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Thursday, January 20, 2011

Stepping Out, A Prime Example

Caught this article and news clip through VIN about a growing, profitable, multi-city company founded by a frum Jew which serves the general market (!). The food is *not* kosher and some commentors are clearly unable to get their head a Jew in the non-kosher food business. On top of that, it seems that few understand the prohibition of benefiting from mixing meat and milk. One would certainly need a lot of Rabbinic guidance to be in the non-kosher food business. But I perused the Fresh Diet website and it appears that the mixtures of meat and milk are from treif animals and therefore (according to my limited understanding of halacha) likely don't fall under the prohibition of benefiting. Like I always say, everyone is quick to scream dan l'chaf zechut for the sorid. But when it comes to a positive story, wow, does the criticism come quickly.

An eight part series interview at a business blog gives a lot of great insight into how the founder developed this successful business. My summary doesn't do justice, but I picked out some themes that I am taking notes on:

*Research and Understanding Markets: He had a business idea for a kosher zone diet delivery service. After some research which showed that no market existed in the Miami area, he quickly scrapped the idea of a kosher niche market and decided to pursue the general market. Even when he was running the business from home, cooking only kosher food, he avoided the label kosher to avoid limiting himself.

*Starting Small without Debt: The business started with the help of his wife. They prepared meals for 3 regular clients in the evenings and he delivered the meals daily before 7AM. After work, he stopped at the grocery store to do his shopping. He funded his business from the first 3 clients.

*Kept his Day Job: Until he had enough clientele and business was expanding, he did kept his day job.

* Flexibility and Knowing the Business: He has stayed ahead of the competition and even though he has taken on debt to expand the business, he has made changes to keep gross margins high and is now working on revenue deals to cover the big expenses (rents and salaries).


* Eye on Profitability: The founder has big goals in terms of profitability and gross margins.


The founder clearly has an entrepreneur's mindset. While he is not college educated, he has developed a wide variety of skills and a great database of information. He also has a tremendous drive, developed from a young age. He understands what is important to the business (technology, appropriate marketing, celebrities). He has also put himself out there, making TV appearances personally with his chef.


I love reading about different entrepreneurs and how they launched their businesses. As a bit of a non-consumer, it is hard for me to imagine spending this type of money. But the world is made up of all types and there are many niche markets out there.

Oh, and those profit margins. . . 5-10% (see the eight part of the series), although he plans to expand to 20% with economies of scale and revenue deals. As I pointed out in an earlier post, businesses are not generally rolling in dough and an owner has to be careful in order to maintain profitability and the margins needed keep the business in the black, as the owner has done each year.

30 comments:

Anonymous said...

Its very interesting that a kosher owner and chef can make it selling non-kosher food where they can't even taste the product to help determine if its any good. Usually to make it big, you need to be selling a service or product that you care passionately about or believe in. I assume that they have some non-Jewish tasters and chefs on staff to make up for what they cannot do.

(Like you SL, I am astounded that there are enough people willing to pay these rates to not have to cook and to help diet, but for those who can afford it, it sounds like a good product since a healthy weight is priceless and being able to eat fresh, healthy food with portion control is so important for one's health. I understand that some very busy people or those with serious food addictions/problems who can't control themselves if they were to go to the grocery store and cook for themselves, this may be a real service as well as a way to earn a living.)

JS said...

Doesn't surprise me at all that people are willing to pay these prices. All of the offices I have been in in the NYC area have public refrigerators on each floor that are smaller than the typical dorm room fridge. They use them for milk for coffee and the 2-3 people per floor who actually have the audacity to brown bag it to work. That's right. Of the maybe 50-70 people per floor, only a handful bring their own lunch. The rest get food from local restaurants or go up to the cafeteria. So, it doesn't surprise me at all that busy professionals would want to pay for healthy alternatives.

As for not going kosher, it's probably the smartest business move he made. His business would have quickly been taken over by the local rabbis and kashrut authorities. His margins would be destroyed by paying exorbitant fees to mashgiachs (who are not allowed to do any work other than sit there) and inflated kosher meat prices. Good luck getting a business off the ground with that dead weight. A friend in the Florida area was told he had to pay $45k for a full-time mashgiach who was not allowed to do any kitchen work if he wanted a hashgacha. A local restaurateur told a friend he closed his business after the local rabbis made yet another attempt to extort money from him for the hashgacha.

