Starter Story

How I Started A Walking Food Tour Business Growing 70% Year Over Year

$20,000
revenue/mo
1
Founders
1
Employees
product
Wander New Mexico...
from New Mexico
started January 2016
$20,000
revenue/mo
1
Founders
1
Employees
3.88M
alexa rank
financing
accounting
productivity
freelance
payroll

Hello! Who are you and what business did you start?

My name is Joe Griffith and I’m the founder and owner of Wander New Mexico Food Tours. We offering walking food tours of downtown Santa Fe and Albuquerque.

Never been on a food tour? Imagine visiting a good friend in a city you’ve never been to. This friend plans an afternoon food crawl, taking you to her favorite restaurants, breweries and culinary spots in the city. Along the way, she introduces you to some of the locals, who give you a sense of the city, the culture, and what it’s like to live there. She also introduces you to some of the chefs and owners at the restaurants – they’re excited to have you visit, and they take the time to share with you their story and the inspiration behind the dish they’ve prepared for you.

That’s our product – an immersive culinary experience that leaves people with a better understanding of Santa Fe and it’s a rich history and culinary traditions.

I launched our first walking food tour in the winter of 2016. That year we did $300 total in sales (no, I didn’t forget any zeros) and operated one tour each week. Today we offer six different tours, operating 17 times/week in three different neighborhoods of Santa Fe and one neighborhood in Albuquerque. In peak months this past summer we did over $30K/mo in sales, and we’re growing around 70% year over year. During this time we’ve garnered several accolades, including ranking as the #1 tour in Santa Fe on TripAdvisor as well as being named by USAToday as one of the “10 Must-Try Food Tours in North America”.

how-i-started-a-walking-food-tour-business-growing-70-year-over-year Enchiladas, posole, and a Silver Coin margarita at Del Charro, a stop on our downtown walking food tour

What's your backstory and how did you come up with the idea?

I never thought I would have my own business, much less a tourism business. It was born of necessity, a bit of luck, and good timing.

You can have the best product in the world, but that won’t do you any good if customers don’t know about it.

First, some important context – this is technically my second attempt at entrepreneurship. Back in 2011, when I was living in Dubai, I had the idea of starting an online food delivery business – basically UberEats, for Dubai. At the time there was only one serious competitor, Foodonclick.

I did a lot of the initial legwork in getting a new business started. I bought a domain (yallaeats.ae), had a semi-decent logo designed, built a giant spreadsheet database of menus from 100s of restaurants in Dubai, and got to work on a business plan. I never pulled the trigger on leaving the comfort of my office chair to go and meet with restaurants and sign them up, mostly because I knew deep down inside that I wasn’t going to take the risk, quit my job, and jump into the deep end of entrepreneurship. I know what it feels like to have an idea but to delay taking the risk – and I believe it’s what’s holding back so many potential entrepreneurs out there. I’ll return to this in the advice section.

how-i-started-a-walking-food-tour-business-growing-70-year-over-year Yalla!Eats, my first attempt at starting my own company

How did that story end? I never went forward with the delivery company. The parent company of Foodonclick ended up selling for $589M to Delivery Hero, a German company. I’m not saying that could’ve been me – but hey, it’s fun to dream!

In 2016, my wife and I decided we wanted to leave our lucrative jobs in management consulting to start a new, quieter and more relaxed life in Santa Fe (she was working for McKinsey, I for Bain & Company). We didn’t know what we were going to do for work, but the consultant in me knew that tourism in Santa Fe was a big market and that if I was going to start a company of any sort, tourism would be a smart move. Before moving, I started some initial business planning by researching the tourism market and sizing up the competition. My initial plans were to start a bike tour company – it’s something I had done (and loved!) during visits to other countries, and it was a concept that I was eager to introduce to New Mexico.

As I worked more on the business plan I realized that starting a walking food tour would a) be in higher demand b) be lower risk, requiring lower investment to start and c) would mean I could share my real passion with people – finding (and eating at) great restaurants. I got to work designing the tour route and recruiting restaurant partners to work with. We moved to Santa Fe in late September 2016, and by late December we had our first paying customers.

Take us through the process of designing, prototyping, and manufacturing your first product.

Food tours are pretty straightforward – you come up with a brand, tour name, design the route, sign on restaurant partners, and away you go. As I thought about designing the tour experience, I knew I wanted the experience to be something I would pay for and love to experience. That’s been a guiding principle since day one. As a very curious person, I wanted for the tour to leave people with a deeper understanding of our city, its restaurants, and the chefs/restaurateurs/owners behind them. I looked for restaurant partners with food I was excited to eat, but also with people passionate about the food and excited to tell their story.

how-i-started-a-walking-food-tour-business-growing-70-year-over-year Guiding during the “soft launch” tour with friends and family in November 2016 (I’m on the right)

Beyond the product (i.e. tour experience), a lot of time in the initial months was spent on brand and website. I paid to have a logo designed, and I built the website myself using Squarespace. Thankfully, there were plenty of established food tour companies in other cities whose websites I could emulate.

