May 28, 2019

Growing A Franchisable Food Business

Like many of you listening, Eric Escobar didn’t start out in the food industry. He’s been working in fitness for 9 years and is the CEO to Camp Xcel which has four gyms located in Los Angeles and San Diego. He started to notice a problem though wherein his gym customers couldn’t reach their fitness goals because they didn’t have the time to cook healthy meals. Xcellent Nutrition was his answer to that problem. Excellent Nutrition is a Mexican-infused meal-prep restaurant designed for weight loss where customers can order ahead and pick up ready-to-heat-and-eat healthy meals. Xcellent Nutrition is growing quickly and is looking to franchise soon.

Jennifer: Eric, thanks so much for joining us today.

Eric: Hey, how’s it going? Thank you.

Jennifer: So, just to give everybody a little bit of a background, can you tell us a little bit about yourself and how you ended up starting your company Excellent Nutrition? What did you see as that need? What was that, aha moment?

Eric: Absolutely. So the aha moment came from me myself that I was struggling eating healthy food so Excellent Nutrition is basically a healthy meal prep business right, And we have healthy meals delivered or you can pick them up at our physical location. One day I was going home from, so I own 3 gyms right, and I was going home from one of these gyms and I was frustrated like, man I have nothing to eat, so I called by wife and like I told you I have an eighteen month old baby, so she’s just very time consumed with that, correct?

Jennifer: Yes.

Eric: I’m sure you know how that feels. So I called her and she’s like you know what I don’t have anything so I’m like man it’s around 10 pm, there’s nothing healthy to eat, I could stop by McDonald’s, which I did do a lot in Lanton but coming from the fitness side of things it’s not the best thing right, and so basically out of frustration I was like you know what I called my sister that same night and I asked her hey are you interested in cooking meals for me. She’s like yeah I’ll do it and at the time my sister was still working but she was like I’m up for it, I’ll do it, I’ll cook for you so that’s basically how it started just from my own problem.

Jennifer: Interesting. So how did you figure out that your problem would translate into a business model?

Eric: Okay so I did know from our clients that we had at a few of our gyms that they were struggling with the same issue right, like it’s not so much that they don’t know what to eat or everyone knows how to eat healthy correct?

Jennifer: Mm-hmm (affirmative)
Eric: For the most part but it’s just the time that goes into it like weighing out your foods, making sure everything’s all natural and all of the time going to the restaurant, going to a supermarket to get your food. Nowadays you just don’t have that time, you know what I mean?

Jennifer: Yep.

Eric: So it became complicated for a lot of our clients at these gyms so it’s like okay like sweet. So I could see that was a problem for me and I’m just like okay if time’s an issue for me I know there’s a lot of busy people that just don’t have the time to cook healthy meals but they want to eat healthy meals. So that’s how it just became, so we tried that out for myself and then a few of my clients started hey, whose cooking for you. So I told them my sister’s cooking for me so their like oh that’s so awesome can you ask her if she could cook for me too, and sure enough like Brant’s family, Kline’s they all started doing it so we started out of our kitchen in our house. It wasn’t like we have this big old operation we didn’t. When we started out in our kitchen it took 4 burners so it was nothing huge and before you know it 2 to 3 months later we had to buy 2 other fridges just to have enough fridge room in our house.

Jennifer: Oh wow.

Eric: Yeah so.

Jennifer: Was it just word of mouth at that point?

Eric: At that point yeah it was word of mouth and then I said okay if Instagram and Facebook worked for our gyms maybe Instagram and Facebook could work for this new prep food business right, and I think that what differentiated us from a lot of people was that one, I’m mexican so everything is based on the mexican flavor. It’s healthy but it’s mexican style meal prep.

Jennifer: Yep.

Eric: And then two, we didn’t do the whole buy it per meal, I’m sending you the result, here’s what, you want to lose weight yeah it’s healthy food but here’s the result as well. I think that was crucial for us not really selling it per meal or selling it for the result and I think so it would be a weekly service not a per meal basis.

Jennifer: So tell us, your business model, so obviously you didn’t start by building out the kitchen, but you’ve grown the business to the point that you now have a physical location where not only you produce the food and deliver from but also so that people can come pick up. It’s almost like a retail store front a little bit in that regard. How long did it take you to get from that home kitchen to deciding okay we are gonna build this out because that’s not inexpensive endeavor, and what type of business planning did you do along the way to feel confident with that.

Eric: Got it, so you know since I’ve been little I’ve always believed in just trusting myself so I said when I was young I was going to marry a south american girl and sure enough I’m married to a south American girl [inaudible 00:05:11] and I own my own business. Fair enough I own my own businesses.

