Podcast Summary
Disrupting the vending machine industry with fresh, healthy food: Challenging the status quo and offering a unique value proposition can lead to success in unexpected industries
Luke Saunders, the founder of Farmer's Fridge, saw an opportunity to disrupt the traditional vending machine industry by providing fresh, healthy food through a smart vending machine concept. Despite initial skepticism, he persisted in his vision and proved that people would buy high-quality, farm-fresh food from a vending machine if it was convenient, cheaper, and of better quality than other options. Today, Farmer's Fridge has been operating for six years and continues to innovate in the food industry by providing a convenient and healthy alternative for consumers on the go. This story serves as a reminder that challenging the status quo and offering a unique value proposition can lead to success, even in seemingly unlikely industries. To learn more about Farmer's Fridge and Luke Saunders, visit farmersfridge.com.
Creating a restaurant-like atmosphere for a vending machine: Investing in a unique and compelling customer experience, even with added friction, can lead to initial success and eventual scale.
Creating a unique and compelling customer experience is crucial for the success of a product or service, even if it adds an initial layer of friction. In the case of a vending machine selling fresh salads, the founder recognized the need to make the experience feel more like a restaurant, despite the obvious differences. He used various tactics, such as reclaimed wood wrapping, a neon sign, and freshness queues, to create a restaurant-like atmosphere. Initially, he resisted the idea of using Mason jars due to the added friction, but ultimately saw the benefits of transparency and appeal. By investing time and resources into explaining the process and building relationships with customers, the founder was able to build an initial critical mass and eventually scale the business. In essence, the success of the business hinged on making the vending machine experience feel as close to a restaurant experience as possible.
Bringing fresh meals to new places: Freshly's founder drew inspiration from his entrepreneurial background and inefficiencies in the food supply chain to create a meal kit delivery service, reducing time from factory to consumer by cutting labor costs and space footprint.
The founder of Freshly, a meal kit delivery service, started the business with the goal of bringing fresh, healthy food to places it couldn't go before. He drew inspiration from his experience running a small business during the recession and later working in a materials business where he saw inefficiencies in the food supply chain. The founder realized that the time it took for food to go from the factory to the consumer was a significant constraint. By cutting labor costs and reducing space footprint, Freshly aimed to address this issue and make fresh meals more accessible to consumers. The founder's background in entrepreneurship, manufacturing, and sales provided him with the skills and knowledge necessary to turn around a struggling business and eventually launch Freshly.
Creating Accessible and Affordable Fresh Meals with Farmers Fridge: Luke Saunders identified distribution, consumer adoption, and packaging challenges in providing fresh meals in under-served areas, leading to the creation of Farmers Fridge using custom vending machines to provide centralized manufacturing and distribution.
Luke Saunders identified a problem with the accessibility and affordability of fresh, healthy meals, particularly in under-served areas. He saw this as a distribution chain issue and a consumer adoption problem, as well as a packaging challenge. To address this, he aimed to compress the food supply chain and create a centralized manufacturing and distribution model with a unique unit model for points of sale. This led to the creation of Farmers Fridge, which uses vending machines to provide fresh meals. The first machine was not off-the-shelf but custom-built, and now there are over $40 million in investments in the company. For startups, NetSuite can help simplify business complexity and provide valuable insights, with a focus on making implementation as simple as possible for small businesses. The goal is to get them up and running in 30-45 days.
Unexpected Challenges in Starting a Business: Starting a business can be difficult and full of unexpected challenges, but focusing on food quality and user experience can lead to success.
Starting a business can come with unexpected challenges and setbacks. The speaker initially aimed to build a custom machine for his food startup but was met with high costs and uncertainty. After feeling discouraged, he considered using a vending machine but doubted its ability to present the food in the desired way. However, after attending a vending show and piecing together off-the-shelf equipment and software, he created a "Franken machine" that proved people were willing to buy lunch from it. Although the machine wasn't perfect, it demonstrated the potential of the business idea. The average ticket price was around $7, with chicken being the lowest-margin product. Despite the challenges, the speaker learned that the food quality and user experience were crucial to the success of the business.
Reusable packaging influences consumer behavior: Designing reusable packaging can make it more appealing and valuable to consumers, leading to increased sales and positive perception.
The reusability and durability of packaging can significantly influence consumer behavior and perception. The speaker shares an anecdote about keeping plastic jars from an airport, which many people do due to their perceived value and reusability. The success of their business hinges on this idea, as they've designed and branded their own jars, making them more appealing and long-lasting than traditional plastic or Tupperware containers. The company's production process is a mix of in-house software development, contracted electronics manufacturing, and local shroud fabrication. They've found that sourcing high-quality suppliers in the US has been more effective than importing everything from China. The machines, which are a combination of electronics and shroud design, are placed in various locations like airports, colleges, and office buildings, with the latter being the easiest to place due to the convenience factor. The speaker also mentions the challenge of getting their vending machine accepted in the market initially, but the delight of interacting with a vending machine that delivers more than expected can make up for any initial frustration.
