Businesses That Succeed Pivot – Rebuilding A Farm Business Model Overnight (FSFS229)

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In today’s episode of Farm Small Farm Smart

The pandemic brought about several restaurant closures, and that does not spell well for the farmers supplying them.  But like many things in life, it’s the tough times that bring out the best in people.  

Today, we’re talking to farmer Adam Pollack of Closed Loop Farms in Chicago, IL.  In March Adam had to deal with a loss of the majority of his restaurant customer base overnight due to COVID-19.  Instead of trying to wait for restaurants to come back online, Adam and his team set out to rebuild their whole business model from the ground up.  They shifted from selling only to restaurants to selling directly to consumers.  With a shift in their customer base, they also had to shift the products they were selling.  Closed Loop Farms began aggregating products from other local producers and shifting their microgreen production to meet new demand.  Overall the changes weren’t easy, but it has worked out so far and put their business in a stronger position going forward.

Adam is a great example of a business owner that adapted and pivoted when his back was up against the wall showing that regardless of how hard things might seem, there’s always a way out.  

 

Today’s Guest – Adam Pollack 

Adam is a microgreen farmer and the owner of Closed Loop Farms. His farm was servicing nearly one hundred restaurants in the Chicago area until the pandemic came. Now, he and his team have adapted by going online. 

Closed Loop Farms – Website | Shopify | Facebook | Instagram 

 

In this episode of Farm Small, Farm Smart

  • The early pivot to online selling (01:30) 
  • Foresight on restaurant closure and taking action (03:45) 
  • A 180° turn from purely restaurant sales to direct-to-consumer sales (06:25) 
  • Taking care of your employees (09:30) 
  • How Adam rapidly built a new customer base (13:40) 
  • Aggregating for other vendors (16:35) 
  • Approaching pricing and profit margins (19:30) 
  • Moving products and ala carte ordering (23:15) 
  • Sweetening deals for subscriptions (26:00) 
  • Collaborating with chefs and restaurants (27:10) 
  • Weathering the situation and making the best out of it (30:50) 
  • Deciding which microgreens to produce (36:30) 
  • Diversifying the customer base (41:30) 
  • What Adam wants in an eCommerce platform (44:00)
  • The biggest challenge of direct to consumer delivery (51:30) 
  • Scalability & Microgreens (58:50) 

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Diego: [00:00:00] How would you react if you were running a farm and almost all of your 100 customers were restaurants and they suddenly shut down overnight. That's a problem that my guest had to deal with in reality. And that's what we're talking about today. Coming up, welcome to farm small farm smart host Diego D-I-E-G-O.

In today's episode of the podcast, we're taking the effects of the pandemic on a business to the extreme, because today I'm talking to farmer and owner of Closed Loop Farms in Chicago, Adam Pollock. If we go back early in the year, Adam was running a microgreen business that was selling to restaurants throughout the Chicago area.

Almost a hundred of them. Then the pandemic came. And suddenly all those restaurants stopped buying. So what was a really big income for the farm suddenly went to zero. How would you react if that happened to your farm? What would you do? All of your customers gone in an instant, all the product that you were raising was really designed for one specific customer base.

What would you do? Let's join the conversation and find out what Adam did.

When you first made the decision to move your farm’s sales online. What was the impetus behind that?

Adam: [00:01:37] Actually the decision to move our farm sales online came before like our pivot to direct to consumer. It actually came last December, when we actually move things online. But we moved things online actually for our chefs.

And the initial reasoning behind moving to an online store was basically to decrease the administrative burden behind receiving orders and invoicing. Cause we math, we're always doing the math in terms of how many hours a week are we spending on XYZ activities and the process of receiving orders, filing them accordingly and like placing invoices or making invoices was easily taking 10 hours a week conservatively.

Diego: [00:02:24] So in a world that wasn't the world we live in now where restaurants are just nonexistent for the most part, how did chefs mind that switch with A-OK moving to online ordering?

Adam: [00:02:36] We had a few customers that we were still doing the text or email selling, and just logging it internally. It's always hard to get anyone to switch their behavior. So we definitely had some that were done through orders in other ways, but especially we were, we're pretty much still doing pretty active sales.

We would go out about once a week and try to sample out some new customers. Especially with new customers, it was like a really great way to get people started up, get them to set up an account. And then with existing customers, we actually did better than we anticipated in terms of getting our chefs to set up accounts.

Diego: [00:03:19] You were selling to, you were selling to quite a few cause I visited your farm last year in Chicago. And I don't remember the exact number, but it was a pretty high number of restaurants that you were selling to. If we go back to the beginning of the year, how many restaurants were you selling to at the time?

Adam: [00:03:35] It changed pretty rapidly. I'm in the good thing. We did have some foresight here before the restaurants totally closed. The interesting thing was like the week before the restaurants were officially closed, we didn't see any change in business, which was like crazy. But during that week, we internally started to think, Hey, restaurants are probably going to be closed at some point in the near future.

Even if they're not going to be closed, they're going to be seeing some hard times with people not wanting to go out. So we anticipated it like the week before restaurants closed. I think it was like Wednesday or something where we just came in and were like, all right, like what are the things that we're working on?

Let's totally push that aside and come up with a new to do list and everything to just to be able to service people in their homes. So we got a little bit of a jump start on it. I think compared to most where we anticipate painted it five days before all the restaurants closed.

So basically when the restaurant is closed, our revenue went to zero. And we have a payroll of, we have eight full time and four part time employees. That was pretty scary, but our credit restaurant's closed on Sunday. And then we did our first home deliveries on Tuesday.

