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I'm Sari Kimbell and I've done just about everything in the food industry. I have helped hundreds of packaged food business entrepreneurs. And now, I want to help you make your delicious dream a reality. Whether you want to be successful at farmer's markets, online, or wholesale on the store shelves, Food Business Success is your secret ingredient. I will show you how to avoid an expensive hobby and instead run a profitable food business. Now let's jump in.
Hey there, welcome back to the podcast. Glad to have you here with me today. So I'm going to launch into my interview with Rob Allen. He is a formidable industry guru expert. Oh man, he's a wealth of knowledge. And we talk in this interview, he and I've talked a lot about like how important business foundations are to your success. And so I want to remind you about the sales tax workshop that is coming up on March 29th. And this is one of those pieces. It is not fun. It's not sexy. But we need to do it. So you want to be sure you get yourself registered for this free workshop. It's at foodbizsuccess.com/salestax2022. The link will be down in the show notes as well. But don't put this piece off. I'm seeing people overpaying, which is never fun, and under paying. And we want to avoid those pains in our business later on. So get yourself registered for that workshop. That will be next Tuesday, in just one week. And if you're listening to this after that workshop is live, you can still grab the replay, just head over to that same link and grab that replay of that workshop. All right, here we go, on with the interview!
Really excited to have our guests today, Rob Allen, on the show. And I feel like I've just been kind of assembling like Sari and friends here lately. So I'm excited to bring on friend, colleague, mentor, Rob Allen. And I don't really know how to describe, how they introduce you, other than I will just say I'll let you introduce yourself. But I will say Rob and I met at Whole Foods Market when we both worked there. And he joined the regional team, and he and I worked closely on opening some stores and you were always one of those. I'll be honest, it wasn't my best moment in life. I was struggling with life things as well as not loving my, exactly loving my work. But you were always a bright spot in my day. So welcome, Rob.
Robert Allen 3:00
Thank you, Sari, that's very generous of you. Opening stores is never a pretty thing, number one. But we got better at it. You know, over time. Yeah, had a great time, spent six and a half years at Whole Foods. Met lots of great people, both on the global and regional teams and store level. Left about five years ago to pursue some of the things and have done, I've switched, or I've had the opportunity, shall I say, to work in about five different industries in my life. So it all comes down to now, if you will. But no, it's fun at Whole Foods really kind of rounded out my love of food. And getting back to people. I was in the M&A and VC world for a long time. And you can't really say you love people then. I've always been a business geek. So kind of, you know, helped with that.
I'm kind of the same way, right? Like I have all these past lives then sort of all come together. But I think you were telling my group that you were our chef.
Robert Allen 4:12
Yeah. I started my apprenticeship at 14 and burned out at a Michelin two star in Brussels, Belgium. I was 27. So I was able to travel the world and work in a lot of great places. It was the olden days, shall we say, when your French pastry cream didn't come up too well and your pastry chef threw wooden spoon at the back of your head. Those were the days, guys. Those were the day. You know, best of times for starters but, you know, it was great. But yeah, came back to the States and still wanted to be involved with food but took a detour into some other companies born in the agronomic development world, specifically canola within Israel, Canada, and the United States. And so it took me on different business journeys in developing companies in all three places to develop non-food based materials. So led me into everything from DARPA to federal government stuff. Super really fun. But it really gave me an appreciation for the other side of business. And then I took a timeout. Oh, probably around, we had done really well. Took a timeout in 2010, decided I wanted to get back to food and people. That's what led me into Whole Foods. So yeah, pretty fun.
Right. You're one of those guys that just like, you just always excel and exceed people's expectations, and you keep your calm and you're cool. And you never,
Robert Allen 5:57
Because I've lived through four children, you know. Thankfully, they're all young adults now. And all of them are just varied in their interests and their passions. And, you know, it's great to see kids, you know, really develop and, you know, yeah, Jen and I both are just like, okay, well, we're almost empty nesters. And, you know, I've always had a calm demeanor outside, inside the whole different thing. But you know, raising kids,
You handle it well. You're a good example for all of us of maintaining your cool and solving problems. So we were, well, first of all, I want to just point out or, you know, share this with the listeners that I think one thing you do really well is and Jen actually mentioned this, so I'll back up even further. So you met Jen at Whole Foods. And you guys had a little love affair, which was super fun to watch. And they ended up getting married. And she's a rock star over there. So it's kind of fun. You guys are still in the industry together.
Robert Allen 7:06
It is fun.
But, you know, hopefully, find some non-work things to talk about.
Robert Allen 7:13
Oh, very much. So we're actually, we're kicking the last vestige of children out. No, just kidding. They're going on to college. But we actually bought a piece of land west of Denver and Morrison, and we're building our forever home there. So we're both mountain kids. So yeah, it'd be fun. We still get to travel together once in a while. Me for clients, her for KeHe. But, you know, yeah, we find lots of fun time.