Starting a business despite rejection and uncertainty: Persist in pursuing your business idea, negotiate for the best deal, and use a website to build traction
Persistence and creativity were key factors in starting a business, even when facing rejection and uncertainty. The speaker shared his experience of trying to secure a location for his business idea, which was initially met with skepticism and dismissal. He eventually found a space in a struggling food court, and although it wasn't ideal, it allowed him to get started. He emphasized the importance of knowing your worth and negotiating for the best deal, even when it seems impossible. Additionally, he suggested using a website and publishing content as a way to build a business and gain traction.
Creating a Digital Presence with Squarespace: Determination and innovation on a user-friendly platform like Squarespace can lead to digital success
Having an online presence, especially for businesses, is crucial in today's digital world. Squarespace offers a solution with its beautiful and customizable templates, powerful e-commerce functionality, and additional features like search engine optimization, analytics, and free and secure hosting. The platform is optimized for mobile use and comes with award-winning 24-7 customer support. Starting a website with Squarespace is quick and easy, as demonstrated by Associate Prash creating Superhumanwallpaper.com within minutes. To try it out, go to Squarespace.com for a free trial and use the offer code "twist" for a 10% discount on your first purchase. Farmers Fridge's Luke Saunders faced challenges in bringing his healthy food vending machines to various locations, often encountering contracts with existing food providers. Despite these obstacles, he persisted and built a grassroots following, eventually securing high-profile placements like a shopping mall on Michigan Avenue. The key takeaway is that determination and innovation, combined with a user-friendly platform like Squarespace, can lead to success in the digital world.
From struggling start to viral success: Farmers Fridge's journey: Through real-world virality, economies of scale, and menu refinement based on customer feedback, Farmers Fridge transformed a struggling start-up into a successful healthy food vending machine business.
The success of Farmers Fridge, a healthy food vending machine business, can be attributed to a combination of real-world virality, economies of scale, and menu refinement based on customer feedback. The company's initial struggle to gain traction led to a serendipitous meeting with a hospital system representative, who became a champion for the concept. The business model relies heavily on touch screens for transactions, but there is a network effect in terms of increased density leading to higher sales and brand recognition. The company collects data on customer preferences to refine the menu and improve offerings, resulting in a significant increase in the percentage of customers who enjoy the food. For example, the North Napa Salad went from a low performer to a high performer after adding chickpeas, tanginess, and feta based on customer feedback.
Entrepreneurial Challenges and Adaptability: Staying true to your vision and adapting to challenges can lead to entrepreneurial success despite skepticism and competition. Learning new skills and seeking advice can help overcome hurdles.
Perseverance and adaptability are key to entrepreneurial success. The founders of a mason jar salad business faced challenges, from skepticism and competition to scaling up the business. They dealt with these hurdles by learning new skills, seeking advice, and staying true to their vision of providing a high-quality, fully integrated food experience. Even when they encountered resistance from the venture capital community, they persisted and ultimately found investors who appreciated their unique business model. The mason jar salad business, which started as a small, organic venture, grew into a successful enterprise by staying true to its mission and adapting to the demands of the market.
The importance of perseverance and the right investment partnerships: Starting a business with limited resources can be challenging, but perseverance and finding the right investment partners can help overcome initial objections and drive compounding growth.
When building a business, it can be tempting to outsource certain aspects to save costs, but doing so may compromise the quality and customer experience. In the speaker's experience, some venture capitalists were skeptical about investing in their business due to the perceived complexity and infrastructure requirements. However, finding a first-time fund that was eager to make bold, high-risk investments allowed them to secure initial funding. As the business grew and scaled, the traction became undeniable, and even more experienced investors took notice. The ability to leverage data to optimize the menu and drive compounding growth helped overcome initial objections. Ultimately, the success of the business came down to perseverance, innovation, and the right investment partnerships.
Food Delivery Industry Disrupted by Retail Apocalypse, Rising Labor Costs, and Gig Economy: The food delivery industry is evolving with technology adoption, optimized models, and a focus on reducing costs and improving customer experience to stay competitive.
The food industry is facing disruption from various external factors, including the retail apocalypse, rising labor costs, and the gig economy. Traditional restaurants are struggling to compete with the convenience and flexibility of food delivery services and gig economy jobs. The adoption of technology, such as self-service kiosks, has become a necessity for mid-tier restaurants to stay competitive. The unit economics of food delivery have become clearer, and startups in this space have optimized their models to reduce costs and increase efficiency. The cost of technology, such as refrigeration systems, has come down significantly, making it possible for food delivery businesses to operate at a profit. The speaker was able to start a successful food delivery business with a budget of $25,000, and the cost of the technology has since been optimized to around $10,000. The focus on reducing costs and improving the customer experience has led to the evolution of the food delivery industry, with companies continually iterating on their products and business models to stay competitive.
