The Startup CPG Podcast

00:05
Daniel Scharf
All right, welcome to the startup CPG podcast. In today's episode, we're joined by Jenna Cameron, a super accomplished sales pro with a really diverse background building food service sales in the startup space. Jenna's held key roles in companies like Alpha Foods, Wild Earth, just where I also actually got to work with her and currently is the sales lead at simulate. Jenna is a super pro, driving growth for plant based brands in the food service area and my personal go to expert for pretty much everything food service related. We are really lucky to have her on the podcast today. I'm really excited to go through her journey, talk about her experiences, and mainly lay out a roadmap for companies that are interested in getting into the food service space. So Jenna, thank you so much for joining us today. Really excited to have you here.

00:56
Jenna
Thank you so much, Daniel. I'm super excited to be here as well. And yeah, I hope anything that I say today is helpful for young brands trying to get into food service.

01:06
Daniel Scharf
It will be. I know that I've heard all of your content before, and I just thank you for being so generous with the career of knowledge that you've built up. I personally learn so much every time and am taking notes. So really excited to get into it. So I thought maybe just to start, can you let everybody who doesn't know you know a little bit more about your background? How'd you start? How'd you get to where you are? What have you been up to?

01:30
Jenna
Yeah, absolutely. So like you mentioned, you and I cross paths at just, I think we worked together for what, like four years or something like that. But I've been in the startup space for the past ten years now and mostly in food service. I actually joined just formerly Hampton Creek in 2013 when I was in Minnesota, which is where I'm from, and started with the company as a brand ambassador. It was my first corporate job out of college. I was just learning as I went. So started as a brand ambassador and then moved to San Francisco to work for them full time and slowly had the opportunity to do kind know everything and anything startup related. And for those of you who don't know, just they make delicious plant based eggs. They've also previously made plant based mayo and cookies and cookie dough.

02:21
Jenna
All of their products are amazing and created by Michelin star chefs. So when I moved to SF and was working as a brand ambassador, I then was managing our team of brand ambassadors back in 2014. Let's just call them creakers. So we had a great team of brand ambassadors. Was doing that for a little bit, and then had the opportunity to jump into food service sales after being in production for about six months. And that was when we launched with Compass Group. And Compass Group is one of the biggest food service contract management companies in the whole world. They serve billions of meals every year, and they service stadiums, college campuses, corporate cafeterias, you name it. So jumped into food service in 2015 and was one of the first food service employees at just.

03:10
Jenna
And through that journey, I was able to build relationships with colleges and universities, our first restaurant chain, partners, distributors, and really learn food service from the ground up. I ended up being at just for about six years and was with the company from series A to series D, 20 employees to 200 employees. Just crazy amounts of growth within that six years.

03:34
Daniel Scharf
Yes, you learn everything, because when I got there, I was so impressed by how much you knew about the channel. You knew buy right, distributor who was there, who was good. You knew how to hustle and make all the contacts. How did you learn all of that? Were there people there who were mentoring you, or were you totally self taught, just like out there figuring it out for yourself? What was that like?

03:54
Jenna
I think it's a little bit of both. Throughout my journey, I would say I was helped a lot by our customers. So I ended up making good friends with tons of my customers. We're still friends to this day, mostly in college, university, and k through twelve. And a lot of those folks who have been in that business for a long time really helped me learn the ropes of food service and kind of tell me what to do and what not to do. So a lot of it was just learning as you go. But I did develop mentors along the way. And like I said, I'm still friends with them to this day.

04:25
Daniel Scharf
Not to get ahead of us too much, but how did you become friends with them? Because that's always my main goal for retail, is just try to get to know buyers and distributors and become friends with them and see them at trade shows and hopefully build trust. But is it just very similar for that? For food service?

04:42
Jenna
Yeah, it's super similar. I would say at the end of the day, food service is all about building relationships, and you can do that in a number of different ways. Like you said, trade shows at Hampton Creek, specifically, we did lots office visits and tours, so I was able to establish a Great Bay area foothold. Specifically. I'm thinking about Jason hall at Marine Country Day school. Still talk to him all the time, or my literally first college university customer, UC Berkeley. I remember in 2014, I was doing operations and food service sales at the same time. So we received a purchase order from UC Berkeley. I then fulfilled it within our system and helped route it on the trucks and then went to go see it on campus. Was like a college event the next week.