So we were able to like, it was a pretty crazy five days for us in terms of getting an online store set up, reaching out to different vendors because that was another thing we were considering, should we just sell our product or should we also aggregate? But that was a big part, reaching out to other vendors, figuring out prices, figuring out how are we going to keep track of inventory?

How are we going to pack boxes? How are we going to place orders? How are we going to pay our vendors? how are we going to track what we owe. and figuring out how these things really fast set up a store, market, all of these things were like, were, were things that had to be done on the fly.

Diego: [00:05:33] Yeah, it almost reminds me of if you watch top chef or something, when they do restaurant Wars where they have three days to, set up and get a functioning restaurant you had far more's, it's like here five days, totally change your business model in the 180 degree, different direction. And it's real. It's got to work.

Adam: [00:05:53] TV show. Yup. Yup. And I like, literally, it's exactly what I've been saying. It feels like one of those reality shows where it's like, all right, start a business and you have three days. But then on top of that, you also have the fear factor thing where also it's happening during a pandemic, and you have to figure out all these new sanitation protocols and, and like, how are things going to be affected by a shutdown? We weren't sure before that was announced or are we going to be allowed to do deliveries, like there were just a lot of unsafe.

Diego: [00:06:24] prior to this over a hundred restaurants you are selling to you are a hundred percent restaurant sales. You had no direct to consumer

Adam: [00:06:31] 100% no direct to consumer.

And it's one of those things where we want to do direct to consumer. For some time we did farmer's markets, a couple of years ago. We put that on hold for a little bit. Because the restaurants was just working better, but we'd want it to go direct to consumer w we've always wanted to get our product out to more people.

I think specifically, we specialize in microgreens. We do, we do have an outdoor farm as well, where we do, we're doing mostly like edible flowers for restaurants, but also herbs and a little bit of produce. but we've always wanted to be able to deliver food to people in their homes.

And we were just I think either way, we're alright, maybe farmer's markets isn't the best way for us to do that. Consumer trends, anyways, people are really used to buying things online now. And people are trying to do subscriptions for things. So either way, we're going in a direction of, let's try to do subscriptions.

Let's try to do deliveries to probably to drop points is what we were considering at first, we're actually reaching out to some of our restaurants to see if they could be pickup points. So that's something like we'll hope to do in the future, but right now we figure, people are trying to stay in their homes.

But yeah, I've always been somewhat uneasy with the idea of like our whole business is based on, a niche crop to a single market. but at the same time it was working really well. So it's kinda like the way that we were almost looking at it is we have this formula down.

It's a lot easier for us to pick up one new restaurant, two new restaurants, five new restaurants compared to starting this whole other part of the business. So it's been something we were like slowly working on, but that we weren't really, I guess we weren't really moving at the speed we are now, obviously.

But I think it's a good lesson in diversity, I think, it's easy to just be like, all right, we have a thing that works. Let's push the thing that works and keep pushing the thing that works. But I guess, obviously in retrospect and in general, it's good to zoom out and make sure that you don't have all your eggs in one basket.

Diego: [00:08:33] Yeah, exactly. It works until it doesn't work and here it broke due to society.

Adam: [00:08:41] It's an interesting opportunity for us to be able to haul all restaurant orders and focus on this other entity. On the one hand it's super stressful because it puts this enormous pressure on us to, to become profitable fast.

But on the other hand, it's almost we can give this whole different business manager. Sure. Our a hundred percent attention right now. She's a really interesting opportunity that we've been afforded. And, we'll see if we get this, the whole loan forgiveness thing that might take got some of the stress and pressure of needing to meet payroll, immediately, which we're not doing right now.

But yeah, it's definitely been interesting to be able to just Go all in on this new business strategy and hopefully, restaurants come back and now we have a really dynamic business that has, restaurant deliveries and home deliveries and distribution of other people's products.

Diego: [00:09:30] As a manager and owner of a business, that's employing that many people. How do you maintain some hope? And I'll say loyalty and. Respect for your employees. Obviously you have to do what you have to do as a business owner, but that's a relatively small business. Does everybody view it is in a way it's a family.

Hey, we're all in this together.

Adam: [00:09:57] Yeah. when this started happening, that was the first thing is what is going to happen with our team? How are we going to keep people working? How are we gonna make sure that everyone's okay through this?

It would have been really easy from a business standpoint, just be like, alright, we're just going to close. And then reopen when my restaurants are open, but in terms of like our team, that was like, to me, that's always, my biggest responsibility is, to our staff. They've supported us as a business for so long.

I think a lot of the time people think about like businesses in turn, like business owners or businesses as being, like they're providing jobs for people and they're doing the service, but it's really a two way service. And obviously, in my opinion, the employee is just as valuable.

It's the businesses, the employee. So that, that was always like from as soon as this happened, that was like the first thing that I want to think about. And we had, we luckily, we have, several weeks of capital in the bank. So I kinda knew Hey, I'd rather try to make this thing work and burn through what's in the bank than just and just not try it.

Diego: [00:11:04] the volume of product that you're moving now, your product, not stuff you're aggregating in, but volume of product leading your farm. To direct to consumer versus direct to restaurants. What's that ratio?

Adam: [00:11:19] Now it's low. It's crazy. Even just like walking through the firemen, seeing what's on the shelves compared to what used to be on the shelves.

Let me do a quick equation. And I had, I would say probably 30%.

Diego: [00:11:35] So 30%, you could look at that in one hand and say, that's a lot less. On the other hand, you could say that's 30% more direct to consumer than you had a month ago. So you've you switch that on and that's grown pretty quick.

