The Product Is Great. Is It a Business?
Introduction:
This week, we bring you another 21 Hats Brainstorm. Elan Daniel, who started a small-batch hummus business inspired by a memorable experience in Israel, is trying to figure out his best path to long-term viability. So far, he’s been selling at farmers markets and direct to consumers, making all of the hummus and all of the deliveries himself. Since February, his sales have been growing between 5 and 10 percent a week, but his growth is constrained by his refusal to use preservatives, which adds flavor but limits the product’s shelf life. So how should he proceed: Should he sell to speciality markets and restaurants? Should he try to sell to Whole Foods? Should he open his own hummus restaurant, or hummusiya? Should he try to introduce his hummus to the uninitiated or should he focus on connoisseurs? To help Elan think through his options, we convened a panel of 21 Hats Brainstormers and recorded this podcast episode. It’s brought to you by New Bridge Studios, which helps companies, creators, and causes connect their story to the bottom line. And by the way, if you have a challenge you’d like to put before a panel of business owners in our next Brainstorm, shoot me an email: loren@21hats.com.
— Loren Feldman
Guests:
Chris Hutchinson and Katie Huey of Trebuchet Group, plus: Mars Chapman of Casey’s New Orleans Snowballs; Amy Collins of the Olea Group; Rachel Ezekial-Fishbein of Making Headlines Public Relations; Jay Goltz of The Goltz Group; Megan Perona of A.R.E. Manufacturing; Leisa Peterson of WealthClinic; Kathy Steele of Red Caffeine; Eric Stites of Franchise Business Review; and Tabitha Mason of Zingerman’s.
Producer:
Jess Thoubboron is founder of Blank Word.
Full Episode Transcript:
Loren Feldman:
Welcome to another 21 Hats Brainstorm led by Chris Hutchinson and his colleague, Katie Huey. As most of you know, our goal here is to have some fun, to maybe learn a little but most importantly, to try to help an entrepreneur who is confronting a challenge. And in this case, that entrepreneur is Elan Daniel, who is building a small business, but is trying to decide what kind of business he wants it to be when it grows up. More about that in a minute.
But first two things: One, this Brainstorm is brought to you by New Bridge Studios, which helps companies, creators, and causes connect their story to the bottom line. And two, Chris is going to talk to us a little bit about how this works. You want to explain it, Chris?
Chris Hutchinson:
Sure. Thanks, Loren. I just want to know, as business owners, how many of you want somebody to come up, poke a finger in your chest, and tell you exactly what you need to do with your business? Just raise your hand. [Laughter] Yeah, exactly.
What we are here to do is to do some mutual learning. We’re not here to teach Elan exactly what we know. We are going to have two parts to this. The first part is going to be, we’re going to ask questions to explore the thinking. Great questions start with: what, how much, or how. How much are you looking to get out of this business? What are you thinking about, in terms of growth? How are you considering the challenges you’re facing? We’re asking these bigger questions, open-ended questions, so we’re all learning together.
After we get through that phase, then we’ll focus down on what are the specific challenges that Elan wants some support with? And then we’re going to deputize you all to do some solution thinking—not, “Here’s the answer.” It’s going to be pieces and parts that he can put together to try to help support his thinking. Just want to let you know I’ll try to be pretty gentle, but you’re not here to lay wisdom on him. You’re here to learn with him and then share things that are pertinent when we get to the second phase.
Okay, so Loren’s gonna start interviewing Elan and give us, basically, the food for thought here. And your job is to think of: What kind of question could expand our understanding together? All right, go ahead, Loren.
Loren Feldman:
“Food for thought,” I like that, Chris. I saw what you did there. First of all, Elan, I want you to know that two of the people here—Mars Chapman and Megan Perona—went through this process themselves, and they came back. So it’s possible to survive this. That’s a good thing for you to know. Let’s start by kind of setting the scene a little bit. You decided to start a business making and selling hummus. Why?
Elan Daniel:
Well, it all started on my honeymoon in Israel. I’ve always eaten hummus and enjoyed it at home in the United States, but we went to Israel, and in a city called Akko, there’s a hummusia—so this place just sells hummus, or hummus. And I remember we missed it a couple times because it’s like this little hole in the wall. It’s like one doorway, no windows. It’s in the middle of a very busy old market with lots of smells and sounds, and there was a huge line. The line moved quite quickly. Two things on the menu: hummus, and hummus with foul, which is fava beans on top of hummus. So it’s really just hummus, and they still ask you what you want. And I was like, obviously, “Hummus.”
So we sat down, and they immediately bring some pickles and some pita. And the hummus is basically out right away, because it’s already done. Essentially, it’s warm, it’s soft, it’s smooth. And the whole experience was kind of a little bit jarring. But I remember taking my first bite and having this moment of: “What is this? Where am I? What is happening? What have I been eating my entire life?” It was basically world-changing. It kind of turned me upside down.
So I came home and started eating my normal store-bought hummus again, and just could never—it’s kind of that saying, “Once you eat cake, you can never go back to just eating bread every day.” And so as a result, I started experimenting and trying to make my own hummus to emulate Hummus Said, the place in Akko. I don’t think I mentioned that. And I still, to this day, have not gotten anywhere close to Hummus Said, because his hummus is legendary, but I’ve come as close as I can so far.