05:27
Daniel Scharf
Start up life.

05:28
Jenna
Start up. Yeah. But I've known them now for years.

05:34
Daniel Scharf
That's amazing. And, I mean, for anybody who doesn't know Jenna, you can probably tell just, Jenna has an amazingly warm, friendly personality. And I think just, you know, I can see naturally why buyers and food service people would love to get to know you. I'm sure that helps a lot. But I also know you to be just one of the most absolute hustlers out there. Like, I've seen your spreadsheets of follow ups, and I know you just absolutely are persistent while being extremely passionate as well. So I'm sure all of that helped you make a lot of those friendships. In the early days while were at just. I remember you were also the chief dog scratcher. You were at least my dog's favorite dog scratcher. Now, what was your secret to being so good at scratching dogs?

06:18
Jenna
It's honestly really simple. My nails grow like crazy. I've always had very naturally long nails, and dogs love them. Right.

06:28
Daniel Scharf
So well rounded. Okay, what was your journey like when you left? Juss?

06:37
Jenna
Yeah. So like I said, I was with just for a little over six years in 2019, I decided to make a leap and jump into something totally new out of my comfort zone. So when I left, just, I went to work for a high protein, plant based dog food company called Wild Earth. And they're actually a shark tank brand. So they went on shark tank. They did the hustle. They got investment from Mark Cuban and then started expanding from there. Their product's amazing. They do high protein dog food. Like I said, a variety of treats. They've got flavors out now. And wild earth was a completely different journey. Not in food service, I will say. I did retail. I did pet retail sales, independent pet online. I learned a ton. I launched this india. I worked with Amazon.com and two.

07:22
Jenna
So basically it was like learning everything that I had learned on the street in IRL and taking it online. So that was a really good opportunity for me to know direct to consumer subscription models, roas and all that stuff. Yeah.

07:38
Daniel Scharf
Well, I bet that also helps you when you get back to food service to have a good understanding of retail.

07:43
Jenna
100% where I'm at now, and I know we're jumping ahead a little bit, but where I'm at now with simulate. I do all of food service, but because we're a younger startup, I've also been able to do about 20% to 25% retail, and my experience at Wild Earth definitely translates to that. Like, for example, I just launched this in Aldi, one of my favorite retailers, with a mixed case of our spicy and dino nugs working with Publix. So, yeah, it was absolutely helpful to learn retail, and not only retail, but d to c. So, like, a lot of brands now have d to c options on their website.

08:19
Daniel Scharf
And I wonder, because we'll go into it, but in food service, some of the food service customers are often retailers. Right? So, like, the whole foods deli, that kind of stuff. Do you ever see benefits there? Because you can do both. Like, you're talking to Publix, and then you ask for an intro to the deli buyer or something like that.

08:39
Jenna
Yeah, 100%. I think it's definitely a translation. I remember at just even, I would attend some of the retail meetings and go to Whole Foods with the retail team and then present the food service skus. But if you're able to maintain those connections, especially as a young brand and kind of dabble in both retail and food service, groceround is a great example. Whole foods, they have the deli, the grab and go sandwiches, the prepared salads. That all falls under food service. So, yeah, it definitely helps to have connections in both spaces.

09:12
Daniel Scharf
All right. Okay, so now getting back to the timeline, so then you were at Wild Earth and focused more on retail stuff, and then what was next?

09:23
Jenna
So after my journey with wild earth, which, again, I learned so much, I spent a ton of time with dogs there, too. So that was amazing. We always had adoptable dogs in the office and things like that, and would do events at pet stores with dogs everywhere. But after Wild Earth, I went to Alpha, and Alpha is an awesome brand as well, and a little bit different. So I was doing food service at Alpha as well. Alpha foods makes delicious chicken nuggets, pop pies, tamales, breakfast burritos, all day burritos. They have a whole slew of amazing plant based products. But the difference with alpha is that I think their sweet spot in food service is grab and go.

10:02
Jenna
So that was really fun for me to learn, too, because at just, I traditionally sold bulk food service, so big ten pound boxes of plant based eggs or huge gallons of plant based mayo. But at Alpha, I was selling a lot of grab and go burritos and pot pies and stuff like that. So grab and go is great for convenience stores. College campuses that have markets on site, which is like literally every college campus, cafeterias or cafes and coffee shops, they're taking sandwiches and turbochefing them, they're prepackaged. So from that experience, I was able to learn a whole different customer set and area of food service that I haven't really worked in before.

