Eat, drink reinvent N.J. food and beverage execs talk about industry’s future

Meg Fry//May 29, 2017

Eat, drink reinvent N.J. food and beverage execs talk about industry’s future

Meg Fry//May 29, 2017

Mazars USA held its fifth annual New Jersey Food and Beverage Executive Forum on a recent evening at the Pleasantdale Chateau in West Orange.

A leading accounting and consulting firm, Mazars USA provides more than 200 food and beverage manufacturers, distributors, restaurants and importers with the specialized expertise needed to navigate the dynamic industry.

“Our three annual forums attract up to 500 C-level executives in the food and beverage industry over the course of the year, giving attendees the opportunity to connect with those outside of their supply chains,” Howard Dorman, partner at Mazars USA, said.

In addition to a global selection of hors d’oeuvres and beverages, the evening included a panel featuring Gary Fisch, founder and CEO of Gary’s Wine and Marketplace, Scott Rudolph, co-founder and chief financial officer of Banza, a food and nutritional innovation company, and Anthony Scotto, CEO of Villa Restaurant Group, with nearly 375 restaurants in more than 30 states and five countries.

The panel was moderated by Judy Spires, CEO and president of KB US Holdings, which includes Kings Food Markets, Balducci’s Food Lover’s Market and Balducci’s Gourmet on the Go Café.

Here’s what they had to say:

Judy Spires: While we are challenged every single day, I am fortunate right now to run a New Jersey company that is 85 years young. It takes a lot of reinvention and innovation to get to that point of distinction, as everyone is going after the same share of stomachs. How, as entrepreneurs, have you successfully crafted your various points of differentiation?

Scott Rudolph: The idea behind Banza is that we take the foods that people love and make them healthier using more nutritious ingredients. Our first product is a pasta made from chickpeas that looks, cooks and tastes like regular pasta, but has double the protein, four times the fiber and half the amount of carbs. We’ve been doing this for about three years, and have been in retail for two. We started out in two stores and are now in nearly 5,000 stores, including Kings Food Markets. … For us, it’s been about the hustle. I came from finance, and I saw that, in food and beverage, in order to actually give yourself the opportunity to succeed, three things were required: the opportunity had to be large enough, and pasta is a $2 billion category; you had to, from the beginning, have a way to sell through any product you put into a store; and you had to always be building the next case study to move along the next part of the business, instead of simply maintaining one strategy throughout.

Anthony Scotto: Our Dad immigrated here 50 years ago to start a small pizzeria in Manhattan. We were therefore exposed at a very young age to a strong work ethic and a commitment to prevail. My Dad, he picked up himself, his wife and his three children at the time and crossed the ocean to Brooklyn. That takes guts and is really the essence of entrepreneurial spirit. … So, my brother and I had a vision of growing the business, because our father is an inspiration to us and, at the same time, extremely proud of what we’ve done. Today, we have about 370 restaurants, we operate a dozen different brands, primarily in the quick service space, and we have a dozen full-service restaurants here in New Jersey and Pennsylvania. In total, we have nearly 3,000 employees, and an additional 2,000 working for our franchises. We thrive on a culture that is built up by the people we surround ourselves with. However, I know what I want when I see it and I know what I don’t want, too, which can be a challenge for my team at times. 

Gary Fisch: I graduated from Rider University with a degree in political science and English. I then decided to sell alcohol. When I started, the in34dustry was really about liquor — popularly priced spirits such as Smirnoff and Dewar’s, (as well as) Coors and Budweiser — but, at the age of 21, I met a winemaker and a farmer by the name of Louis Martini. After that, any time I sold a bottle of Louis Martini wine, I had the feeling that I was selling a friend’s wine because he was so passionate about it. That’s when I stopped trying to be a liquor salesman and became a wine salesman in the 1980s. So, when the opportunity came exactly 30 years ago to buy an approximately 1,100-square-foot retail store in Madison, I had no money and no plan, but it seemed like a good idea. I was now a wine expert who knew more about wine than our competitors. That knowledge and passion for wine back in 1987 was our differentiator. Now, we have four locations in northern New Jersey and about 120 employees. Our primary business is beverage alcohol, but we also sell gourmet cheeses and charcuteries as we continue to grow.

JS:A lot of people have that passion in the food and beverage industry today. How do you continue to reinvent your business as everyone nips at your heels?

GF: When we first opened, we worked seven days a week, 364 days a year. That was with one store, when it was very easy. I bought and I packed and I sold the wine. Now, I maybe work six days a week, except for our busy season in November and December, because I am developing a team of people that has the same passion for wine. With our pay scale in retail being what it is, we have to offer something else. So, more and more of staff travels. I brought, for example, a handful of team members to Louisville, Napa and Sonoma this year. I want to energize our team so that when I am not the building, someone is representing Gary’s the way I would.

SR: It sounds simple, but it’s really just connecting with consumers. We had filmed a reality show called ‘Venture for America’ three weeks after we came up with the idea — so, all of a sudden, when we first launched, we were suddenly getting all sorts of orders. The only way we could keep our customers was by having individual conversations with each and every one of them. The first place we sold was at a farmers market in Detroit, and, throughout our business, we have strived to take that farmers market appeal and style and bring it into the grocery store. ‘Venture for America’ helped us open doors initially, but it really wasn’t about getting on the shelves. It was about figuring out how to build a customer base and community around each store. Pasta is kind of boring and, while people love it, they are not eating as much as they used to. As a disruptor brand, we figured that we could connect with them by giving them what they already love and building a customer base around each individual store. … Today, we are the No. 1 pasta in Fairway, the No. 2 pasta in Target and the No. 3 pasta in Wegmans. We of course had to push as hard as we could to get on those shelves at those retailers, but, now, they are giving us more and more chances to make an impact. We also have eight new SKUs coming out this summer.

