How Two Friends Bootstrapped A Meal Delivery Startup To $2M/Year
Hello! Who are you and what business did you start?
As we say in the South: “Hey Ya’ll!” I’m Mary Drennen, a co-founder of Nourish Foods.
My partner, Tiffany Davis, and I are classically trained chefs with a strong background in healthy recipe development and high-volume food production. Tiffany excels at operations and diving deep into the details of all of our recipes, meal components, and production flow. My strengths are more on the business development, sales, and marketing sides of the business. I think we are a complete Yin and Yang. We share almost no strengths, except for our culinary skills.
In late 2014 we launched Nourish Foods. Nourish creates and delivers high-quality, healthy and fully-prepared meals to your door each week. Our goal is to give individuals and families their time back. There is no shopping, cooking or cleaning involved with Nourish.
What's your backstory and how did you come up with the idea?
I was born and raised in Birmingham, AL. My interest in cooking began at an early age in my family’s kitchen, helping my mother (an avid home cook and proponent of family time) whip up simple, yet delicious Southern-focused fare. These early interactions and memories fostered my passion for the culinary arts.
In 2004, after culinary school in NYC, I moved back to Birmingham to work for Cooking Light (a Time Inc. publication) in their test kitchen. Tiffany (my co-founder) and I were both tasked with creating healthy recipes for home cooks, that were not only balanced nutritionally but beautiful and creative as well. Although food delivery, as an industry, wasn’t even born, we were planting the seeds for what would launch as Nourish 10 years later.
One of my mentors told me early on, “If you can run and grow this business without taking on investors and giving up the equity, do it.” And I took that to heart.
Fast forward to 2012, I was contracted to produce a line of healthy, prepared meals for a fitness company in Birmingham, under an exclusive, private label. Each week we would email out a five-day menu, take orders from each gym on an excel spreadsheet, and then produce and deliver the purchased meals across the city 3 times a week. The first week was 400 meals, then 900, then 1200 and it completely swallowed me whole in the first month. I hired 2 full-time chefs and a part-time dishwasher in the first 4 weeks.
In the same year, the fitness company franchised their model and sold 50-60 units across the Southeast. Most of the initial franchise owners were also members of the gym in Birmingham, so they came to know and love our product we were delivering to the local gyms.
Over and over, those new franchise owners wanted me to figure out how to translate our food program here to their local market. We assessed doing a “franchise” model ourselves, where I would contract with a local chef to produce the meals based off of my recipes.
Ultimately that didn’t work how we intended. After lots of consideration, I knew this was the opportunity to test the logistics side of shipping fresh meals.
For a chef with a culinary backgrounding, learning the distribution process of shipping, sourcing packaging, and coolant was overwhelming in that first year. We shipped our first cooler boxes to gyms in Nashville, Atlanta, and New Orleans in December 2013. Despite making plenty of mistakes, our products began selling and I quickly realized the market for this was HUGE.
After months and months of begging and pleading, I finally convinced Tiffany to leave Cooking Light in June 2014. We knew there was a larger market for our products outside of the fitness world.
At the time, Tiffany and I were both single moms. Working long hours, crazy busy, trying to stay healthy in our 30s, and juggling children (and their crazy schedules). After months of questions and requests from others in the same boat, we knew that this was not just a problem for us. However, the solution was actually really simple for us. We launched Nourish in November 2014 to address this problem head-on.
How did you come up with the recipes and manage the operations?
We spent a great deal of time and effort on our recipe development phase. Not only do the meals need to be delicious and nutritionally sound, but we also have to consider that the meals will be reheated in the microwave or oven (sometimes a few days from when it was made in our kitchen).
So we do a LOT of recipe testing and flavor/quality checks. Every component in every meal is made from scratch in our commercial kitchen, including mayonnaise and bone broths, etc.
We don’t outsource any part of the production process, so we can ensure our quality is the best on the market.
The production process and recipe development are very easy for Tiffany and me. One of our biggest challenges has been “letting go” of that part of the day-to-day operations and hiring the right people for the right positions. To say that has been our biggest challenge is 100% accurate.
Our production staff includes 1 production manager, 2 sous chefs, and 3-4 prep/line cooks, depending on the week. They prep 6 days a week to produce the current meal volume. There is a bit of seasonality with our volume. During January-April, we are slammed every year (and staff work 7 days a week), summer months we see a dip in volume.