But I started making it for myself, and I would bring it to parties, and I’d bring it to a friend’s house for Super Bowl things or whatever, and people would eat it and just be like, “This is amazing. This is so good. How do you do it?” And before I knew it, I was selling it out of the house in Indiana. And if you know anything about Indiana—Indianapolis, specifically—they struggle with ethnic foods. So my hummus was the closest to authentic Middle Eastern ethnic food that a lot of people had had. And so I started selling it out of the house, and it was very popular, selling out every week. But we ended up moving to Princeton, New Jersey, where I actually went to high school, and I decided to kind of kick it up a notch.
I got my ServeSafe Certification. I started renting out a commissary, started selling at farmers markets. And we started, actually, the farmers market circuit in February, and this business has been growing pretty steadily ever since. I’d say we’re growing almost 5 to 10 percent per week, which is kind of incredible, having only started 2025 in February. But I’m trying to figure out, at this point, if I need to keep growing. And if I do, is there an exponential growth pattern happening that I need to find a different system to get me there?
You know, I have a lot of questions. And I’ve never gotten to this point, especially with food businesses. I have had other businesses, but this is unique to my experience. And I want to say also, thank you, Loren, for having me, and thank you everyone for being here to assist me as I look to grow the business and advance this business.
Loren Feldman:
That’s great. Thank you. Elan, give us a sense of how far along you are. Do you have employees? Are you doing this yourself? Where does that stand?
Elan Daniel:
So the vast majority of the cooking is me. I have expanded the menu beyond hummus. So one of the first things I added was pita, because without pita, if you don’t have the right vehicle to deliver the hummus, the hummus itself kind of loses a little something. And I’ve played with that in a number of ways. And then, as things have grown, I’ve had to kind of grow a little bit here and there.
I have three employees now, all part-time, super part-time, maybe five to 10 hours a week. And one person is helping me make pita, because pita can be very labor intensive with the rolling and hand forming. And then I have two people helping me at markets, especially on days when we’re at two separate markets. So we went from one market every other week to three markets every week. So, again, it’s really quickly evolving.
Loren Feldman:
Do you sell in other ways? You have a website, right? Individuals can order on it as well, correct?
Elan Daniel:
Yeah, so I have a bit of a radius for people living within essentially five to 10 miles. I offer a delivery service. Because I finish making everything Thursday or Friday morning, so Friday afternoon, before markets on Saturday, I’ll deliver to a few people. So I have these sort of regular people, and I have people who subscribe. So every week, kind of like every week you go to the grocery store, you get the same thing. So every week, there are certain people I give the exact same order to on Friday afternoon.
Loren Feldman:
Do you feel as though there’s anything holding you back at the moment?
Elan Daniel:
Yeah, I think a retail location would be helpful. I do get that question a lot from people at the market: “Do you have a retail location that we can come to during the week?” I’ve had other people say, “Do you deliver this far?” I can’t justify driving 30 minutes one way to deliver a $20 order. It just doesn’t make sense. So I’ll meet people in the middle.
But if I had a retail location, obviously, there would be a lot easier place to send people. Just come on in, grab some stuff, and run. So I think that’s a bit of a hindrance. Another option there—and this is where the question starts—is getting the hummus into other locations, so into, say, grocery stores or specialty markets, or finding other restaurants that might want to hold it and then sell it off their shelves.
And you know, the question is: Should I be investing and leaning into more of the industrial, where I’m focusing on the making and having other people sell it? Or should I have a location where I’m selling it and focus really on the sales? Because those are two extremely different processes and different types of investments. So, industrial would be more in the equipment, and then the retail would probably be more in the space itself. So it’s kind of bouncing between the two. And I don’t know if there’s a happy medium, but—
Loren Feldman:
Do you have a vision in your mind of where you’d like this business to be in, say, five years?
Elan Daniel:
I’d say, I mean, prediction and vision are tough. All right, I know what I’d like to do. It doesn’t mean I’ll go there. I’d say I’d like to see, certainly, more stability, so in the sense of having my own location where I can make it, that I have full control over the kitchen and then enough growth, enough steady growth that I can sort of predict where I’m headed next, as opposed to trying to guess from kind of erratic ups and downs, which I know that’s just the way food goes.
But, yeah, I think if I were to dream, not just big, but just dream—a dream is I lean more into retail. And I’ve asked all my employees, my wife, my child: “Where do you see this business going?” And everyone has said, retail, not industrial—because of who I am, not necessarily because of what the business is, which is, I think, an interesting way to frame that thought.
Because I really enjoy the interaction with the people—they all see me at the farmers market. And one of my favorite things is giving people something new that they’ve never tried, and then sort of their face lighting up, like, “What is this?” Which is the name of the business: Mazeh, in Hebrew, means, “What is this?” And a lot of times before they even try something, they’ll come up and say, “What is this?” Because it doesn’t even look familiar. So, “Yeah, exactly.” “What?”