Yeah. Well, when we, when I got to say hi to Jen in Las Vegas when we were there for Fancy Food. She said something that I was like, yeah, you're totally right. But like, you are very good at continuing relationships and like picking them back up and like putting in the effort. And I think that's one thing in this industry that's super important. And so I admire that about you. And I'm like, aright, I'm going to strive to do that. So you reached out to me, I don't know, maybe a year or a little more ago.
Robert Allen 8:12
A couple years ago.
Yeah, we've stayed in touch and then kind of reconnected again. And we've talked about doing some projects together and working with some clients. So, but tell me what you do now because I think that's really interesting. And how you help package food businesses specifically?
Robert Allen 8:29
Yeah, it's been a long, strange road, shall we say, and trip. But after I left Whole Foods, I went back into consulting, which is great. Helping restaurant groups go into CPG retail world. And also, in my past life, in the investment banking sector. It's really turned into a lot of investment in CPG. One thing led to another and about four years ago, through mutual friend, I got connected to Mark Cuban companies at the time. And so steadily for the last three and a half years, I've worked with one to two Cuban companies, and Shark Tank companies. Aside from that, a year, you know, on different projects, whether it be from initial stage development, meaning they're just, they've got a great product, they've got an idea, they've got a dream. And they'll get investment, and what do we do now? It's everything from co-packing to everything else. And so I really, my focus is, you know, Sari, the last three years is evening the playing field, if you will, for vendors. I saw a real dearth of information and knowledge. You can have the best product in the world. You can have the best retail partner whether Whole Foods, Albertsons, whatever. But you will die a death of a thousands cuts unless you understand the distribution and the placement aspects. I've got enough operational background to be able to help on that aspect as well, whether it's copacking, own manufacturing, things like that. But also, know that you've got to pay the piper on every piece of, and some of it's worth it, some of its not. So really concentrated on that middle side for the last few years, which has been great. I primarily work with a company called Nuts 'N More out of Rhode Island. They're considered one of the top 10 investments made by Cuban in the CPG world. Pete and his group are just fantastic. So I've helped them navigate the retail world. They were in other channels, Amazon, Instacart, through their website, and they were doing nutrition tours, things like that. And then they wanted to break into retail. And so we've navigated that through greater technology. And a real keen eye, a skeptic eye, to you know, it's not about opening all the doors in the world, it's about strategically opening the doors.
Right, the right door.
Robert Allen 11:20
The right doors, and where your product fits. If you're a premium product, you know, do you want to be a sub-premium retailer just to get a thousand doors open? Not really, you're not going to stay there. So it's really, it's been really fun. And then I'll get other projects thrown to me that I work on as well that are some are, you know, danger, danger, you know, lots of fire around, which is fun. I've kind of quit doing that because it tests my patience, shall we say. But it's awfully fun. You know, again, I'm a geek for this. I love seeing entrepreneurs go into it because I've been there. Why don't I do anymore? Gray, you know, and I love doing what I do. I love helping people. But it's a real cut out and another thing, working on and off with my wife, which is awesome, which we have both at Whole Foods and elsewhere. But you get a real, I've really dug into the distribution relationships last year and a half. The good, bad, the ugly, you know.
Yeah, I want to talk about that more too. I don't know, maybe I filled this up in my head. But the way I think about it is like, Mark Cuban invest with a food brand on Shark Tank and then like after the show starts stops taping and he's like, okay, now you need to work with Rob. Call, Rob!
Robert Allen 12:51
No, actually, that's funny, because all due respect to all the guys on Shark Tank and girls. Cumin has given companies and they have a special CPG unit in there. And really bright folks. But getting into the minutiae and the detailed aspects, that's what's great working with a company like Nuts, and Lauren, Pete Farah, is that he says, okay, let's dig deeper. Let's, you know, let's find out the whys. You know, lots of examples of why's but going deeper with a company that's pretty established. But it's still breaking into retail over the last two years, opened up 2000 doors last year. This year, the goal is only 200 to 300. And a lot of those are independent. So that's a whole nother story on the other time, but it's really shifting strategy from, okay, let's get some of the big kids. Let's get some of the medium players, you know, and go from there. But it's shifting the promotional strategy, your digital strategy, everything else.
Yeah. So you came and talked with, I brought my client and 11 clients out to Fancy Food, invited them out, and I wanted,
Robert Allen 14:08
By the way, that was great.
Yeah, it was so fun.
Robert Allen 14:11
Great group. Great group.
Yeah, I wanted to give them some extra value. Really bring them together and offer them something you can't just get from walking a show. So you were out there and I asked you to come speak with the group and we pulled up some benches outside. It was a perfect weather. And you just kind of shared, you know, some of your gems. You're dropping some wisdom like a microphone.