We increase again when fall brings back to school structure and during the holidays we are always slow. Obviously, as we’ve grown those fluctuations in seasonality are more predictable and less harsh.
Each week our menu offers 10-12 new entrees, 4 “All Time Favorite” entrees, and a few seasonal add-on options (like Soups and Stews, or Protein Balls, etc). Customer orders are finalized on Thursday at 2 pm, and the first production cycle begins for the meals that ship out Thursday evening, Friday evening and delivered on the weekend. We run a second production cycle of the same menu for the meals that ship out Monday evening and Tuesday evening.
Our distribution process has been much more challenging to figure out. Locally, we staff our in-house courier team to deliver our clients on Sunday each week between 12-5pm. We have a courier team leader that manages the process on Sunday and 8-15 drivers on the road (again depending on volume). We have used outside courier services in the past and ultimately chose to bring it in-house so we can control the routing, customer communication, and errors/corrections, etc.
For all clients outside of the Birmingham market, we ship via UPS or FedEx. Luckily our 1 and 2-day ground zones from Alabama covers almost ⅓ of the entire country, which makes our ground footprint substantial. We do not ship anything over a 2-day transit time. We feel it compromises the quality of the product and shortens the number of days clients have to consume the product.
For our clients outside the 1 and 2-day ground zone, they have the option to pay an upcharge for 2-day Air or Overnight Air. We currently ship between 300-400 boxes per week.
How did you launch the business?
We launched the business really through word of mouth and grassroots efforts.
In early 2015, we were producing our own brand, Nourish, for our direct to customer shipments. And also still producing the private label for the fitness company. Luckily, we were able to eventually move the private label clients over to our own brand, which helped streamline our process tremendously. We began reaching out to other gyms, corporations, and local bloggers to help drive sales.
Being an entrepreneur is like waking up and going to war every day. If you aren’t really committed to being in the trenches, it won’t work.
In 2015, we only did $250k in sales of our brand. At the time, we weren’t doing any marketing, except for grassroots, and in hindsight that was exactly where we needed to be. We needed to work on our website; to make it more user-friendly. We needed to work on our product; to make it more appealing. We needed to work on our branding; to make it more special and memorable.
Since our brand launched in 2014, we have built 3 separate websites, each great for our business at the time. However, we now continue to invest in technology because it is the only way to drive continued growth.
Our latest website was launched late 2017. The front is Squarespace and was designed it in-house. The process was fairly easy and low cost.
While Squarespace is our website host, we implemented Send Bottles for our backend checkout. Send Bottles is a fairly new startup, that allows us to use text messaging to communicate with our clients. More importantly, it allows for a better customer experience. They can choose their weekly meals based off a text message and also skip if they need to.
We ended up doing a ‘soft launch’ of this current website last fall to give some select clients an opportunity to beta test the site and provide valuable feedback. We were careful to migrate the existing clients over slowly as to not overwhelm the system or lose any clients.
Since launch, what has worked to attract and retain customers?
Our first year of the brand launch was a tough one.
As I said above, we did very low sales on our own website (250k that year). Luckily we still had the private label business that allowed us to keep ourselves and our 5 employees at the time employed.
We teamed up with other websites to sell our products through their channels. TakeThemaMeal.com was the largest e-commerce meal scheduler at the time and they needed a brand to sell through their platform. We worked with them for 2 years and those types of partnerships really sustained our growth as we were slowly building the Nourish brand.
I always find the most compelling entrepreneurs are those that really feel the problem on a personal level and have the expertise to create a solution (not simply business people that put investment dollars behind a problem that they personally never know).
I think our “story” really attracts our customers. They experience the same problems that Tiffany and I have, so there’s a deep connection there. Look, food delivery is a very crowded space; to resonate with clients you can’t just have the best product on the market (it’s not enough) You also have to tell the story that connects the client not just initially but keeps them around.
Once our branding was right, the packaging was in development and our new website was about to launch, we knew it was time to really put some $ into marketing. We started with YellowHammer in August of 2017 and it has been a driving force for growth over the past 18 months. We utilize both social media marketing and digital ads with a team out of New York (YellowHammer Media Group).
In addition, we have an in-house sales and marketing coordinator that handles daily social media posts, partnerships with influencers and PR efforts.
Communicating with our clients and potential clients on social has been huge for us. This won’t be news to your readers, but our target demographic is on social media ALL DAY. Mostly Facebook and Instagram at this time. They are finding new products on social, looking to their “friends” for recommendations, and being influenced to purchase directly through social. We spend between 10-12% of our monthly revenue on marketing, and the majority of that is through social media ads (FB & Instagram), and influencer marketing.