Now here's a question that I think is relevant to a lot of people listening to this. Cause you had no direct to consumer presence. You weren't at farmer's markets, you weren't selling CSA. How did you rapidly get a bunch of customers on the direct to consumer side, when you are only selling to chefs?

Adam: [00:12:09] First off, we had a pretty good social media presence. So that was really helpful. And then after that, it's just like brainstorming in terms of alright, I'm just gonna, I start with a spreadsheet. And I started just like writing down the names of everyone that I knew that would help support us right now.

And that would be interested in our product. And I drafted up an email and I sent it to everyone and told them, just send it all their friends, they might be interested in. So that was like the first thing is, was like, Hey, who do we know who like, because I've had a lot of people ask me, can we start getting deliveries?

And I was always like, ah, we don't really have the infrastructure built out in the meantime. Like I could just bring you some greens when we have them or something. So just like starting from a really small circle and trying to get the people that we know to promote it to their friends.

That was a big one. And then social media was a good one as well. And then we realized we needed to get press because that first week, I don't know, half of our orders were from people that we knew. So we realized we needed to get press. We drafted up a press release, which I have never done before.

But I looked it up on Google and found a template. One of the managers of the building that we're a tenant in which called The Plant, helps with this it's made do a little bit more, or like reaching out to media and stuff. So I was lucky to have her support and editing it.

But, yeah, we were really lucky and we got a couple outlets to pick it up. So we got like ABC, Chicago and WTTW, to pick up the story. And, and that drove a lot of traffic to our site, which by the way, not to mention, we didn't even have a website. So we also put together a website on the fly and the website's been really good.

And the cool thing about the website is that it gives you, information on where traffic is coming from. And we received a lot of traffic from media. So that was definitely big. As soon as it ran, I started getting like phone calls from people, just if we deliver to their, neighborhood.

So it definitely was a huge help. And we've luckily we've been seeing a lot of repeat customers. We've been seeing a lot of people that are telling us, they found out about us through a friend. And then maybe most importantly of all is the fact that we're aggregating for these other businesses.

So they've been promoting with us as well. And that was a big factor in how we're deciding, when we were making that choice of, should we just sell microgreens? And when the outdoor farm is up our outdoor crops, or should we be selling, a whole range of things that was a consideration was we don't really have that many people.

We don't have any direct to consumer presence like you were saying, but like some of the people that we could bring on might have a better direct to consumer presence. And if we bring on 10, 15, 20 vendors, our collective marketing is growing by 10, 15, 20 times.

Diego: [00:15:00] When you went to those other vendors, what was the pitch to them?

Adam: [00:15:03] Let's see. Basically the first thing that we were really thinking also was like, Hey, we're not the only vendors that are losing, that are, that their market is totally in question right now. So there's probably other vendors that are really trying to get their product out that might be producing, at a high volume, but not able to move it right now.

so basically the pitch was like, Hey, this is the service that we're doing. We want to help like move your product. We could be another source of, we could be another, distributor on your behalf. And it wasn't really a hard pitch to make, on our end it was more for us. So we started more, I think it wasn't so hard to get vendors on.

It was just harder for us to organize ourselves to be like, alright, what are the information we need? Okay. We need. we need a description of the products. We need photos of their products, description of their farm or their business. We need a host, wholesale and retail pricing and then also figuring out like how many people products can we accommodate?

We don't want, that was something we've been conservative with in terms of we don't want to be in over our heads and have too many things to keep track of. Which I think we've done a good job at, yeah, but, actually to be honest, it's almost been the other way around where at this point, we're at a point where that vendors are reaching out to us, asking us if they could join the platform.

And we're actually like, we're like trying as best as we can to get back to everyone because we're so busy with all the other things that are going on that, that we've had almost like a backlog of people trying to get onto our platform, which is a good position to be in. And I, and it's another list of people that that we have responsibility for in a sense.

So now aside from my employees, also like looking out for vendors, I'm trying to move our vendors products as well, and trying to make sure that we can be helping them.

Diego: [00:16:50] Yeah. It's an awesome story and how that's evolved. And I think when you go to a vendor, you could look at it one way and say, look, I need to make money on this.

So I need a big margin. Or as big a margin as I can get, but then you can also look at it and say, okay, there's some other capital here. We can get their audience. We can get them to promote. That's beneficial to us. We can get more product in our store, which helps attract more customers, which maybe helps us move more of our product.

So we could give up some margin, but we do have to cover our costs. How did you approach how much you needed to make on a product when you decided to take them on?

Adam: [00:17:29] That's such a good question. And to be honest, we're still figuring it out. We're not entirely sure we want to make as good of a margin so we can try to cover our costs but that's, those are numbers that we're still running, in terms of okay, basically, how long has it taken to pack everything? It takes this amount of time to pack a we've done this, the orders. So therefore our time per orders, this amount, how many items are in each box. So therefore our item, therefore our rough, like time per item packed is how much, what does that cost us?

And it goes to that, once you factor that into our margin, are we still profitable on that? because ultimately, if we buy mushrooms, for $6 a pound and we sell them for $8 a pound and we have to repackage them once they come in and maybe it takes us 15 minutes to package these pound, once you start crunching those numbers, it's Oh, we might have a problem here.

We're not like we don't have exact sound that it's going off of, I guess a little bit of intuition. Intuition and kind of factoring in these things and trying to come up with some loose numbers on them. So yeah, we always figure that, when we have a better idea of what our margin is per item, when we factor those things in.

We might find that there might be certain items that don't make sense for us. And we might have to make a choice between seeing if we could get them to lower their price, increasing our sales price or not offering that product. I guess admittedly, we don't have it totally figured out, but we have the concept and we'll definitely be reanalyzing, like reanalyzing, which are the products that are working for us and which one on pretty soon.

