As owner and President of Schu’s Hospitality, Larry oversees restaurant development, hospitality management services for food, service/lodging, strategic consulting, and niche consumer food products for a variety of clients. From 2014-2016 he was the interim Business Development Director of Food, Beverage and Hospitality for The Henry Ford. Larry has a long family history of food and hospitality experience, including owning and operating Schu’s Grill and Bar for 24 years.
We spoke with Larry about how local food procurement has changed over the past several years, and how local food is both a challenge and opportunity to institutions.
Larry Schuler, Shu’s Hospitality
What’s the biggest challenge you see for large institutions purchasing local food?
The reality is that really maturing the farm to table model has been major challenge. Where do we source the product? How do we qualify it? How do we manage every farmer that comes to the back dock? How do we, as foodservice directors, stay in step with the rest of society? Sustainability is a big key word. But there are suppliers that have not been able to keep up with the trend. It takes a lot of time and effort to move juggernaut suppliers.
Tools that help you manage the farmers and connect to new farmers that are growing other things are important. There’s no way I’m going to be able to get in my car and drive around to every farm in the region to identify supply and pick up my radishes (or whatever). Flexibility and information about inventory are also necessary. If I’m normally buying 10 cases of something, and a supplier can easily say they only have 6 available, I can buy those 6 and find the other 4 somewhere else. That’s a big deal!
Our industry is still about relationships. We’re one of the last industries to get into technology. Now we’re starting to move at breakneck speed, but there’s no substitution for a warm handshake. And it gets right down to the final product that the guest or customer is eating. The product you represent provides a portal for relationship building with the end user and the supplier. You can create relationships with farmers, and if you’re willing to make a commitment to a supplier or farmer, they’ll grow more for you.
What has evolved in local food procurement over the past 5 years?
First of all, the big boys that have the resources, like Gordon Food Service and Sysco in our region, they’re all challenged with supplying to their end user the freshest product possible as well as the healthiest product possible. Those that realized this need some time ago are ahead, but are still challenged to meet the goal of local food. For the first time in many, many years, I’m seeing large suppliers that realize they need to be able to deliver the promise of local food if they want to compete. It’s one thing for a small restaurant – because of the volume you can source differently – but the need is growing in institutions as well. It has to be regionalized. Right now we get great products from California, but when it’s in season we should be able to get regional products.
Menu design is another big change. We need to design menus in a regional and seasonal fashion, and consumers are becoming more attuned to that. Now they’ll look at me and say, it makes sense that we serve pickled products in the dead of winter. The good restaurant companies have always been fairly attuned to this. Today even the fast food industry is waking up to this, just look at Chipotle or Qdoba.
What makes you hopeful about the local food system?
I’m not only hopeful but also excited about the expanding opportunity for agriculture today. Many years ago – 100 years ago – it was a way of life, but we got away from it. There was an emphasis on processed foods and the way of the farmer was pushed to the side and it was hard for a small farmer to make a living. I think there’s honor in that. It’s kind of like our industry for so many years. We were considered the burger flipping industry. If you were in the restaurant business people asked what you were going to do for your real profession. If you weren’t an owner you weren’t considered a real professional, but in Europe that’s not true. America has awakened to that, and I think television has helped with all the cooking shows.
I’m excited about what I’m seeing in the agricultural industry, it’s dedicated to healthier foods with fewer antibiotics and more humane meat. It’s going to change the way we’re buying; you’re going to see a more whole approach.
Is there one thing institutional foodservice operators can do today to increase local purchasing?
I am doing a lot of advising and consulting in that arena. Where do we go in the next ten years? How do we set up our kitchens and our receiving and our dining rooms to address this? Labor is a big challenge, not only finding it but training and paying for it. A full service model is expensive. As an independent operator, how can you handle that? I’m advising looking where your customer is now and where they’re going in terms of palate demands. Don’t think about the now, think ahead. The next 5 years are going to be a big opportunity for regional foods.
You’ll have the opportunity to work directly with Larry, along with a stellar group of supply chain innovators, at Local Orbit’s workshop, Transparency, Collaboration & Shared Value in Local Food Economies, November 7-9. Apply now!