Anonymous said...

JS: I agree with your comments, but not just because of saving money on kashrut supervision, but the more important reason that the orthodox community can't just be feeding off of itself (no pun intended). Because the community spends tons of money that goes outside of the community for goods and services produced outside of the community, whether its cars, medical care or consumer goods, then to survive it also has to sell goods and services outside of the community.

I would also note that not every office is like yours. My offfice of about 30 people has a full size fridge that is stuffed full with people bringing their own lunch from home. Also even people who don't brown bag it for lunch still often manage to prepare food at home for dinner, breakfast and on weekends. This diet plan is for 3 meals every day of the week.

Miami Al said...

JS,

Funny though, it's NOT meat prices with these businesses, it's really the extortion/supervision.

There is a local candy and nut distributer in South Florida, owned by a Frum owner. The facility is under reliable supervision. I was in a local farmer's market picking up produce, and saw the candies, checked for a Kashrut symbol for fun, and was stunned that it was that it was a white label from local distributer for the store.

This was NOT a store that caters to the frum community, or even the non-frum Kosher Jewish community... this city happened to be a city that used to have KKK problems 20 years ago, and to this day has almost ZERO Jewish presence (no Chabad, no Reform/Conservative Temple, a small unaffiliated synagogue that might be a messianic one for all I know). However, they got their candies/nuts from a local vendor, are there was the kosher symbol.

When I mentioned my excitement, a friend that shops in all the Kosher places in the majorly Jewish areas commented that they have them all there... although the prices were higher because it was being sold as a "Heimish" product.

For my family pick up meats from a butcher shop, and that's the extent of our dealing with Kosher Grocery stores, the local super markets have the cheeses at lower prices anyway.

I've seen Cholov Yisrael milk at Whole Foods, under their "local companies" initiatives.

Because of the emphasis on local products, a whole new world has opened up selling food through the high end, high margin, retail channel. But few Frum entrepreneurs understand marketing or have a place.

JS said...

Anonymous,

I fully agree we need to engage and do business with the "outside world." That said, it's a crying shame that in many businesses those who do want to work within the community get completely shafted by the system. Granted that we are too insular, but some businesses need to be insular by definition - a kosher restaurant, a butcher, a Judaica store, certain charities, etc. It's absurd that even an honest person who isn't looking to rip off his clientele has to charge exorbitant rates just to make a meager profit and stay in business. I forget the exact numbers, but because my friend was looking to run a small business, if he had acquiesced and hired the do-nothing mashgiach he would have had to increase what he charged for food by about 30-40% (e.g., about $8.50 for a hamburger and fries instead of $6) - at that higher price he couldn't attract enough customers to stay in business (or pay off the large capital expenditures necessary to start up in the food business).

As for brown bagging it - in the smaller offices I have been in, a much greater percentage bring lunch from home. I imagine this is due to not having an office cafeteria and also working less hours which makes it easier to prepare meals. At the larger offices, you have a cafeteria, you're generally in an area with more restaurants, and you work far longer hours so you're often having all your meals at work.

JS said...

Another aspect of the kosher issue:

There are so many people who limit their own, personal profitability by choosing to go "kosher" over "non-kosher" in the sense that they only want to work for Jewish/frum businesses and won't work anywhere else.

Now, I'm not talking about a rebbe who teaches gemara - such a person cannot find work outside of the yeshiva. But, why would a frum math or science teacher insist on only working in the yeshiva instead of at least looking at the local public school? I keep hearing about examples like this and I find it mind-boggling - the person takes a tremendous pay cut, gets far reduced benefits that he pays more for, no pension, and limited retirement benefits if any at all - all for a "frum" environment.

tesyaa said...

JS at 10:48, you know the reason - people prefer to be in a frum environment not just for the comfort factor, but for the "frum hours", e.g. early Fridays, erev yom tov off, and for mothers, to be on the same schedules as their kids. For mothers who wouldn't work otherwise, teaching in a yeshiva, especially their own children's yeshiva, is a tremendous bonus.

But I agree, a lot of people don't want to step outside their comfort zone and deal with non-Jews and non-frum Jews. There's a tremendous fear of contamination, not just with the imagined loose morals of everyone outside the frum world, but with any kind of outside ideas.

tesyaa said...