And also what sells, but I think you make a great overall, you make a great overall point of the fact that they're bringing value other than just the margin that we make on them. a big part of it for us, we just like realizing, Hey, if we're delivering to people's door, we have to charge a delivery fee.

We've been doing a $10 flat delivery fee and it was I know for myself as a consumer, if I'm paying $10 delivery, I need to buy at least $50 a product personally. If I'm buying something and it's like less than $50, then I probably won't want to pay the $10 delivery. So that was a big part of it was thinking, okay.

Maybe not everyone wants to pay $50 a week on microgreens. But if we could bring more products on here, it's gonna make the overall process more appealing. It's going to split the delivery cost and it might bring people to buy microgreens that otherwise wouldn't have come just from micro grains, but since they're here shopping, I might as well try it.

Diego: [00:20:04] And you could always probably throw them into some sort of weekly bundle of stuff that, you just want to move.

Adam: [00:20:10] Yeah. And that's a good point too, with the subscriptions. It's not something we don't have the up and running yet, but we definitely want to. It's one of our like big ticket, do, as soon as possible items is setting up a subscription offer.

Just in terms of having that security of like weekly orders. But other than that, I haven't even mentioned this. The fact that people are entirely ordering ala carte right now, which because I think it's like a really nice service to offer to people, especially when we're offering so many different products that people can buy exactly what they want.

It definitely makes it more complicated on our end, but I think we've done a nice job of like keeping up with the complexity of it.

Diego: [00:20:48] The ala carte thing I think is huge today. Literally I was online trying to find somebody here in San Diego that does what you do and has an ala carte service where you could order vegetables. And I couldn't find anybody that did that. It was all you had to go in a box and they show what's in the weekly box. And my, like my kids, aren't going to eat that stuff. And I just wanted to get certain things and I just wish there would have, cause I was ready just to say, I can't go to the grocery store.

Instacart is basically booked for every store around here. These types of things. If I could have gotten 10 pounds of apples from somebody, like I would have popped on them, but I couldn't, I had to get four apples and a bunch of other stuff. So I like the ala carte, but I also liked the subscription model.

I think it does give you that. I think a blend works because you get that consistency, but then you also don't discourage away the person that doesn't want your choice for them.

Adam: [00:21:48] What I think we're going to move on with the subscription, right now is I think we're probably going to do like a microgreen subscription, as the base subscription, so you got three varieties every week.

I think we'll probably be what we start with and there's just it's just like a migraine subscription, but a nice feature to that is that you could add whatever you want top of it. so I hope that works. I think for people that like really love our product, it'll be a really nice feature. And I think ultimately there's a lot of people that want to order every week.

And there are people that are ordering every week, but I think we want to make it as easy as possible for people to order every week. And if they have to go to the site every single week, that's not as easy as setting a subscription. And it'll also hopefully make our plantings a little bit more predictable so that we don't, we're not short and we don't have to waste,

Diego: [00:22:37] Do you think the subscription conveniences enough to lure people in to a subscription? Or do you think you also need to have a price incentive? So if you get the subscription, you get these three microgreens, you're getting them at 80% of what they would be. Allah cart. What are your thoughts on that?

Adam: [00:22:55] I think we do have to sweeten the deal here. I do think we will and I think, aside from the three microgreens we’re also making salad dressing too, actually. I guess right now we're working with one of our chefs to make, to make salad dressing, or he's making salad dressing and we're bottling it. So I think the subscription will probably be something along the lines of okay, you pay for this three microgreens and you get like the free dressing or something or whatever it is.

I agree with you on that. There should be a price incentive to try to push people towards. that recurring order because for us, it will just be so helpful. I think, to have that security of every single week, we know that we're getting these customers, but I think it's worth giving a price incentive too.

Diego: [00:23:40] You've dealt with a lot of chefs sell a new a hundred restaurants a week when you were doing that. And I've thought, okay, with all these restaurants shut down with, to basically their takeout, if they can even still do that. Is there something in going to chefs and asking them to create some sort of product that they normally wouldn't do like a salad dressing.

If it's a Mexican restaurants, maybe they can do tortillas and tortilla, chips and salsa. Maybe they can bake bread where it would have been off their radar before. But now it's, Hey, you got a commercial kitchen is some revenue or additional revenue better than none. Is that an idea that might fly.

Adam: [00:24:20] Yeah, that's something that, so basically when this whole thing happened, I sent out like a blast email to all of our shafts and, I just told them like, basically, the first thing is Hey, we're, we stand in solidarity with you in this like really difficult time.

We have a bunch of greens. If anyone wants like greens for their staff, we're sitting on a bunch of product and we'd love to make a donation. But then on top of that, it was like, Hey, but this is also the service we're offering. We're going to be doing home delivery and we want to do some prepared items.

Does anyone want to collaborate on some prepared items? so that's where the salad dressing thing came about, was from that. And we're also even we sell to an Indian restaurant that we're talking to right now about collaborating and having them. Do like a masala base, that we could freeze.

So it's like a, like a tikka masala and then maybe even having them come up with a recipe for how they could use it, some of the other things on our site with their sauce, and just this cross promotion that hopefully really benefits both sides. And I think that's honestly really one of the nice things that has come out of all this just yeah.

From, with the different vendors and farms that we're collaborating with. It's really nice to be able to plug into a larger community, right now of like small food producers and farmers, and then also engage with our chefs and in a new way. And, I think everyone is appreciative too.