10:44
Daniel Scharf
Interesting. All right, cool. So then from Alpha, you went to simulate, right?

10:50
Jenna
Yes, simulate. I just touched my first year anniversary with simulate. Yeah. So for simulate, we're very focused. We make chicken only. We do breaded and unbreaded. We have tenders, nuggets, cutlets, unbreaded pieces, and we just launched a really cool chicken breast this year, which we actually launched on our website, d to c. So I was able to help with that execution as well. But it tears and tastes and has the texture of chicken, actually looks just like a chicken breast, too. So, yeah, that's been really fun to kick off this year.

11:27
Daniel Scharf
I don't know if you know what that is like for d to c for a, I'm guessing frozen product. But how's that been? I know from back at just when we ran the numbers on that, we're like, this is impossible. Oh, my gosh, the costs are so.

11:44
Jenna
High to ship 100%. That's such a good question. So, to be clear, for any young startups that are listening, I'm not recommending that you have frozen d to c subscriptions of plant based products on your website. From a profit margin standpoint, I don't think it's a strong channel to have exclusively. However, because simulate started in 2019 as a d to C brand and then since evolved into retail and food service, we're in about 12,000 points of retail distribution today. We're earlier in food service, we've got chains, we've got college universities, we're stopped at Dot nationwide, so we're making headway there. But because we started as a d to C brand, we have about 150,000 people on our email list, and that helps us be able to communicate with them.

12:34
Jenna
We can do these limited drops and really use it as an opportunity to sample and get product feedback, and these limited drops works really well. And for two breasts, it was $20. So I think from a price standpoint, we planned ahead.

12:50
Daniel Scharf
Makes a lot of sense and probably a lot cheaper than running demos.

12:54
Jenna
Totally.

12:55
Daniel Scharf
Which I know you remember well from your creaker days at Hampton Creek.

13:01
Jenna
Love demos.

13:03
Daniel Scharf
Yeah, me too, actually. I mean, I love doing them, but yeah, they are expensive and hard. Well, what an amazing journey. And I mean, just working for so many leaders in the space and getting all these cool experiences. I think one of the things that I love most about this startup CPG world is just being at companies that are out there pioneering in their space, figuring it out. You get to have the coolest experiences.

13:27
Daniel Scharf
If you think about, like, I worked at Mars chocolate a long time ago, and I think everybody's job is very predictable and structured, and the person who did your job before you is probably still there and can tell you all about, you know, it feels like at a lot of these companies, you're in the jungle with a machete, just like, all right, I'm going to make this happen, which I think often can lead to really awesome results if you're persistent. So I imagine that your career is just one of the most fun that I can imagine. So now let's give everybody the good stuff. Okay, so first question is, all those companies we just went through that you've been at, what went well, what didn't go so well?

14:06
Daniel Scharf
What do you think you were doing well, especially, let's say, on the food service side, if you want to do that exclusively. And then what do you think you should have done better or could have done differently to be more successful?

14:18
Jenna
Yeah, that is such a good question. Let's see. I actually wrote down. I didn't really take any notes, but I wrote down notes on this because I thought it was just such a good question. But let's just start with. Oh, sorry, I'm getting a call. Hopefully that's not. Let's just start with simulate, because that's where I am right now. And, of course, it's like the freshest in my mind. So simulate has come into food service a little bit later than some of the other brands in the space, and we also do chicken. So chicken, as I'm sure any other chicken plant based chicken founder knows, it's a little bit saturated. So there are a lot of chicken nuggets, there are a lot of chicken tenders and things like that on the market.

14:55
Jenna
So for us, I would say in food service, it was harder for us to get into those bigger chains because someone else is already there. And as much as I would like to say, let's kick out more meat brands and let's get rid of the chicken. Chicken tenders. If someone's happy with a beyond or impossible and it's on the menu, it's in distribution, it can be hard to kick them out, which I'm totally fine with. It takes a lot of brands in the space to make headway. So that's been hard for us, for sure, is like getting into regional and bigger chains. But for simulate, because our products are so amazing, I think we've had. And our branding, by the way, we're extremely Gen Z focused.