So I think retail kind of plays to my strengths, but that doesn’t mean that it’s going to play to the strength of the business. And I want to make sure I’m honoring what makes the most sense for all of the different people I’m going to serve best, as much as what I can offer the business and the customers.
Loren Feldman:
So as some people here know, I met you at a July 4th barbecue this year where I tasted your hummus, which was terrific, and I asked you about it. And you told me that one of the reasons it’s as good as it is is because it doesn’t contain preservatives, like most store-bought hummus does. How do you think about that, in terms of you just talked about getting into more retail locations? How big of a hindrance do you imagine that to be if you continue to make it without preservatives?
Elan Daniel:
Yeah, I think that’s an important part of what makes it as good as it is. Not just my hummus, but what also detracts from the store-bought hummus is the preservatives. The citric acid feels like an overpowering flavor in the vast majority of them, and you almost can’t even taste the chickpeas or the tahina or tahini. So, yeah, I think that’s important. And part of what my sort of vision of being an industrial-oriented business that doesn’t do preservatives is having these sort of ghost kitchens in locations closer to retail locations. So if I went in that direction, that’s how it would have to go, in my mind, because you’d have to prepare it close to where you’re selling it—not necessarily at the exact location you’re selling it.
Loren Feldman:
All right, let’s open it up to questions. Who has a question? And please start by stating your name and what you do.
Chris Hutchinson:
Go ahead, Rachel, introduce yourself.
Rachel Ezekiel-Fishbein:
Rachel Ezekiel-Fishbein, I do public relations. Elan, your story resonated with me as a lover of Israel, a lover of hummus, and I actually have a friend in the hummus business. I’m wondering what your vision is for your audience, if you are envisioning this as more of a niche product for a specialty audience, if you’re hoping that this is going to become a larger thing that introduces everyone to hummus. Because in my head, as a PR person, I have all these ideas about the narrative of your story. But it really depends on who you’re trying to reach, and how you’re thinking about your audience.
Elan Daniel:
Yeah, that’s a great question. The audience, I honestly, I kind of think is everybody, like you said—just trying to get people to taste as close to what real hummus should taste like. Again, it’s not Said, but I’m close. And also it’s not the preservative-based stuff that you get at the grocery store. I’ll give you an example of what I’m experiencing now in Princeton. One of my main audiences in Princeton are Israelis, because Princeton University is a major attractor of Israeli high-tech talent who end up becoming academics here. And so a lot of Israelis end up moving here, don’t stay for very long, some stay for very long.
But there’s actually a WhatsApp group specifically for Israelis in Princeton. So it’s super, super local, super specific. And people come to the farmers markets because they saw someone post that I was at a farmers market in that Whatsapp group. And one of the things I’ve also seen is, I’ve seen Israelis get very passionate about my hummus because I think it gives them an ability to share their culture, our culture, with non-Israelis who also then get very excited about: What is this thing I’ve been missing my whole life that you guys have been doing for however long? So it’s sort of like the Apple situation with early adopters. They’re not early adopters. They’re already adopted, trying to then evangelize hummus to other people. So they’ve sort of been a great asset for me in Princeton.
But then, of course, there’s the local people who I interact with on a regular basis that are just interested in the thing people have been talking about, like Loren. And then, of course, there’s tourists who come through farmers markets, who are just kind of exploring the farmers market, and they kind of find this new little experience on one of the stands. And they’ll sit and talk with me for a good chunk of time just learning about different types of food that they’d never heard of or whatever.
And then, of course, in Princeton, I think there’s another audience that you don’t necessarily get everywhere, and that’s university students. I kind of almost see them as their own version of long-term tourists. They come, they stay for four years. They kind of experience a little bit of this town, but then focus on their focus area. But then a lot of times, they’re gone. So I think there’s four different audiences that I currently interact with. And right now, I think the one that gives me the most sort of, I guess, the biggest megaphone, if I were to put it that way, are the Israelis.
Chris Hutchinson:
Okay, Jay has a question, then Eric, then Kathy. So Jay, go ahead. What’s your question?
Jay Goltz:
I’ve got a couple, three. One, what kind of margins do you have? Could you sell to a store and leave enough room for markups that there’d be anything left? Have you done analysis on that?
Elan Daniel:
Yeah, I think there is. Right now, though, my margin—so cost of goods sold is 20 percent, which is not bad. So I could probably sell it at 50 percent and then still have 30 left over.
Jay Goltz:
That includes labor, when you say cost of goods sold, right?
Elan Daniel:
No, that’s—
Jay Goltz:
Okay, that’s called cost of materials. I’m in the frame business. I fight with people constantly with this. They don’t count their time. Cost of goods sold in manufacturing includes labor. So with the labor, how much is your cost of goods sold, if you had to pay people?
Elan Daniel:
Well, if you count me as zero, then it’s—
Jay Goltz:
But that’s a problem.
Elan Daniel:
Yeah, that’s the question.
Chris Hutchinson:
That’s a great set of questions, Jay.
Jay Goltz:
Wait, let me just ask: Did you look into getting kosher certification?