Be in a situation where we can be collaborating and support one another. So I think, first off we've done our, and in addition to that, we're also doing some of our own prepared foods. We have access to a commercial kitchen as well, so like we made a, we bought squash and frozen tomatoes from another local farm.

And so we made a soup with that, that we've been offering. But we will, I want to do a lot of those kind of, provided by no things. And I think it's cool. It's cool for us to have, to be able to like, have the name recognition of some of the restaurants that we're working with on our site and have it in like an exclusive way, Oh, you love this restaurant.

Now you can, order the sauce on like your favorite dish, and have it in your home and you can only get that through us. That's pretty cool. And then to the restaurants, it's like another way that they could be bringing in revenue when it's, when it's really difficult. And just, I think all cross promotions in terms of marketing are our win-win.

So we're promoting our restaurants and, bringing a wider range of audience to our restaurants and the same with them to us.

Diego: [00:26:49] The situation out there is so hard for a lot of businesses. And I am very empathetic with that. I get that, but it's amazing also the amount of opportunity that has came out of this for businesses to reinvent themselves, to change themselves, to evolve.

And some of this might not even be possible in, if you go back three months and you wanted that same. Restaurant to make that sauce that they were famous for. And they're like, no, we're not going to do that. And maybe now doing it, that becomes sticky and you carry it out on the back end and you've weathered the storm with them, stood in solidary, using your words through all those and that partnership doers.

But so many people, this is this is such a hard time, but I look around and I just say my God. Yes. But. But look at all the potential opportunity out there because so many people are doing nothing that if you are aggressive, inactive, and you want to make stuff happen, like people are now more willing to talk and make stuff happen than they ever would be.

Adam: [00:27:57] Yeah. I definitely, I agree with you. I think for a lot of people out there might not be the same flexibility depending on circumstance. And depending on industry and not, and all of that, but absolutely. I think, you know what it's like, it's what is it like, adaptability is really what, I guess what drives, what, like evolution, in the sense of those that are able to adapt to difficult circumstances or they're the ones that survive, yeah. I agree.

And not to sound like, it's like a weird line where you don't want to, yeah. You don't want to sound like, Oh, this terrible thing is like an opportunity or whatever, but it's more like, Hey, like this is a terrible situation, how do we make the best of it? And how do we see the potential in this and how do we use this to our advantage however we can?

And I think a lot of it is almost like a willingness to like, switch, just fight really hard. Like I think ultimately, like I see myself as like a fighter, of like the things that, I believe in a fighter on behalf of like our employees and stuff. And so I think just like having that mindset of do or die and like a, maybe that's like a little overly stated, but, I guess there's also like a downside of that with just like putting so much on your shoulders and feeling such a burden and stuff, but that's like a part of my personality where I, I think, I feel a lot of responsibility and I think, I have an instinct to want to fight.

Diego: [00:29:31] I'm the same way. That's, I was telling you before the show, that's why I'm doing this podcast series. Like I didn't have any of this planned two weeks ago. And then in one night I contacted about five people. You are one of them and said, Hey, would you like to come on and talk about what you're doing?

Because, yeah. I'm trying to do my part to help, but there is that part of me, that's just fight on live on. There's a lot of opportunity in a good way, like there's exploitive opportunity, but then there's taking advantage of opportunity to lift yourself along with others. And I think that's what, you're trying to do there.

Adam: [00:30:07] Yeah. fine. Yeah. Finding opportunity in difficult times as I guess you have to be creative and you have to fight. Yeah, but at the same time, I also want to recognize that no matter how creative are, no matter how hard you fight that, like they're, for a lot of people, there are things that are out of your control.

And that, depending on your circumstance, that might not be possible. And even for us, I know I'm gonna fight to try to make it work, but at the end of the day, we actually went when this was all going down, like at first, when it was just like, Oh my when it was just all happening so fast and we're under so much pressure and had to get everything done so quickly.

And it was like a Saturday and I was on the phone with JR, our operations manager. And he was yo slow down. He's just he literally had just told me, like just take some breaths, you can't at a certain point, like at a certain point you can't stop Coronavirus, Which was just like a funny moment or whatever, and, and it was yeah, no, I feel you, but look, I'm going to do everything that I can. I'm going to like work like an animal.

Diego: [00:31:06] I agree. Some people, for some situations, there are things beyond your control. Actually. There's a fine line between. Just sitting there and taking it and saying, Hey, this is what the situation is. I can't do anything. And just going out there and saying, yeah, this is the situation I'm going to fight. There's no guarantees. It might not work, but at least I'll do what I can. And that's what you guys have done.

And I like that message production. When you're selling to a hundred chefs, you have all sorts of nice crops. Like distercia micro greens. That probably aren't going to fly to a home consumer. How do you decide? Okay. Here's what's in our array of microgreens that we can produce. Now we're selling to home consumers.

This is what we're going to make, so it can be attractive to them.

Adam: [00:31:55] Yeah, that's a great question. And it was something that we immediately like, alright, right now, today we grow 30 or not today, two weeks ago, we were growing 30 varieties of microgreens and we're like, all right, let's cut 25 of them, but we also were creative in the sense that we had so much already growing. and We wanted to harvest everything that we had. So we did keep certain things. And one of the, one of the varieties that we put on, we call it like Michelin mix, because there's certain varieties that just would not make sense to sell to home consumers.

Like in my opinion, at least, micro Sharewell and shiso and micro Bazell and, those kinds of things that are like, they just take a long time to grow and they don't, maybe we're talking two and a half ounces out of a tray in some instances. And to be honest, some of them weren't even profitable selling them chefs at a very high price, but we put them because chefs wanted them.