AS: When a guest comes through one of our doors, we want to transport them to that place. So, when we build a brand, we ask, what is that place? What is it we want them to feel when they have arrived at their destination? There are many different touch points in which to do this, from the ambience to the menu to the service. We acquired a small group of restaurants called The Office four or five years ago because we saw value in the real estate and we saw opportunity in repositioning a tired brand. We asked, what is the personality of this brand? How can we make every single decision speak to that personality? What will make our guests want to return? Sometimes, a guest can have an experience, pay the bill, walk out and not be sure whether they loved or hated it. But they feel it inside, and they trust that feeling in deciding whether or not to return again. That is why our business is part art and part science. Every day, we just simply have to try to get better.

JS: How difficult is it to instill the enthusiasm that you have for the brand in the people that you hire today?

AS: All of us running businesses today are talking about culture and what that means and how we define and implement it. We look at some of the benchmark companies that have done an awesome job in that, such as Starbucks, Apple, companies with people who just live that brand. We aspire to that and are constantly working on it. Today, 60 percent of our workforce is millennials. They are not a difficult group because they are not hard-working — they are. They just work differently than what we are accustomed to. Baby Boomers and Gen-Xers do what you want them to do when you want them to do it. Millennials want purpose, they want to understand and, most of all, they want work-life balance. They embody the European mentality of working to live, while most of us in my generation lived to work. You must understand those wants. Millennials also are not as patient. They want to know what’s next and how to pivot. So we put the power of ‘what’s next’ in their hands by creating career paths. We say, ‘These are the steps you need to take, the items you need to achieve and the information you have to be knowledgeable of in order to advance.’ We also have high industry turnover, so we built an entire video-based training system in order to effectively communicate with our new hires. It also serves as the means of providing consistent messaging to all of our employees across the business. It has been a great way to connect.

SR: I started this business when I was 31 with my 23-year-old brother. I had gotten my ass kicked in private equity banking before this, but he had only worked at a startup at that point. His talents were amazing and we complemented each other very well despite the fact that his mindset was completely different. Then, the first person we hired was right out of school. For the first eight months, the only thing he did was answer emails and dealt with our manufacturing plant. After eight months, we said, we know you’re interested in marketing, so we’ll spend some time and put together a plan. He put together the most amazing thing I have ever seen and designed our brand. … Fast-forward a few years, working out of my brother’s house in Detroit, working out of my apartment in New York, we never spent a dollar on rent and continued to push forth with that scrappy mentality. We were up to about 10 people, but we started to realize that we had to provide certain benefits and opportunities for those who had never worked in a corporation before. We wanted to keep hiring for the different levels of creativity, but there was a desire for a culture that allowed for greater work-life balance. I mean, your employees are your talent and your capital, so you make it work.

GF: While my 27-year-old daughter is making the world a better place one person at a time as a social worker, my 25-year-old son, who currently works for Ernst & Young, has expressed an interest in the business. He is doing his research, though, because he knows what the work-life balance is like. He wouldn’t want to come into the business with me working and him balancing. … I can’t decide if that is a millennial thing, or simply work experience. There is this impatience these days to become the CEO of the company. There are some people, regardless of generation, that want my office before I even sit down for the day. I say, ‘Shouldn’t you at least punch in first?’ I think you need to earn it. On the flip side, we have had some young kids come in who have worked extremely hard, and we have simply had to be more patient. We have had to ask them more frequently to put their phone away, for example, or to refrain from wearing jeans with holes in them in the retail space. Employees today want to know why, when and what does it take to advance. There is a lot more questioning going on, and they are constantly challenging us to offer them things that will keep them. … Recruiting is a huge challenge. But we tend to be sexier retail than grocery, and we taste wine a lot, so if college kids come in and graduate without a plan, we say, why not give this a shot? We assess their interest and work with them to figure out a career.

JS: What does your business look like in 25 years?

GF: So far, the alcohol industry is regulated, so Amazon-type companies have met a lot of challenges in trying to get into the beverage alcohol business. But, while our lobbyists are good, their lobbyists are better. If someone wants to deliver wine to your door, they will, with a meal on the same day. In 25 years, the retail footprint will be much smaller and much more convenience-driven than destination-driven. We offer an experience that you can’t get online. You can come in and taste our cheese and wine and talk to people, which is a point of distinction that will always help us moving forward. But, at some point, that particular generation may not care. It may be enough for them to watch a video of you describing how your pizza tastes for them to click and have it delivered.

AS: Technology is a game-changer in our industry: how the consumer orders the food, pays for it, has it delivered by Uber or drone, and how they review that experience. … Also, global flavors are more prevalent today. Who is going to bring Indian food to the masses, for example? In 25 years, is that going to be an experience that you readily see on every corner? Twenty-five years ago, who was thinking about coffee on every corner? There is going to be a big movement around flavor and whoever is able to make that consumer experience the easiest, that’s who will win.

SR: The brands that will survive and flourish are the ones who respond best to consumer needs and connect with them on a deeper level. In order for grocery stores to survive, for example, they need to figure out how to bring in the brands that best connect with millennials and future generations and essentially build with them the future. It is simply about staying at the forefront, making sure that your company, your products, your brand and your values are constantly evolving to meet consumer needs. … Food is still most efficiently purchased through a grocery store, especially when it is fresh or heavy. So, I believe there will still be a local presence if retail can maintain the flexibility to evolve with the times.