Elan Daniel:
Yes, I can’t do it yet, because right now, I’m in a commissary. So once I get my own location, then I could look at that. I’ve already talked to my rabbi in town. Once she found out I was doing it, she was already like, “Hey, have you ever thought about going kosher?” And well, yeah, but I can’t yet. You’re not gonna hechsher this commissary that’s working with pork and whatnot.
Chris Hutchinson:
Great. Thanks, Jay. Eric, why don’t you introduce yourself and ask a question?
Eric Stites:
Eric Stites, with Franchise Business Review. Elan, very interesting business. You touched a little bit on it, but I want to kind of go back to what you’re looking for, as far as you know. You talked about the sales side of the business, the marketing side of the business being very different from the cooking and production side of the business. I guess I want to understand where your heart is a little bit more in those two areas.
And then also, generally, from a financial perspective, are you currently meeting your kind of lifestyle goals? Are you looking to expand that dramatically? What’s that kind of personal drive, I guess, from the financial side, outside of the specifics of the business?
Elan Daniel:
Those are great questions. And I haven’t actually spent that much time—I spend so much time in my life being introspective about what I want from my life and all of that. This is one of those moments where I just said, “I don’t care what I want. Just go do it. Go do something and see what happens.” And I never expected this to be as successful as it’s been, quite honestly, but I started doing it because I enjoy it and I love it, and it just happened. Maybe that’s part of the reason and part of the recipe for the success around it. But yeah, I haven’t thought much about what I really want from this—other than the fact that I just wanted to do it. So I did it.
And the thing I like most about it—honestly, I don’t think I could say one thing. I love so much about it. I love cooking. I’ve always loved cooking. That’s part of the reason why I just told myself, “Hey, I’m going to make a life doing this.” But I also love socializing, but they’re two very different things. Cooking is not very social, but the selling is extremely social. So I get to sort of scratch two itches with one business.
And then, as far as your question around lifestyle goals, I am extremely lucky to have a wife in academia who works at NYU and is able to cover most of our bills, so I can do things like this. So I’m not as concerned about exploding our net worth, or anything of that nature. At the moment, I’m really just enjoying it, and I want to continue to enjoy it.
And I want it to grow to a point where it’s not necessarily just a hobby that makes a bit of money, that maybe it is a contributor to our household income, but also something that can contribute to the community, something that can contribute to employees’ lifestyles. You know, it doesn’t necessarily have to be just about me, because I get so much joy from giving. I worked in the nonprofit sector before, if that tells you anything. I really did enjoy giving more than I enjoyed getting. And I hope to get it to that point where I can also give as much as I’m getting.
Chris Hutchinson:
All right, we have Kathy, and then there’s Amy, Tabitha, and Mars. So Kathy, introduce yourself and your question, please.
Kathy Steele:
Yes, I’m Kathy Steele. I am the CEO of Red Caffeine, and I love Eric’s questions about your vision. I think that’s critically important. I like setting the direction. But my question is really about your product itself. Talk to us. I mean, you talked about it being a fresh product without preservatives. You talked about it being something unexpected from what people traditionally expect from hummus. But tell us a little bit more about what really, truly differentiates it from other products out there. How could you in a marketplace, where it’s going to be very competitive, stand out?
Elan Daniel:
You know, the proof is in the hummus. But unfortunately, I can’t send you all samples. But when people do come up and try—because I’m very sample-oriented, because it definitely has a unique flavor to hummus. People who are in the restaurant business will taste it and be like, “This is very unique in flavor.” And it’s delicate. It’s very subtle in its uniqueness. I guess it’s my spice mix. But also, Israeli hummus is a little different than the typical because it’s more tahini-based, as opposed to more chickpea-based, so it’s a little richer.
So Israeli food, in general, tends to catch people off guard, I think, in a lot of ways, because it is a little unique—not completely, because Israel is a melting pot of many Jewish cultures around the world, and we brought all of these different culinary traditions together. For example, Amba. I don’t know if you’ve ever heard of Amba. It’s kind of a fermented mango pickle that we use on something called sabih a lot and other stuff. It’s very similar to chutney, but it’s from Iraq. It’s the Iraqi Jews who were doing business in India who brought it to Iraq, made it popular in Iraq. But then when we moved to Israel, and immediately started building these Amba factories, it’s one of the major ingredients in a lot of Israeli cooking. But it’s Indian, Iraqi, Israeli. It’s sort of this weird amalgamation of different cultures all mashed together.
So I think the Israeli thing is starting to catch some popularity, but it’s still a little bit unique in the United States. So, for example, in this region, we have Zahav and we have Laser Wolf. And I don’t know if you’ve heard of Zahav. It’s an Israeli restaurant in Philly, and he’s a James Beard Award-winner. Maybe Michelin starred. I can’t remember all his—
Loren Feldman:
It’s a restaurant that’s impossible to get into in Philadelphia.
Kathy Steele:
Okay, okay, so you are definitely a foodie choice, regardless of the origin of the product. Talk a little bit about shelf life and some of the barriers to and limitations to the product.