Startup costs were minimal. Being a risk-averse person, this is part of what made taking the leap into entrepreneurship palatable for me. The main expenses, in the early days, were the logo, website, and bookkeeping.

Describe the process of launching the business.

The launch consisted of a “dry-run” tour for friends and family, followed by my first tour with actual paid customers. I’ll never forget that tour – it was New Year's Eve of 2016, and the tour was a mix of some of my wife’s family and their friends, and then my first actual paying customers, an unsuspecting family of five on vacation in Santa Fe.

Our launch was made easier by the fact that several of the restaurants I was working with were already a part of a food tour with operators in Santa Fe. For those restaurants that hadn’t been part of a food tour before, the dry-run gave us a chance to work out the kinks and test out the route before launching more substantially.

One thing that wasn’t intentional, but worked fairly well, was launching during the slow season. After a tour on New Year's Eve, it wasn’t until February that we had the next paying customer. At first, sales were very, very, very slow. This ramp-up period is a challenge and something we’re currently going through with our expansion to Albuquerque. As much as you can try to have a solid marketing and PR plan in place in the months and weeks leading up to launch, we’ve seen that it can take months before word of mouth (i.e. TripAdvisor reviews) get out and people actually find our product as part of their research in preparing to visit a city. The reason I say that this worked well is that I was able to use the slow season to work out kinks, not only with the product but also with our approach to marketing and customer acquisition.

In the first several months I’d say 90% of marketing spend was wasted. Initially, most of marketing spend went towards printing and distributing rack cards, which ended up being a waste of money. I also spent a bit on un-targeted Facebook ads, which was even more of a waste of money. Since then I’ve learned a lot more about what works and what doesn’t when it comes to marketing - more on this later.

how-i-started-a-walking-food-tour-business-growing-70-year-over-year

how-i-started-a-walking-food-tour-business-growing-70-year-over-year Our first rack cards (from early 2017). These were a big waste of money.

Since launch, what has worked to attract and retain customers?

I like to think about customer acquisition by looking at the cost to acquire each customer (CAC, or customer acquisition cost) and the value of each customer (CLTV, or customer lifetime value). Let’s start with the easier one first – CLTV.

CLTV is a function of how much each customer spends on a transaction, and how many transactions you can expect from a given customer over their lifetime. Our business and product are unique in that 90%+ of customers are one-time. Not because they didn’t love their experience and become a promoter, but because of the nature of tourism. Most tourists visit a location, check it off their bucket list, and visit somewhere else next year. Given this, we have to fight hard to acquire customers. Further complicating matters is our average order value – around $300 – means that our budget for cost per conversion is lower than many businesses in other industries. So, let’s say our CLTV is $333 ($300 divided by 90% non-return rate).

The other lever we can pull is customer acquisition cost (CAC). This is how much you spend on marketing in order to drive one transaction (the lower the better). Although we’re much better now than when we started, there is still a ton of opportunity for improvement. As a general rule of thumb, I aim for a $30 CAC (10% marketing spend as a percentage of sales), but in practice, this varies greatly by marketing channel.

Below is an overview of the various marketing channels I currently rely on, the pros/cons of each, and what has and hasn’t worked.

What has worked for us (in order of priority):

· TripAdvisor: the obvious industry heavyweight, and the go-to for many tour operators. (+) it’s the go-to resource for many travelers. (-) it isn’t effective until you climb the rankings

· Blog: this has been an inexpensive way to get discovered by folks researching / planning their trip to Santa Fe. (+) it’s free, or low-cost, depending on whether you write the content yourself or hire a freelance writer (-) if your content doesn’t relate to your product, or you aren’t good at getting people in the first stage of your sales funnel, you can end up with a bunch of traffic that bounces

· Google Adwords: thankfully, the only time people search several keywords related to our businesses (“Santa Fe food tour”) (+) their intent to buy is pretty high. We’ve had success here, but unfortunately (-) the volumes are limited

· Facebook ads: in the first year, (-) I wasted a considerable amount of money with lookalike audiences and other attempts to reach new customers. Facebook has proved effective only when it’s directed at (+) retargeting visitors to the blog.

· Local partners/referrals: there are a few local tourism-related sites that I advertise / list on, some paid, and some not. When we first started, the local tourism and state-level tourism bureaus were great places to be listed for free. (+) intent to buy is very high, but (-) volumes are limited

What hasn’t worked for us:

Rack cards: you know these – the flyers in the racks at airports, hotels, tourist rest stops, etc… When I first started we tried this, first with a traditional vendor, and secondly, with a local vendor that specializes in a smaller format, “concierge” cards meant to be placed at the desk of concierges. My hunch on why these don’t work - the majority of my customers plan and book their tours around a month in advance. With rack cards, folks don’t see these until they’ve already arrived in town, and it’s tough to convince people to spend $100/person on a food tour at the last minute.

