December 12, 2016

A Look Behind The Scenes Of The Food Industry (PODCAST)

In this podcast we take a look at the the inner workings of the food industry – from how food products market themselves to getting approval from the USDA and other food certifying organizations – and how the deck may be stacked against small food entrepreneurs in ways we didn’t even know (that being said, it doesn’t mean we can’t and won’t overcome those challenges!  We may be small but we’re scrappy!).

Jennifer: Today we have Jeff Scot Philips with us on the podcast and he’s going to provide us with a lot of insight into the food industry, so I’m really excited that he’s here.

Quickly a little bit about his background. Jeff is a nutritionist, a professional speaker, an author and an entrepreneur himself. He founded Break the Cycle Incorporated, a seminar hosting organization, before creating Fit Food, a healthy meal delivery company.

He then started Fit Chefs, which is a manufacturing business that created food products for popular health brands. He now spends most of his time speaking about business and entrepreneurship, as well as the corruption in the food weight loss industries, and teaching consumers about what they can do to avoid falling victim to it.

Jeff, thank you so much for joining us.

Jeff: Oh. Thank you for having me.

Jennifer: We have a lot to talk about today because I not only want to talk about your experiences in the food industry as an entrepreneur yourself, but also about your new book, which is titled ‘Big Fat Food Fraud,’ which, first of all, is a fantastic title in terms of catching everybody’s attention. For food entrepreneurs, this is a big topic.

Your book alleges that the food industry manipulates information in a way that doesn’t provide consumers with the full picture about what they’re eating or what they’re consuming. Obviously, that is a huge topic that’s of interest, I think both to food entrepreneurs from the entrepreneurial side but also from, all of us eat food, so from as a consumer as well.

I want to start at the beginning and would love if you could just tell us a little bit about how you got into the food and nutrition industry yourself.

Jeff: Sure. It happened organically. I was a personal trainer and a nutritionist. Then, as I think most trainers and nutritionists, dietitians go through, which is the majority of my clients weren’t taking my recommendations or for whatever reason, just weren’t making the food and eating the way that I was wanting them to.

One day I was like, “To heck with it.” I make all of my food for the week on Sundays anyway, for the entire week, so I said, “You know, I’m just going to make their food for them, Just not give them a choice but to have it available and take their excuses away,” so I did that.

It was funny, because they weren’t used to eating that way and most of the meals I made them were just protein and vegetables. There was nothing more than 20 grams of carbs, so I unknowingly put all of my customers that did it into ketosis and they all lost seven pounds the first week. At first I was a little worried but they were thrilled about it. Then, a kind of grew from there.

Of course, they wanted to keep doing it but they had to tell their friends and it just kept growing. Then, I started hiring help. At first it wasn’t a business but after it kept growing, I was like, “You know, this is a real thing. A better hire some help and incorporate and do this.”

Jennifer: You said it wasn’t necessarily started as a business. It was really started as a way to help your clients, from a personal training and nutrition standpoint. At what point did you decide, “Okay, I need to create a plan around this”? If you did or perhaps you didn’t create a business plan around this, at what point, how did you put money into the business to help it grow? What about that piece of it?

Jeff: Yes. At first I was certainly just trying to fill the need. I wasn’t thinking in terms of starting a food business. It didn’t turn into that until maybe after a couple of months of doing it.

Just enough people were coming that I said, “This probably isn’t legal for me to just keep giving people food for money. I probably need to make this legit and form an LLC and the whole thing,” and rent a kitchen. Yeah. I decided to do that.

To get it started, as far as the money goes, the first time around, because I didn’t have a lot of money and I didn’t want to take out a loan because again, I wasn’t necessarily sure this was going to be a business. I remember reading, I think it was Robert Kiyosaki, called ‘OPC: Other People’s Cash.’

I just went to the clients and said, “Hey, I’m going to … ” I didn’t give them a choice because we had rapport. I was like, “Listen, I making your food for the week. I’m going to buy your groceries. I’m going to cook it. I’m going to bring it back, so just give me your grocery money and I’ll deliver your food at the end of the day.”

Essentially, they funded the business that way. I just kept doing that with each new customer, so I never really had the pump … It was the perfect way to start it because I also knew by doing that, that I have a customer already. I don’t have to get the whole, “If you build it, they will come.” I didn’t have to worry about that. They came first. Then, I had to figure out how to build it really quick.

Jennifer: Obviously, if you were getting, people were telling their friends about it and everything else. As you said, you had to grow this business quickly. First of all, you had a great test market even if you weren’t thinking this was originally going to be a business. Talk about great word-of-mouth marketing.

