Lost in the Supermarket

A Company That Offers Fresh Healthier Foods Can Be A Success

December 02, 2020 SupermarketGuru
Lost in the Supermarket
A Company That Offers Fresh Healthier Foods Can Be A Success
Show Notes Transcript

Mike Wystrach is co-founder and CEO of Freshly, a weekly subscription service delivering healthy and fully prepared meals directly to customers’ doorsteps.

•Freshly is a weekly subscription service delivering fresh, chef-cooked meals that can be heated and served in 3 minutes directly to customers' doors. All that is needed is a microwave, fork and plate to get a satisfying lunch or dinner on the table. 

•Between August 2019 and summer 2020 the company grew from delivering 600,000 weekly meals in the U.S. to well over 1 million

•In April 2020, the company launched Freshly for Business

•In October 2020 the company was acquired by Nestle for up to $1.5 billion – Nestle had already been an investor 

•Customers can get meals as cheap as $8.49 per meal

Phil:

Welcome to in the supermarket today with me is Mike Wisetrack , the co-founder and CEO of freshly, a weekly subscription service delivery, healthy and fully prepared meals directly to customers, doors, born and raised on a ranch in Southern Arizona. Mike grew up working in his family's restaurant, where you develop a keen taste for the food industry from a very young age, starting at 10 years old, he learned the ins and outs of the food world by lending his hand to all aspects of running the family restaurant from raising fresh ingredients themselves to serving meals to guests over 30 years later, Mike's parents still own and operate that restaurant to this day. And Mike is nowhere to be found after he graduated from the university of Arizona. Mike moved to New York city to work in investment banking, but he then came back to our food industry and his family restaurant several years later, with a stronger entrepreneurial focus and experience, he eventually shifted to opening his own restaurant while also pursuing new real estate and technology opportunities. It was through this process of managing multiple ventures that Mike realized something needed to change his own personal eating habits. It was clear that a diet lacking in nutrition was unsustainable. So we turn to a physician and close family friend help guide him towards a healthier and more balanced lifestyle with a focus on fresh. This new way of eating revitalized Mike's quality of life and let him to truly grasp the value of balance and nutrition and set out to make it easier for more people to access healthy foods. So what started out as a solution for his own personal problem has transformed into a new way of life for thousands of others. Mike co-founded freshly in 2012, blending his knowledge of the food industry with a passion for making healthy, delicious, and nutritious food, more accessible to all of us without having to worry about the work or the costs are involved. Firstly, it was headquartered in New York city and delivers more than 1 million meals per week to customers throughout the nation. So Mike, welcome to Lost in the Supermarket.

Mike:

Uh , thank you for having me on a great intro is you may , you may , my early days in the restaurant scene seem exciting now is actually just dish-washing and busing tables. But my , as many people who started the food industry started ,

Phil:

Hey , uh , my first job was at McDonald's. Uh , my second job was at Howard Johnson's the now defunct chain , um, busing tables and it was on the garden state Parkway in New Jersey. Uh , you know, so yeah , uh, that's where we all came from. Uh, but, but you , uh, besides , uh, creating this business that helps people eat. And so on from a business standpoint, I guess your investment banking , um, really came in handy , uh , Nestle bought you for a , what $1.5 billion a couple years ago?

Mike:

Yeah, just recently actually they just, we just closed the invested a couple of years ago. Uh , and then just recently acquired a large majority of the company and a 1.5 billion , um, great outcome. We're really excited to be part of the Nestle brand and , and really to help both Mark Snyder the current CEO, as well as , uh, Steve Presley, the USCO kind of transform and think about how can Nestle , uh , really change the way Nestle does business. But , um, yeah, my, my background was unique, as you said , uh, in that, you know, I had a lot of experiences that kind of tied together and put me in the perfect position to create freshly. Um, you know, first and foremost, as you said, is I've been around food from every angle of my life, from, you know, raising cattle on a ranch to , uh, my parents bought our first restaurant, as you said, when I was a month old and growing up in the restaurant industry and having parents who were entrepreneurs and risk takers, right? So my parents outside of owning restaurants have owned gas stations, hotels, a little of everything. So, you know, I kind of was bred in that entrepreneurial risk-taking mindset , uh, went to wall street and really learned kind of the ins and outs of building businesses that scale , um, really thinking through complex kind of financing and different strategies there and, and was able to come back to Arizona and , and do a bunch of different , uh, projects. Some of them were around real estate, which didn't seem to be connected to what we do now, but a big component of what we do now is actually really involved in real estate. And we have big facilities and we're always building new facilities and stuff like that. So again, kind of a , a sorted history that kinda tied together to put us in a perfect position to create freshly, which is , uh , I don't think he , you can only connect these dots looking backwards. You never would have , uh, strategically put all of the diverse positions I was in as a strategy for building this business, but they all came in helpful.

Phil:

I've got to ask you , um, the, the number one question , um, and the number one question is why are you , um , growing and doing well and selling for, you know, part of the business for 1.5 billion to two the Nestle's of the world, while other ones such as blue apron and other meal kits, if you would , um, have failed .