Elan Daniel:
Yeah, shelf life is probably going to be a challenge. And these are great questions to sort of help me understand the viability of an industrial product. I think the shelf life is probably about a week. So it would probably sit in, say, a deli aisle, as opposed to the hummus aisle. So that is a bit of a challenge, right? The freshness and the lack of preservatives on a grocery shelf could be a challenge for maybe one that it’s not turning as quickly, so they’d have to throw it out a lot more often. So, that’s a good point.
Kathy Steele:
And would that also include some of the other products? I noticed that you had a lot of other products on the website, but you mentioned making homemade pita, which I also imagine has a bit of a shelf life as well.
Elan Daniel:
So the pita actually is freezable. What I do, because I have to make it ready for farmers markets, and in my opinion, the shelf life of pita is actually one hour, because it starts to go a little chewy after that. So I par bake it, freeze it, and then when I go to the markets, I actually take a little pizza oven and finish it for people. Or take it home, freeze it, and when you’re ready, pop it in the oven for five minutes, and finish it off. So it has actually worked quite well.
Chris Hutchinson:
Let me see if I can get these other three questions in before we break out to talk about or we get to that place where you’re going to pick what you most want us to give advice on, or ideas, or caution. So we’ve got Amy, Tabitha, and Mars. Amy, introduce yourself.
Amy Collins:
I’m Amy Collins. I’m the founder and CEO of the Olea Group. We provide underwriting services to community development financial institutions across the U.S. So I do not know anything about the food industry. I know a lot about small business finance, and I’m curious if you are interested in or would consider opening a restaurant.
I’ll also add, I lived in Jerusalem for four years between 2017 and 2021, so I have eaten a lot of hummus, and I think I would be your customer if I lived close to you. So I can kind of put myself in the shoes of your customer, I feel like. And combining that with my experience with small business finance, just hearing what you’re saying about this dichotomy or what you view as, are we doing retail or are we—what did you call it—doing industrial production? Retail, to me, feels like all the downsides of the industrial side without the upside that you would get from a restaurant.
A restaurant sounds like it would connect your passions of being with people, serving people, kind of helping people to experience the food and fall in love with it. And I’m picturing, if you had a restaurant, you could also sell your product in containers to go, and that could be the retail. But I don’t know, even being a lover of hummus, that I would drive to a retail location just to pick up that one grocery item. And so that points me to, I feel like you either need to go industrial and try to get into Whole Foods and all these other bigger stores or open a restaurant. Are you interested in the restaurant?
Elan Daniel:
Well, I’ll clarify when I say retail, I mean restaurant-style, where I’m interacting directly with customers, as opposed to me getting a middle person, as in the grocery store or something else. So imagine, when I think retail, I think hummusia. Really small, just has hummus, but stuff that compliments hummus as well.
Amy Collins:
Okay. But you can eat it there at the counter if you want to.
Elan Daniel:
Yeah.
Amy Collins:
Got it. Got it.
Chris Hutchinson:
Okay, good. Good clarification. Thank you. Tabatha, introduce yourself and your question.
Tabitha Mason:
Hi, I’m Tabitha Mason. I own a Zingerman’s business in Ann Arbor, Michigan, and my mouth is watering. I feel like I would have better questions if I really understood your vision and where you want to go, because that is something that we really stress within our organization. But taking that to the side, I’d love to hear about how you set your current pricing structure and what you see right now are the bottlenecks to either further growth or helping make your decision.
Elan Daniel:
Thank you, Tabitha. Yes, great questions. So my pricing structure is on the low side. I want to be in a place where everyone can access it, but I’m also able to have some margin to make sure that I can grow as a business. You want to be able to take some of that from the top and put it back into the business. I think if there was a retail location, I would have to increase my price a little bit. So, for example, five ounces of hummus is $6 on its own, and it’s pretty small. I think it’s about a single serving, so for one person at one sitting.
But then I have a hummus with a topping. So I have the toppings themselves that you can eat on their own, except for maybe zhoug. I don’t know if anyone knows what zhoug is: a really spicy green sauce. And I do a two for 10, right? So it’s a nice little upsell where it’s like, “Oh, you know, you save two bucks if you get another thing.” And it usually compliments the hummus itself. And in Israel, zhoug, a lot of times, very often goes with hummus. And honestly, that’s the trifecta that I like: pita, hummus, and zhoug. And you kind of put the zhoug in the middle and swipe.
But I have other toppings as well. So if someone’s not into spicy stuff, I’ve got a sweeter thing, or I’ve got a more umami thing. But you can definitely have those on their own. Some of them are their own dips. Some of them are almost salads on their own. So that’s kind of my structure right now. It’s a good way for me to get complementary things together at something that makes the customer feel like they’re getting a good price, as well as a good value. And for simplicity’s sake, I just do $1 per piece of pita. And then, sorry, what was the second part of your question? That was the pricing structure.
Tabitha Mason:
I’d love to hear about what you think the current bottlenecks are, either to helping you make a decision or to growth.
Elan Daniel:
Yeah, so one of the big bottlenecks is finding space. I’ve actually started looking, and I’ve been talking to listing brokers and whatnot of different spaces, and New Jersey is not an easy place to find real estate. I don’t know if anyone’s aware of the real estate market around here—the housing market alone—but certainly the commercial space. And that’s definitely been a bottleneck.