JS, to add to my 10:56 comment, notwithstanding that, most of the husbands I know (read breadwinners) do work outside the community, for law firms and other big firms. The wives are more working within the frum community. Also, another reason teachers don't work in public schools may be that they lack credentials - this is extremely common.

Miami Al said...

JS,

The reason I'm going to say that the meat prices don't matter (much). Kosher red meat, in wholesale, is probably 2x-3x of a difference. But in a healthy "fresh" food weight loss plan, how much red meat is in the diet?

It's going to be relatively low fat, lean meats, chicken, turkey, there are a few very lean cuts of pork. You're not getting big cuts of beef, etc.

Regarding the working in the "frum" environment...

Why do people thinking about Aliyah talk about neighborhoods that they want to live in and research those, but no job hunting? Unless you seek out an anti-religious enclave, anywhere you go will have a kosher markets, a mikvah, and a Shul under an Orthodox Rabbi. There is a believe that you should NEVER be religiously inconvenienced, it's instilled by teachers who never are (just broke all the time), and now we have a lazy, scared, and bankrupt generation.

Yippie.

Miami Al said...

To clarify on my neighborhood comment, EVERYONE I know that moved to Israel rented the first year. If you are renting for a year, who cares if it is perfect? Worst case, it's family Shabbat time or a handful of other religious families until you find a better fit.

What's more likely to make Aliyah fail:
1. Lack of adequate income to support family
2. Lack of other moms with similar choices in head and leg covering attire in your immediate vicinity

Abba's Rantings said...

JS:

"why would a frum math or science teacher insist on only working in the yeshiva instead of at least looking at the local public school?"

1) ability to work half a day
2) work calendar and kids' school calendar are alligned (on this i'm going to pull the "you don't have kids and can't understand")
3) work calendar and religious observance calendar (incl. shabbat in winter) are alligned
4) lack of credentials
5) laziness (public school may be more demanding in terms of daily expectations)
6) market saturation (where i live the only real demand is for science/math teachers)
7) satisfaction of teaching jewish kids (let's not scoff at this; it doesn't mean that educating non-jewish kids isn't worthwhile)
8) get benefits through spouse
9) pension and generous benefits for future hirees are in flux (e.g., bloomberg claims he won't approve any new contract for non-uniformed employees that doesn't modify retirement benefits for new hirees)
10) inertia

before you pick away at these, remember that only a few of these have to apply for a particular person to make jewish schools seem more palatable, even with lower salaries, poorer benefits, etc.

JS said...

Abba,

From the people I have spoken to who choose to work in a frum environment, I have never once heard a calculated, thoughtful pro's and con's like the one you list. The people I have spoken to are either passionate about working with Jews or, the vast majority, made it sound like either they hadn't even thought of working outside the community or they couldn't think of a single reason why (i.e., the default is work within the community barring substantive reasons not to).

At the last occasion I had to speak with a large number of people working in the community (at my wife's reunion) BOTH the husband and wife worked in the frum community. So, it wasn't a case where the wife alone works in the yeshiva for convenience reasons because they have the benefits and salary from the husband at the big firm.

In my home town when I was growing up the local public schools were all off for Rosh Hashana and Yom Kippur and scheduled spring break over pesach because if they didn't, they'd need a large influx of substitute teachers - a large percentage of the teachers were frum or at least observant of major holidays. Nowadays, there are only a handful if that. It's a generational thing, I believe. There is a vast difference in religious outlook between people of my parents' generation and my own despite my parents' generation sending my own to MO yeshivas.

Most of your list is a bunch of excuses. I have no problem with people wanting conveniences, but at least admit it. Don't make up some baloney excuse. Just say you like coming into work on Monday morning and being asked how Shabbos was instead of being asked what you did on Saturday.

AztecQueen2000 said...

There's another reason frum women would rather teach in frum schools. Usually, they get a tuition break if their children are also enrolled there. And, since college is now a big no-no, how many frum people could even get a public school teaching credential?

Miami Al said...

JS,

It's not a religious matter as much as the fact that most people are lazy. Most people are NOT type alpha personalities. Most people are NOT go getters. The trick to a sustainable system is to make the "default" position end up okay.

I recall someone pointing out that if you:
A) Graduate High School
B) Get a job, stay employed
C) Get married and stay married, and do C prior to having children

Your statistical likelihood of ending up in poverty was pretty close to nil, unless you have additional education.

