At the Food Finance Institute, we often first work with food entrepreneurs on clarifying and understanding their business model. We do this because the business model is the sum of all the things that ensures the organization sustainably makes money and delivers on its core products, services and mission. What many food entrepreneurs don’t often realize is that innovation comes not just in the form of new products or services, but also in their business model.
Many food pantries have a model that seeks to buy as much cheap food as possible – usually poor quality food, unfortunately – to then distribute to the people who access their services. This is likely meant to maximize limited charitable dollars and serve more people. But this food acquisition and distribution model doesn’t address the root causes of poverty and other factors that drive people to use pantries in the first place. To serve the whole person for the long term, enterprising food pantries would need to innovate on that model or form close partnerships with other organizations that help address those peoples’ and their communities’ underlying issues.
On our podcast this week, Michael McCormick, the Executive Director of the Livingston Food Resource Center, talks about how he began his tenure with a study of that food pantry’s customers and how it led him to start transforming that organization’s model. This data helped him and other staff and volunteers understand that many of the people there were struggling with unemployment or underemployment, often due to a lack of marketable job skills, as well as serious health issues like diabetes.
Based on this data, Michael decided that the pantry would include both healthier food (much of it procured from local farmers) and access to job training focused on needed culinary skills. Adding value-added processing capacity and culinary job training were essential to making the local sourcing model work and required acquiring new assets to add an adequate commercial kitchen space at the new facility. This then necessitated a successful capital campaign with designated funds for specific programs. And, the new space allows for kitchen rental, value-added processing, community room rental and catering to provide ongoing earned income for their operations moving forward.
The Livingston Food Resource Center re-imagined itself as a provider of multiple opportunities and services, rather than simply a food pantry. This re-imagining changed their business model to better serve their customers, driving local economic development through purchasing local food and growing earned revenue that supports a multitude of programs to meet their customers’ needs. We encourage all food entrepreneurs and social innovators to look deeply at their business model to see opportunities to innovate and grow their impact.
And now, our roundup of the best food and beverage finance news, events and resources from around the web…
Business Model Insights
- 7 Tips To Help You Prevent Cash Flow Crunch (Investors Community Bank) – “
- 3 lesser-known brand tips for contract manufacturing success (New Hope Network)
- How Cali’flour Foods won online—and it wasn’t all Amazon (New Hope Network)
- Patient capital can give entrepreneurs a leg-up when seeking VC funds (FoodNavigator) – “Routine headlines about multi-million – or billion – dollar venture capital investments into food and beverage startups may give the impression that VC funding is the best way to scale a business, but the model is far from perfect and actually could do more harm than good for the majority of entrepreneurs.”
- 10 fundraising tips for natural retailers (New Hope Network)
- Six Tips For Effective VC Fundraising From The Founder Of Copper Cow Coffee (Forbes)
- Retail is Like Where’s Waldo (The Intertwine Group) – “Getting on the shelf is the battle, but getting off it is the war. Distribution without discovery is deadly. It remains the most repeated mistake made by young Natural Product brands. As a founder, you need to prioritize discovery over distribution. Discovery is both an investment by the company and a partnership with the retailer.”
- Why personalized packaging works for CPG companies (FoodDive)
- What’s the right channel for your brand? (New Hope Network)
- Modern eating trends reveal surge in mealtimes, snacking (Refrigerated & Frozen Foods) – “Survey data reveals that as of 2018, a far higher share of adults consider breakfast to be the most important meal of the day compared with lunch or dinner. Research also found that the percentage of adults who eat several smaller meals throughout the day edged up slightly from 2008 to 2018.”
- Why Food Reformers Have Mixed Feelings About Eco-Labels (NPR)
- Amazon’s online sales will be lower in 2019 (Store Brands)
Farming and AgTech
- Stop pitting plant-based vs animal agriculture… multiple farming systems will co-exist in future (FoodNavigator) – “Consumer interest in grass-fed meat/dairy and plant-based foods, stems from the same desire to find more humane and sustainable alternatives to factory farming, says Maple Hill Creamery CEO Tim Joseph, who was surprised to see Impossible Foods single out regenerative grazing in its recent impact report.”
- Big Dairy Wants You to Know Vegan ‘Butter’ Isn’t Actual Butter (Bloomberg)
- AgTech Landscape 2019: 1,600+ Startups Innovating on the Farm and in the ‘Messy Middle’ (AgFunder News)
- 2018 U.S. Food & Beverage Startup Investment Report (Food Tech Connect) – “The year saw $1.45 billion invested across 200 disclosed deals, according to our research. In total, there were 247 reported financings in 2018. The largest check size of the year was for $114 million to Impossible Foods, with a median check size of $2.4 million (up from $3.9 million in 2017) and average check size of $7.3 million (up from $8.9 million in 2017). Despite a slight decline from 65 deals in 2017, M&A remained strong with 59 branded food and beverage deals closed in 2018.”
- June 2019 NCN News (Nutrition Capital Network)
- Personalized profits: Big money moves into personalized nutrition (New Hope Media)
- From Grain To Plate (Meadowlark Organic Farm) – Free, 6/30 in Ridgeway, WI
- Expo East 2019 (New Hope Network) – $, 9/11 – 9/14 in Baltimore, MD
- Guiding Wisconsin Farmers to Legal Resilience (Farm Commons) – Free, 9/13 in Madison, WI
- Food Culture Forecast (Hartman Group) – $, 9/29 in Chicago, IL
- Food and Ag Ideas Week (Grow North MN) – $, 10/15 – 10/20 in Minneapolis, MN
- National Farm Viability Conference 2019 (Multiple Hosts) – $, 10/22 – 10/24 in Redwing, MN
- Annual Farmer Cooperatives Conference (University of Wisconsin Center For Cooperatives) – $, 11/6 – 11/8 in Minneapolis, MN
- Good Food Financing and Innovation Conference (FamilyFarmed) – $, 11/3 in Chicago, IL
- Business Tax Basics (UW-Madison SBDC) – $, 11/19 in Madison, WI
- National Good Food Network Conference (Wallace Center) – $, 3/10 – 3/13 in New Orleans, LA