Robert Allen 14:37
I won't use the gems I like, but let's just say that the middle ground. It's really knowing about knowing yourself as an entrepreneur. It's knowing your brand and being real about where you want to go. I'm all for it if the brand fits in farmers markets, and we can do it throughout the country, region, State, whatever. Do that. If you really have a heart to go into retail, get the information, and it's hard to get the information.
Work with somebody who knows this.
Robert Allen 15:15
Right. And, you know, is I told you before. Part of that thing, and we talked about it before I presented to your group was like, okay, do I give them the Scared Straight Talk? You know, and see the faces fall in the smiles go away real quickly. Yeah, it's a little bit like that sometimes. But then you kind of, you know, you weed yourself out. It's not meant to scare you away from a dream or something. It's meant to be just very realistic about what you can anticipate. I mean, I don't pretend to know at all. I love learning. I love this crazy industry we're in. But even if I told you about three weeks ago, I had a client kicked out of a DC. No names, no anything. It was like, what? And they were doing really well hitting minimums that are expected in DCs, distribution centers for retail there. You know, and it was news to us. So going down the rabbit hole of the whys had nothing to do with the brand, actually had nothing to do with the retailer. Had everything to do with the distributor, deciding to close a warehouse, move everything to another warehouse, in doing a SKU rationalization and going up, you know, in somebody along the way.
Yeah, just making a decision and you're out.
Robert Allen 16:39
Making random decision. Now, that's not always the case. But we found out in this specific, we went deep on this, trust me. In this specific case, we found out that their normal protocols for displaying an item out of a DC were not followed. So, you know, we can cry over spilled milk. But what it did for us as a brand was to go back and say, okay, how do we not do this again? How do we make sure that as a brand, we're making all the safety checks we thought we were? There were some internal things, you know, they just happen.
It's a great reminder that you're always gonna have problems. It's just how do you react respond to those problems? Or do you spend a lot of time spinning out? And you know, this shouldn't be happening and why us! And instead, it's like, okay, well, let's just, we got to get to the bottom of it, we have to start solving the problem and ultimately, like, in that situation, you couldn't do anything to fix it. All you can do is learn from it. Like you can't change it.
Robert Allen 17:46
Yeah, very much. So we got to the fact really quickly, okay, we went through the three things that we could do to try and reclaim that spot especially this retailer. They have, oh, they have 65 stores. So it's not an inconsequential amount. And it was an independent, which we really liked. But we even went to them and said, can you vouch for us? Well, once you get in another DC, you can pull it, you know, there's a whole nother thing. So at the end of the day, it was spilled milk. And we're like, okay, let's learn. Let's highly engage in this. This had to do, Sari, with not only the distributors, the broker of record, the retailer, the category managers, CMS, the AM's account managers, you know, trust me, we go deep.
Yeah, I think it's all you can do is, I think, just as a bigger metaphor of like, how you can apply it to anything is like, okay, this is happening, let's just get real with it. Like, this is what's happening and then what can we control? What's in our control? What's out of our control? What information do we need, and then, you know, make some decisions. Control what you can. Release the rest because you literally have zero control over it. So it doesn't feel good to worry and get mad or, you know, you don't want to like burn bridges either. So and then kind of accept the lumps and learn from it and move on and, you know, see what other outside solutions you can apply.
Robert Allen 19:19
Which is great advice. You know, just great advice. You want to take it, you want to take it professionally, but same time, we can't help but take it personally what, you know.
I mean, it could be somebody the market manager moves your booth, right? Like, I'm a manager, so I have to do that sometimes, right? So it could be I'm getting kicked out of a distribution center to. You know, Amazon shut me down or I got moved at my farmers market.
Robert Allen 19:49
But it's accepting what is in front of you, but then looking for the externalities of the situation to make sure you're gaining more knowledge so it doesn't happen again. Or you can foresee it. And, you know, that's a whole nother thing that is empowered to vendors, I would say over the last seven, eight months, with a couple companies out there, they've been working with it. That's another subject, but that can forecast where the opportunities are. To use Whole Foods language, where are your opportunities? And so are we lagging in certain areas? Or, you know, are we winning? Where are the opportunities? And a distributor is not going to give you that ROI spins, you know, you got to pay big money for that. There are all sorts of ways to get those externalities under your hat. So you don't face that same thing again.
Right, have a little bit of innovation, PTSD? Where are the opportunities? Innovate, innovate, innovate.
Robert Allen 21:03
Okay, I'll keep my mouth shut on that.
Yeah, we're gonna, we're gonna move on. Totally.
