So that brings us then to collaboration. So we're going to collaborate with other people. We're going to increase our portfolio, if you will, so that we can have additional people. Now, our rule of thumb is that if we work with consignment, so it's all about who takes the risk.
If we're going to put something from a neighbor, you know, so we've got food crafters in the area, okay, that are producing things that we don't. Lacto ferments, kombucha, wool products, mugs. I mean, there's a whole complement of things.
And so if you're going to own it, clear to the sale, we go consignment. The difference between consignment and regular markup is who takes the risk of owning the inventory? So if the collaborator is going to own the inventory and only get paid if it sells, then we only do a 20% markup in the store or any of venues that we sell to.
If we are going to buy the product at wholesale and sell it retail, we're going to take a 30% markup. And of course, grocery stores run these markups all the time and different amounts on different things.
The more perishable it is, the higher the markup. I mean, on produce, lots of times the markup is 50%. Why? Because it's so perishable. If we don't sell these bananas this week that Kroger ordered, Kroger orders, you know, 2,000 pounds of bananas.
And if they don't sell them in a week, what happens to them? They go out the back door, right? And so there is a huge markup in produce. And then as you move down into more shelf-stable stuff, the markup goes less and less and less as you move down into crackers and canned goods and things like that.
So just realize that your markup is going to be different depending on what you're working with. But collaboration, let me tell you, in your product portfolio, expanding your product portfolio makes all the difference in attracting people because it moves you toward the one-stop shop.
And just in case you missed it, believe me, the new benchmark in marketing is Amazon. Okay? And whatever we do, whatever we do, and this, you know, I even hate that I have to say this, but it's the reality.
We're going to talk a little bit about some of our emotional feelings over the last couple of years. Have you ever read a little business book, Who Moved My Cheese? Familiar with that? Who Moved My Cheese?
It's a little tiny business book. It's about this mouse that goes through a labyrinth to find cheese every day. And of course, he's got this labyrinth memorized, and he can go find his cheese real easy.
Well, one day he goes out there and there's no cheese. Somebody moved his cheese to a different cubicle. Well, now he's got to figure out a whole different pathway to get to the cheese. And so, you know, at Polyface, just to be totally transparent, you know, we built this business 40 years ago with a Kodak slide projector, speaking at Kiwanis clubs, Rotary, Ruratan, AARP, you know, Toastmasters, you know,
Civic Clubs, and doing on a typewriter newsletters that went in a mail with a stamp on them and phone calls and to people that were our age, you know, baby boomers. And we built this nice, successful business.
And in the last five years, somebody moved our cheese. We don't have a Kodak carousel anymore. We don't even have a Kiwanis Club or Rhode. Well, there's a few, I mean, there's like six old geezers that are 85 years old, and they kind of trade around the presidency and try to keep the little emblem on the wall, you know.
We still meet. We still meet here, you know. And that's not where the conversation's happening. And as we go through these two days, I'll give you some of my angst of how we have been pushed to try to adapt, you know, as somebody moved our cheese.
Those of you who, some of you might be aware that July 4th we launched nationwide shipping. And man, did we get torn up on social media for selling out to the devil and going to the dark side and all this stuff because I've been such a adherent of local.
But our cheese got moved. People that used to come out 10 miles to the farm and get their food now say, well, why should I come out 10 miles and get my food when I can just, at 10 o'clock at night, I can get on Amazon and, you know, I mean, Sherry and Daniel get, they're on auto reorder for toilet paper.
Teresa, I say, what? You know, you can't even go to Kroger's and get toilet paper? No, it shows up on the porch every month with a big smiley thing on a box, you know. This year, before December 31, this year, millennials will surpass baby boomers in spending power.
And I know millennial. In fact, Sherry and Daniel are technically one and two years respectively over millennials. So they're in this crazy stage of, you know, remember growing up without social media.
And even the difference between like our son, Daniel, and our daughter, Rachel, are five years apart. The difference between them in social media is incredibly different. Because that five years, here came the smartphone and the other things.
So I'm saying, I mean, our cheese is, it's been moved. So think about, I don't know how I got on that, we're going to get on that in a little bit more. But anyway, so you're going to create collaborations.
And we farmers, we are notoriously non-collaborators. I'm going to do it myself. Right? And collaboration requires that we pick up the phone and go talk to somebody. What? You mean I got to come in, wipe the grease off, kick my shoes off?
I'm tired. I don't want to go, you know, formulate a business arrangement with somebody, right? And so I know I'm asking for a lot here, but I'm telling you that widening our portfolio, remember the person that makes the sale owns the customer.
