst ensuring that Gold still had the deciding number of shares. This was how he boosted his business.

Key lesson two: Getting your product right

Chances are that if you want to start a food business, you have a clear idea of what your product is going to be. However, over time, and with learned experience, you might find that your product is completely different from what you started out with. This is perfectly fine as long as it is still reflective of your brand story.

Zak Zaidman fell in love with Costa Rica and wanted to find a way to support the organic farmers there. He chose to work with banana farmers in Costa Rica and the simple import of the fruit was not enough. He then added banana vinegar along with chocolate and dried fruits. Out of the three, the chocolate turned out to be a real hit. Products from his company, Kopali Organics is now stocked in Whole Foods Market throughout the United States. His first product didn’t work out, but he stayed true to his cause even though he ended up selling something completely different. 

Sometimes, food entrepreneurs don’t even have a product in mind, but they have a clear idea of what they wish to achieve. Shannan Swanson and Liane Weintraub, for example, were young mothers who wanted to provide their kids with organic baby food. They knew what they wanted to do but they did not know what their product would be. So they consulted brand strategist Susan White. From there, they determined their food company’s core attributes which were genuine, all-organic and fun. Their product eventually became fruit snacks for kids and not baby food but it still stuck to the company’s original brand values. 

A successful product in the food industry can be simple or complex but its main aim, either way, it must satisfy a need.  Kara Goldin always had a problem with flavoured drinks. They contained way too much sugar and she did want her family to consume that. Her kids though, found water too boring and she went looking for a solution. She added fruit to water and created a subtly flavoured drink without any added sugar. This was the beginnings of her product, Hint.

Key lesson three: The challenges of scaling

Many food entrepreneurs start off with a product that was designed and produced in the comfort of their kitchen at home. When a business takes off, however, it’s not easy to scale that small recipe to one that would supply the demand of hundreds. The most common problem is that the standards of the products drop because you are no longer personally overseeing them. You are the person who knows your product best, after all. 

Mary Waldner, the owner of Mary Gone Crackers started her food business when her friends encouraged her to start selling her gluten-free crackers. She started making the crackers because of her own gluten allergy and was glad to share them with others who suffered her fate. As the crackers became more and more popular, Waldner decided to start a co-packing operation. She soon found that her crackers were no longer produced to her standards and she had less control over the product overall. This is when she decided to change her approach. With the aid of venture capital, she was able to start her own factory. With this move, even though Waldner could not make as many crackers as they did with the co-packing operation, she was still able to control the production process. This ensured that her crackers were to her standards. She chose quality over quantity and Mary Gone Crackers grew at a steady albeit slower pace.

Some food entrepreneurs struggle to scale their business right from the get-go. This was definitely the case for Phil Anson when he wanted to sell fresh burritos in large quantities to retailers. Unfortunately,food regulations were pretty tight for fresh wholesale products. His burritos needed to be produced in a USDA-approved facility. Besides this, he had to deal with shelf-life and distribution issues. After five years of struggle, he decided that fresh burritos may not be the best route for wholesale. This led him to consider the frozen food option. Anson’s frozen burritos are now stocked in 7000 stores which is almost 20 times what he used to achieve with his fresh burritos. 

Key lesson four: How to create a buzz around your products

Putting your food products out there is always daunting at first but if you don’t do it how will people get a taste? This is where samples come in handy. We all see those free samples at our local stores, and honestly, who can resist them? It’s a great way to convince customers to buy your product. 

All the food entrepreneurs mentioned thus far used this approach of sample promotions. It can be time-consuming though, especially if you are doing it personally at various different locations. You can try and narrow it down and only go to those locations where you expect your target audience to be. This is what is known as a directed campaign. A good example of a directed campaign comes from Keith Belling who is behind Popchips, the low-fat alternative baked and fried chips. He knew Los Angeles was filled with health-conscious people, so that is where he began his campaign. He knew that his chips would have appeal on the West Coast. Once he moved over to the tougher East Coast and specifically, New York City, he had to change his approach. He started handing out samples at high-profile events like Fashion Week and sent influential celebrities sample packages in addition to the samples he sent to grocery stores.  He managed to get Popchips stocked in more than 200 stores in Manhattan alone. Belling’s carefully targeted marketing campaign gave his business the buzz it needed.

The key takeaway from Cooking Up a Business is:

Starting a food business can be exciting and scary at the same time. There are many factors to consider like startup capital, scaling your business, marketing and that is before you even start worrying about distribution and shelf-life. But the good news is that you can always learn from successful food entrepreneurs who have been through these experiences before. Armed with this knowledge, you can lead your food business to success.

How can I implement the lessons learned from Cooking Up a Business:

Do not be afraid to start your business without a specific product in mind. Ensure that you determine what your brand message is and you can develop your product around that. Once you have your product get ready to get it out there for people to try. Consider where you want to market your products and which locations will be your biggest advantage. This will key to introducing your product to the public and getting them to buy it.

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