Robert Allen 21:07
So I want to talk about promotions. And one thing you told my group that was really like, it's like, I knew it sort of intuitively, but I had never really been able to explain it. And I'd love for you to kind of talk about what to expect. I mean, I recognize that for some people listening, this is like a conversation beyond where they're at. But I also have a lot of listeners who are scaling their business, right, and wanting to go from, you know, maybe 100k, to, you know, working on 500k, 500k to a million. So I think, this is a really good conversation. And even if it's, like, I'm just getting into my very first wholesale accounts, right, it doesn't really matter the scale, but the theory still applies. So what I heard you say, and you can go more into this is about like that first year of promotions and kind of what to expect there. So can you talk more about that?
Robert Allen 22:07
Sure. You know, in the retail world, you have what's called free fill. And every, most every retailer will require some sort of free fill. What that is, is one or two cases of each SKU that you have, you give it to them. It's a promotion. So, you know, let's just talk year one, breaking into retail. Say we want to open a hundred doors. You can expect that requirement of one to two cases prefilled. So whatever your COGS is for that, then, you know all the little death of a thousands cuts of either shipping, you know, last mile trucking, things like that. So you have to account for that your first year. I'll give you some ballparks and each category is different. Categories mean are you perimeter the store, bakery, deli, produce, you know, they all have different, meat, seafood. They have different requirements for slotting fees, you know, things like that, slotting can be free filled, things like that. The center of the store is much more staid, it's, you know, if it's peanut butter. Hey, we want two cases of this per SKU, we're gonna do this. We need you to run at meaning $1,000, $1,500 ads four times a year, quarterly promotions, depending on the retailer, it can be two weeks, it could be three weeks, or four weeks, where you're giving an OY, an off invoice or an MCB, Manufacture Chargeback, TPR Tampered Price Reduction, all sorts of acronyms that blow your mind after a while.
You were laughing about how many acronyms.
Robert Allen 24:06
Yeah, between Whole Foods and the military, there are more acronyms to deal with. But the great thing about the promotions. The first year, you're gonna have to promote a lot. So be prepared for once quarter, whether it's $2 off or $1 off whatever, retailers no longer match those promotions. There was a day even up to five, six years ago where if you put $1 off on a product and it's a $7 product, sometimes you'll get them to match that. That's gone a way way. So you have to be really sensitive, especially that first year where your ad will call the whole promotion, adspend if you will, where ad spend could be 28 to 30% when all the dollars, the nickels, pennies are counted after the year. So whereas you think your profit margins are healthy that first year, you know, you really need to do some analysis. The second year that can go down, you're still required to do promotions four times a year. If you're in key or unify, you will submit promo plans usually by Q3 versus Q4 of a year, for the following year. And you'll put in hey, for Hannaford, we're going to do $2 OY, March or excuse me, February, May, September, December, something like that, whatever the category that's relevant for the seasons, for your shoulders, for your Jakers, for introduction, things like that. So it's a lot of planning, and saw the hopes and dreams, if you will, but it's a planning so the retailers in the distributors, hey, you know, they check off and say, hey, is Sari's brand? Are they doing all the right things? You know, are they on time delivery? Are they given the right promotions? Are their sales correct? Which is ambiguous thing we can go in later, but where do they fall? You know, in the scorecard of a brand. And so knowing the playing field, I guess, is a big thing, knowing what the playing field looks like first is huge. Most people say well, okay, actually, great example. I had, I was thrown into, I was smokejumper thrown into the fire by an unnamed company to help another company that they invested in. And it was, the owners were amazing, you know, I just I fell in love with them. Their product was very solid. Their copacking was a little wonky. But they, they could sell anything. And they got into retailer ABC, which equaled about 1000 doors, but they didn't have their back set first. They didn't have all their pricing strategy stuff. There's like, hey, we've got these sales, we've got these POS, let's just go. I was like guys, hold on. You don't even have the true,
Robert Allen 27:20
Yeah, the foundation, you know, and I told it to your group, Sari, one of the most important piece of paper that you can have is your spec sheet. Everything goes into that. It's everything from your GT one, your SKUs, and everything from your weights, your proper names, to how you ship, where you ship, you know, all the, and your pricing structure. Pricing is everything. So if retailer A wants this, are you truly going to be in that pricing structure, you're going to have to do a TPR or in EDLP. EDLP is everyday low price, you know, sort of promotions to get in there. So these are all considerations of setting the table to move forward. And really important, really important.
Yeah, I have a whole module in Food Business Success just on all of these acronyms.
Robert Allen 28:19
The food industry overview. Because you do, you need to know the playing field. You need to kind of have at least a reference document. You know, so many people listening to this podcast, they're in their home kitchen and they have this great idea, but they've never been in the food industry. So what, I guess yeah, my biggest takeaway from all of that is like, I think that there's a rush when people have the product, right? And they just want to launch and get into as many stores as possible, like, oh, let's go, turn it on. I have product and to come back and make sure your foundation is really strong because a lot of people don't. If they've never been in the industry, or they don't understand it. They're just looking at the, okay, I got in the store. Here's my cogs, here's my margin. Great. I'm just, I'm like looking at it very simply. But I think what you kind of really drilled in to me is that you have to have the runway for that first year. And so you can't get into more stores than you really have the budget for, the capital for, to support because your spend on trade spend and marketing and promotions is going to be so much higher that first year, right?