And if you can work with a neighbor that's making pumpkin bisque, all right, soup, and canning it, that you can add to your pork chops, okay? That customer, that friend, that food crafter with their label, if you manage the customer, if you manage the sale, you're going to own that customer, not them.
Okay? And so think about when you're collaborating, think about compatibility. All of your practices, sourcing, and ingredients. Because remember, your brand is everything. Protecting your brand is everything.
And so you want to make sure that as you collaborate, you're finding like-minded people. And they don't have to be perfect. They don't have to be perfect. But they have to be aligned enough that you're not embarrassed or spending a lot of time answering FAQs, frequently asked questions that make you have to dance around a little bit.
Another thing that you can do in collaboration is value adding. The single fastest growing component of the retail food sector right now is the sector called integrity convenience. That's the only sector that's really expanding right now.
Right now it's expanding at 8% a year, which is phenomenal in the food sector because you got a certain number of people. People can't eat, but so much, right? And so if you're watching the news and you're watching the old, the old big companies, Heinz, Campbell's, whatever, you know that the food, if you can get a half a percent growth in the traditional food sector, you're doing really, really well.
So right now, integrity convenience is really moving forward. So what is that? We're talking about snack sticks. We're talking about frozen heat and eat pot pies, broth, all of the convenience stuff, snacky type stuff.
30% of all food in America right now is being eaten in automobiles. Sometimes I wonder if the push to the self-driving vehicle is not actually an ancillary thread from the fact that 30% of our food we're eating in automobiles.
I mean, look at the lines at the takeout window at McDonald's and Hardy's and Wendy's and stuff. I mean, it's humongous. I mean, if you're doing any kind of food service and you don't have a takeout window, you're behind the times.
And that's one of the things that we're having to face at our place. Somebody moved our cheese. I tell the team, nostalgia is wonderful, nostalgia sells. It's a great story. Nostalgia is cool until you're one day into obsolescence.
So there's a fine line there between nostalgia and obsolescence. So you can collaborate with value adding and you can take your core product and value add it forward. For example, when we began cutting up chicken, for example, man, we didn't, I mean, I'm tired of butchering chickens.
I'm going to get them in the freezer and be done with it. And we'll teach you how to cut it up. If you don't know how to cut it up, we'll teach you how to cut it up. Well, no, I really want a boneless, skinless breast.
I don't want to have to fool with any of that other. And I mean, again, move my cheese. 50 years ago, I'll be very sexist for a moment. Every woman knew how to cut up a chicken. I mean, it just came with your DNA.
You were born as part of your DNA. You knew how to cut up a chicken. Today, 50% of our customers, all of our customers are women, 50% of our customers don't even know that a chicken has bones. They don't.
I mean, they think we go out and, you know, we go out and pick bone of skinless breast, you know, bone of skinless breast tree. Chickens are out there, whatever, growing like pears or something. And so that's called moving your cheese, okay?
That's a movement. Anyway, the year that we began cutting up chicken, we made, this is a long time ago, we made an extra $20,000 on chicken without raising another chicken. That's the power of value adding.
And guess what? We made a whole pile of new, happy customers because of a collaboration by value adding. So you may do it. We've hooked up with a kitchen that does soup called 100 Bowls of Soup. We now send them pallet loads of necks and backs, and they make broth and chicken stock that we sell for $10 a quart, and it gives us $2 a pound for our salvage.
Okay? We're not doing it, but we're collaborating with a value adder to let us do it. Hot dogs grew out of that. We had trouble moving some of the, we wanted something beyond sausage, and we were having trouble moving all the ground beef.
Alan Nation used to say, he said, if you're direct marketing grass-finished beef, if you can't make your program work profitably on ground beef alone, don't start. Think about that a minute. If you can't make your program work on ground beef alone, I know a company in Virginia, boy, they came in with all the glitz and glitter and, you know, artisanal food craft, blah, blah, blah.
Put in a federal protected slaughterhouse on the farm and it was, they hit the ground. I mean, they were a big splash, you know, front page dues and all the gourmet food, blah, blah, blah. And they lasted about five years and went out of business.
And I got to sleuthing around trying to figure out what the deal was. The deal was that they were selling all the top end and not selling the ground. And they refused to take a lower price for the ground, so they were stockpiling it in a warehouse, a frozen warehouse in Richmond.
And they had a million pounds of ground beef in the bank, and he went bankrupt. You got to sell everything. And what that means is a lot of times we have to value add salvage stuff. What do you do with the necks?