So it was kind of something that I just knew had to happen. I don’t know if that makes sense to you, I don’t know how to explain that, I knew it had to happen and it took me around thirteen months because I didn’t know anything about kitchens, I didn’t know anything about construction and I didn’t do it myself, but I didn’t know the whole process in getting a permit from the health department, from the city. Opening up gyms is so much easier than opening up a kitchen, straight up. Its so much easier than opening up a restaurant, so there was a lot of things like a learning curve maybe I could have cut it down from thirteen months a lot less but it was just a learning curve on my end that I just didn’t know how to do. You know what I mean?

Jennifer: You know I think not only do I know what you mean I am imagining that a lot of people who are listening are also nodding their heads and saying yeah you know there are a lot of people who come into the food business from another career and it is its its own little world full of twists and turns that would not happen in any other industry.

Eric: Yeah, it’s crazy so I was just like you know what we were outside with my wife and I was like you know what we do enjoy the rollercoaster and just finish, pass through it and make sure that our clients are so happy with our service that we were doing still at home right so it took us around thirteen months and it took quite a bit of money to get to that point because it was in a pre-existing kitchen or we decided.

Jennifer: Oh so you totally built it out.

Eric: Yeah, we totally built it out. It used to be an ice cream franchise so the ice cream franchise went out but they just had a cooler. That’s actually what told me okay this is a good spot, at that time that’s what I said that’s a great spot because they already had the cooler and the freezer in there. So like I’m going to save tons of cash but I forgot about the hood, about the permits, I forgot about the plants. I didn’t even forget, I just didn’t know.

Jennifer: So how have you, I want to step back because you mentioned you had said okay you know you figured that since you’d used social media successfully with your gyms that you thought you could also use that to help grow this business. So you told us that initially you first started not even marketing, initially the first customers were word of mouth but once you decided to start marketing to customers what did you use and what did you find to be successful or not successful as you worked to grow your customer base.

Eric: Got it, okay so in our gyms we do a lot of email marketing that’s kind of something that I’ve always done probably for the past 8 or 9 years. So that works as well with any food business like if you market for specials, you market for, like you send out emails, collecting emails from prospects and then you’re sending out emails in regards to hey here’s our specials or here’s our new flavor coming out right. People want new stuff so I always knew that true for the gym and it’s true probably across most industries. That’s why you get bombarded by emails. People say they don’t work but why would you get bombarded by emails if they didn’t work.

Jennifer: Mm-hmm (affirmative)

Eric: So I think that’s one, and two I have to pretty much let go of Facebook and go hard on Instagram because Facebook for food it’s hard to paint, for us it was hard to paint actually like here’s the food you’re going to eat, here’s how it tastes, here’s what it looks like. Instagram’s more of that platform where people want to see stuff. They want to see those visuals so that’s where we started doing it and then we started from there on Instagram we were sending them link and bio right and we were collecting them send them specials. Then from their we created a site where people could purchase online and pick up in store which has worked amazing for us.

Jennifer: Oh nice. You capture them when they’re most interested.

Eric: Yeah so we capture them and it’s basically like ecommerce but at the same time they pick up at the store. Now they have the option of picking up at store or getting shipped out which either way works for us.

Jennifer: That’s excellent.
Eric: Yeah so it’s been a crazy experience in learning because it’s so far different from the industry I was previously in.

Jennifer: So let’s talk about. I’m going to ask you about an interesting question. So learning versus team so it’s like how much of this have you dedicated yourself to saying okay I am going to figure this out and do it and how much of this are you looking to, whether it’s marketing or consider all the aspects of running the business, how much are you looking and saying okay I’m actually find somebody else to do this for me or to help me do this because I just can’t do everything. So where do you find that balance if you find that balance?

Eric: You know I feel for the most part I try to learn as much as I possibly can about the subject until it’s expertise where I just don’t know how to do it, just so I can have the knowledge of knowing what it is so when I outsource it I know if the person is actually doing it or not doing it.

Jennifer: Mm-hmm (affirmative)

Eric: Right, and I feel like the mistake a lot of people do is they, for instance, they outsource their marketing and I’m like yes you can, I’m not saying you shouldn’t, you should, but then you don’t know if your marketing person is doing their job or not or are they just saying oh well you have this many impressions. Impressions to sell does not matter, it’s how many sales are you getting~ from that marketing that matters.

Jennifer: Mm-hmm (affirmative)

Eric: Right? So I truly feel that knowing it then outsourcing it and that’s what literally helps me to actually have this business surrounding, like I’m probably there 5 hours a week so I’m not there a lot but it’s just knowing that the systems are working that we have in place.

