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The Secret Ingredients to Building a 7-Figure Meal Service Business

the-secret-ingredients-to-building-a-7-figure-meal-service-business

Spencer Donaldson is a serial entrepreneur who’s hectic schedule made it difficult to cook healthy meals, so he launched Eat Well Nashville, a meal service business to meet his personal need. In this episode of Shopify Masters, Spencer Donaldson shares his journey of building on community feedback, acquiring a competitor, and finding the ideal frequency for contacting his customers.

For the full transcript of this episode, click here.

Show Notes

Dietary changes that inspired the start of a business 

Felix Thea: Tell us about the idea behind this product and how Eat Well Nashville started. 

Spencer Donaldson: My partner and I are entrepreneurs our whole lives and we’re were busy all the time, not able to eat healthy and we felt that it was kind of unfair that on every single corner you have a fast-food restaurant yet you don’t have an easy option to eat healthily. So here in Nashville when we launched, there was really no one that offered what we wanted. We tried every service, we tried all the national services, we tried CSAs and we tried Blue Apron and nothing was quite convenient enough and nothing quite resonated with us in terms of product quality and how natural the ingredients were. We were looking for something that was healthy with clean ingredients that we could just pop in the microwave or the oven.

Felix: How did you guys get into the food business?

Spencer: Our backgrounds are in technology marketing. We’d start a lot of different companies around our own personal needs somewhat selfishly, but we just wanted to solve the problem of eating healthy. So we had no food background at all. We just really wanted to drive health and wellness because we weren’t seeing it for ourselves. We were so busy and tied up with building companies that we didn’t have time to eat healthily or take care of our own wellness. We pushed forward with the idea and launched just to friends and family to see how it would go out of a small commissary kitchen. And very quickly we realized it was going to take off because we thought we’d only start with 30, 40 customers and we had close to 100 customers within the first month and we had only told friends and family. So we knew we had something then and decided to scale it even more and make it something that would really resonate with the community and drive that wellness all over Nashville.

A group of 5 friends eating meals prepared by Eat Well Nashville.
Eat Well Nashville was born from a personal need for convenient healthy meals. Eat Well Nashville

Felix: What do you recommend other entrepreneurs focus on during the very early stages of starting a business?

Spencer: So one thing that I did that I see as a major problem with other entrepreneurs is they don’t do enough research upfront. There’s a lot of people in our space is very similar businesses that have failed. And I listened to a lot of podcasts and read a lot about those companies. So what I did was just reach out to the founders of the companies that failed and some of the companies that we’re succeeding in the space to see exactly what they recommended doing and what they recommended us staying away from and we learned a lot from that. Not only that, we flew to other markets to see what other companies were doing in the food delivery space to figure out what was working and what we liked and what we didn’t like.

The key ingredients to research and feedback 

Felix: When you were doing this research, what kind of questions did you want to have answered?

Spencer: All kinds of questions about the scale of the business. We wanted to view as much of the operations so we would ask some folks if we could check out the kitchen. And a lot of them would allow us to tour their kitchen and see how the operations worked. And that helped us tremendously because we had no clue really where to start on the operational side. Because we were hiring chefs here in Nashville that was coming out of high volume kitchens, like hotels and things like that, but they had never done meal prep at all. So we were starting from the ground up. So by doing that we were able to gain a lot of knowledge and grow the business based on the anecdotes we got from those visits.

Felix: What did you do to prepare for entering the food industry? 

Spencer: Reading as much information as you can about what’s happening in any given industry. And then also networking is the biggest part. I’ve been in Nashville now for 10 years and I’ve been able to develop a network that’s very open and I think the market you’re in has to be an open market. And that’s the great thing about Nashville is everyone’s very open to sharing ideas and to driving success within the community.

Felix: What was the vision at that early stage before things blew up?

Spencer: We saw it as just being in Nashville and kind of focusing on the fitness and health community, and this is one of the biggest mistakes we made early on is that we thought everyone was going to want brown rice and plain chicken that had very little flavor. And we realized really quickly that that wasn’t the need. First off the food and the product has to be amazing. It has to be flavorful. So the number one thing about the product is you have to have something that folks want to eat, whether it’s healthy or not. So when we started, we got the fitness crowd interested in the business and then we realized there was a much greater market with busy executives and just other people who had families and not much time that didn’t necessarily want it to be plain. So we had to go back to the drawing board and figure out how to make healthy recipes that tasted amazing.