You had mentioned to me when we had talked before this interview today, that your businesses have grown really quickly, perhaps more quickly than you necessarily anticipated. How did you manage that rapid growth? I think it’s something that all entrepreneurs hope for but it certainly comes with its own challenges of how to ramp up quickly. He talked about hiring employees, as an example.

Jeff: Yeah. One of the ways that I handled it was with a lot of wine. That certainly helps. It wasn’t easy. I don’t think it is for anyone. Yeah. The customers were coming quicker than I really could anticipate, especially at first. I’ll tell you in a second how I began to manage that. Yeah.

I had to start hiring chefs. At first, I was just hiring people I knew who could help. Once I decided to turn into a real business, then I specifically started hiring chefs. As that became, by the way, I’m sure everyone listening at least has a little bit of an understanding, but hiring chefs can be like the toughest.

They’re probably the worst employees ever and I don’t mean that in a condescending way. They just, they’re artsy by nature, from my experience, like anyone who cares about food can be but if it’s not their company, they don’t want to listen to you.

Jennifer: The only reason I’m laughing is because I am a chef by training and my husband will always tell you that I am the worst employee. I’m a much better employer than employee, so I hear you.

Jeff: Exactly. Right. That’s why I’m not making fun of chefs, it’s more … Now, if it’s their companies, then it’s your business but exactly, they can be the worst employee. Not because they’re bad, just because they think it’s theirs and it is yours and you butt heads.

How I learned to do with that or I stumbled onto dealing with that, I may be getting ahead of myself here, but I started developing these little systems to just make everyone’s jobs very robotic. I stumbled onto that by, one day I was frustrated.  We were having all kinds of problems. You know how it is when you’re starting a business, just everything, it’s a problem at first. The chefs were driving me over-the-top insane and they were messing things up, they were being artsy trying stuff and I went to a McDonald’s one day just to blow off steam, just to get away from it and I couldn’t help but notice how choreographed McDonald’s was.

All of the movements and everything that the employees did was just super robotic. They weren’t thinking about it, they were just carrying on their daily lives. It was beautiful looking. At first, I asked the franchise owner how it was working. She told me it had an operations manual. I asked her if I could see it, which she let me.

I realized they had systems for everything. The tiniest little thing you could possibly think of, to where to put your hands, where to put your foot, how to stack the condiments on each little burger. It was genius, so I took that and just copied it, but for my company.

At first, by the way, the chefs, everyone resisted the heck out of it. It was the hardest thing, of course, no one wants to do that.

Jennifer: Yep.

Jeff: That was so difficult. That’s when the wine came in handy but … yeah. Once I was able to get those in place, the remaining months, it just streamlined everything. That was how I was able to control that.

Jennifer: You’re talking, the operations piece because I think, to your point, it’s one of those pieces of food entrepreneurship that we don’t often think of unless you come from an operations background. It’s funny, I talked to some engineers who’ve come over and come into the food industry and they’re very operations driven.

I had one food entrepreneur/engineer tell me, “When you get to the point where you need to be turning out a consistent quality product, that consumers have a certain expectation that it’s always going to look a certain way, it’s always going to taste a certain way, you unfortunately do have to take some of that artistry out of it and rely on the methodology.”

You have to rely on certain steps, and whether that’s you doing it or training somebody else to do it, but you have to take … The creativity, he once told me, is in the creation of the new product but in the existing product that the customer’s buying, there are expectations attached to that and some of that artistry has to come out, which I think sometimes is hard for food entrepreneurs to realize.

Jeff: Yeah. Again, because I wasn’t coming from a culinary background, I didn’t necessarily have a plan.  I wasn’t trying to make everything consistent at first, although that’s super-duper important. It’s just that I wasn’t aiming for that, I was aiming for more consistency of the logistics, like keeping the chefs in line and making sure they weren’t getting too artsy.

By building the designs to control that part, the end product came out consistent too, kind of two birds with one stone. Actually, many more than two. Putting little business systems in place solves everything.

The business systems, If you want, I could tell you I had to start a second company or the company again and if you want me to tell you, those systems are really what allowed me to do that super easy with no money.

Jennifer: Yeah. I was actually going to ask you a little bit more about these business systems, so anything you could tell us. I think that a lot of entrepreneurs, honestly myself included, the more ways that we can look to put systems in place and help the business run smoother and become more successful, we will take.

Jeff: Yeah. Here, and I’m not claiming to be a master of the systems at all, but I learned a lot from watching McDonald’s and getting my hands on their manual. Also, after I learned about business systems, I got my hands on a book called, I think it’s called ‘Instant Systems’ by Bradley Sugars.