I think another bottleneck would be the lack of having a space, because it’s kind of hard to hire someone to help me, to sort of help exponentially grow the amount that I’m actually able to make. Because the amount you can sell is dependent on how much you make, especially if you sell out every week.
So I think space is a big component, and that’s really the next step in my journey. And I think that’s why I have that question in the back of my head all the time about: Do I want to go restaurant retail? Or do I want to go industrial? Because it’s about time to start looking. And do I need to get to a certain level of sales before I even look for a space, or am I at a point now that I can justify it? How do I even know? So, yeah, I think the space is a big, big component.
Chris Hutchinson:
So we have two more questions, and then we’re going to shift to: Elan gets to pick sort of what his most important request of us would be. And then we’ll all provide some advice and ideas. So it’s going to be Mars and then Loren. So Mars, go ahead and introduce yourself.
Mars Chapman:
Hi. Thanks for sharing your story. My name is Mars Chapman. I own Casey’s New Orleans Snowballs in Austin, Texas. I, too, am very passionate about a food product that is rather specific and not treated fairly by the laws of thermodynamics or physics. I just have a very short question, and then one that’s just a little bit more. One, are you paying yourself? And then two, have you ever worked in consumer packaged goods or restaurants before?
Elan Daniel:
I am paying myself a very modest amount. The best paid employee on my staff is my 10-year-old daughter, and I’m paying myself, in a way, through her. She’s the best return on investment ever on this whole thing, because she’s learning all kinds of skills you wouldn’t otherwise get. And yes, I have definitely worked in the food industry before. I worked as a barista for a year. I worked in a restaurant as a server for two years. Worked as a cashier in a restaurant. I worked as a bartender in London, which was a trip in and of itself for a year—you know, because an American in a British bar during a time when they were not real happy with the American political situation was very fun, especially as they got later in the evening. As they drink more, they got a little more free on their views. So I got yelled at a few times.
Actually, it’s kind of interesting. I’ve spent most of my non-sort-of-professional career working in the food industry and enjoying it, but then working towards a career that I didn’t end up enjoying. And I find myself back here for, I think, good reason. And Amy, by the way, I worked in community development for the last 18 years, so I know community development well. So when you say CDFI, I was like, “Yep, I can speak your language for sure.”
Amy Collins:
Awesome.
Chris Hutchinson:
So we’re gonna have Loren wrap it up before we shift gears.
Loren Feldman:
One last quick question, Elan: Have you thought much about how much risk you’re willing to take to try to build this business? Would you be comfortable, for example, taking on an investor or a partner or taking out a loan, using your home as collateral, all those fun things? Is that something you’ve thought about?
Elan Daniel:
How do I measure the different levels of risk? How would you measure the different levels of risk that I’d be willing to take?
Loren Feldman:
I’m not sure what you mean by that.
Jay Goltz:
Are you willing to sign a lease? Are you willing to sign a lease for three grand a month?
Elan Daniel:
Yes, that I’m willing to do—well, as long as it’s not 10 years. That was one that I’ve had recently where I was like, “10 years? That’s a long time.”
Jay Goltz:
That’s a long time.
Elan Daniel:
Yeah, and then with a 5-percent escalation clause.
Jay Goltz:
That’s ridiculous.
Elan Daniel:
It’s ridiculous. And it’s not a very high-traffic area, either. So no, those are your calculated risks for sure. Investor? I want to see how far I can go on my own before I need to take on an investor. I guess it would depend on the situation, right? If the investor is bringing something to the table that can grow the business in a way that I can’t, then I could see that being an important value to the business itself. It depends on how we might interact, as well. And then putting a mortgage on my house? Maybe, I don’t know.
Jay Goltz:
Can we get your wife in the picture here? [Laughter]
Elan Daniel:
Yeah, we can!
Chris Hutchinson:
Okay, so we’re at the turning point in the conversation. I’m wondering if you can also just pull back a little and say: What would you really like for this group to give you? And here’s what they’re going to do: They’re going to give you a success tip, a caution, or a next step. It’s not, “Here’s your business plan for the next five years.” It’s just one piece like, “Oh yeah, watch out for this.” Or, “Here’s something that can be really helpful.” Or, “Here’s the next step that you might want to take.” So what can we do for you, Elan? What’s the question or the consideration you want us to give you advice about?
Elan Daniel:
So I think ultimately it’s: How do I decide which way to grow and what pieces of information are my clues to finding out what is the right decision around the markets that I have? And when I say markets, I mean the audiences for Rachel’s way of framing it, as well as the customer base, the product types, as well as the type of business that it might better be suited for. Does that all make sense?
Chris Hutchinson:
Let me see, so I might have captured it. I tried to do it in the text in the chat field. I said, “How do I decide which way to go? And what are the clues and pieces of information I need to know?” Is that the basic thing?
Elan Daniel:
Yeah, I think that’s good.