Further reading: take a look at the National Restaurant Association’s 2016 What’s Hot Survey, looking at food trends from 2006 and expectations for 2026.
Vicki Zilke will join Local Orbit’s workshop Transparency, Collaboration & Shared Value in Local Food Economies, Nov 7-9 in Ann Arbor. Vicki, a Master Gardener and former Nurse Practitioner, along with her husband Tom, owns and operates Zilke Vegetable Farm, a successful 40-acre farm that grows a diverse selection of vegetables and herbs in a sustainable and transparent manner – without chemical pesticides or herbicides.
Zilke sells to both consumer and wholesale markets and Vicki brings a producer’s perspective to the workshop, including knowledge about meeting certification requirements for institutional procurement programs and scaling up for these markets. We spoke with Vicki about how the local food economy has changed over the last several years, and how she has managed the growth of her business through food hub partnerships and regional networks like the Michigan Food Hub Network.
Vicki and Tom Zilke
What do you see as the biggest change in local food since you began farming?
Since we started in 2009, there has been an enormous uptick in demand from large institutions like hospitals, colleges, and schools for locally grown product. This has provided us with a carrot and gives us a good reason to scale up to meet this significant demand. Instead of just sticking with CSA, we’ve started to implement new processes to meet this new market. If we’re going to go from two beds of basil to two acres of basil, we have to change our model to work with that. Right now, we’re looking to optimally scale up our wholesale business alongside our direct-to-consumer market.
You sell direct-to-consumer and to wholesale markets – how do these different revenue streams affect your business and your plans for growth?
Our business was built entirely on direct-to-consumer sales and that segment continues to be the largest portion of our gross sales. Wholesale revenues have lagged behind predictions, but I believe that solutions are being actively designed, tested, and implemented to allow us to tap into the demand. We want to be ready on our end for these orders.
What can food hubs and aggregators do to help you and other regional suppliers scale up?
Food hubs are an essential piece in the local food movement, as they are matching demand to the supply. I do not have to contact each buyer individually each week and extract an order; nor do I have to make multiple deliveries. The work done by hubs to connect and deliver is the help producers need, as we work on processes and systems on the farm.
You participate in a variety of local food networks like the MI Food Hub Network – how do these help you and the region grow and sell more food? Can you give a specific example of their impact?
The Michigan Food Hub Network sponsored my tuition at Vermont’s Food Hub Management Certificate Program in 2015, allowing me to develop additional business management skills specific to local food. The Network meets regularly to create links, identify opportunities, and share knowledge across/between partners in good food work, and individuals there have provided support and advice. The Michigan Food Hub Network is a program of MSU’s Center for Regional Food Systems, a partner of the Michigan Good Food Fund which is ready to discuss our business expansion plans and funding options.
Dan Hobbs will share his expertise on networked and collaborative food systems at Local Orbit’s Transparency, Collaboration & Shared Value in Local Food Economies, Nov 7-9 in Ann Arbor.
Dan has twenty years of agricultural and rural development experience in the United States and South America. He is the Cooperative Development Specialist with the Rocky Mountain Farmers Union, where he works to create collaborative networks of local food stakeholders, including the Colorado Food Hub Network, a national model for creating a transactional network of regional food hubs. He also owns and operates a 30-acre organic seed and vegetable farm in Pueblo County Colorado and is a founding member of the Arkansas Valley Organic Growers.
We spoke with Dan about the changes he’s seeing in regional collaboration, and how local food producers and distributors can work together to scale up.
What’s the biggest challenge you see for local food hubs and small distribution businesses?
In the case of the farmer-oriented food hubs, supply problems and professional management are the biggest challenges. There is limited and variable produce supply – meaning that while there may be a good variety of product, there is inconsistent supply of it – and lack of stable year-round products. It can also be difficult to find experienced professionals in rural areas.
Why have you and the Colorado Food Hub Network decided to pursue a formal, transactional network?