What do you do with the pork backbone? What do you do with stuff? You know, we're struggling with that even with stewing hens. One of the ways that we have a lot of stewing hens because we're running 4,000 or 5,000 layers right now.
And stewing hens are an issue. I mean, we try to sell them all, but we don't, now that we're at this scale, we're struggling with trying to sell them all. And so there comes a point at which your price is so low, it's actually cheaper, knock them in a head, compost them, than it is to actually de-feather them, gut them, all blah, blah, blah, blah.
So we've just hooked up, in fact, farmhounds, okay, in Atlanta. Good folks. Good folks. They seem to be. I haven't met them yet. They're coming up to pick their first palace. Well, they said they're working with White Oak Pet.
When they said that, I said, well, they must be something then, because Will's no dummy and works with people that pay their, and we're always concerned about paying their bills. You get in this very long.
Alan Asia used to say, remember, in the food business, you don't want to do any get it now, pay later, because you can't repossess yesterday's meal. It's pretty hard to foreclose on yesterday's lunch.
All right. And so anyway, if you're in this very long, you'll find out about accounts receivable and getting your bills paid. And it's an ugly business sometimes. People that just smile and you think, oh, they're just pure as a wind-driven.
They talk about earthworms. They talk about bumblebees. Oh, they must be a wonderful person. And I mean, yeah, and they don't pay. Yeah. Anyway, this farmhounds outfit does dog food, pet food. And so they're coming up to get their first pallet load of stewing hens and gizzards and stuff.
And with the Weston A. Price Foundation, you know, Sally Fallon's group, in the last five years, we've quit having to sell to compost chicken feet. We know we need four-legged chickens. People started out, you know, they started with Weston A.
Price, and next thing you know, they're asking, can we get feet? Well, sure, we'll save you the feet. How much? I don't know, 50 cents a pound, that's fine. It's just a salvage. We normally compost them.
And, I mean, people started coming getting feet, and then we couldn't keep men. We raised it to a dollar, went to $1.50. Still couldn't keep men. $2. We still can't keep men. And so between the pet food with the gizzard and the feet, we're looking at an extra now, almost dollar a chicken today that we weren't capturing just a couple of years ago.
That's pretty cool. That's a game changer. You do 40,000 chickens, and that's $40,000. Little things like that add up. So hot dogs grew out of that. We were having trouble moving all the ground beef.
And we had ground beef, but we have something else. And so we collaborated with a guy that worked with us to start the hot dogs. And now, you know, we're selling, I don't know, $50,000 worth of hot dogs a year.
It's not a mainstay, but again, it's a little bit here, a little bit here, a little bit here, a little bit here. And it adds up. So value adding, making sure that you've salvaged everything, that you're taking everything to a higher level if you can, and moving it through.
I mean, a food truck, diner, I mean, yeah, I mean, I've just done a little bit of thing, but I could make this value-adding list here about five times as long as it is. I mean, there's tons of other things that you can do in the value-adding sector to move that forward.
Institutions, you know, remember that there are things that you can collaborate with. Farm tour packages. I mean, there are organizations that organize farm tours and events. I mean, think about if you have a beautiful place collaborating with ecotourism.
It's a huge thing. You know, contact the local urban Sierra Club, Audubon Society, Isaac Walton League, okay, and collaborate with a bus tour, okay? And you can feed everybody and you can put a price on it and go with that.
You know, demonstration farms, I mean, there's all sorts of things, publicity and events, tours. Remember, there is a hunger beyond food in our culture for connections to nature, connections to farms, connections to agriculture stories.
There is a real hunger there in our culture for that. So tours, several years ago, so Teresa's the introvert, I'm the extrovert, I'm sure you couldn't have guessed that. And several years ago, we kind of felt crowded with the number of people who were coming to the farm.
Of course, I love people, Teresa, you know, goats and hides. And so we said, how can we, but we also know that people come with money and they want to spend it, so spend it here. And so we said, my problem, my tension with it was I wanted to talk to everybody.
And at the end of the week, I couldn't get any work done because I was always saying hi to, you know, where are you from and talking to these people that came. So I needed relief from feeling like an obligation agreed to everybody.
Teresa needed a relief from feeling like she had to go incognito to pull weeds in the flowerbed. And so we started brainstorming, well, how can we have people come to the farm that's compatible with both an extrovert and an introvert?
So I can get my work done. You don't have to hide. And we can work this out. So we started the farm tours, the lunatic tours, haywagon tours. And we did it for free. And the whole idea was to free me up.