Chris Hutchinson:
Okay, so, Katie, can you move us over to the second step of the next—there we go, perfect. So this will be a little bit quiet. We’re going to have people type in your name and then whatever the thing is that would answer this question: How does Elan decide which way to go? What are the clues and pieces of information that he needs to know to make this decision, and to make this decision well?
Loren Feldman Voiceover:
So, at this point, everyone in the Brainstorm attempts to respond to the question formulated by Elan and Chris by offering a success tip, a caution, or a next step. The participants type their thoughts into the software program that Chris uses, which allows everyone to see the suggestions and to “like” the ones they favor. The suggestions that get the most likes rise to the top of the list. When everyone is ready, Chris asks the authors of the most-liked recommendations to explain their thinking to Elan.
Chris Hutchinson:
So, Jay, why don’t you kick us off with the one at the top.
Loren Feldman:
And remind us who you are.
Jay Goltz:
Jay Goltz. I own Artists Frame Service picture framing, and a furniture store, 120 employees. If you asked me what my biggest mistake was: pricing. It’s absolutely at the top of the list. I think one’s going to have to really get a good understanding of what is it truly going to cost to manufacture this when you’re not using 10-year-olds or yourself and selling at retail? Whoosh, half the margin’s gone.
So the question becomes: Where’s the best opportunity to either do the volume at a lower margin or maybe it’s not worth chasing the volume and taking the whole markup? Or maybe there’s somewhere in between, with doing more online stuff. And I think the kosher thing—kosher sells a lot more product. It’s not just Jews who buy kosher. A lot of people buy kosher: vegetarians, Muslims, blah, blah, blah. So that might be a big advantage.
Chris Hutchinson:
So several people nodding their heads to that, so that’s really good. Elan, any questions, or should we press on to the next one?
Elan Daniel:
Yeah, so what are some good ways to—pricing strategies. What’s the best way to determine your pricing strategy beyond your own cost? How can you know what the market will bear, other than putting it out there?
Jay Goltz:
That is a huge mistake where I’ve watched lots of people go broke. They think the key is you’ve got to go out there and charge the least that you have to. And the secret to business is charging the most that you can. And the fact of the matter is, when you’re making a premium product, I hear words like, “Oh, I don’t want to rip anyone off.” “Oh, I want to be fair.” “I want to be accessible.”
There’s only one word, as far as I’m concerned, and that is: What is the appropriate price? And the appropriate price includes you making sure you can make money on it, and if the market can’t bear that, you don’t have a business. So Zingerman’s is a lovely, great place. Love it. It’s not inexpensive, right? Would you call it inexpensive? I don’t think so.
Chris Hutchinson:
Tabitha is shaking her head pretty vigorously.
Jay Goltz:
Yeah, I’ve got the same thing with framing. No matter what I charge for picture framing, people complain about it, and I see people go broke all the time. And I can’t tell you how many people have told me the year after they came to a class I had, that it saved their business. You’ve got to charge what you’ve got to charge. That’s the reality of business. And until you figure out what your true cost is, figure out how long it takes to make, what is your margin—and then, you have to figure out what your overhead is that the margin’s got to cover. You need to come up with a quote-unquote model Income statement of, “Okay, if I want to make 100 grand a year, here’s what I’ve got to gross, here’s what my material is going to cost, here’s what the labor is going to cost, and here’s the overhead.” And see if you can get that to work.
Elan Daniel:
But really, you’re building your pricing strategy around your overhead.
Jay Goltz:
Absolutely, your cost. Absolutely. It’s certainly not, “Well, other people are charging…” These other places that you’re competing against are massive, gigantic factories, cranking out hundreds of thousands of these products. You can’t use that. You’ve got a premium product. It’s got a short shelf life. It’s not going to be the same price.
Elan Daniel:
I mean, maybe Tabitha has a good sense of: What are sort of margins around premium products? Ann Arbor is maybe a little different than Princeton, but a college town.
Chris Hutchinson:
So let’s skip over to Tabitha.
Tabitha Mason:
We don’t apologize for our pricing. It is important to us that we have products that are approachable, but there’s a big range within approachable. And so, we have a wedding venue that has very small and very large. And you can buy day-old things and a half sandwich all the way up to something very expensive. And so for us, it’s understanding why we charge what we charge and helping our customers understand that.
And so our customers, when someone says on a local group, “Don’t go there. It’s too expensive,” they hop in and talk about our insurance and all the things that we do for the community. Because they understand. So I look at what market can bear. And we aren’t ashamed of profit, because you can do good when you’re profitable.
Jay Goltz:
And there are going to be people who say, “You’re too expensive.” Live with it. That’s life. You can’t think you’re going to get everybody to say, “Oh no, that’s reasonable.” There’s gonna be some people who want to go get cheap crap. Knock yourself out.
Tabitha Mason:
Yeah.
Mars Chapman:
I was just going to say—Mars Chapman, Casey’s New Orleans snowballs—something that might be helpful to think about is, you’re not competing with—I forget some of the big national hummus companies out there. You’re not competing with them. You sell a boutique, fantastic, hyper-local, made-within-the-last-48-hours, freshly baked bread, served with love and heart right there, from your hands to the customer’s hands. You’re not competing with them.