That said, your statistical likelihood of ending up upper middle class is pretty close to nil, as well.

Adrienne said...

I fully understand what this guy is doing. Good on him for having a successful company. I am planning to start a handmade artisanal candy company in a few years, and I don't plan on getting a hagschaha, it seems too much a hassle for too small a market share, who will probably not buy handmade custom candy in strange combinatiuons. I know who I am trying to market to.

Shoshana Z. said...

The man who runs this company is a Lubavitcher from a very well-known and respected family. Yasher koach to him for thinking outside of the box and being able to support himself and his family. I think it is a big kiddush Hashem.

Abba's Rantings said...

Thanks Aztec, how could i forget
11) tuition breaks

and there is also

12) more forgiving of frequent maternity leaves and gaps in employment

JS:

everyone has to do their own cheshbon. i don't think everything that i listed is is an "excuse." my wife works in a public school. for us that's what makes sense.

Avi said...

Add in "time to learn Torah" as another perk/reason to work within the community. My brother works in the alumni office of a major Yeshiva in part because they allow (expect, really) him to learn several hours a day in the morning.

Mike S. said...

While I am always happy to hear of someone hustling (in the good sense) to earn a living, I thought there was a prohibition against making a business of Biblically (as opposed to Rabbinically) prohibited foods, even to non-Jews. So he can forgo the kashrus supervision but not sell treif meat.

tdr said...

Great posting, SL. This man's story is inspiring. I especially like how he started his business small and grew it slowly so as to avoid debt.

This blog is one of my favorites, but I have to say that the cynical comments of some of the regular commenters (you know who you are!) are starting to irritate.

This is a positive story and Shoshana is right -- this guy is making a kiddush hashem! Can we try focusing on the positives rather than rehashing all the same old stereotypes about how lazy and insular the black hat crowd is?

Try giving the benefit of the doubt once in awhile please.

D said...

I agree w/ TDR,
SL, you'll end up losing many readers if you keep letting the cynics and haredi-bashers fill up your comment section.

The amount of sinat chinam of some of your regular commenters is just incredible..

Even when a good story comes out, they need to spend their whole time criticizing others...

Miami Al said...

D, TDR,

I think the negative comments were MOSTLY from the VIN comments. This guy is freaking awesome and should be celebrated. The negativity and shock at the lack of Kashrut is part of the insularity and laziness.

This gentleman's success severely highlights the lack of it around us.

Anonymous said...

The reason this blog garners some chareidi-bashing comments is that most of the posts cover topics related to chareidi Judaism. The blog already has a chareidi focus. If the blog were covering the modern orthodox community, there would be plenty of comments criticizing modern orthodoxy.

Orthonomics said...

I love this story and I intend to find more success stories because they are informative and inspiring.

I try to keep a balance on the blog. A lot of stories that hit the press are more chareidi-centered. That does not mean that the modern Orthodox world is not digging its own hole in terms of finances.

I also try to make informative posts such as the most recent.

I will try to keep a balance and I ask readers to try and keep their own balance on comments. Thanks.

Anonymous said...

Mike s is correct! There is a separate rabbinical prohibition in buying and selling food that is biblically prohibited.Specifically and only food. Horses and Donkeys etc are permitted since their main purpose is for work - not consumption. Nothing to do with deriving pleasure from prohibited foods. Buying and selling pork belies is not problematic as one never takes delivery as well as ownership of stocks in Burger King since a shareholder can't walk into a kitchen and take a burger. BUT this business is a problem as as many layers as there may be between him and the food - since he is not a minority share holder but the only owner - chazal has prohibited this type of business. One has to be a very competent posek to permit what he is doing - if it can be done it all!! - see. Shulchan Aruch (second section) chapter 117)

Anonymous said...

I meant shulchan aruch yoreh deah second section chapter 117. This is not bosor b cholov or taravos

Anonymous said...

Why work hard and be an "alpha personality" when you can live a pretty good life with little effort? Not everyone wants to be upper middle claas and some just want to take it easy. There's nothing wrong with that.
Yaakov

Orthonomics said...

Yaakov, gezenterheit so long as the little effort crowd isn't asking everyone else to foot the bill. Just don't take it easy on some tapped out "alpha personality" dime.

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