Mike:

Yes . I think, I think the easiest way, rather than me to toad how great presi is, is to really look at macro trends that have been happening in food in the U S for the last 50, 60, 70 years. Right? So we look, we come out of post-World war II . Um, and what happened during world war two is for the first time ever bomb left to go to the workforce at huge scale cause cause dad with off fighting in the war. And when we came back home, that was the new norm. And we seen since, since 1950 , uh, the amount of households that are dual income families have increased almost every single year. Right. And what that means. And if you look at a corresponding chart, food for home consumption has dropped corresponding with that, right? And the reality is , is, as we know, is as parents and individuals, it's , it's hard to work a nine to five , um , and come home and have to cook and do all the things that are associated with cooking, which is dishes and all , all the stopping and prep and stuff. And that truly was a full-time job. And so what we saw as these macro trends that have really led into convenience, right? So we see the first kind of things that pop up post world war two is fast food, right? So fast food is kind of first innovation, same time, what else is happening? TV dinner , right? So all these things are happening because mom and dad need more convenience to be the family . Right now, what we realize is, and we didn't realize back then was the importance of healthy food and how we were substituting convenience for health. Right? And we saw that we've seen the dramatic impact of that over the last 20, 30 years with obesity rates, spiking, you know, 60% of Americans overweight and really what the opportunity was freshly created, I think is unique is how can you get all of the things that you want in food in one kind of convenient package , which is really convenience , health affordability, and great tastes , right? And our key to our success is that the product is in demand. I think some of the challenges the meal kit space has had is that consumers just are cooking less, right? They have been cooking less for a long time. Now, I think we all want to be cooks . We all love the idea of cooking. We all fantasize about being a next step. But what we realize is cooking is a skill. Those of you who've grown up in the restaurant, know that it actually is a skill that you have to own and , and, and you have to practice just like anything else is, you know, I, I play a lot of golf. I would love to be a tiger woods or Phil Mickelson, but I know it's like, it's going to take a lot of practice and cookie it's the same thing. So I think what we saw in the meal kit space was, you know, this idea and this dream that you were going to be a great chef and you're going to cook these great meals. And all you needed was this package that shows up, it didn't quite work that way. And the big challenge was, was time and convenience. Right? And I think people really liked the idea. I just think it's hard to do time and money . And so we came out at a different approach. And as you started off, as I wasn't trying to build a company, I was trying to scratch my own itch, which is I want to eat healthy. And I have the challenges that many Americans have is I didn't want to cook. I didn't want to do cleaning. I didn't really know what healthy was. I was getting so much information. I just wanted someone to do it for me. And I think the benefit of freshly is that it's your own personal chef and nutritionist bundled into a box shipped right to your house. So it's been a big demand business. And we think is one that is going to be kind of the next evolution as we think about convenience and fast kind of food. Uh, and we think about the convergence of health and food , uh, which has been a trend that's been going whole foods certainly kicked this off in the seventies, but I think that is going to be the big thing we're going to lean into over the next 10, 15 years, as we look at the really, you know, crisises that we're going to have in the healthcare system really related to what we're eating. Right . And that's, that's kind of a crazy thing is that, you know , the biggest threat to existence is as you know , humans and longevity in our life, it's actually what we put in our mouth and what we consume every day, which is kind of crazy to think about is that we're our own worst enemy when it comes to living longer healthier lives.

Phil:

Absolutely. Um, so let's talk about the space. Um, your meals come just ready to heat up. They cost about $8 and 50 cents a meal. Um, why, why should I buy from you? Why should I buy freshly products instead of going into a supermarket and buying a freshly prepared dinner that all I have to do is bring home in microwave.

Mike:

So, so first of all, I think, you know, grocery stores are an option just like going into , uh , electronic stores or going into a bookstore or any of those things, they're their options. And they generally do a good job. Uh, what we tend to do, which is a lot different than what they do is one week, give you more variety on one focus area, which is prepared meals. So we're going to give you more variety around fresh prepared meals too . We're going to make a lot easier for you. So you're not going to have to leave your house to get our meals. Uh , we're going to have teams that are dedicated 24 seven to customer service to make sure that those meals we're using a ton of data and machine learning and information to make our meals better, but also to personally recommend meals for you. So again, I think there's, there's some general analogies is, you know , uh, why would you go to Amazon when you can go into , uh , you know, a Kmart or a Macy's , uh, and , and certainly those, those, you can do that. And that's, that's a choice. Um, our customers generally come to us because they want convenience and they want someone who's really focused and specialized on one thing, which is prepared meals. And as you know, is, you'll go into a grocery store and you'll get fresh meals in two hours down as bleach and toilet paper. Right. Uh, and, and to be honest, they're going to make more than that bleach and toilet paper than they are on those prepared meals, right? It's it tends to be , uh , a hard margin business. So , uh, our customers tend to get a better experience end to end with us from taste health, all these things. And again, our , our degree is we're very transparent. So you get to know Presley, right? And the reality is, is well Kroger's or whole foods, or any of these guys may be buying prepared meals. You don't know who they're buying. Those you'll know the quality of the ingredients, the core offering. Um, and I think that's, that's why our customers come to us is really that vertically integrated touchpoint , where you get to know the brand, the brand values behind that product that you're buying. And you don't have to deal with going and parking in a grocery store and get in line and self-checking yourself out and having to bring up our meal 15 times to figure it out on the self-checkout scanner.

Phil:

Well, Mike you've , you've certainly , um, created a fabulous business. Co-created fabulous business. Congratulations. And thank you for joining us today on Loston the supermarket.

Mike:

Yeah. Thank you. Appreciate it.