Jennifer: You know it’s funny you use that word systems because I hear that come up again and again as I talk to entrepreneurs who are running successful businesses which is this idea of putting these processes, putting these systems in place so that you can manage all the aspects of your business versus kind of a more creative approach and saying okay well I’ll try this and then I’ll try that but figuring out what systems are going to work and then also going back and tweaking them later because your customer base is going to change and how they interact with say social media will change so it’s interesting also to hear you talk about that systems processes.

Eric: Yeah, so I think a plus b should be c right?

Jennifer: Mm-hmm (affirmative)

Eric: If at one point b stops being c you gotta go back and check what’s going on with a and b you know.

Jennifer: Yeah.

Eric: It’s like that’s true in every business, for example the gyms or for this kitchen that we’ve built up. It has to equalize and if it doesn’t okay it’s maybe not the employee’s fault, it may be the systems have just changed that we have to go back and look to make sure. Times change so you know technology is changing like crazy so we have to go back to make sure okay is it the technology, is it the people, what is it. So you have to some times go back and double check on that.

Jennifer: So your business is still relatively, I mean I use the word relatively in kind of air quotes here, I mean it’s still relatively new, so what are your plans as you look to the future about where it is you want to take this business next.

Eric: So the next thing we’re looking at is, so I didn’t mention this to you but we’re actually in a few GMC stores so we do kind of become sort of pulse selling enough to GMC locations. So they buy them in stores right.

Jennifer: Yep.

Eric: I’m sure they are known across the US and parts of the world, so we’re in some of those stores but our whole deal is franchising this exact model that we have right now because it’s inexpensive to run one, we save on labor and food costs, and two you don’t need a big huge space to run it so you could be in a retail storefront and not need a huge space to run it. You need a nice kitchen, somewhere that people can pick up and you’re good to go. So that’s our next thing, is actually getting this to more major cities across the US.

Jennifer: So then can you explain to listeners how, you know I think when we hear franchising we often think of it from the standpoint of the franchisee or the person buying into the franchise but you as the founder, the company founder, how does that work what do you, on a high level, what type of things do you have to have in place before you can start franchising your business to other people.

Eric: One, make sure you have a good process, a good model that actually works right, and two, especially in the food industry just what I seen from our cooks, they all have a different style of cooking right, so you have to try to eliminate that especially if you’re in a franchise as much as possible. So what I mean by that, let’s say you have a special sauce instead of telling the cook hey create this recipe right with the special sauce you’d probably send that sauce to a co-packer and have them make it so every time they need that sauce it’s already packing, they’re ready to go, so there’s no differentiation in flavor, right.

Jennifer: Mm-hmm (affirmative)

Eric: So that’s what I feel that’s one thing right, having your recipe intact and making sure they work and then two other things you might need make sure it has self support, marketing support which I feel a lot of entrepreneurs, not even in the restaurant space, I’ve talked to a lot of restaurant owners lately and they don’t worry about marketing but I feel like your business lives and dies by marketing itself and business.

Jennifer: Yep.

Eric: It doesn’t matter which one it is it lives and dies by sales so of course your food has to be great, but if you’re not actively going out and trying to find customers, like everybody’s on the internet, you have to be there now.

Jennifer: You know I’ll agree with you one hundred percent, I’ve gone down for me, I’m here in Seattle, I have gone down to the fancy food show in San Francisco for a number of years and I have to say I have seen so many phenomenal products that taste amazing not make it long term and so many what I would, you know, sort of mediocre in comparison products that have made it because they’re marketing is like rock solid and they put the time and the money into marketing and it’s like unfortunately at some point there comes this point it doesn’t matter how great your product is. You’ve got to get people to hear about it and to try it and to test it if you want to keep your business going.

Eric: Absolutely, so I have this guy next door to me, it’s a pho place, basically, he’s worried about his food so much and I get it it’s the artist and all the restaurant owners, like everybody’s an artist when they are creating their food right.

Jennifer: Yes.

Eric: Essentially, and it’s like you have to have that fine balance between being an artist and actually being, I know it sounds bad, but I know most people don’t want to hear this, but a salesman. You have to sell your product or else people won’t buy it and if people don’t buy your product you will go out of business.

Jennifer: Yeah. If people don’t buy your product you can’t be the artist.

Eric: Yep. So, that’s my big take and I know this because in the fitness world people love oh I’m the best trainer I know about all this stuff and working out. Yes, I get it but if you can’t sell yourself you cannot grow your business so the same thing applies across all spaces and in the, I feel in the, the 2 most competitive worlds I feel are the restaurant business and the fitness personal trainer business.

Jennifer: Yeah as I think about how much competition is in both of them you’re right it’s intense.

Eric: So you have to market more than loud spender, the person next to you, or else they will go to them.

Jennifer: So how does it work with franchising. You get your business ready and then how do you let people know that you’re looking to franchise in other cities. I’m just curious how that process works.