Instagram: this will probably come as a surprise, but simply having an active presence on Instagram hasn’t led to very many directly attributable ticket sales. We’re still active for brand and image reasons, but isn’t a big focus.

Print ads: maybe this work, but given my limited budget I haven’t tried. When I look at the cost and think about how many conversions will result, I have a hard time making the math work.

Concierge/hotel word of mouth: when I first launched I went around to all of the hotels in town, introduced myself, and took time to meet face to face with many of the hotel concierges. This paid off in a few instances (one hotel, in particular, sent me many bookings), but again I’ve found it’s tough to convince folks to sign up for our tours after they’ve already arrived in town.

There’s always more that we could be doing - some of the areas where I’d like to improve our email marketing and in increasing our CLTV by introducing non-tour, ancillary revenues (merchandise, for example).

How are you doing today and what does the future look like?

We’re doing really well! In terms of profitability, we’ve been profitable since nearly day 1 (the benefits of a nearly entirely variable cost business) and in terms of growth, we’re almost doubling revenues each year.

Beyond the financials there are a few other things I look at to measure progress:

  • TripAdvisor ranking: with how critical this is too marketing it’s something I constantly keep an eye on. In just under three years we’ve very quickly climbed the rankings - in 2018 we achieved the #1 ranked food tour in Santa Fe, and earlier this year we achieved the #1 ranked tour (overall) for Santa Fe. This is major bragging rights, and something that the team and I are hugely proud of.
  • Developing relationships with local restaurateurs and chefs: the quality of our product heavily relies on long-term relationships with passionate restaurant owners and chefs at top-notch restaurants. Without them, we wouldn’t have much of a tour. Because of this, we pay a meaningful tasting fee to all of the partners we work with - COGS is typically in the range of 50-60%, which is quite high relative to most food tour operators. This is very much an intentional strategy - not only does this mean our tour guests are getting a great value, but it also means we’re supporting local area restaurants and keeping our relationship with them sustainable. Given the explosion of food tour operators in recent years, there are many companies out there that expect free or nearly free food from the restaurants (in exchange for the “marketing exposure” of the tour). I don’t think that the model will be sustainable over the long-run.
  • Repeatability: a big focus for this year has been putting the systems and processes in place to make the business scalable. By this, I mean creating a well-oiled operation that can be easily duplicated in new cities. I’m also using this as a chance to document how we do things and lessons learned, with the hope of creating a “Food Tour Playbook” that others can use as they work to start their own food tour companies. More on this later.

In terms of future growth, the main focus will be geographic expansion. We just launched Albuquerque earlier this year, and I’m currently researching and evaluating other small to mid-size cities with a great food scene and a walkable downtown area. Colorado, Arizona, and Texas are interesting (and nearby), but I’m also casting a wide net and looking at locations as far as Vermont.

There’s also of course still more potential in Santa Fe. In addition to offering more frequency of our existing tour products, we also might launch one or two new tours next year. And I’m also exploring online retail/merchandise, as well as brainstorming possible ways to monetize all of the non-food tour related blog traffic that we’re seeing.

Through starting the business, have you learned anything particularly helpful or advantageous?

There are three big lessons I’ve learned since starting Wander New Mexico:

  1. Marketing is HUGELY important! You can have the best product in the world, but that won’t do you any good if customers don’t know about it. The single biggest limiting factor in driving growth has been getting our tour in front of folks planning their trip to Santa Fe and convincing them our tour has to be a part of their trip. It’s been even more of a limiting factor when entering new markets. As we expand geographically I’m hoping that we continue to get smarter, better, and faster with market entry and ramping up sales.
  2. Be thoughtful about what work to insource/outsource: while I spent the first year doing nearly everything myself, there comes a point in the business where you won’t have the time or necessary expertise to do everything. When this time comes, be intentional about what you continue to do yourself and what you choose to outsource. For me, the two factors I consider are a) does this work bring me energy and b) how do my skills at this work compare to hiring someone else. Applying this, I spend time on things I enjoy and am good at (like developing new tour products) and outsource things I don’t enjoy and am not good at (bookkeeping, for example).
  3. Invest the time and effort to find great people: it sounds cliche, but it is really true. For us, tour guides are at the core of what we do, so over the past few years, we’ve really dialed in our hiring and interview process to ensure that only the best make it through. It definitely took time to figure out what made a great tour guide and to develop an interview process where we could quickly identify these attributes in applicants. We spend a lot of time screening, interviewing and training, but this has paid great dividends in the quality of guides that we have a result.