But what we did was we started, we offered like a Michelin blend, which was, still at a discount compared to what we would need to get if we wanted to continue to grow it. But it at least gave us like a premium, an end to move some of the things that we had on hand. But, I think the main varieties that we're going to continue to grow are, like your, probably the ones you'd expect in terms of like Sunfire, radish.

We're also doing broccoli and kale. And we're going to experiment with a few, we might do like a few trays a week of like a more premium variety and maybe just sell it by the pint container, like a little, a deli container, and see maybe there is a demand for it. The surprisingly, the Michelin mix, which we thought, are people really gonna pay for this? It's actually, it's actually selling. We might want to do some like special features. And I think especially what I was even touching on before, we want to start to even put like recipes and stuff on our site and maybe get chefs to even contribute recipes.

So maybe we'll highlight a specific recipe and maybe grow like a special. A special, a special micro, garlic chives, or whatever it is for that recipe and then offer, a small amount to go with it. We might've been want to do some sort of like a recipe package or something where, they buy the microgreen, the vegetable, the sauce and the meat or whatever it is, to do the recipe of the week.

We haven't gotten that. That's maybe a few weeks out, in terms of like where we are right now, but it's the kind of things that we're thinking about. And another thing in terms of like planning is also been the outdoor farm, which is a more difficult one to plan for because the crops take longer.

So we need to be more predictive in terms of when a restaurant's going to come back because our, our primary crop that we've been doing outside is edible flowers. And, we're people stuck in their homes, are they really going to be looking for edible flowers right now?

Especially if they might be taking a pay cut, is that really what they want versus like things like tennis NATO's and cucumbers and lettuce. So we're definitely changed hanging out our plantings to do more, more things that might apply that people are going to use a staples of their diet, but we're also, right now the stay at home order is until May.

I think it's unlikely, but I think it's possible that rounds might reopen in May. And if they are, we want to be able to service, our customers have supported us for the last three years. So we still want to plant some of these things. And maybe we could find a way to sell them.

Like some of them might be good for like cut flowers and maybe we could sell them. There's cut flowers to people. We're even considering doing like some potted plants that people might want to just keep under windowsill or to transplant into their garden. We just have to think about how we ship those things and not having soil spill all over the vegetables and stuff, so we're really, we're really considering a lot of different things here.

Diego: [00:35:43] The situation being as fluid and fast changing as it is, it's hard to plan ahead, but let's say. May one, this is over already. Opened back up and you had the opportunity to go back to all 100. Would you go back into restaurants as hard as you were in the past and try and continue this direct to consumer.

In other words, do both.

Adam: [00:36:12] Yes, a hundred percent do both. And I think, that touches on what I was saying before, in terms of diversity, I think, we need to learn, we need to learn our lesson from this. Hey, we were really dependent on a single market and it might not be COVID-19, but maybe, who knows what it is, their recession, in the event of a recession.

People might go to restaurants lots, but we'll go to restaurants last and restaurants on top of that might be less likely to spend money on things like microgreens and edible flowers. They might, they might order less of those things. so yeah, we a hundred percent intend to continue this service once restaurants reopen.

So yeah, we'll definitely have to reanalyze if it’s profitable. If it's not, we won't be able to do it. But I think additionally, it's going to make things more efficient, like even from a delivery standpoint, because one of the things that we encountered previously was, sometimes we'd have to turn restaurants down because they don't make sense on our delivery route, or maybe we're keeping some restaurants on, but we realize, Hey, like this isn't really worth it unless we build up more customers and it.

It gives us a better opportunity. maybe we have, two restaurants, Tom, it takes 45 minutes to drive to or something, but maybe we can try to market direct to consumer in that neighborhood. And now maybe it makes more sense. I think being like a self-distributed company. We're always thinking about, how do we hit like a critical mass of deliveries per area? And that's when you start getting more efficient. So I think in many ways it'll be helpful like even diversity set aside.

Diego: [00:37:51] Yeah. And with all this scramble, you went from no online presence, no website to. Website online store very quickly for your eCommerce platform, you started with align and your experience with them has been okay.

There've been some things that you haven't loved about them. There's been some bumps along the road. When you look at an eCommerce platform, having used local line, having done some research into others. For this distribution model, what are some of the features you really want in a plan?

Adam: [00:38:23] There’s a lot of things to consider especially with doing home delivery. So first off we want to think about someone that allows to have a weekly subscription, because some don't, we want to think about. The fact that he's to accommodate, we do two delivery days. So we need to think about, we service different areas and different delivery days.

So we need something that's adaptable to be that when someone makes a username and they say where their address is that the site knows that Hey, only offer delivery on the day that it goes to this area. So it needs to have that kind of adaptability, ideally has some route optimization because if we're delivering to homes, we have to hit, we have quite a lot of homes.

We don't really want to be plugging in everyone's addresses manually on Google and coming up with our own route, which is gonna bet that's a whole other thing, too. The restaurants, we had most of our restaurants order on a weekly basis. So we really had a route down. Whereas the home consumers, there's going to be more fluctuation and delivery routes.

So there's the route optimization side of it. There's inventory tracking and making sure that everything tracks the inventory correctly and data trust in real time. There's probably more factors that aren’t coming to mind necessarily.

But even usability of the platform and having a good user experience, that it's easy to set up an account, it's easy to place orders, that things move quick and they seem modern and sleek. On our end, it's really important for us to have a store that syncs with QuickBooks, just like in terms of S where all of our books are tapped, o that's a big one.

Something that I think all of them probably take Square, so that's probably a simple one or some way to just receive credit card payment. And then we also want some that generates like nice reports for us as well. We want to be able to go to the store. Especially when we're doing microgreens, but we're also doing all these sorts of products.