It’s a small easy read. I think, I don’t even know if it’s more than 100 pages but it used little diagrams to show how to put systems together. I’m a visual learner and that helps me a lot, just seeing how he maps them out for his company. He doesn’t have a food business but it doesn’t matter.

It’s really showed me how to set up processes.  Because, it seems like a daunting thing and it certainly boring, at least to me. I’m not an engineer. He basically showed everything you do really to break it down to its potential, is just watch what it is that you do, to do any single task in the company.

Then, just write down every little tiny piece of it, or the chef that does it the best, when they’re doing it the way that they’re supposed to, watch exactly what they’re doing. Whether it’s you or someone working with you, marked down every tiny little thing. The amounts, obviously the exact recipes, the timing, the quantity, their movements, where they store the things for efficiency reasons. You just put it all down on paper or wherever.

The thing too, is testing it against others. I’ll give you a great example, this is from the book too. When we were learning, we had these turkey meatballs that we made and we used to have a big bowl with the mix. Then, we would scoop them out with an ice cream scooper to make little turkey meatballs.

I was in the kitchen timing and testing things to try to figure out the fastest, most efficient way to make them and I learned, after a while, that if you laid out all of the turkey meat just on a flat cookie tray, these are trays, if we diced I can’t remember exactly how many rows, the number right off the bat, but if we used the pizza slicer to cut them into squares first, then we put them in the oven, they would rise up into little balls.

Just by doing that, that switching from scooping out every individual one, just to slicing like a 10 x 11 row and column, it shaved off, I can’t remember, but maybe 20 something minutes per hundred some turkey meatballs. It was nuts. We scrapped the ice cream scooper and now we had a new system. Anyone who came in, this is exactly how you diced them, exactly how you …

You can put anyone into that job now. It doesn’t require the culinary skill. The recipe does it first but once you have it, like you said, then that’s not where the artistry comes in anymore. Now, it’s just making the same consistent thing and that’s how that works.

Jennifer: How long did it take you to create those business systems because I can imagine a lot of people listening might be thinking, “This sounds great but how mice must find time in my day on top of everything else I’m doing?” Or do you just simply decide, “I need to make this a priority and let some other things sit on the back burner for a bit”?

Jeff: I did a little bit of that. Yeah. I really dove into. I knew that if I could suffer for a little while and just get these in place as quickly as possible, everything would be smooth after that. Yeah. I made that my sole focus, for the most part, as much as you can when you’re a small business. You can’t drop everything obviously but the majority of my day …

Once I nailed down the first system, I don’t remember, but let’s say it was this turkey meatballs for whoever was doing … At first, it was me doing. I nailed that down and got just as perfect as it possibly could. Then, I plucked someone else from another task and got them to do that, now that it’s super easy. I went and took over theirs and while I was doing it, I too, systemize it, write it down.

I was able to bounce around the whole kitchen that way and make a system for at least all of the cooking processes and once I did that and was able to put people in place to do each task, matter of fact, by the way, when I did that, I didn’t have to keep hiring as many people.

You we’re able to get a lot more jobs done with fewer people because, for example, the turkey meatballs, just for one, it took so much less time and it was so easy to do, they could knock that right out and then knock out two or three other things in the time that it would take hours and hours before.

Jennifer: Yeah.

Jeff: Yeah. It did take months though. It took months just to get those down, just because of all of the testing and the documenting in the training. Training them is the tough part. Then, once I did it for all of operations in the kitchen, then I jumped out and I started to do it for things like sales and marketing and bookkeeping, my least favorite, which I think you did a recent podcast on.

Jennifer: Yep.

Jeff: Yeah.

Jennifer: What would you say then, was the benefit of all of this work? You said, “If I could suffer for short little bit of time, than there would be this payoff,” so what was that payoff to you?

Jeff: There are quite a few. One, it got me out of my business. I was able to step away and things just ran without me, which I can’t tell you how beautiful of an experience it was. It was almost like a religious experience of some sort. It may be teary-eyed the first day. I didn’t have to touch anything. The customers get their food. It was amazing. That’s number one and that’s probably the most obvious one.

The second one, although this turned out to be a little bit more of a negative in the long run than a positive, but at first, it did make it really easy for me. If someone is looking to grow their business and investors, I was able to do that. It was very appealing looking to investors-

Jennifer: Oh. Good point.

Jeff: Right, because they see now the scalable thing. All of a sudden-

Jennifer: They see it is not just reliable on you. If you get, no offense, if you get hit by a bus, the business doesn’t go down with it.