What platform/tools do you use for your business?

Although I try to use as much technology as possible in the business, outside of our reservations software most of the platforms/tools I use as the same that probably 95% of other startups are using – you won’t find many surprises.

The core of our operations is an online booking software for tour and activity operators called Peek Pro. This main function of Peek is to receive customer bookings, email customers with their booking confirmation, and provide guides with their tour assignments and tour manifests. I’ve been using them since Day 1, and while I’m generally happy, I would encourage anyone thinking about starting a food tour to also consider Peek’s main competitor, FareHarbor. Both Peek and FareHarbor charge a percentage of sales, so while it’s very cost-effective in the early days, I have lately started to consider switching to a fixed cost platform such as Xola. Two others that should be on anyone’s shortlists when conducting a vendor evaluation are Bokun (now owned by TripAdvisor), and EzTix.

Another tool that’s been great for us is Jive, which we use for the phone system. Jive is basically Google Voice on steroids – probably the feature I love most is that both I and my customer service rep receive calls simultaneously, and we can see which option someone chose in the phone tree (which helps us prioritize which calls to immediately answer).

Since each tour guide is paying restaurants directly, we have a fairly significant volume of expenses. I use Expensify for this, and to pay the guides their fees. I have a love-hate relationship with Expensify – while some of the functionality is great, and it’s the best solution I’ve found for our particular needs, I’ve found their customer service is horrendous/next to non-existent.

Everything else I use is pretty standard – Squarespace for the website, Upwork for finding niche technical expertise, Quickbooks Online for bookkeeping, Hotjar for UI/UX work, a bunch of Google Sheets, GSuite for email, etc…

What have been the most influential books, podcasts, or other resources?

I really enjoy meeting with other business owners and entrepreneurs in person. Where I live there are a number of entrepreneur meetups and speaker series, and I’ve found these events to be a great chance to take a step back and think about my business in a more reflective setting. Sometimes hearing from others about their business, challenges they’re facing, or how they’ve approached things, even if it’s an entirely different industry, is helpful for me as I think about my business.

One resource I can recommend (and put a plugin for) is a project I’m in the early stages of working on The Food Tour Playbook. I’m the process of compiling a practical handbook of everything we’ve learned during our journey and is meant to serve as a playbook for others looking to start their own food tours.

Advice for other entrepreneurs who want to get started or are just starting out?

Most of this advice is fairly well-worn, but they are all the points that have been very helpful to me in the last several years:

  • 1) Stop reading this blog, get out there and TAKE SOME RISKS!
  • 2) Figure out how to test your idea quickly
  • 3) Done is better than perfect
  • 4) Do what you love/build a job that doesn’t feel like a job
  1. As someone who has always been risk-averse, the biggest advice I can give is if you’re reading Starter Story and considering starting a business but haven’t yet taken the plunge, stop reading now, get out a blank sheet of paper, and write down a list of everything you need to do to get from where you are today to having a customer give you $ in exchange for your product/service. Then, set an aggressive deadline and get out there and make it happen! Speaking from experience (including the experience of my first failed startup), it’s very easy to spend time and resources on logos, websites, and business plans. It’s harder to actually take the leap of faith and get out there, be vulnerable, and put yourself in front of possible partners or customers. The sooner you do this, the sooner you’ll have that first $1 of revenue.

  2. For a food tour business, minimum viable product (MVP)-driven product development has meant pushing ourselves to design and sell new tour products as quickly as we can. We often start selling tickets to new tours before we’ve even finalized the tour route. This helps combat procrastination and forces us to find the path of least resistance to getting things done.

  3. This resonates with me in particular as it’s the antithesis of what I was taught during my five years at Bain & Company. But, as an entrepreneur, you will always be stretched thin, and the sooner you become comfortable in acknowledging that most things don’t need to be perfect, the more you’ll be able to leverage where you spend your time and where to over/under-invest.

  4. Another cliché, but you’ll have a lot more fun if your business involves something you’re passionate about. For me, that was food and history. It becomes harder and harder to stay true to this as your business grows, and management activities start to consume more of your time. To combat this, it’s important to occasionally revisit how and where you spend your time in your company and to consider what to insource/outsource (see point #2 under lessons learned).

Are you looking to hire for certain positions right now?

The short answer is yes, I’m always on the lookout for qualified, passionate folks in a number of different areas. A few specific things:

· Food tour entrepreneurs/city managers in other cities where we are considering an expansion. I’m most interested in Tier 2 cities (1M population or less) with more than 2M visitors annually, a walkable downtown area, and a great food scene · Current food tour owner/operators interested in selling a stake in or exiting their business · Tour guides in cities where we have existing operations (currently Santa Fe and Albuquerque, NM)

Where can we go to learn more?

-  
Joe Griffith,   Founder of Wander New Mexico Food Tours

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