We want to see. Number one, Hey, the more products that we add, how does that affect microgreen sales? If we have 10 products on what percentage of microgreen, what percentage of sales is micro greens? And if we have 40 products on what percentage of sales is microgreens and which products are selling how much. And also, because that's the way we track, how we pay out our vendors is by doing the report every week to see what's sold.

So definitely like generating these kinds of reports. And having an, like an ease of generating these reports, is a big factor for us.

Diego: [00:40:58] This is the challenge of farms migrating online right now is it's ironically a little bit early in the days of the online farm store for as much as some of these platforms have been around the interfaces seem okay.

I've talked to enough people now to know that every platform has got its pros and its cons, you thought Local Line was. Okay, not great. It worked, but it had its constraints. I've talked to people who use Shopify and they think that works, but it has its constraints. Cause it's not really set up for farms.

So on one hand you have the farm stores that tend not to have the backing of the big eCommerce platforms, but then you have the big eCommerce platforms that aren't necessarily meant for farms selling produce on them. So it's, where does this all shake out? And obviously everything's evolving and changing quickly, and it's just where this ends up.

We don't know, but I like your thought process in terms of here's what we're looking for. And it's up to anybody who's thinking about doing this to really look into all of these platforms really well, and probably talk to some other users who are using them first before diving in.

Adam: [00:42:11] Yeah, absolutely. I think ultimately out of this crisis, it's fundamentally going to change the way that, at farms sell their products to their customers. I really think that in terms of looking at long-term effects, on the small farm industry, so to speak is everyone is setting up stores now.

And I think that the customer, I think that it's a good move. I think that, that customers are gonna like it and I think that farmers are gonna like it. I think, there's a lot of, there's a lot of pros and cons to being at farmer's markets. And I think, one of the things. One of the concepts of doing farmer's markets.

Obviously it's just a huge amount of work in terms of setting up your stand and breaking down, standing there for the entire market, even though maybe the peak part of the market is only two hours. you have a rainy day and have a bad day of sales and now there's this other opportunity to sell to people directly at their door.

And no matter what the weather's that you have sales and, and you know that you already have the orders in by the time you're doing your delivery, so you don't have to stand around or hire someone else to stand around. You're just delivering stuff that's already been sold.

So I think this is going to have some like long-term effects on the way that farm set of product a hundred

Diego: [00:43:30] percent agree. And it's almost one of those things. I think we'll look back at and say, why did farms not all have online stores?

Adam: [00:43:39] Exactly. And sometimes, a necessity breeds innovation, obviously, and even there was the case with us, we wanted to do direct to consumer so long and we've been talking about it for so long and, and now we just started doing it.

And I think, I think that's also a good lesson perhaps with other things. Cause there's so many things we want to do. And like sometimes I feel hesitant to go for certain things, because of all the other things that we're busy with, but I think it's a good lesson in just kind of going for it, with all the things that we want to do with our business.

And then, if it doesn't work, then we scale it back or something. But now that we've been implementing this, it's Whoa, I feel like we probably should have started doing this kind of thing a while ago. We've been talking about it.

Diego: [00:44:24] What's been the biggest challenge of direct to consumer delivery.

Adam: [00:44:30] We're still in early days. But, earlier this week we had an issue or we had an issue on our Tuesday deliveries, which basically we got some media and we got some media over the last weekend and. We basically had doubled our sales from the previous week. So Tuesday was like the first day that we had a significantly increased amount of orders.

And we also had a little bit more products than we had the week before. And, we ended up like miss-packing, a few, a couple boxes. And so it was just, “Ooh, we got to make this right.” But, wow we're gonna lose any margin and go and try it, going and driving to these people's houses to go and bring them the thing that we messed up on.

So that was a big one. So today we had our next delivery, which was the same volume. And this time we made this, assembly line sort of thing where like we have people we have everyone's box, We have everyone's box with a label. And then each person stands at a station and they are responsible for certain things.

We have one person that stands at like the dry goods station and then one person that stands out like the produce and then one person that does the micro greens and then one at the mushrooms, for example. So, it's one person puts in the box and they pass along the box on a cart and then they passed it to the next person.

And so we implemented like an important step, which was at the end of it. To have one person that checks the final box and make sure it's all right, and I think that made it—that seemed to have made a big difference. So that was one it's just correcting people's orders could be tricky.

And then the other one that kind of goes along with it is figuring out how many neighborhoods we want to service. We want to service as many people as we possibly can. We're also nervous to stretch ourselves too thin because, especially dealing with people that are placing smaller orders on restaurants is that it's hard.

It's hard when we have only one, one order in a neighborhood or whatever it is, so figuring out the parameters of that and then how we communicate that to our customers. We're basically telling people that you service all of Chicago and then we also do surrounding suburbs.

Sometimes we'll get someone in a suburb that's a bit further and there's no one else there. And, it's kind of maybe we should take them on because if we take them on, then maybe we can try to build up more people there. And we don't want to turn anyone away. On the other hand, sometimes it's too much.

We've also had some difficulty with some certain deliveries. We had a situation where one of our drivers got stuck in a parking lot on Tuesday. It's just a little different shot, delivering to people in their homes. It's just like a new, it's a new logistical thing.

And each person's home has a little different thing in terms of, where do you park? Do you leave things with, a door person? Do you leave things in front of a gate? There's different instructions. They're just the little things on top of it. There's, there's like a pickup and delivery option and sometimes people accidentally selected pickup when they really want delivery.