Jeff: They reminded me of that everyday. Yeah. Exactly. In fact, investors, because all they have to do is pump the same system into either another location or just bigger in the same location, depending on the business model, they loved that and it makes it really easy. Yes. That was the second one.

The third way, that it was super beneficial to have the systems in an operations manual. We can get into it if you want but long story short, I ended up losing that first business that I had with the investors and I had to start from scratch. I didn’t have to, I wanted to. I was trying to get back into it and do it right.

I didn’t have no money. I actually was roughly $100,000 in debt the second time.

Jennifer: Oh, wow.

Jeff: Yeah. That was fun.

Jennifer: So really no, I mean, negative money.

Jeff: Right. Yeah. Everything I earned for a little while, was going to someone else. That was really the toughest part. Everything beyond that was plug-and-play and I knew that, so what I did, I couldn’t go to the individual customers …

I could have, maybe, but it was go big or go home at that point. I had to swing for the fences because I knew I had to jump immediately to having a kitchen, to having a team of chefs, to having food purveyors and some expensive equipment. What I did was, I started contacting retailers.

For example, because it was health food, we sold out of a lot of gyms and chiropractic offices, supplement shops. Yeah. Also, I was contacting online fitness gurus.

Jennifer: Okay.

Jeff: Yeah. That was a really easy one because I was just contacting them and saying, “Hey, you know, you’ve got a big brand, maybe you’ve got your own line of shirts or whatever, how would you like to have your own line of food?”

Jennifer: Hmm. Nice.

Jeff: Right. That’s flattering. I was like, “We’ll handle everything. We’ll handle the cooking obviously and the distribution. We’ll drop ship it right to the customers, so you don’t have to touch it.” Yeah. What I did, was I signed up a bunch of people that way.

Again, I used the same thing that I did before, just collecting the money from the consumer’s first. Then, I’ll put into motion. I use that money to get a kitchen, to hire chefs, but because I had the systems, it was super easy to just set up the exact same company I had before. It was all there, I just needed people and a space to fill it in.

Jennifer: Mm-hmm (affirmative). Sorry, just to step back for a second, in listening to how you were reaching out to build this customer base, now obviously, you’re working in the health food channel, but some of the stuff that you were talking about, it’s different than what food entrepreneurs normally think of. They’re normally thinking of the supermarket, or the farmer’s market, or selling direct to the consumer through their online store.

You just brought up a couple of really interesting models. Could you tell us a little bit about, I guess almost, your sales philosophy because the fact that you went out to these online fitness gurus and approached them, that also takes a little bit of chutzpah. To be willing to handle hearing no, can be hard, so I’d love to hear a little bit more about how you just decided to swing for the fences with that?

Jeff: Sure. I definitely heard a lot of no’s. That was just-

Jennifer: That’s good to hear. Not for your business, but I think that’s good for entrepreneurs to hear, that you are going to hear no.

Jeff: Absolutely, lots of. Matter of fact, there were way more no’s than yeses. I think, I read somewhere a long time ago that, you had to go through a minimum of seven no’s to get to one yes. That’s absolutely the minimum. I internalize that.

Once I started doing that, I knew I wouldn’t going to take it personal like, “Okay. I’ve got to get seven no’s out of the way to get my first yes, so let’s get to it. Let’s go get … ” I almost-

Jennifer: Let’s with get those no’s.

Jeff: Yeah. Almost like a positive like, “Yes. I can’t wait to get my seven no’s because then there’s a yes coming.” It didn’t always work like that. Sometimes I had to get through 10, 12, whatever but once I had that philosophy about that, it wasn’t a negative to me.

Also, a trick that I learned, I’m trying to remember where I learned it, it might have been from that book ‘Spin Selling,’ if it comes to me I’ll say for sure, but instead of cold-calling, I learned to cold-email people because it’s so much less invasive.

If I can find them, I’m sure I still have them, I might be able to share them, give them to you so maybe you could share in the link or something. Yeah. I used these email templates and-

Jennifer: Oh.

Jeff: Yeah. I would cold-email these people so that you get to a warm phone call. It actually eliminates some of the no’s or at least you don’t see the no’s. You’re just sending out the email. If it’s a no and you don’t ever get to a phone call, you have no idea. It doesn’t get you …

Yeah. That was a big trick that allowed me to get some of these people to say yes, I don’t want to say quicker, but again it was a system, it streamlined the process of getting people signed up.

I also use, it’s an extension for Gmail, it’s called Boomerang.