Robert Allen 29:41
Yeah. And we're not even talking to brokers yet. On certain things, yes. To your point, the runway. There's a company that is working with last year. They were a 10 million plus company. But in their expansion, they didn't account for how much that first year of their expansion into the retail paradigm was. And so here they were in September, saying, oops, we need about three quarters to million dollar runway, you know, to make it to the end of the year. And so then you're going for lines of credit, you're going back to your investors for things. Yeah. And a capital raised before the holidays is never fun. For anybody, you know, it happens, but in CPG land, not really.
Well and I want to bring it down to just anybody going into wholesale. I mean, you may not have all of those things, right. Maybe you have free fields, maybe you don't. Maybe you have slotting fees, maybe you don't. Like you said with independent, smaller, sometimes you can get out, you know, not have quite that burden as a traditional conventional retailer. But it doesn't really matter to me how big or small you are, like, you still need to be able to, you need to put that in your forecast of like, I have to support the store as whether it's 5 stores or 50, or 500. I need to be able to support the store and be a really good partner, especially that first year because I need to drive trial and you drive customer trial. How do we get customer trial? It's usually with sale signs. It might be with demos, right? It's gonna be with employee education. So giving them samples and education pieces. It's going to be ads, coupons, all those things, right. Those are things that drive trial, I have to prove to the store that retailer that I am a really good partner, and then I move product. And because that scorecard that you mentioned, right, at the end of the year, so your marketing promote. And I want to talk actually about those terms, but like that support of each of your wholesale accounts is really crucial to be realistic about it for the first year, and it's gonna be much higher and then level on.
Robert Allen 32:11
Yeah, correct. Exactly. Right. Your second year is much different. It's not half, but it's still significant were you're looking at new types of promotions.
You don't have to do the promotion.
Robert Allen 32:34
But there are more creative ways to do it. I'll use Publix as an example. So they have loyalty programs. Publix has 12.4 million people in their loyalty program. Our main broker that I work with, they have a side arm that provides digital platform for digital coupons within the Publix's forum. Now, that's a whole nother rabbit hole. But the digital platform for promotions, especially your second year is really, really important. Because you're going to dovetail off. And then you can strategically place digital coupon or coupons, you know, whether it be paper or digital, everything's going digital, into specific areas. So if we're having a slow time in Alabama, okay, let's flood the, you know, 15 stores in Alabama, or 100 stores and those types of things. So it's really the balance. But it's also having, you know, if you're getting into it to be bought in five, six years, that's a very low percentage, you know, of companies. And so having the long haul, we heard back in the whole foods days, it's really tough getting on the shelves, and we experienced both at regional and global level. But it's tougher staying on the shelves, that first three years in the retail industry is just tough, you know, but once you make it, and you do the right things along the way, you're setting yourself up and the brand for success, you know. Then you can talk line extensions, you can talk all sorts of fun stuff. But it's really, you know, it's still what have you done for me lately? What's new? You know, and so after the first year, the second year, you know, your solid brand, you're finding your way within, say 75% of the stores that you're in with a retailer or something like that. Then you can go back to your distributor partner and the retailer during category reviews, which usually two times a year per retailer and say, hey, this is what we're doing for this next year. You guys excited? Sweet here's, you know, and so it's really in, you know this Sari. This is a small industry we're in. You know, you're reputation your, you know, how you do business is, it's amazing. I still run into people, you know, from our whole foods days that are now in different areas in this world, and they're still great.
Oh yeah, people move stores. They move retailers. They move, you know, yeah, whole food to distribution, whatever but like, to your skill about maintaining relationships, like don't burn any bridges.
Robert Allen 35:30
I mean, I think the great thing I like about this industry is that if you're out there, and you're an SME, a subject matter expert, which I would never claim myself to be in this, but it's, you know, it's relational based, you know, hey, it's not just gleaning information. I'm truly altruistic about this, I believe we need to share the information so it can get to everybody. I mean, your point of, you've got a section of your training, just on the acronyms in retail. Who knew? I mean, I think it's awesome. So those little bit really help. And this is not like going into an electronic store selling a widget. You know, if you've got a perishable product, that's a whole nother discussion, you know, versus shelf stable, you know, things like that, frozen categories. We can go on for days on the shipping disparities, you know, of the supply chain, and you know, where you're going to incur the costs more, where you have to anticipate it. Also, stuff like that.
I just kind of realized, I'm like, I'm gonna call this podcast, like, retail reality check with Rob, and because I don't really want to deter people. And I don't think you do either.