15:34
Jenna
We do very well at college, university, so we're definitely making a ton of headway there and then because our breading system and the spiciness, the pepperiness is so good. We also have done a really good job of getting into fried chicken chains and being the plant based option in fried chicken chains. So that's been really cool. Like, if you're ever in Ohio and you go to hot chicken takeover, we're the plant based nugget on menu, and it's delicious. You can pick your spice level. They're really good. So, yeah, for simulate, I would say chains have been a little hard to get.

16:09
Daniel Scharf
Know, with that strength that you guys have on Gen Z, are you able to really showcase that when you're going and talking to the cnus? Are you showing them TikTok videos that people are doing featuring you guys or you're following or stuff like that? Because it makes sense from the branding and I think the founder story. But how do you show that to differentiate yourself to the cnus and other food service customers?

16:34
Jenna
So I think if you look at our website, you can see our branding and everything from our packaging to our lifestyle photos. Super minimalistic, very Gen Z focused. We also have twice as many followers on TikTok than any of our other competitors probably combined. So we do really well on TikTok, too. So we definitely can share those stats. We have a ton of followers on Instagram as well. And people really. We have a cult following for, like, people love simulate. Yeah. So we definitely highlight those.

17:03
Daniel Scharf
All right, so. Okay, so should we move on to one of the other companies then, for pluses and minuses or headwinds and tailwinds?

17:14
Jenna
Yeah, for sure. So next, I'll go to Alpha Foods, and I think for Alpha, I kind of touched on this earlier, but our forte is in grab and go, so we did really well getting into college campus stores. We have a great partnership. I mean, I'm not with them anymore, but a great partnership with loop. Convenience. It's a convenience store and then also fall at bookstores is a great partner. Fall at bookstores is basically a campus adjacent bookstore, but they also have food. So they have freezers, they have coolers. It's a great opportunity for branding, and they have thousands.

17:50
Daniel Scharf
Yeah, that's what I was going to ask. So you said they interrupted you.

17:53
Jenna
1200 locations. Wow. Yeah. Tons of locations. They pulled through Vistar, which recently got acquired by PFG. So if you're a brand that has grab and go and you're relatively stocked at Vistar, I think fallout would be a great operator partner to go to. And then on the flip side, at Alpha, I would say it was harder for us to get into those big volume play bulk opportunities just because in terms of pricing, weren't necessarily the most affordable. Just thinking like k through twelve, military healthcare, weren't necessarily the most affordable, not the most expensive, somewhere in the middle. So it was really hard for us to get into those kind of like bulk opportunities. And also from a bulk standpoint, there are so many ingredient and nutritional requirements that take a really long time to navigate.

18:44
Jenna
One of the brands I think I've seen out there that does a good job of this is Dr. Prager's. I've seen them in a lot of k through twelve. They really scrub their ingredients and make sure they're gluten free, soy free, all of that stuff nutrition friendly. So yeah, I don't think we had a lot of headway there and I think that's a challenge for a lot of brands. I think rebellious also does a good job of really targeting like k through twelve and those places that need those specific ingredient statements.

19:14
Daniel Scharf
Got it. Okay, cool. And now to our former employer, Hampton Creekjusteggjust.

19:24
Jenna
Yeah, so at just, I mean I was there for so long and I feel like I touch so many different areas of food service. They have amazing products that would pretty much fit into any category of food service. But you're still dealing with the same constraints in terms of pricing and just adoption and familiarity and stuff like that. Similar to simulate, just kills it. In college, university, I was able to get us into a lot of the big tens, most of the Ivy leagues, some really cool systems. I developed a pricing program for all of the California schools. So the CSUs, the UCS, the Texas system, the Michigan. The interesting thing about CNU is a lot of those regional players will share pricing programs because they want to make it easier to pull products from distribution. So they want everything to be stocked.

20:13
Jenna
So if you can get into a handful of California schools, you can much more easily get into the rest of them, if that makes sense. So CNU killed it. We also did really well with other non commercial like healthcare. Healthcare is great for a plant based egg because not only do some of the nutritional guidelines and menu requirements not allow the patients to have, for example, more than one egg per day. But some states, like California, mandate a plant based option. So for us, I think we know CNU healthcare and then regional chains, cafes, like know Phil's coffee, those really fun.

20:51
Daniel Scharf
Remember, I think I went with you to some of those pitches. That was a great.

20:54
Jenna
Yes, you did. That was so fun.