Jennifer: Okay.

Jeff: What it allowed me to do was, you can use … Actually, let me back up. First, the more important one I used, it’s called Yesware. I don’t know if you’ve ever heard of it.

Jennifer: No. I haven’t.

Jeff: It’s really neat because it does a number of things. Number one, it allows you to use personalized templates, see you can create whatever you want it to say. It allows you to personalize, you can plug-and-play. You actually have to do the research, or I did anyway, so I know I’m talking to when I reached out to retailer.

Sometimes I was selling to retail shops and co-ops and grocery stores but I would know what their market was and I would send them an email. Yesware then, allows you to … This is all automated. If they don’t respond back, you can set say within two days or seven days, then you use the Boomerang extension to send them a follow-up email with another template.

Yeah. It’s a pretty neat little system, I guess you could say, of prospecting. It makes it really simple for people to get new customers and contacts and clients.

Jennifer: It sounds like it’s a great way to stay, we’re talking a lot about systems today, it sounds like a great system to help a small sales team, it might just be one person, might just be the entrepreneur, stay on top of that sales prospecting because that’s one thing that you can mean to follow up two days later, then there’s a fire in the kitchen and the last thing you have time for is to get onto email and do that and it can really fall off your plate.

Jeff: Yes. Absolutely, because when I was doing this, it was just me. Yeah. It made it super easy, plus it’s all documented, it’s all there, you can come back when you need it but the beautiful part is, once you set up so much, it will just go. If you’re busy for a day or so or handling something that came up unexpectedly, that thing’s still working for you. It just makes it really easy to do.

Plus, most of entrepreneurs, especially people who love doing the food part, we might not particularly love the selling part.

Jennifer: Yep.

Jeff: That’s not everyone’s thing. Not everyone wants to be a salesperson. That just makes it super-duper easy. By the time I got these people on the phone, they were already primed and interested. It was just a matter of showcasing the product and service I had to offer. I wasn’t really selling. That’s definitely something I …

If you don’t love the selling part … Using those things and I’m sure there are newer apps by now but those are the ones I was using. I’d definitely recommend them.

I think you wanted to know just about the philosophy of selling at wholesale instead of retail?

Jennifer: Yeah. Just how you determined what was best for your business.

Jeff: Mostly through trial and error, as I imagine most.

Jennifer: Thank you for being so candid about that because I think it’s really good for people to hear, that we’re going to make mistakes along the way and you just got to learn from them. That’s how you’re going to succeed.

Jeff: Absolutely. Oh. I’m not any smarter than anyone. It was all trial and error. The systems even, while that sounds maybe grandeur or just amazing, it was amazing when it was in place but when I was figuring all of these things out, it was such a pain.

I was just constant stress and living in the kitchen for a while. I was literally sleeping on the floor for a long time. Hopefully, no one else is having to do that but I’m just saying it’s not always easy and … Yeah.

No. It was mostly trial under. There wasn’t anything wrong … I didn’t dislike selling it direct to consumers but I knew that, getting back in, because I was selling something that didn’t exist at the time, I had all of the systems but I didn’t literally have the food or the chefs. I was like, “I have to go big or it’s not going to work. I can’t just take a couple of orders and get this going again.”

I knew I had to sell to people who would give me access to larger numbers of consumers. I needed a lot of money come in up front.

Jennifer: Okay. Yeah.

Jeff: That’s how I made that decision. By the way, it turned out to be, for me at least, a really great model because on the one hand, not to be condescending to the consumer but I really never enjoyed customer service. I doubt I’m alone in that.

Jennifer: Yeah. It’s hard.

Jeff: That- Yeah. It’s tough. I don’t know. it’s just one of those things and it didn’t go well with me. Certainly, you don’t let chef employees on the phone. That’s never a good idea, I don’t think. By selling to the wholesalers, we were set back because you’re not talking to the customers anymore. You get your money up front. To me, it was a nice model.

Again, not that the other one’s bad but it eliminated a lot of the problems. It had challenges of its own. You’re essentially working for them now but, yeah-

Jennifer: I think one of the things this illustrated also though, his understanding what your strengths and weaknesses are and understanding what you like and don’t like. Then, working to design a business model that works with that because there are some people who absolutely thrive off of the in person interaction with consumers and love that.

Perhaps a wholesale model wouldn’t work as well for them because honestly, they would drive as much joy out of the business. Just developing a business model that’s going to make sense for you.

Jeff: That’s a great point. Yeah. Yeah, you’re right. Everyone’s different and a lot of people do love the interaction. Not that I didn’t like interaction but I certainly wasn’t good at fielding the customer service. Even once I had people in place, it was still … I don’t know.