Balancing inventory across locations: The food delivery system uses a cost function algorithm to optimize inventory, minimize waste, and adjust to customer demand, ensuring a variety of options are available.
The food delivery system utilizes a cost function algorithm to balance inventory across different locations every night. This means that if an item runs out at one location, it may be sent to another location where it's in demand. The system is designed to avoid overfilling inventory and minimize waste by adjusting to the specific needs of each location. Additionally, if an item sells out, customers are informed but can still be offered alternative options. The system is iterative, and the team has experimented with making items disappear and bringing them back based on customer feedback. The team behind this business has a unique blend of product and supply chain expertise, with a focus on efficiency, minimizing waste, and providing customers with the options they want. The team's willingness to operate at a high-risk level, as demonstrated by selling a car to keep the business afloat, has contributed to their success.
Making tough decisions for a stronger business culture: Entrepreneurs must make difficult choices, let go of team members or work with less resources for a longer runway and stronger business culture. Focus on efficient task assignments and resourcefulness to avoid startup cannibalism and ensure long-term success.
Building a successful company requires tough decisions and a strong conviction. Entrepreneurs must be willing to make difficult choices, even if it means letting go of team members or working with less resources. This can be challenging, especially in high-pressure environments like New York City. However, these sacrifices can ultimately lead to a longer runway and a stronger business culture. It's important to remember that bringing in too many people or having unnecessary expenses can actually hinder growth. Instead, entrepreneurs should focus on assigning tasks efficiently and being resourceful with what they have. This mindset can help companies avoid the "startup cannibalism" and ultimately lead to long-term success.
Affordable, convenient, and tasty meals in high-cost areas: People appreciate affordable, convenient, and tasty meals, especially in high-cost living areas, and businesses that offer these benefits can thrive.
Providing convenience, affordability, and good taste in food is a winning formula, especially in high-cost living areas like New York City. The success of Farmers Fridge, with its $7 meals, demonstrates that people are thrilled to save money and appreciate the value, even more so in such environments. The story of the original corner food vendors in New York City, who worked tirelessly to bring affordable food to the masses, also echoes this concept. The contrasting business models of Farmers Fridge and Sweetgreen, each catering to different market segments and price points, further highlights the importance of affordability in the food industry.
Affordability gap between healthy and unhealthy foods: The food industry has made food affordable and reliable, but the affordability gap between healthy and unhealthy options can make it challenging for individuals to make healthy choices, especially for those with limited budgets. Finding ways to make healthy, high-quality food as affordable as unhealthy options is necessary to promote better overall health.
The food industry has made food extremely affordable and reliable for a large population in America, but there is a miscalibration in the quality of calories. While unhealthy foods like those high in sugar, salt, and fat have become cheaper over the last 50 years, fruits and vegetables, which are essential for good health, have become relatively more expensive. This discrepancy in pricing can make it challenging for individuals to make healthy food choices, especially for those with limited budgets. The goal should be to find ways to make healthy, high-quality food as affordable as unhealthy options. For instance, removing extraneous things in the supply chain and focusing on providing basic, nutritious meals at affordable prices could help bridge this gap. The affordability and reliability of the food system are impressive achievements, but a rebalancing of the cost of healthy versus unhealthy foods is necessary to promote better overall health for the population.
The Economy's Triumph Over Healthy Food: The economy makes unhealthy food cheaper and more convenient, leading to poor dietary choices. Innovative solutions like farmers fridge aim to provide affordable and accessible fresh food.
Making unhealthy food cheaper and more convenient than healthy options can lead to poor dietary choices. The discussion touched upon the affordability and availability of high-calorie, low-nutrition foods compared to fruits and vegetables. The economy has triumphed in making such foods readily available, but the distribution system and food design contribute to overconsumption. The distribution system makes it difficult to ensure freshness, while food is engineered to be addictive. Despite these challenges, efforts are being made to provide affordable and accessible fresh food through innovative solutions like farmers fridge. The company has successfully deployed 100 fridges in various locations, partnering with food service companies to expand their reach. While the margins are lower for fresh produce, these partnerships serve as a valuable resource for gaining entry into new locations. The conversation also touched upon the responsibility of individuals in making healthy choices, acknowledging that convenience plays a significant role in dietary decisions.
From 100 machines to a potential public company: Determination and limitless possibilities in entrepreneurship can transform a small business into a potential public company
Luke's company is on the path to becoming a public entity with a goal of expanding beyond 10,000 machines. This achievement comes from humble beginnings, as Luke once had to sell his Audi and start with just 100 machines in New York. The corporate strategy for this growth is yet to be determined, but the potential for expansion is limitless after going public. This conversation took place during a brisket-making session, symbolizing the potential for "startup cannibalism" and fierce competition in the industry. Overall, Luke's journey from a struggling business to a potential public company is a testament to determination and the limitless possibilities in entrepreneurship.