20:57
Daniel Scharf
Those were some of my first. Gosh, I loved it. It was so lucky to get to go to some of those pitches and tell the consumer insights and data stories, I guess. Speaking of having your pitches and materials ready, I thought it'd be fun to just kind of go through a simulation, no pun intended. And let's say, for example, Jenna starts her own brand, and it can be plant based, mayo or whatever you want. And let's say that you already have some retail stuff going, and now you're starting to look for your opportunities in food service. And you have nothing at this point for the food service channel. You don't have your materials, you don't have your packs, nothing.

21:38
Daniel Scharf
Take me through what you're going to do day one ahead of your launch, and then we'll go into what you're going to do on sales as well once you have all that.

21:46
Jenna
Yeah, absolutely. So just prefacing this by kind of like, the most broad overview of food service, just to get everyone thinking about the size of the opportunity. The way that I like to think about food service is it's everywhere you go to eat outside the home, from the moment that you're born until the moment you die. So this could be a k through twelve cafeteria, a college campus you're eating at when you go out on date night and you want to have a beautiful meal. It can be a theme park where you're getting, like a corn dog or something. It can be a stadium. You're getting a hot dog. You're watching the a's game. There are so many different opportunities in food service.

22:29
Daniel Scharf
You just evoked so many memories for me with that overview, like getting a little nostalgic. You should do marketing for food service in general.

22:38
Jenna
I really should. It can honestly be really hard to understand. It took me so long to fully grasp what food service means and the level of complexity, but really, it's massive.

22:51
Daniel Scharf
The point is not lost on me that I just realized my last meal in life probably will be a food service meal.

22:57
Jenna
Quite possibly.

22:59
Daniel Scharf
Okay, we'll move on from that.

23:01
Jenna
More?

23:02
Daniel Scharf
Yeah. Okay. All right. So that's a really helpful overview.

23:08
Jenna
Yeah, just laying the land. So, yeah, as a young brand, I think the most important thing you can do from day one, once you've got that retail foothold, is establishing your product market fit. So just like taking a look at your product, whether that's a jar of mayo or a sauce or a condiment or a center of the plate, plant based protein, what I would suggest founders do is really look at the product that you have and determine the point of differentiation. Right. Like, who else is out there on the market with a similar product? How's your product different or better? You need to take a look at pricing and pack size, and there are a lot of different ways you can do this.

23:49
Jenna
If you have a broker who has access to intel, and by intel, I mean like adopt foods login or Cisco login, they can run a report and send you all of the competitive intel. Great. If you're not there yet, you can do some of this research online. There are a lot of brands that sell food service products that are readily available to everyone. So if you're a member of restaurant depot, you could even check out Costco. But you can also go to Webster on. What's that? Foodservicedirect.com. Yes.

24:22
Daniel Scharf
That's my favorite one for.

24:23
Jenna
I love that think.

24:25
Daniel Scharf
I think when were working together at, I kind of backed into, okay, you can look on foodservicedirect.com to see just tons of different options. They're a reseller, so whatever their price is, you can kind of estimate what the actual brand is selling it for if you assume about 60% of the price that you're seeing on food service direct. So that's my little rule of thumb that I love sharing, because basically, that takes into account whoever they're getting it from and the markup that they're putting on top of it. But in most cases, we found that was actually pretty accurate. So, yeah, like you're saying a good place to see what's out there and what the pricing looks like, the pack sizes that they're offering. Right?

25:04
Jenna
Yes, exactly. And you can search by any keyword. You can search like a jam or a jelly or a chicken or a plant based or a vegan. Just search for any keyword you would use to look up your own product. And that way you can find the competitive items out there. You can look at their pack size. Are they selling like five two pound bags in bulk? It's just really helpful to gather that intel before you even dabble into food service. And then on top of that, typically.

25:33
Daniel Scharf
When you're looking at the pack sizes, because let's say, in retail? Yeah, I believe mainly in not going against the grain on pack size. Like if you're agreed launching an RTD coffee and you go into the store and see most of those are sold in twelve ounce sleek cans, maybe think about doing a twelve ounce sleek can and not try, because that's how consumers, let's say, perceive the set or are going to interpret your drink as kind of fitting with their idea of what that is. Would you say that's pretty similar in food service? One, because it's kind of what's out there. And two, maybe because kitchens, chefs and operators get really used to working with that kind of a pack.

