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SOCAP10: Locavore Foods

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  • 1. LOCAVORE FOODS, MICHIGAN SoCap Food Systems Track 2010 1 Prepared by Melanie Cheng & John Fisk Night-before disclaimer
  • 2. 2-SECOND HISTORY  Eric Hahn + investors founded Cherry Capital Foods in MI with a 100 mile radius mandate  Very successful  Eric asked to advise ag departments across country to replicate  Eric believed 100 miles was limiting; how about 24-hour radius?  Eric: Yay  Investors: Nay  Eric left and founded Locavore Foods 2009 2
  • 3. LOCAVORE FOODS SNAPSHOT  One of most successful local-food “distributors” for schools in country  Serves Detroit, Chicago, neighboring counties:  70%: 900 public schools via contract  15%: Restaurants  10%: Stores  5%: Distributors, Institutions, Farm stands  Serves ~ 100 farms from 1 to 600 acres  18 mos. old with $1.2M sales, soon to grow with…  New partnership with established “conventional” distributor to meet schools’ logistical needs 3
  • 4. LOCKING VOLUME BY MEETING SCHOOL NEEDS  Schools need local product  Some schools part of Farm-to-School program = mandate to source locally  Some schools are “USDA Grant Schools” = >80% kids’ family income qualifies for reduced-cost or free school lunches = receive gov. funding to subsidize purchase of fresh fruits & vegetables  Schools not appealing to other distributors  Hard to find farms who meet USDA sizing and price requirements  Hard to find farms who meet insurance, food safety standards 4
  • 5. SCHOOLS ARE APPEALING TO LOCAVORE FOODS  Established relationships with farms  Already knows who has HAACP and GAP certification  Engages them at prospect of big volume school contract  Educates them on exact [typically smaller] size, pack, price  Secures large volumes ahead of time across multiple small/medium farms  Eric Hahn former life as Chef  Menu-planning with “school lunch ladies”  Manually shifts demand to seasonal supply  Example: iceberg lettuce mixed with 80% seasonal greens 5
  • 6. LOCAVORE AS FULL SERVICE PARTNER TO FARMS  First in: school contracts  selling farms’ small sizes for USDA kid portions  “leftover” med/large sizes not acceptable to school portions  Friend for life: help moving “leftovers”  Distributors and other wholesale buyers prefer med/large anyway  Education on pack and pricing  How to plan, pick, wash, pack, price  Pick-up service  Locavore picks up from farms; allows smaller farms to reach larger channels 6
  • 7. LOCAVORE AS CHEF CONSULTANT & FORAGER FOR RESTAURANTS  Menu-planning  Seasonality  Produce education  Marketing ideas: ex – “pastured chicken night”  “Contracts” with farms for standing orders  Access to special items 7
  • 8. LOCAVORE AS “REGULAR” DISTRIBUTOR TO OTHER WHOLESALE PURCHASERS  Standard order processing & deliveries  Pricing on par with other local-food distributors  Only competitive with mainline commodity prices if farms choose to set their price at that level 8
  • 9. LOCAVORE FOODS MAGIC FORMULA  Farmer relationships  Knowledge of who does and can grow what  Knowledge of who has insurance, GAP ahead of time  Holding trust in guaranteeing school sales  Pickup service  Education  Farms about pick, pack, price, plan  Schools about working within USDA guidelines  Restaurants about seasonality & produce  Efficiency  Helping farms move all product to diversified customers  Picking up from farms while making deliveries to customers  Expanding by using physical assets of larger distributors  Opportunity here! 9
  • 10. STARTUP & FINANCING  Day 1: 1 man, 1 van, 1 plan  Loans  Personally funded  Today: 3 staff, 3 trucks, 3 warehouses  Imminent partnership with established distributor wanting to incorporate more local = 15 more trucks  Partner wants more local  Locavore can now provide bananas, winter produce to schools  Profitable now  Break-even estimated 5 years 10
  • 11. MORE INFO  Eric Hahn emhahn1@msn.com 11