Robert Allen 36:56
We just want to give people the reality so they can plan for it, make adjustments. And I thought you brought up a great point about self awareness. Like, do I want to do that? Do I want to be that kind of business? Do I want to play this game? Because there are other ways to have a profitable successful food business.
Robert Allen 37:18
Robert Allen 37:19
I cannot agree more.
So we're just really talking about the reality of like, larger scale retail and what to expect if that's what you want to go.
Robert Allen 37:29
Yeah, you know, if to look at it in stages, okay. You can go after the big kids, whether it be Target, Kroger, Whole Foods, things like that. But there's so many independents on a regional basis. They're just fantastic. Actually, last week at the Unify show in Orlando, I met, I'd never heard of them before, it's a hick furred. And it's an independent retailer, family run retailer of 12 stores in Florida. Their flagship, what used to be one of the old lucky stores as matter of fact. Great family, really cool. And they're just killing it, you know, they're not part of infra. They're not but there's so many ways to just go, hey, I've got a great product, you have a great store or level of stores, I think we'd make a good love match. And you'd be surprised how often that can get you in to your local three store chain, which is awesome. You can do it in knowing the scalability. That's just from the home aspect. Or if you're in a shared kitchen, things like that. Go in, you know, it's still an entrepreneurial paradise to go into, you know, I won't name any retailers, but some independence and go, hey, I think we'd make a good pair. I just had this guy. He's a buyer for this chain in 7 store chain in and around Chicago. I thought he'll sooner kneecap me than shake my hand. He's very intimidating individual. But really funny. That guy was awesome. And we talked for a while and I said, okay, there's not gonna be a funny business on chip and he goes, give me the deals. Okay. Yes, sir. But it's that type of back and forth where, listen, I don't want to dissuade anybody from following their CPG dreams or their food dreams because it is a fun business at the end of the day, please, we're talking food. We're talking people, and let's have fun with it. And the majority of people that you meet that or other vendors or retailers still have, you know, glossy eyes. It's awesome. You know, that's what.
Yeah, we're still dealing in food. I used to say a whole foods all the time. Like, I sound like, we're not saving lives here people like we're selling great food.
Robert Allen 40:07
Our shade in our houses. Yeah, we're not saving baby whales on the beach. Let's just step back here.
We are in food. We're having fun. And let's not take it so seriously. Like, this is a really fun business. But I think having advisors, mentors, colleagues, like myself, like you, can really help in the fun factor.
Robert Allen 40:29
Yeah, and where you inject your passion and your background, I think is just, that's why when you started some of the things a few years ago, I was like, hey, I need to reach out. And when we reconnect us like, yeah, you still have the same type of spark, you know, back when we first met, I was like, yeah, okay. That's, you know, and it's, I can't tell you, how important it is to have, sometimes a cheerleader, sometimes a realist, and sometimes just, you know, hey, this way it is because it's really important through everybody's journey, and it still gets me up every day. I just, I love dealing with the entrepreneurial aspects, even when I'm in really tough situations for clients, and I've most likely probably been there before, and can help out. If not, I'm the first guy to raise my hand and say, I have no idea but I'll find out. And that intellectual curiosity has to be part of every, every phase of what you're doing, you know, how can we do this? Do I know somebody, you know, that can help me with this?
The Who is really important, right? When you start trying to build the How bridge, find the Who. Find who else has done this. Who helps people do this, right? Like, I don't need to figure all this out on my own. Let me go find out the Who to help me with How, I think is super important. I want to talk more about promotions, because I think you could really help us understand. First of all, can you help define some of those different buckets, because I tend to want to just call it marketing, but I know, you know, for like general terms, but I know it really does get broken down, especially in the retail space. So can you help define some of the terms like trade spend, promotions, like how those differ from each other?
Robert Allen 42:23
So as a vendor, trade spend is exactly that. What you're going to spend to get ahead in a retailer. So your trade spend, say for year one, for promotions, can be 15%, 18%. Then on top of that, you've got another layer of promotions, which is part of the free fill. So those are, you know, that's where the first year gets really expensive. Second year, you're not going to free fill except in the extra doors you're opening and things like that. Promotions are, they can be interchangeable just depends on. Okay, trade spend usually goes to the retailer, and promotions go to the retailer through the distributor. But there are ad buys, meaning if you want to be in the flyer for sprouts market, okay, you're going to buy that ad for X amount for four times a year, things like that. And they'll place a little a coupon book or some in different retailers coupons next to your product if you have it. You know those types of things. So that can all go into promotions and marketing. So again, you can see where they're interchangeable sometimes, It really depends on the context. So Whole Foods looks at trade spends in and promotions differently than Kroger does. You know, it's yeah, that's too long.
That's why I need somebody like you to help me figure it out but I kind of look at marketing like I mean it is a general bucket but there's like outside where you're marketing directly to your customer maybe it's social media ads, it could be other things versus trade spend like you said is direct with the retailer.
