It takes more than a little love to make a prized family recipe a winning business. But with pluck, planning and plenty of persistence, it can be profitable.
REMEMBER GRANDMA'S SECRET recipe for hot and spicy spaghetti sauce? Year after year, you would sit and watch her add "a dash of this" and "a pinch of that," wondering when she would realize that it was good enough to sell. But she never did. Michele Hoskins, owner of Michele Foods Inc. in Calumet City, Illinois, recalls watching her own grandmother serve up a family favorite that reaches back four generations and today has become the flagship product for her $5.5 million premium syrup manufacturing company. "When my grandmother was alive, we used to go to her house every Sunday for breakfast to eat her honey creme syrup over waffles and pancakes," says Hoskins, whose great-great-grandmother, a slave from Arkansas, developed the recipe in the late 1800s. "Selling everything but the children," Hoskins raised $100,000 in start-up capital to launch her business with Michele's Honey Creme Syrup in 1984. The company has since grown to include two additional syrups (Michele's Butter Pecan and Maple Creme Syrups), a $3.5 million food service contract with Denny's and a product development project with America's Favorite Chicken, owners of Popeyes and Churchs franchises.
Hoskins, 49, is not alone when it comes to turning a prized family recipe into a successful food business. Her products share shelf space with thousands of new items ranging from salad dressings to gourmet barbecue sauces to soul food in a can. "Each year, there is a new product," says Brian Todd, senior vice president of member services for the American Institute of Food Distribution in Fair Lawn, New Jersey. Last year alone, there were 13,266 new food products introduced and the top 10 generated over $2 billion in sales.
According to industry experts, total food expenditures for 1996 totaled about $686 billion. While there's little information to show how much of this revenue has come from home recipes, a stroll down any grocery store aisle indicates that Mrs. Paul and Sara Lee aren't the only ones stirring up success. Wally Amos did it in the 1970s with a recipe for homemade chocolate chip cookies that became the Famous Amos Cookie Co. And Bill Williams (president of BE's 1996 Emerging Company of the Year) continues to carve a niche in the soul food arena with his $10 million operation, Glory Foods Inc. But these successes have not been without the proper planning, research and financing required to take a recipe from the stovetop to the store shelf.
Before building your food empire, first study your market and determine whether your product is something, that the general public will want. Also, canvas supermarkets and gourmet shops for similar products because you don't want to duplicate a hundred other items. "It would be very hard to get a new cookie on the shelf today because you have too much competition," says Hoskins. "Make sure you have a niche."
Keep in mind that it takes more than just a few mixing bowls, measuring cups and a kitchen stove to start a successful food business. Depending on the product, start-up costs range from $25,000-$100,000 and should cover production, packaging, labeling and advertising. Preparing a recipe for mass consumption requires assistance from food industry experts such as food brokers and chemists, who can help with product formulation, packaging and labeling. Going it alone could mean disaster.
You must be dedicated to making it work. It can take years before a product is ready for consumers and even longer before a profit is made. "When I started, I would have a plant make me a 55-gallon drum of my syrup," recalls Hoskins, whose product volume fell short of the requirements for many manufacturers. "I would take it home, put it in my basement, and after work and on the weekends, I would go in the basement, hand pour it and hand seal it. It took me about 6 hours to do one case," says Hoskins who ended up filling 100 cases.
DOES YOUR RECIPE WOW THE MASSES?
While family and friends will rave about your chicken gumbo and insist your rice pudding is "to die for," it's the reception from the larger audience that really matters. While successful products are high in quality and attractively packaged and labeled, most of all, they're unique. To determine if your recipe wows the masses, take some daily mental inventory.
When enough customers told Sylvia Woods that they'd buy her homemade barbecue sauce by the gallon, the owner of the famous Harlem soul food eatery, Sylvia's Restaurant, realized the potential success of bottling one of the products on her menu. "For the holidays, people would bring bottles and jars and ask us to sell them the barbecue sauce," says Woods. "Then one night, firemen came in with a gallon jug and said, `Can you give us a gallon of your sauce because it's so good.'"
That's when Woods and her son Van, president of Sylvia Woods Enterprises, decided it was time to begin developing a line of products using...