26:10
Jenna
Yeah, that's such a good point. I think. Definitely don't go against the grain unless you have a really compelling reason to. Because often those pack sizes have been created that way for a very specific reason in food service. And often that reason will have to do with price per ounce, the cost of the packaging, reducing waste. So if you have, let's just say you have a ten pound case of something, instead of doing all of that product in one bag, that's a ten pound bag. In food service, you may want to have smaller two pound bags because your operator, an operator basically means like restaurant or CNU, not a distributor. The person who is using your product and cooking it's a chef or a line cook.

26:49
Jenna
They're taking that bag out of the box, they're tearing it open, and they're throwing it into the deep fryer, or they're putting it in a little container and storing it in the fridge to thaw. They don't want to take all those ten pounds and risk wasting it. If they have a little two pound bag, they rip it open, they get rid of the two pound bag, and everything else stays in the freezer. So just paying attention to those pack sizes and the inner pack size, not just the outer case, it's like, oh, a ten pound case is not just a ten pound case. The ten pound case has inner little bags. So I think just using that as a blueprint is super helpful.

27:23
Daniel Scharf
And would you recommend that people actually go talk to operators about it also, when they're researching the packs? Like, hey, what are you using now? How does it work for you just to try to learn a little bit more about it? Did you ever do that?

27:35
Jenna
Oh, yeah, I do that all the time. I still do that. If we're working on launching a new pack size, I will talk to my friendly operators, like, hey, chef at UC Berkeley, for example. How would you like to use this product and what pack size would you use it in? And typically, people know what they want. They'll give you straightforward answers, they may give you a couple of options and they'll tell you why. So if you are able to establish a couple of friendly partners early on, I think that's definitely the way to go.

28:05
Daniel Scharf
Yeah, I remember when were doing visits to some of the big restaurants, like fast food restaurants, especially if it's not exactly the thing that they're used to working with, they are going to say no because they've got a bunch of employees who are basically trained to just follow the steps. Exactly. And it's really critical for them to be efficient, and they're just not even going to bother if it's just not something that's really in their wheelhouse.

28:30
Jenna
Yeah, absolutely. And we may get to this from a culinary standpoint later on, but that just reminds me of not only the pack size, but it's important to have your product. If you're making something that's a plant based version of another thing, you want to be able to cook that product in the same way that a chef would cook whatever you're trying to replace. So if you deep fry it, you want to deep fry it for two or three minutes, not like ten. You want to be able to saute it, to bake it, to air fry it, to turbo chef it. So developing those cooking applications and minimizing the change is going to greatly help you succeed in food service.

29:06
Daniel Scharf
And a turbochef, I think, for most people who don't know, is like that little mini oven they have at Starbucks where they warm up the sandwich. Right?

29:14
Jenna
Yeah, turbochefs are cool. It's like a crazy hot little mini oven that things just pass through and it gets all nice and crispy. So you could take a fully frozen or a detawed breakfast sandwich and have it ready to go in a couple of minutes.

29:26
Daniel Scharf
Perfect. Okay, so, and then on a pricing standpoint, let's say probably a lot of people listening are making, like, a better for you version of something that's out there already. And so let's say they look up and they see what their pricing is. Let's say you're getting, like, ten pounds of something and it's, I don't know, $50 or something. How are you going to think about pricing versus that? Obviously, as a startup, you're not going to have the economies of scale, so your cogs are going to be more expensive and your product. Yeah. You don't have the scale, and probably your product is more expensive because it's a better for you version. How are you going to think about the pricing obviously balancing against your margin requirements with scale?

30:06
Jenna
Yeah, that's such a good question. I know this part can be really hard too because you obviously want to and need to protect your margins. But you also want to make sure that people will actually buy your product in food service because if it's an arm and a leg more expensive than the competitor, it's going to be challenging. So on the one hand, from a marketing standpoint and an ingredient standpoint, you have to shout to the world why your product is so much better and why people need it, why it's going to bring increased foot traffic into your door. You could talk about the veto vote.

30:39
Jenna
The veto vote meaning if you go out with a group of people, there's one vegetarian or vegan or gluten free person in the mix, and you go somewhere and the restaurant has zero options, you're probably going to go somewhere else. So it's taking like ten potential customers to your neighbor's restaurant, for example. So there's a marketing component for sure. But then in food service there's like a lot of sneaky things that come into the pricing that you won't necessarily be aware of until it's too late. So I always encourage founders to think about their margin from a future standpoint. Right. So you'll have, let's just say your list price. This is a price that you would sell to anyone and you're trying to sell into the restaurant next door. And let's just say your pack is like $50 per case.