So it's just you're dealing with a lot of individuals and, it's nice. On the one hand, we're really equipped to handle that because selling to chefs, like I think has really prepared us well because chefs are the most demanding customers and they're the most—they need the thing that they need and they need it now.

And they really demand consistency. They want to always have everything available. They're probably some of the higher maintenance customers. So, from going from chefs, it's actually really equipped us well to deal with consumers and really provide just like a real, the high level of customer support.

When an issue comes up, that I feel like we can really give a lot of individual attention. But, yeah, I definitely anticipate it. Maybe being an issue, especially once you start thinking about, hey, if we're setting up subscription services, we're going to have people that go out of town, they forgot to cancel their order, and now they want refunds or whatever it is.

I'm definitely just anticipating a lot more overhead in terms of what's required, with like special instructions for different customers.

Diego: [00:48:41] At some point, you're in Chicago, so the big population around there where you have potentially multiple delivery days per week, this Amazon--type model.

Adam: [00:48:56] Yeah. I'm somewhat hesitant to comparison to Amazon, But, the reality of the situation, it is that Amazon and these web companies and these big software companies have affected consumer behavior. So we do have to, Hey, we can offer a service.

That's in line with what people expect from that, but that's still a local, small business, that is maintaining a certain ethical standard. And that is operating in a way that has ethical labor practices that, that we’re being stewards environmentally. But still providing that kind of flexibility and customer support and ease of placing orders that you can get from bigger companies.

Diego: [00:49:38] So ever evolving and everything that you're doing at Closed Loop Farms in Chicago, I think is amazing. I think the kind of rapid way that you've pivoted is really inspiring.

And I really want to thank you for coming on a Friday night short notice, you obviously have a ton of stuff going on. You have a lot of employees relying on you. So thank you for coming on and sharing everything you're doing. I really appreciate it, Adam.

Adam: [00:50:04] Yeah. I'm super happy to contribute, I've been listening to your content for some time, I've gotten great benefit from a lot of, like the podcast and the videos that you've created. So I'm super happy to be able to pay it forward in whatever small way I can to hopefully try to create content that's of use to others.

And, sorry, just on another note, just because I realized I didn't even mention this, but like another thing that, like just one last little benefit too, is the scalability factor as well because, the reality of the situation is actually now that I'm thinking about is actually doing the sales to restaurants has gotten a little bit harder as we've progressed because we've already hit like our biggest targets.

Doing a niche product to restaurants and a certain type of restaurant is by definition limiting, whereas doing direct to consumer in a city like Chicago, it gives us ability to scale. Like we never could have previously.

Diego: [00:51:07] if you're going to scale like that, does that mean that you're going to have to aggregate more? Because there's only so many microgreens that you can put through this funnel.

Adam: [00:51:19] I don't know. I'm not sure about that. I'm a pretty big believer. I'm a pretty big believer in the idea of bringing microgreens to keep people in their homes. I think as someone that's, a lot of it is growing, we've chosen microgreens and a lot of ways, because it's something that like, that worked for us as a farm financially.

And it made sense. Over the last three years, since we really focused on microgreens, myself and our whole team has really integrated microgreens as just like a staple. A staple crop in our diets. And I think, I would love to see more people, eating microgreens, they're super nutritious.

They're really convenient as well. So that's even just like thinking about the way that we market our product is, it's different also in terms of the selling points. But I think microgreens makes sense for people in their homes.

I think the combination of like nutritious year-round availability and just like the ease of how they can integrate it into their diets, by just adding it to whatever they're already cooking. I think it could really be something that there could be a really big market for, and I think by aggregating with other producers, I think that we might be able to get our product to a wider base of people that otherwise weren't looking for microgreens.

Diego: [00:52:47] Yeah. That's a great point. I'm with you.

And I think that makes a lot of sense the way you're putting it. It's one of those things where. I mean at the end of this, ironically, and in a tough way, like it's not easy now. Like this could grow your business. Exponentially, because say you never had hit the Corona COVID-19 hiccup here, you'd still be selling to chefs.

Maybe you never would have done this because when you run a business, it's like, I'm always, you're always busy doing something now here's this hard, forced pause. We got to change. Now we're changing to go back to how we were. We can always flip that switch back on when we can.

But now it's it is hard, but you can come out with this really a separate new business.

Adam: [00:53:40] Yeah. Yeah, absolutely. That's the hope.

Diego: [00:53:43] Oh, I love the idea of it. And again, just inspiring. So keep on keeping on.

Adam: [00:53:48] Yeah. Thanks, Diego. I appreciate that.

Diego: [00:53:53] There you have it. Adam Pollock of closed loop farms in Chicago. This is one of the more amazing stories that I think I've ever heard on the podcast for the sheer amount of obstacle that Adam and his staff had to overcome. It is remarkable. All your customers gone in an instant, your business model changed in an instant, no website to online store in an instant, multiple paychecks.

Needed to be solved in an instant yet through ingenuity, through adaptation, through pivoting, they figured out a way to change and get the wheels back on the road and get moving in the right direction. Now, this was recorded back in April of 2020, and here we are in September of 2020, the wheels still are on the ground.

Everything is still moving forward and things are looking good at closed loop farm. So next time you think you're facing a challenge next time you think things are just too hard or too tough. Think about the challenge that closed loop farm had to face and how they overcame it. I really hope this episode was a big inspiration.

I hope you can use this episode as jet fuel to help your entrepreneurial career and your business to either change things or take things to the next level. I want to thank Adam for coming on the show today, you can reach out to him on Instagram at closed loop farm. And if you enjoy this episode, let me know on Instagram at Diego Footer.

Thanks for listening until next time. Be nice. Be thankful and do the work.

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