I found it much easier, we were much more efficient at the wholesale model but some people, yeah. Some people might like direct to consumers or both. At one point, we were doing both. Also, because I had good rapport with fitness because of my background in training and nutrition.

I had good rapport with the fitness guru types. I loved interacting with them quite a bit. By the way, that was just a different business model altogether. We were selling some to the retailers like grocery stores and co-ops and whatnot, gyms but for the fitness gurus, we were just drop-shipping it for them, which the food was never on the shelf.

We were pretty much co-packing, meaning it’s like the Walmart great value brand. We created the food but put their brand on it and shipped direct to their consumers.

Jennifer: Yeah, which is a really interesting model.

Jeff: Yeah. It was an interesting model. Again, they all have challenges but that one seemed to be a really good one for me anyway.

Jennifer: Talking about your nutrition and fitness background, then also talking a lot about the food industry, it’s a great segue because I do want to have a chance to talk about your book, ‘Big Fat Food Fraud.’ Just so that listeners who will become, hopefully readers of your book, to see they understand a little bit about what your book is about.

I want to just share this quote from Oz Garcia, who’s the author of ‘Redesigning 50’ and ‘Balance.’ He wrote this after reading your book. Hopefully this will give readers a sense of what it’s about and then I can ask you a couple of questions about it.

Jeff: Okay.

Jennifer: The quote goes as follows: “In his rollicking, unabashed and sometimes shocking book, Jeff Scott Phillips offers an unprecedented inside look at how labels can be manipulated, regulators can be fooled and how consumer gatekeepers from personal trainers to nutritionalists sell high-margin “health food” … ” Here, just so everybody knows, health food is in quotes. “To an unsuspecting public that wants to lose weight.”

That’s a lot in one sentence, just to summarize the book. I think that, for food entrepreneurs, specifically listeners to this podcast are typically smaller food entrepreneurs, who are working really hard to sell products to consumers. The idea that there might be some other bigger companies out there who are doing things like manipulating labels or fooling regulators, can make it seem like the deck’s really stacked against them.

I was hoping you could share with us, a little it, in regards to some of the things that you’ve seen transpire in the food industry?

Jeff: Yeah. This is a big open question.

Jennifer: Yes.

Jeff: Where to begin? First of all, just because this is my personal experience, I would recommend to anyone, if you’re going to take on investors/partners, just do your best to find out as much as you can about them and make sure you’re on the same page. I was not with mine, it turned out.

When I got into business with people, originally we were creating food and people are losing weight. Everyone was happy and the food was great but once I partnered with people who didn’t care about that end of the business, they more cared about the scalability and the revenue.

Again, I’m not saying that’s a bad thing. Our values didn’t align and that’s where the problem came … That’s when they started nudging me to degrade ingredients when we did that. They weren’t the only ones. I don’t know how much you want to go into it but there were a lot things, the USDA the FDA. A lot of things came into play.

When we did things like degrade the ingredients, consumers read their labels and ingredients, we would sometimes then have to not list those things or label them as something else, so they would still buy the food. That’s what the investors wanted. Obviously it wasn’t what I wanted. It’s not what the consumers wanted. It turned into a mess.

If you take on investors and you love your business, your product, your service, your consumers, you have to make sure they’re in line with that.

Jennifer: And make sure they’re in line with your values.

Jeff: Yeah. Absolutely. That’s a big one. I’m not sure how much else you want to go into all of the other crazy stuff. Working with the USDA was a whole other wild animal. That was …

Jennifer: I’d love to hear little bit about that, without necessarily giving the entire book away. Just so that listeners know, I have read portions of the book and I do highly recommend it. It’s really interesting. There was a lot in there, that I’ve had 20 years in the food industry, there was a lot in there that blew me away. I definitely recommend reading it.

Tell us a little bit about working with USDA because that’s something that sometimes, folks do have questions about and I have fortunately never had to do it. I usually tell people, “God speed, good luck.”

Jeff: Yes. That’s all you can do, just “Good luck.” It’s a wild ride. One that probably people like, and when I say like I mean they’re horrified of the story from the book about, I call it the salmon story … One of the things that we made the most were these frozen dinners, like a Lean Cuisine frozen dinner and we’d been making this salmon dish …

Actually, there were a couple. There was salmon in a couple of different beef type of dishes but the salmon one in particular, the USDA stepped in after six or eight months. The USDA regulates everything in retrospect. Unlike a health department, who may be watching you in real-time, with the USDA you document everything you do and they read it when they get around to it.