There are a couple reasons. First, different complementary production areas enable various hubs to focus on their strengths while sourcing from other hubs to deliver a wider range of Colorado products in local delivery areas. Second, we can join forces to service higher volume accounts – mainly in Denver – for select items available in larger quantities. Both help in an effort to scale-up business for all hubs involved.
What role does competition and collaboration play in growing local food systems?
Both are fundamentally important. Competition raises the bar for business professionalism, quality control, development of product and market differentiation. Farmer hubs are also developing communication expectations for when they cross into each other’s territories. Collaboration promises to help all the hubs scale up and share best practices and other information.
How does transportation affect your business and your regional food system?
Transportation is centrally important and very challenging. We have long distances to urban/market centers from most production agriculture areas. Balancing consistent deliveries with full loads is an on-going challenge, and one of the biggest hurdles we’re working on right now.
You’ll have the opportunity to work directly with Dan, along with a stellar group of supply chain innovators, at Local Orbit’s workshop, Transparency, Collaboration & Shared Value in Local Food Economies, November 7-9. Apply now!
Kathy Sample and Bill Brinkerhoff have built a successful business that supports local suppliers year round. They’ll join Local Orbit as Discussion Catalysts for our upcoming workshop, Transparency, Collaboration & Shared Value in Local Food Economies, November 7-9 in Ann Arbor.
Bill and Kathy are founders of the Argus Farm Stop, a new model farmers market located in downtown Ann Arbor with a mission to sustainably grow the local food economy. Producers receive 80% of the sale for their products and are able to set their own prices. Started in 2014, they just completed a significant expansion of their business.
Prior to forming Argus, Kathy spent nearly 20 years in metal and gas business development and Bill spent more than 20 years in the pharmaceutical and biotech industry.
We chatted about the inspiration of creating a daily, year round farmers market, and how it impacts the local food system in SE Michigan.
Argus Farm Stop
What was your inspiration for creating Argus Farm Stop?
We happened upon this little grocery market in Ohio, Local Root, and literally our first thought upon walking in was “Why aren’t there more of these?” Ours is a little different, Local Root is a coop and we knew enough that we didn’t want to be a coop. That was not a business structure that we felt we could make quick decisions with. I feel confident that that’s been validated, that going with an L3C was the right decision. They did a coop because they were a bunch of people coming together.
What was your mission and goal for creating Argus Farm Stop?
Well, we knew that the farmers market in Ann Arbor was robust, in fact over subscribed. And we knew that Ann Arbor had a huge CSA population, but that CSAs have a high attrition rate, which requires a lot of marketing. So, we saw these young farmers coming in with new farming initiatives, and a lot of these folks get grants to farm but have no where to sell their products to. So we knew that Ann Arbor was ripe, and that there was a population of people who didn’t bother going to the market because it’s too crowded. There was an overflow population that wants local food, and we still feel there could be another Argus elsewhere in Ann Arbor.
How do those goals fit into the broader growth of the local food system?
These young farmers farm and think they’ll just go to a farmers market, and they totally underestimate how hard farmers markets are and how variable they are and how dependent on weather or other odd things like if there’s a football game. People who are enthusiastic about their new business, it’s hard to tell them that it’s difficult to get sales, but we knew that if we provided an easy place to sell and didn’t overcharge and had a high return they’d be interested, encouraged to continue farming, and Ann Arbor would be the better for it by having more local food. We’ve had younger farmers tell us “I cannot imagine farming without Argus. I’ve gotten my biggest checks from Argus.” We had one farmer tell us that Argus saved his farm when he had broken his hip and was in the hospital – and his wife would haul a freezer of product to Argus and we’d sell it. Hopefully in the end, it increases access to local food, even to underserved populations.
How has your perspective evolved since you first began operating?
The way we do the intake of our produce has changed a lot. When we started we were awkward and bumbling – we didn’t anticipate the questions we needed to ask or all of the information we needed to track. An example would be if a farmer brought us tomatoes in March for $3 a pound. We had a form that asks the price, weight, product name, but we were never encouraging the farmer to examine the price. If these are early tomatoes they shouldn’t be $3 a pound. We started asking if they wanted to keep the price to get them thinking about it, and intake forms helped us do this. We’ve also developed some standard operating procedures we didn’t think about in the beginning, including guidance for employees.