I’m sad to say we don’t use email marketing as often and effectively as we should. We have around 15k past and current clients on Constant Contact. We need to do a better job of reaching out to them with value-add content. However, I know I receive WAY too many spam emails, so we try to keep emails to a minimum to increase effectiveness when we do use this outlet.
How are you doing today and what does the future look like?
Unlike many of our competitors, we have grown at a comfortable rate over the last four years with a keen eye toward maintaining profitability first and foremost. COGS, CAC, CTV are all metrics that we monitor closely.
Our COGS are pretty extensive: Food, Freight, Packaging, Coolant, Production Staff and Logistics Staff with 45% GP YTY. I always think we can tweak and improve what I call the BIG 3 (Food, Freight, Packaging). We plan to maintain 12-14% net profit for this year, which is on target. (I always think we can improve that as well!).
Our largest SG&A expense is obviously marketing. As a fairly new brand, trying to grow brand awareness and drive sales, we put about 10% of our monthly revenue into marketing (digital ads exclusively right now). We are exploring some other online ad opportunities and possibly PR as well.
We monitor our CAC per week is roughly $46. In addition to controlling the BIG 3 and driving growth, I am focusing some of my efforts on the website flow, user experience, and optimization. I think you can always make small tweaks that have a big impact.
In the next 12 months, we will move into a new production and distribution facility (hopefully in a building that we own). We plan to have USDA certification in the new space, which will open us up to wholesale opportunities, and private label as well.
Through starting the business, have you learned anything particularly helpful or advantageous?
One of my mentors told me early on, “If you can run and grow this business without taking on investors and giving up the equity, do it.” And I took that to heart. So far, we have self-funded, bootstrapped and gotten a little bank debt to grow at the rate we have.
I think that speaks volumes for our product, nimbleness, and ability to keep the customer first. We aren’t solely focused on the bottom line, but building a brand that has meaning and literally changes people lives. I realize not everyone will have that ability and for certain products and technologies, you won’t even get to market without investors.
We have made as many smart decisions as we’ve made mistakes. However, if I look in the rearview mirror on our mistakes I’m reminded that those “mistakes” ultimately lead to positive changes in the business. Each and every one of them (even the ones that still sting!).
What platform/tools do you use for your business?
One of our biggest projects in 2018 is implementing a full-scale ERP system. Many challenges came from this process:
- We can’t use a restaurant/recipe ERP system because it doesn’t address our fulfillment needs.
- We can’t use a standard manufacturing ERP because we have 96 SKUs and our recipes are complex (not like producing a tennis shoe).
- The process of organizing and measuring the recipe database is a BEAR!
(Hopefully, it will be up and running in test mode 1st qtr 2019!)
Until then! Internally we use Monday.com for keeping up with tasks and with each other. Our customer service all runs through Send Bottles software (both texting and calling).
Our transactions run through Stripe. We analyze all of our recipes through ESHA, which is the gold standard in creating solid nutritional information.
Our routing software is OptimoRoute and has a lot of capabilities.
We use Constant Contact for email marketing. And the obvious ones like Google Analytics, Evernote, Dropbox, Quickbooks, etc.
What have been the most influential books, podcasts, or other resources?
Tiffany is actually the podcast listener of the two of us. She loves How I Built This, Worklife, Ted Radio Hour, Studio 360, & Hidden Brain.
I’m the reader. I’ve set up a little library in our office to share books on entrepreneurship, business, really anything.
I’m absolutely inspired by Danny Meyer’s Setting the Table, and am currently reading Mindset by Carol Dweck, which one of our team members loaned to me as a matter of fact.
Advice for other entrepreneurs who want to get started or are just starting out?
Do your market research. Even if you see a problem and can create a solution, that simply won’t be enough. There’s competition, barriers to entry, and hidden regulations that you can’t possibly know.
Being an entrepreneur is like waking up and going to war every day. If you aren’t really committed to being in the trenches, it won’t work.
Are you looking to hire for certain positions right now?
We are currently hiring an Executive Chef, so Tiffany can focus on the ERP and recipes database. That role is a large one; one that takes ownership of the kitchen space, inventory, and manages the production staff so that we can run the business.
Where can we go to learn more?
Hey! 👋 I'm Pat Walls, the founder of Starter Story.
Get our 5-minute email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.