In response to customer requests, restaurants around the country are producing and selling signature food items. The 2012 National Restaurant Association Forecast reports that 59% of fine dining, 54% of family dining, 41% of fast casual, 37% of quickservice, and 35% of casual dining operators retail packaged food. These products – typically dressings, seasonings, sauces, mixes, etc. – can help promote and extend a restaurant’s brand, and be a source of incremental revenue. Some produce small quantities of signature products in their kitchens; others work with food manufacturers to replicate their recipes in larger quantities. The majority of these products are sold on premise; only a small percentage make it into grocery stores due to the substantial financial commitment required to produce a large volume and provide the marketing dollars often required.
DUE DILIGENCE “Do your research first. You need to know and abide by food safety regulations, which are different for retail food products than for food served in restaurants,” advises Barbara Lang, educator, entrepreneur, and author of From Restaurant to Retail. “Talk to the Department of Health in your area, as well as your state’s Cooperative Extension office and Department of Agriculture and Markets – they will help guide you.” (Regulations differ by municipality and state.) She adds that there are Food Venture Centers at Cornell University, University of California at Davis, and in Hardwick, VT that help individuals and companies get food products safely to market. “The easiest products to start with are ones that don’t contain liquid or proteins – such as dry spice blends and baked goods – which remain more stable so food safety is less of an issue.”
START SMALL “I recommend that clients start small, testing their market with no more than three products,” advises Mary Carter, founder, Food Trade Consultants, a company that offers a turnkey solution for restaurants and individuals who want to produce and package food products on a small scale with a limited budget. Judy Barnes, owner, Citrus Deli, Redlands, CA, worked with Mary to bring three chili verde sauces to market. Judy says she wanted to get into retail on a “pay-as-you-go” basis, without getting a loan to finance the project, and needed lots of advice and direction. “We moved slowly and Mary held our hands through each step – once we could no longer produce and package sufficient volume in a small certified kitchen she connected us with a co-packer – a company that manufactures and packages food products.” Marcus Davis, owner, the breakfast klub, Houston, TX, dipped his toe into retail by bagging and selling his proprietary blend of coffee beans on premise. “People love our coffee and it was an easy item to package,” he explains. Following the success of his coffee, Marcus began retailing two other products requested constantly by customers – the seasoning used on catfish and chicken, as well as the waffle and pancake mix. (These products were initially made and packaged in house; as sales increased Marcus began working with a manufacturer to meet demand.)
“It’s critical that the product you retail has the identical quality and flavor as it does in the restaurant – that’s what customers want. To make sure it’s identical, we use the retail product in our kitchen.” – Marcus Davis, owner, the breakfast klub, Houston, TX
PRODUCING AND PACKAGING ON PREMISE One of the items The Melting Pot restaurants retail is their Signature Chocolate-Dipped Strawberries. Neil Hackley, vp operations, says the boxes of three and six, which are prepared and packed daily in each of its 140 locations, are especially popular to take home. The fondue franchise company also boxes and sells chocolate wafers, $1 of which goes to St. Jude Children’s Research Hospital ($6 million has been donated since 2003). Mr. Stox, Anaheim, CA, makes and packages 1,000 custom-designed tins of “mahogany brittle” during the holidays. Owner Chick Marshall says the $12 tins are something unique for customers to buy as gifts and they sell out every year.
WORKING WITH A MANUFACTURER Mark Maynard-Parisi, managing partner, Blue Smoke, New York, NY, says they interviewed four manufacturers to find the one who could produce the quality and quantity of barbecue sauce they wanted. “Scaling the recipe and tweaking flavors in large volume was very difficult, requiring lots of time and tasting.” Ray Flores, managing partner, El Charro Cafe, Tucson, AZ, says they tried using outside bottlers for their salsas, but felt the flavor couldn’t be reproduced consistently, so they moved production to their commissary. “Producing in house allows us to adjust batch size and inventory levels as needed for our seasonal business.”
THE GROCERY STORE MARKET Steve Sazama, owner, Saz’s State House, Milwaukee, WI, says they started making BBQ sauce 20 years ago and selling it on premise, at Milwaukee’s summer festival, and the state fair. Now they’re working with a grocery broker and have promotional deals with the Green Bay Packers and Miller Lite. He says retail sales account for 10% of overall business and adds, “We’re fortunate to have a great relationship with our manufacturer who helps us with R&D to determine which of our products we should bring to market.” Marcus says that local grocery stores have approached him. “I look at getting my products on grocery shelves as a wonderful way to grow my brand and revenue stream rather than opening additional restaurants.” Sometimes, serendipity can strike. Mark says Blue Smoke’s pastry chef made a chocolate, jalapeño, peanut bar to give away on Valentine’s Day. A purchasing agent from Whole Foods fell in love with it and now the bars are being made by a manufacturer to Blue Smoke’s specifications and sold at two New York City Whole Foods stores, as well as Blue Smoke restaurants. The branded wrapping has a map on the back showing the restaurants’ locations.
NOTE: For a copy of Barbara Lang’s Restaurant Retail Resource List (books, online guides, manufacturers/co-packers, etc.), questions to ask yourself before getting into retail, and how to do a market analysis, email email@example.com