If they catch something later, then they come back. Of course, that’s a horrible system because it allows a lot of companies to create two sets of books, the one they actually do and the one they want the USDA to see. Anyway, the USDA found that out, they’d come back after we’d been doing this for a while and they said, “Hey, salmon has too much … This particular meal has too much fat in it. It’s not technically a low-fat, healthy lean meal, which is what you guys sell.”

We were like, “Okay, what do we have to do? Stop selling it?” They said, “No. You just have to put a bunch of sugar into the meal.”

Jennifer: No.

Jeff: I was like, “What the Hell are you talking about, put sugar into the meal? That’s horrible. That won’t help anyone.” They said, “Well, what you do, by putting sugar in the form of breads or pastas … ” Most Lean, not Lean Cuisine specifically, but most of those frozen meals have breads and pastas.

They said, “The reason you do that is because it ups the total grams of food in a meal while keeping the fat low,” because low-fat, a lot of you may know this, but low-fat has nothing to do with how much fat, it just has to do with the ratio of fat to total grams.

They made us do that, the USDA did. They said, “All right. You’re going to put this sugar, carbs into the food,” which now all of a sudden isn’t healthy but we’re allowed to call it one. The crazy part was, the USDA does not regulate seafood, The FDA does, but whenever you’re working with one, the other won’t have anything to do with you.

Jennifer: Oh. Wow.

Jeff: It’s crazy. There’s so many gray areas where neither one of them knows which one’s supposed to regulate a certain thing. It’s nuts. So we did this now, and I asked them, “Well, we’ve got to list this on the label now that you’ve made us put this in here. People are going to hate it. What do we do?”

The USDA said, “We don’t care.” The seafood’s not under our jurisdiction, go to the FDA.” I went to the FDA and they said, “Yeah. You’re already working with the USDA, we want nothing to do with you.” I was literally left to my own devices. Neither one cared what we put on the food label. All they made us do was put sugar in the food.

Jennifer: Oh. Wow. As a consumer, that’s terrifying.

Jeff: Ah. Yeah. That’s the horrible part. The consumer has no idea. They have no way of finding that out unless someone tells them. Yes, working with the USDA, they have so many crazy rules and then have of the stuff, they don’t even regulate and vice versa if you’re working with the FDA.

Jennifer: I’m just speechless.

Jeff: I know.

Jennifer: Speechless and terrified. I’ve heard, I won’t go into it, I’ve heard some horror stories of small businesses trying to work with the USDA as well over the years and the thing I’ve often been told is that specifically for small or medium-size businesses, the USDA really isn’t set up to work with you. The USDA is set up to work with the super mass guy-

Jeff: Right.

Jennifer: The smaller folks are an anomaly to them and they’re like, “Well, we don’t really know what to do with you guys.

Jeff: Right. That’s right. Then, the FDA, they’re even less organized than the USDA, so the chances of them doing much with small businesses is just not likely to happen. They’re not going to pay much attention. Neither one’s going to pay much attention.

By the way, when I was working with the USDA, I was trying to get the FDA to come and inspect the other half of the food. The USDA inspects the chicken but the FDA inspects the egg that comes out of the chicken. We were trying to get the FDA to come to the …

“Hey. Come, just please check the place out,” and they said, “But you’re working with the USDA, so we can’t work with you.” This was just a phone call, just the first phone call and I told the woman, I was like, “How do you know I’m working with the USDA? I told you that. Until you come out here, how do you know anything I’m telling you is real?”

She was like, “Well, are you working with the USDA?” I said, “Yeah,” and she said, “Okay, then we want nothing to do with you.”

Jennifer: Oh. Wow.

Jeff: Yeah. It was bizarre. I’ve never seen anything like it.

Jennifer: How then, if, this might be one of those questions that you’re like, “I actually don’t have an answer to,” how does a small food entrepreneur who is trying to, small/medium size who is trying to play by the rules, how do they do that when the rules are seemingly constantly changing?

Apparently, you could say one thing and not necessarily mean it or have two sets of books but that’s what, theoretically, some companies out there might be doing, how does a small entrepreneur who does want to play by the rules manage to do it?

Jeff: I found it easier to do on a smaller level, partly because you are under the radar of these companies. Again, they made it harder to sell genuinely healthy foods than the opposite, which I thought they were supposed to do.

Yeah. When I was still on a smaller level, it was much easier because I could so what I knew was good for people, just stuff that I would eat. On that note, it’s much easier. You just don’t have to deal with them and then their crazy regulations but at the same time, I do think that a challenge comes into place.