You’re competing with, like—I’m going to think of people who are doing, like, really bougie candy or flowers. You’re competing with a really special high-end experience. And so when you think of pricing, make sure also that you’re comparing that component of it as well. Yes, it is hummus. Yes, you can get it from a national company for very cheap, for an eight ounce deli container. But I don’t think that what that is and what you’re making are anywhere—they aren’t playing the same sport.
Chris Hutchinson:
So, let’s go to Amy real quick.
Amy Collins:
Amy Collins. My comment was to look for a pop-up opportunity, a place where you could open possibly a temporary restaurant for 30, 60, 90 days, which would allow you to do two things. First, see how it’s received by the community. Maybe you get a lot more foot traffic, interest, and excitement than you think, or vice versa. And also, kind of work out the kinks and see if you like it. I don’t know what opportunities exist for that in Princeton, but I would imagine, especially being close to a college campus, that that is a possibility, which is connected to my other comment, which was just to be extremely cautious about taking on overhead.
I’m an entrepreneur, but I say I’m an accidental entrepreneur, and I’m extremely averse to risk—unlike most entrepreneurs. And so, I would not assume that it’s gonna work, we’re gonna make it work. You indicated some caution about signing a 10-year lease before. So I think you already have that baked in where you know you’re thinking about the overhead costs before jumping in feet first.
Chris Hutchinson:
Loren, I’m wondering, we have 5-10 minutes left max. How would you like to help us land this so that we can send off Elan with something really helpful?
Loren Feldman:
I think maybe we should ask Elan that question. Have you had a chance to scan the other comments, Elan?
Elan Daniel:
It looked like there was a bit of… so again, back to this optimism—not to get too optimistic. Be a little bit more cautious, a little bit more careful about that next step. This has been extremely helpful. How will I know when it’s time to take on the overhead?
Amy Collins:
My advice is: when you’re busting at the seams. Like when it’s: We cannot operate one more day in this facility, in this circumstance, in whatever it is. I don’t know if that’s good advice, but that’s how I’ve grown my business so far.
Loren Feldman:
You’ve got some nodding heads there, Amy.
Mars Chapman:
And I would just say that, you know, I sell stuff for five to seven dollars, five to eight dollars a piece, so it’s really a volume-based business. You know that you’re ready to take the next step when you’re consistently hitting a ceiling, like if you triple production, and you’re still selling out and you just cannot meet demand.
Chris Hutchinson:
So Elan, what is your next step? What are you going to do with this information?
Elan Daniel:
Well, it sounds like I’ve got to dig into my numbers a lot more. And I’ve got to add in the cost of labor, whether it’s mine, whether it’s phantom labor or it’s labor that we would have to add on to grow.
Jay Goltz:
Or have more children. That’s the other option. [Laughter]
Elan Daniel:
I won’t get into that. But yeah, so I’ve got to dig in a little bit more. I’ve got my spreadsheet with, like, super-detailed numbers, but I really haven’t added in the labor. I haven’t added in all the overhead, and sort of leveled it across all the different products. So I need to kind of really generalize all the expenses and figure out where I’m at. And it also sounds like I probably need to raise my prices. Because we were catching a happy medium. We weren’t too high, we weren’t too low. But maybe the way to grow is actually through pricing.
Jay Goltz:
You say you deliver to people’s houses. What is that? How much does it cost? How much are you charging?
Elan Daniel:
Same as I do at the farmers market. So it’s, you know, six for a small, but two for 10, and then three for 15. But I end up with $30 orders each. Each order is about 30 bucks.
Jay Goltz:
And do you charge for delivery?
Elan Daniel:
No.
Jay Goltz:
Do you know anything else in this world that you can get delivered to your house for free?
Elan Daniel:
Half of them are my friends, so I just go and hang out with them.[Laughter]
Jay Goltz:
There you go.
Chris Hutchinson:
That’s a different ROI. Well, I want to thank everybody. I mean, you can see this picture. Everybody’s busting with intense energy to support Elan. We want you to be successful. I just really want to appreciate everybody’s thoughtfulness and the questions you asked and the things you’re offering. I think we’ve given Elon a great, supportive environment for him to do his best thinking.
Loren Feldman:
Elan, you odn’t have to. Is there one last question or thing that you’d like to raise?
Elan Daniel:
I think this has been extremely helpful. This has been very helpful for somebody who’s starting out in a world that they haven’t really had their focus on for most of their career. This is very helpful and just gives me a new perspective and way to look at what I’ve been working on for the past six months, day in, day out, pretty much 24 hours a day—because you dream about these things, too.
But yeah, so having this wealth of knowledge, this diverse group of people with different perspectives, different businesses, and different ways that they’ve grown and different ways that they’ve run their businesses, come and help me sort of put it all together, to help me sort of figure out where my next move is and what I could be doing better, is invaluable.
Loren Feldman:
All right, thank you, everyone—especially Elan, but also Chris Hutchinson and Katie Huey from Trebuchet, and our sponsor, New Bridge Studios, and of course, all of you who pitched in