Robert Allen 44:21
Is direct usually pass through from the distributor and retailer in the, you know, I'll put it nicely. The opportunity to trade spend. So if you're doing free fill. The money sways back but there's handling fee by the distributor for that privilege.
It's my product plus you pay for the privilege of giving me my product.
Robert Allen 44:50
You're welcome. No but the external marketing, whether it be digital marketing, you know, online, social, things like that. That's a separate bucket. Where it completes a little bit is with a digital campaign for coupons, for driving sales. We can talk geo targeting for a minute.
Yeah, I want to talk about this because I know you've been getting into coupons and looking at digital space. So yeah, start talking a little bit about that.
Robert Allen 45:24
So it's, that's one of the way the advertising is taken back to the vendor, and has a little bit more control over it for your ad spend, whether it's gonna be 12 cents a clip, 9 cents a clip. But digital couponing can happen on a broad base. Or it can happen within a like loyalty club program. Like I was talking about Publix before. It's more specific. There are companies out there that we've dealt with that we'll see we're having a problem in Alabama, okay, and we have 14 stores that are under par, over six month period, we want to really highlight it. Their geo targeting aspects for digital coupons and loyalty programs. So when you walk in that store, or within 100 feet that store, digital coupons can pop up into your app, and say, hey, and drive the customer there. This will be $1 off, $2 off, something like that. So the the clip rate is 9, 12, 14 cents or something like that if somebody clicks on it. But you've also got to have the product in stock. That's the biggest thing where it's like, oh, I got a coupon. Oh, it's not in stock. So it's really using both hands, you have to make sure with your distribution, your retailer. Hey, guys, we're gonna be running this promo in these 14 stores in Alabama, starting March 1. We need to make sure that our top three SKUs are in there in order to support this because this coupon is only good for two weeks or four weeks. You know, we want to make sure we're in stock instead of out of stock. So it's really forecasting, but it really puts the power back in the vendors hands. You can cut that off say, hey, we only want to afford 10,000 clips. Okay, you know, it stops there. So as soon as 10,000 person, you can hold back.
Control on how frequent and how much and budget.
Robert Allen 47:32
Exactly, it will go to the dark side of OY stuff. Often boys were a retailer distributor can,
Don't do it. Just stay away if you can.
Robert Allen 47:43
You want to track as much as possible, obviously. And so, you know, yeah, that's this whole discussion, it really is dependent on where you are with a distributor, where you're with retailer. And so it's not just we opening doors, it's really okay, we open those thousand doors. Is that close to what we thought would cost us? And if not, where are we going? You know, do we need? Do we need some buffer? Are we not filling, you know, shelves is just the free fill? Like for Nuts 'N More, we had a retailer, very large retailer, rolling this out by divisions. Well, one division, let's just say is not compatible at all. We were in schematics were in, you know, their order guides everything else. And once the free fill hit, the reorder rate just dropped off, like, you know, rock. So we're like, okay, guys, how can we pop, you know, post this up? So we work with the distributor, we worked sort of with the retailer, but mainly with our broker at the points and okay, guys, we're gonna do another infusion of coupons, promos, things like that. You need to get the stores to put it back in there planogram, order to the order guide, you know, things like that. So, yeah, all sorts of fun stuff you can do. But really, there are strategies to take. It's only been the last year and a half, two years where the vendor strategies are getting stronger. I think, you know, and to the point we've talked about before, get as even a playing field as possible. You know, it's that's what you want to try and do.
Yeah, unfortunately the industry does not necessarily favor the manufacturer, the vendor, the brand so you really have to be vigilant in all aspects and I think if anybody, we won't get into distribution on this. It is a whole other podcast. But I would say again, self awareness and real like a reality check that like if you're going into distribution, if you're going to be working with retailers, larger retailers, like, you need to have really good record keeping, really good tracking mechanisms in place, like don't just be like, whoa, we are in a distributor like, because they have chargebacks, they have all these fees, and you have to check them each month. I mean, you have to wear this whole other hat and maybe you're not the best one equipped for it. So maybe you need to bring on help.