There’s actually a new Argus model opening in Corktown in Detroit, The Farmer’s Hand. It’s a couple of gals that worked with us, and we taught them our filing system and all the information they needed to track for their farmers. Instead of doing brewed coffee like Argus, they’re going to do prepared foods as a higher margin revenue stream.
What’s one thing you’ve learned about the local food system that would be helpful for others to know?
We’re in a unique position as a small business that we can do things the old-fashioned way. How we communicate with farmers and suppliers has been a big surprise, and it really took a lot of patience to develop a way to communicate with farmers. A lot of it is calling and texting each one versus emailing. But the relationships we establish with farmers and the lack of sophistication in-store make it easier to talk to customers about the farms.
By creating awareness of what is available, and expanding the options for local consumers, the impact of local farms becomes clearer to the consumer. They begin to try new things, to talk with the farmers about the things they are learning, and to understand the benefits of knowing who grows their food.
What advice would you have for someone trying to build a similar business?
Get to know those in the community that support your mission, and build a network of those who will help you by answering questions and talking about your business. Reach far – into academia, the community, government resources – and be ready to have a lot of conversations.
You’ll have the opportunity to work directly with Kathy and Bill, along with a stellar group of supply chain innovators, at Local Orbit’s workshop, Transparency, Collaboration & Shared Value in Local Food Economies, November 7-9. Apply now!
Over the past few months, Local Orbit has published several blogs with a similar theme: managing change. Change occurs in every business and organization – and it’s a sign of health, related to managing growth, embracing new opportunities – or taking action to fix a problem.
To address the changing needs of customers, markets, and suppliers businesses may change the products they offer, their pricing, or how they market and communicate. They may also change their internal processes and systems in response to external shifts and growth. But change can be difficult to manage, especially when your current work still requires your attention.
In a previous post, Local Orbit COO Eric Meister addressed how indecision – the failure to act on needed change – could be costly to a business. In a post on incremental change, Jackie Cohen discussed the iterative approach we take to building the Local Orbit platform. For software development, this means over time we implement smaller parts of large features without significant disruption to our customers. Any kind of business can apply a similar iterative approach to managing the process of change.
We work with a diverse range of businesses, with many different business models, to help them transition to new processes and systems. The most frequent shift we see with our current and prospective food hub customers is the addition of restaurant and/or institutional customers to an established consumer business model.
Adding to a new market segment involves many considerations. You need to identify new customers, understand their needs, and evaluate whether there are enough of them to create a viable revenue stream. You need to determine what product offerings will change; how to work with suppliers to manage new volumes and pack sizes; create processes for ordering, order management, and fulfillment; and re-think your marketing.
You’ll also need to examine whether the shift requires new staff or physical infrastructure, or whether to establish new supply chain partnerships to support these changes. And you’ll need to update your financial models and forecasts to understand how all of these variables play out with the fiscal health of your business.
If you tried to address all of this simultaneously, your existing business would suffer and you would almost certainly become overwhelmed. And, no matter how well you plan, you won’t get everything right.
Instead of investing all of your time and money developing a perfect, all encompassing plan and trying to do everything at once, you can set up some well-defined experiments that enable you to test. It may sound simple, but the key to tackling a project like this is to start with smaller changes that you can build on to achieve a larger goal.
For the example above, this may mean working with one or two suppliers and one new institutional customer for a limited time. Before you start, clarify your thesis (assumption) and establish a simple, measurable goal that can be achieved within this time frame. As you experiment, you can analyze and learn, then iterate, adding and expanding on the experimentation until you find what works.
When you implement change gradually, you alleviate the risks and stress of change – while also creating more valuable solutions to your customers’ problems and more effective internal business processes.
Using an iterative approach, you’ll not only tackle change in a manageable way, your business will become more agile overall, which becomes an advantage that will help you continue to change in order to meet the evolving needs of your customers and ensure long term success.
Control is for Beginners
Local Orbit’s Business Model Canvas and Customer Journey Mapping tools can help you help kick-start new projects or iterate on existing services.