So if you want to talk to me, if you want my undivided attention, here's a day set aside for you to get it. You want to come from wherever you come from and you want my undivided, you can come. And Teresa could look at the schedule and say, oh man, Wednesday, we got 100 people coming.
I think I'll go make bank deposits that day or work in the office or whatever, right? Okay. So she was able to schedule her time to not be with people. And I was able for the first time, and I love people, so you come to the farm.
And now I was freed up for feeling like I had to go and say hi because if you really want me, you'll come on a lunatic tour. The schedule's on the website. You sign up. It's an RSVP. And so we did this the first year for free to try to accommodate within our emotional traits the people.
And the problem was, as the season, so all the seats filled up real quick, 12 tours, 100 adults and all the kids that go with them staggered through the season. Everything filled up real fast, but as we got to the end of the season, half the people didn't show up.
So we said, oh, we got to get skin in the game. So the next year we say it's $10 a seat. Put something in the game. That solved the no-show problem. Non-refundable $10, come. And we did that for a couple of years, and that really worked, and then we gradually raised it to $15.
Now we're at 20. We've been 20 for two or three years. So now these 12 tours generate, you know, between the 20 times 100 is 2,000, the tour times 12 is $24,000. And each tour they spend over $1,000 in the store.
So we're looking at a $36,000 move of the needle. And of course, the tour. We don't have any cost of goods in the tour. That's just time. So that's a really high margin thing. And so we've taken this point of angst and contention into a new profit center.
Hickory Hill Gap Farm in North Carolina. They started on-farm dinners. And they do, I'm trying to think, they do one a month. I think it's eight through the season. I think it's 100 people at 50 bucks a plate.
And they offer them, start them in May or April, May, June, right through the season, eight of them. And 100 people, that's $5,000 a meal. And in less than 24 hours of putting the schedule on the website in March, they're sold out.
5,000 times 8 is what? $40,000. A one-month... Could you do a once-a-month meal for 100 people? Now, you know, that's going to take some... You got to get your act together. But think about it. I mean, if you've got a barbecue pit or something where you can, you know, get together some scale, some volume, and maybe there's a friend that loves to cook and will do a couple of the dishes for $200.
And so you share a little bit of it. And you pull this off, and you've got these people that come out to the farm, and I mean, they're just ecstatic. You get them a little farm tour, a little bit of infotainment, a nice meal, a nice relaxing time at dinner with their kids, you know.
And it's cool. Simply hooking in with complimentary fits in your area in order to stimulate interest, to stimulate buzz, Snapchat photos. Okay? Hey, we were out at so-and-so's, you know. And so, you know, so this year we had Temple Grandin.
She wasn't cheap. But I'll tell you what, she is famous. That was the greatest farm event we've done yet. We limited to 300 people. It was an all-day. We did a farm tour on hay wagons. And then she did an autism workshop in the afternoon.
And we capped it at 300 people. And that whole event was sold out in less than two weeks at $100 a pop. We gave them a nice lunch, a barbecue chicken lunch. But it was simple. Just sliced tomatoes, sliced cucumbers, iced tea, barbecue chicken.
We're a meat farm. They don't come for quiche. They don't come for vegan tofu burgers. And so let's see. $300 times $100 a pop is... How much? Get the decimal in the right place. No, $30,000. Oh, I wish $300,000.
$30,000. But here's the thing. Those people who came, they spent another $5,000 or $6,000 in the store. And think of the customers. People who would have never come to the farm. They came because they knew Temple Grandin.
Now, maybe there's a celebrity person in your area. Maybe, you know, just this last weekend, we had the privilege of some of you that are around here in Nashville. We had Rory Feek was with us. And now, we didn't charge a thing for this because this wasn't a thing to charge for, but it was fantastic.
We had a potluck, so we didn't have to fix anything. And we just invited people in the community. We had 200 people from the community show up for a concert in our hoop house with Rory Feek. It was the best thing in the world.
I mean, people were just levitating. Normally, you'd pay $100 a pop to go hear him in concert. And here he was right in Swope, free, potluck. We didn't have any money in it. But man, the PR, the emotional equity, all right?
And even some of our old hermit curmudgeon neighbors that think we're typhoid Marys, they came and laughed and had a good time, all right? So it's a big deal. So this event thing, you know, if you're an introvert and you're scared about that, just get a partner, maybe a niece, a nephew, an extroverted spouse, a friend, an aunt, an uncle, a neighbor, somebody at church, somebody you know.
The point is there are gifts and talents for all this collaboration. That's the point. There's gifts and talents for all this collaboration.