Robert Allen 50:26
You know what, Sari, that brings up a really excellent point. I think, yeah, I think you know her. A very good friend, she had company in Colorado. I think she's in 4000 doors nationwide. And she didn't control the middle of the chargebacks of all the different nicks and cuts she get every invoice. You say, oh, I submitted this PO, when invoice comes back and it got $5 on it, when it should be 1000. You know, what is going on here? And unfortunately, she lost her company because she couldn't, she didn't know this. Well, she spent the last 10 years just making it back, make evening the playing field by saying, hey, guys, this what you need to look for. She's inspiring to me, always is, and she you know, she learned, and then she moved forward. And unfortunately, it's not. It's not a, you know, wayward case. It happens every day. Even with the large companies, if you don't have somebody with a really good acumen for keeping in such as financial, it's reading the line, to reading the invoices, being able to look at deductions. Is that what we agreed to? You know, because you're going to go into contractual agreements with Unify on different arrangements. And if you don't have that already set up, through SPS programs and things like that, that will help you with that. It's big job, you know, in the 500,000 to $5 million, you know, annual range, it can eat you alive especially that first and second year in retail. So,
The time to set it up is that, you know, 50k, like, that this is early, so that they're there. And then you can scale with your systems. And, you know, you might need to change the systems a little bit to be more efficient, but like, at the very least starting the practice early of really watching those invoices, wearing that hat of like, what role would that be like? Like, it's like, well, data forensic,
Robert Allen 52:55
There can be. There are a couple outfits out there that actually will go out. And they'll do a two year forensic study of your POS, invoices, in any agreement you have. And they will recoup. It's kind of like Frank Azar, you know, he'll take a big portion of the money he gets, but you know, at least you can correct the records. You don't want to get to that point, you don't want to have to hire forensics on it. So you want a controller, or comptroller to be able to run that for you. And it's really setting yourself up for success. Hey, if I like making, you know, if I like making candy canes, and that's my passion, but I have no financial literacy other than I can balance my checkbook, but this is my dream. Know, your role, you know, know your roles, and it's not, you know, I know, my role. Can I go in and be a CPA? No. Did I spent a lot of years where I played an attorney on TV? Sure. If you will, I'm just kidding. I didn't. But, you know, I was in the contractual aspects in multiple industries. And that's how I broke into, actually, with some of the companies I work with now, by looking at their regional distribution agreements, and saying, you guys didn't really agree to this, did you? Because you did. And it's really, you know, it's really getting out of the contracts or negotiating new things. And, you know, I always defer to an attorney, but I can look for the buzzwords within the CPG, retail, distributor world that, you know, really help. And, actually, I talked with one of your clients and said, okay, you need to go back. And because they asked me, and I said, you need to go back and look at your agreement, you know, and then, you know, go from there because I'm always willing to help because, again, I think from the altruistic side, if we can make it easier all together, awesome. You know, let's go. To make a living but you know, it's still, I think it makes better.
I love it. Well, to kind of wrap up, I think what we're both saying here is know what you're getting into, go into their eyes wide open, understand the playing field. Get help. Like, don't try to do this all on your own if you've never been in this industry, and just booked that into part of your startup, you know, your costs for scaling up, is working with somebody like yourself and other consultants out there that you don't have to. I know that can be a big line item on your budget. But if you want to do it right and set yourself up from the start.
Robert Allen 55:35
Yeah, that's why, you know, not to finalize on this point. But that's why I asked you, should I give a Scared Straight Talk? Because I go back to 80s, 90s, scared straight, you know, kept me out of jail. But anyway, they used to have this program called Scared Straight. And all these kids go ahead and get the hell scared out of them. You know, and, you know, it's, I want to give that talk. It's a 10 to 15 minute talk. But then, hey, you know what, it's a beautiful bluebird day sky. You know, let's look at it. You know, it's good to be honest on the pros and cons. You know, that's all.
Be self aware, be realistic, have all these pieces, like know what you're getting yourself into, especially in the retail space, because it's a whole other animal, for sure. So you are always so generous with your time. And I really appreciate that about you, Rob, and very giving. I do want to bring you in for our Food Business Success for a VIP call at some point. So in the program, that's a great place where people get to ask you questions.
Robert Allen 56:43
I don't answer your question. Just kidding.
Like I said, you're always very generous with your words and your time. So, thank you. If people want to kind of find you is the best place LinkedIn to connect to you?
Robert Allen 56:57
Linkedin or just directly through you. It'd be great to all be in the hood together on this. Again, I only work with three to four clients at a time, which is great. But as Sari said, I'm always willing to answer questions, you know, and whatever. Because I really believe in, you know, especially your group. They're just so engaged. And it's just awesome.
Reminds you of the like, oh, yeah, I remember why I got into food.
Robert Allen 57:31
Yeah, that's I'll carry the gray hair for all of us.
Love it. Thank you so much for your time today, Rob. I really appreciate it.
Robert Allen 57:41
Oh, my gosh, you guys, that was so fun. So good. Rob is just a wealth of knowledge. He's so generous with his time and his industry knowledge and connections. And it's so important that you all are expanding your world of people, this industry people are successful by their relationships with others. And so by you getting to know me, and if you want to come inside Food Business Success, and become a member or become a one on one client, you automatically get access to more people like Rob. It opens up your world of connection and relationships by your connection with me. And so that is just so important as I think about who succeeds and who succeeds faster in this industry. So I hope you really got a lot out of that. And I'm just gonna leave it here. So until next time, have an amazing week!
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