31:23
Jenna
As you start to scale in food service, you won't be delivering directly to every single customer. You're going to have to get into distribution, especially when you get into chains, and a lot of chains will have a preferred distributor. So you have to work with Cisco, for example, or us foods or PFG. When you scale even further, you will hopefully get into somewhere like dot, that's a redistributor that sells to Cisco and us foods and PFG so that you don't have to sell everyone your pallet minimum, for example. So you want to plan for that as much as you can in advance so you protect your margin. There are distributor programs, there are operator programs, there are distributor sales rep incentives.

32:04
Jenna
You want to offer street programs like bogos to help you get into all of the onesie two z locations all over the country. So it's tricky to walk that balance. But this can be anything from like 15% to 3% for a smaller distributor. I'd be happy to list out a couple of examples, too, because I know it's, like, overwhelming. But if you have a regional distributor, they're asking for three or 5% national. Cisco would be like 9% to 11%. Just giving a few examples.

32:37
Daniel Scharf
And what does that mean exactly, when they're asking, what is that percentage of and what is it to.

32:43
Jenna
Yeah, so this can be basically, if you sell in to an operator that's big enough and they really want your product, and they're willing to force stock it, and forced stock means that they will work with their local distributor, whether that's like buywright or Cisco. They say, I really want this chicken tender. Will you please bring it in for me? My usage is 20 cases per week, so the rep will bring it in for them. Beyond that customer, it's likely going to be closed coded unless you develop a program with that distributor. So if you want to open code the product, and open code means anybody who's looking at the Cisco little portal online can find it and buy it. I run into this all the time where I'm, like, trying to sell someone my product, and it ends up being closed coded.

33:29
Jenna
So even though it's there and it's sitting in the warehouse, my operator can't order it. But if you develop a distributor program, which, let's just say could be 3%, that allows you to open code it. It keeps it stocked. You gain access to their regional trade shows, their annual trade show. It basically just gets you a foot in the door. And I think 3% is super reasonable for most distributors. But once you start getting bigger and bigger, that number goes up. And then you're also dealing with buying groups like Sodexo and Aeromark and Compass. They're also going to want a piece of the pie.

34:08
Daniel Scharf
3%, whatever your list price is, $50 for a case or something. So they're going to charge you 3%, and then they're also going to mark up the product as well. Right, that they're delivering.

34:21
Jenna
Yeah, I forgot about that part. So the other thing about food service is that there's not a lot of pricing clarity. So you can sell something that goes out of your warehouse store and it ships to, let's just say, like a Cisco, and they sell it to a restaurant or a CNU, you won't necessarily know what they're selling it for. Sometimes your operator can tell you if they're big enough. They've got a great relationship they're like, no, our program is 5% markup, but that most often won't happen. And they could be marking it up for like 15, 20%. So then when you sell your product and it's $50, your operator down the street is like, hey, I thought you said it was $50. They're actually paying it a lot more for it. That's why you don't want to share pricing necessarily either with operators.

35:08
Daniel Scharf
Okay, so in this scenario we're talking about, let's say a good scenario probably, is that you're going direct to a distributor and they're selling to this operator who has anchored your product there. So in this scenario, probably, let's say they mark it up 20%, so they're reselling at 60 your product, that was 50 to the operator. And then I think what you're saying is also you might be paying them 3% on some kind of a program to have it coded in their system, which is just something you're going to end up paying to them directly or they're going to take it off their payment to you.

35:41
Jenna
Like a bill back or a rebate or something like that. Yeah, exactly.

35:45
Daniel Scharf
Okay. And mainly that's just like pay to play, to work with them. That's what would be getting it open coded in theory, something like that. Okay. Which means. Absolutely. And it sounds like differently from in retail. I think most of us see the process as like you pitch to a buyer your specific product and then they talk about how you're going to get it there. Or maybe you're already available in their distribution center, whereas in food service, it sounds like a benefit of being open coded, is it sounds like a lot of the purchasers are in there, in the portal just seeing what's available and looking for options.

36:17
Daniel Scharf
And so being listed there is really important because I think in retail, I don't feel like people are doing that as much like buyers are not just scanning the portal and seeing what they can get and just grabbing it. Right?