Eric: Okay, so you see, same thing, I truly feel you always have to, like you were asking me, oh do you just figure it out or do you hire people. Something like this that I don’t know so much of I hire somebody who has eight hundred franchise location already.

Jennifer: Mmmmmm

Eric: So I’m buying speed.

Jennifer: Yep.

Eric: By hiring the guy because he already knows what he’s done.

Jennifer: Buying speed, that’s an excellent phrase.

Eric: Yeah, so I’m literally buying speed because he’s done it already so why am I gonna actually try to reinvent it myself when I can just pay this guy, he already did it and he can teach me quickly how to do it. He can give me his contacts, he can give me his franchise lawyers, he can give me all the things he did to create that so I was like that’s the route I’m going to go for this. So as far as that, literally I bought speed for that.

Jennifer: God I love that phrase and the ideas that yes there are some things you can figure out instagram at least to a certain level but there’s other things that are much bigger to tackle and you do have to do that, the cost analysis of your time, and so you said you can buy speed which is you will spend less time figuring it out and you know hopefully make less mistakes along the way by having an expert to help you.

Eric: Absolutely and I feel as far as franchising, you have to go where people are at right, you have to go where people are at so if people are on social media right now essentially that’s where people are going to buy or learn about their franchise, does that make sense. The same way they would learn about your restaurant, the same way they would learn about a gym or anything else. That’s where people are hanging out or on google, but just say hey put up a sign hey I’m franchising now, nobody’s really going to pay attention to you anymore because everybody’s attention is on this little thing [inaudible 00:19:50] where my wallet is right now. It’s probably like an arm’s distance from anybody listening to us right now right.

Jennifer: Yep.

Eric: So that’s where we have to go where the people are at. So if people are on their phone that’s where we have to go to get the franchise, where people are on their phone that’s where you have to go to get your customers as well.

Jennifer: You know you’ve given us lots of great advice tonight. I am curious if there’s, I’m still like all excited about buying speed. I’m gonna start using that, that’s gonna go into my lexicon now, but I’m curious about if you’ve had other food entrepreneurs approach you asking for advice as they get started what your biggest piece of advice is to them.

Eric: So I’ve had quite a few people come up to me because they’re just so in shock how it grew so quickly and it grew out restaurant entrepreneur your food’s great or if you want to be one probably odds are your food’s awesome, you know.

Jennifer: Yep.

Eric: Even this guy he owns a pizza shop and I’m helping him right now, so you know this pizza shop he’s had it for ten years so he’s so in love with the process of the dough, the pizza lot, which is great right, but you have to learn how to sell that to the customers right, so stop being so much of the artist and learn how to market and sell it.

Jennifer: You know as you were talking I was thinking about you had mentioned so in love with the process of making pizza and yet everything you are saying is like but you have to be as equally in love with the process of selling and marketing the business to have it be a business and not just have it be a passion.

Eric: One hundred percent. If it’s a passion you are going for like totally, I totally agree, just stick like that but if you’re trying to create a business that automates your life so you can spend more time with your family and friends. I have my eighteen month old boy, you have your little girl, so it’s kinda like we have to find ways to make it work so I don’t have to be there all the time.

Jennifer: Yeah. Yeah. Absolutely.

Eric: So that’s exactly what I told him, I’m like you have to make it work so you don’t have to be there all the time and you automate this so you can have, actually enjoy time with your family, not run eighteen hour days at your restaurant.

Jennifer: Oh I totally agree. Totally agree. Well Eric thank you so much.

Eric: Hey, not a problem and you know it’s amazing to me on this podcast and for anybody who wants to seriously grow their business, to start seeing it as a model that other people can replicate right and even if you’re not in a franchise, which is cool, but that way you can get yourself out of the business when you want to and then you can just plug yourself right back in when you do want to be back in the business.

Jennifer: That’s great advice too. You know sometimes we do become so closely tied to the business that if you do need to take a vacation, a mental health day, whatever it is, that you stepping away there is nobody else you can step in and do it without you.

Eric: Yeah totally. Totally agree on that so, yeah thank you so much for having me.

Jennifer: Really appreciate it and I’m excited, keep us updated, I’m excited to hear how your journey goes.

Eric: K, thank you so much and my website if anybody’s interested it’s called Xcellent Nutrition so it’s like excellent without the e in the front and then and basically what I have there is literally how we grew our meal preparations.

Jennifer: And as a reminder again to our listeners we’ll put a link not only to the website on the transcript that will accompany this podcast but we’ll also have a word by word transcript so if you’d prefer to sit down and read it or you want to go back and read certain portions again that will all be on smallfoodbiz website as well. So Eric thank you so much.

Eric: Thank you, take care.

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