I’m sure you and a lot of your listeners probably have experienced this. I kept running into the diet fad thing. Every time a new thing came along, like gluten for example, all of a sudden we had to change around a big part of what we were doing to adapt to it. Then, paleo and whatever the next one is, that’s the thing that the people want.

I had to spend a lot of time and energy, sometimes adapting to those but sometimes fighting against them. Sometimes educating the consumer like, “Hey, just because these cookies, or Twinkies, or whatever say that they’re gluten-free and paleo, don’t eat cookies and Twinkies please.”

Like, “Just chuck these. Just keep eating the way that you already were from the food that I was feeding you and you’re good.” I don’t necessarily have an answer, a good one, but that’s the challenge that when I had investors, I didn’t have that luxury I guess. They’re like, “No, no. If everyone wants gluten-free cookies and Twinkies, that’s what we’re giving them.”

When I was on a smaller scale, I didn’t have to play into those little silly games. I was able to sell good food that I knew wouldn’t hurt people.

Jennifer: Yeah, that you could stay true to. Again, going back to that idea, if you can stay true to your values and even if you start up your company because you want to sell cupcakes and cakes just so that somebody can have on indulgence, then don’t be afraid to stay true to, “This is why I did it, so people can just indulge every so often and really have something good and gooey and chocolatey and delicious.

Jeff: Absolutely. There’s nothing wrong with that. The crappy part was when we were selling that kind of stuff to people but pretending that it wasn’t that stuff. No. That’s a great thing and absolutely, I don’t think that’s a problem at all. No. When we were selling stuff that had hidden sugar and people didn’t realize it, that was a problem.

No. I think staying true to it and having transparency with the consumer, is so huge. Sometimes, just letting them know, “Hey, this is what you’re getting,” or “Hey, even better, what do you want?” and let them tell you. I think that’s-

Jennifer: I’m sure it’s, as you obviously know and I’m sure every listener has run into with consumers, either as a consumer themself or selling to consumers, this whole issue of transparency amongst consumers, is becoming such a hot button issue in the food industry right now.

Jeff: Yeah.

Jennifer: Customers who feel like the wool has been pulled over their eyes, they will drop you like a hot potato, but also, then they’ll get on social media and they’ll tell everybody about it. The food industry, for a long time, has gotten away with a lot of stuff that I think consumers are wising up to.

A lot of what is talked about in your book. Like I said, there was a lot in there that really surprised me. As both a consumer and a food industry person, it left me speechless. It is something that the average consumer is starting to figure out and is not happy about.

Jeff: Right. Yeah. I think so. I think it was just maybe a month ago, what was it, the report came out that, I think it was the New York Times broke the story about the sugar industry just got busted after all of this time, I think since the 50’s, when they paid this Harvard scientist who found that sugar was the leading cause of heart disease, they paid him to say that it was fat instead of sugar.

Jennifer: Mm-hmm (affirmative). I remember reading that and I will include a link to that, just in case anybody’s missed it. I’ll include a link in the transcript to that article as well because it was a really interesting one.

Jeff: It was. That just shows, this is how deep it goes. They’ll do whatever they can to hide it and manipulate … That’s the problem. The big guys are creating, which we play a role in this, but the big food companies are creating a lot of what consumers think is education and it’s really just advertising or just hiding someone else’s information.

They literally paid scientists to put out false information and people started avoiding fat because of it and eating a bunch of sugary stuff. It’s horrible.

Jennifer: Again, I want to remind everyone, the book is called ‘Big Fat Food Fraud.’ I’ll include a link to the book as well, in the transcript on the small food business website, a really interesting read Just if nothing else, because we all eat food it is a really interesting read but certainly coming at it from the standpoint of a food entrepreneur as well.

Jeff, I just want to thank you. I really appreciate both the time and energy you put into the book but I also appreciate you taking the time to talk to us today.

As you’ve been talking, I’ve been thinking about the systems that I need to put in place, in my business. Thank you for that and a reminder that it’s something that I need to be actively working on and I am forcing myself to make the time to do but really appreciate your time and just wish you the best of luck with the new book. I’m really excited to have this out there for consumers to read.

Jeff: Yeah. Thank you. Thank you for having me. I’m a big fan of the show, so it was nice to be able to come on here and every time I listen to it, I learn something new as well. It’s been a pleasure.

Jennifer: Oh. Thank you. I really appreciate it and I hope we have a chance to talk to again soon.

Jeff: All right. Thank you very much.

Jennifer: Thanks.

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