36:28
Jenna
Yeah, no, people do that all the time. That's why you want to make sure your search terms are good to go on all of your portals and make sure you're GDSN compliant, which is a whole other beast, but, yeah, so they can search vegan chicken or oat milk or whatever, and your brand will pop up if you're open coded. And if you're not, then it won't.

36:48
Daniel Scharf
Okay. And then just on the pricing standpoint, because you were talking about making sure you build in assumptions for all the other you're let's say it's Cisco, for example. Like, if you're just kind of going directly through Cisco to maybe, let's say a chain. So they're operating out of a couple different distribution like Cisco and some of the other competitors like them. Those can be bigger programs, right?

37:16
Jenna
Yeah, absolutely. So Cisco is interesting. I love Cisco, by the way. It takes a long time, though, to build to a national program with Cisco. I mean, they're like one of the biggest distributors out there, and it takes a long time to kind of build to that national level. They have OPCOs, which the, basically the distribution center for Cisco is called an OPCO. They have Opcos all over the country. So what I did at, you know, what I think is a totally fair strategy is to go kind of OpCo by Opco and build those programs regionally based on the customers that are there, especially in plant based. You may not have a ton of product flowing through Cisco in Mississippi, but you might have a ton flowing through an LA, in SF, in Chicago, in Florida, in Texas.

38:08
Jenna
So you can absolutely work with those distributors directly and build a local program with them. And unfortunately, it's not like a one size fits all. It could be 9% to 11% for Cisco. It could be 12%, it could be 7%. Or it could be pay to play kind of like a slotting fee. Let's just say like $1,500 per skU. I've seen all of these scenarios at Cisco specifically, and again, it's all about building those relationships and going there and meeting them in person and doing those trainings and cuttings and establishing your ally.

38:45
Daniel Scharf
Okay. And then if you do get one of those deals, but you're not doing too much volume, and it's across a couple of different regions, that's when you might need to look at someone like dot the redistributor. Right. And that will have some of its own pricing implications.

39:01
Jenna
Yeah, I love dot. They're really easy to work with. They have a great system. They are pretty straightforward in terms of pricing. It's by the pound, and it's straightforward. And then they service like everybody. So they service Cisco and US foods and PFG, some strategic national accounts, which is really fun. Whenever I find a national account that pulls from dot, I'm like, yes, because it just makes it super easy. But, yeah, Dot can definitely help solve some of those problems.

39:31
Daniel Scharf
Okay, so I think what we've covered so far is at least a decent overview on the pricing. How do you actually communicate the pricing? Right. You need some kind of a price sheet that I know I've worked on with you before. But what do you think are the key elements that you need to cover on the price sheet that you're going to be sending out to people?

39:51
Jenna
Yeah, that's such a good question. For food service, it's also a little bit different. Again, you're dealing in kind of like pounds and ounces versus individuals. Within a case. In retail, you'd have like twelve jars of something. In a case, they'd have the inner and the outer pack. In food service, it's all about pounds and ounces. So you need to include on your price list your products, the item code, the description. You can have a separate sheet that includes your distributor codes, but I wouldn't put that on the price sheet. And then you need to have your fob pricing. So if someone has their own trucks and they want to save money and they want to pick up from you, awesome. So you have fob pricing, delivered pricing, and then as you scale, you can develop kind of like tiered pricing.

40:39
Jenna
So if someone meets your minimum, let's just say your minimum for direct is like one pallet, you offer an incentive if they can do five pallets or half a truckload. I think for a lot of early companies, that won't necessarily be an issue, but something you can build to. And you can throw your dot priceless on there too. And then you'll need like tie high the case dimensions, the height, the width, the depth, all that fun stuff, the gross weight, the net weight on that.

41:12
Daniel Scharf
Tiered question, because I think people understand, hey, depending on where your warehouse is, if you have to deliver across the country, that can get very expensive. So it sounds like you think for early brands, maybe just have one national delivered price and if it's far, you're just going to eat it.

41:30
Jenna
Yeah, unfortunately, if it's far, you're just going to eat it. It's always great if you're able to focus geographically to start. And let's just say you're a really young brand in food service. You manufacture out of the Bay Area and you just want to ship in California. And that's your early food service strategy. You're like, we're going to start with this one region. We're going to gather data points and get some menu mentions. We're going to build chef partnerships and take it from there. You can do that and save money. But if you want to go big right away, then I would just have one national.