Felix: What made you decide to do that kind of pivot rather than just moving forward with your original hypothesis?

Spencer: I think the biggest thing was just the feedback we were getting from our customers. We were pretty relentless about surveying our customers and figuring out where they want to be, what they want. We realized from those surveys that, the people who are ordering are not necessarily just people in the fitness industry or people who do CrossFit. These are single mothers who have two, three kids. These are CEOs of major companies in Nashville and they’re asking us for these other things. So there’s a much bigger market. And from those surveys, we realize the customers that we’re trying our food, were not necessarily just the fitness people. That’s when we really quickly decided to make a little bit of a pivot to where we were providing healthy natural options but increasing the flavor, increasing the spice content and things like that.

A meal consisting of chicken, sweat potatoes, and salad from Eat Well Nashville.
From customer feedback, Eat Well Nashville was able to shift focus and incorporate more recipes to cater to a wider customer base. Eat Well Nashville

Felix: What are some of the most important questions that you guys asked customers?

Spencer: It’s all relative to the product that you’re selling, but for us, it’s all about product quality, product consistency. The other thing too that we ask our customers is how they want to be marketed too. And I think a lot of companies forget to ask that question. We had a lot of people ask for text message marketing for instance, because they were forgetting to order by Friday, which is our order cutoff day. So they couldn’t get their meals. When you’re a community-based company that’s focusing on a local market, it’s a lot easier to get customers who are willing to share that information because they want you to be better and they want you to be around for a long time.

Felix: Where do you begin the research and what are the important questions to ask for your industry?

Spencer: The number one thing about what we do is the product. So we’re relentless when it comes to product quality, product consistency. And so a majority of the focus is around our product, how consistent it is, the quality of the product, what sides they like, what they don’t like about different sides, what they don’t like about proteins. Because our customers are eating this food on average seven meals a week, every week, every other week. So we need to be very consistent, especially when they’re reordering the same meal. So for us, being our own customers and eating our own food, we realized that that needed to be the focus.

How growth and scaling took place 

Felix:  How did the idea gain momentum within the first month? 

Spencer: Yeah, we had over a 100 customers in the first 30 days. About double what we thought. And then the first year it grew very rapidly. We actually acquired a competitor in our first year of business, which then increased the size of the company pretty quickly because we acquired their customer base as well. So the first year we were serving thousands of customers and we had become a seven-figure company within our first year of business.

Felix: What do you think happened that allowed you to blow up so quickly? 

Spencer: Really it comes down to that being conscious of the product and putting out an amazing product and focusing it and eating the food ourselves. Word of mouth has by far been our number one marketing channel. And it’s just because the food is good. If you focus on your product and you’ve got an amazing product, your customers want to share that information. They want to refer other customers to your business. So that by far was one of the biggest things, and then the other aspect was just the B2B model that allowed us to go into businesses and pitch not just one customer but pitch to entire companies which really allowed us to scale the business very quickly. Because companies want their employees to eat better. So this was one way for us where we would go into a company and introduce them to the product and let them know what we were doing. Do a lunch and learn, maybe give them some snacks or some sample meals to try and that really helped tremendously.

Felix: How do you get the customers to try it out for the first time? 

Spencer: I mean there’s a couple of ways to do it. We’re discounting for first time buyers, which helps, a 15% discount is what we would offer to get someone to come in to purchase. But also I highly recommend for any entrepreneur with an eCommerce program using some sort of a reward points program or referral program. We use smile.io. They’ve been great for us. But that will allow customers to refer and the new customer gets a discount on the order, which helps tremendously.

Felix: What’s worked as an incentive for the rewards program to get existing customers to spread the word?

Spencer: So typically they’re getting 2% of the order value and points and then it’s basically like 1,000 points get you $10 off. So since our customers are coming back frequently, they’re getting access to that. And typically for the new customers that are being referred, they get $10 off their first order.

Felix: When it comes to this B2B model, when did you recognize that this was an opportunity? 

Spencer: We knew right away just because of our background in B2B marketing and sales that it’s easier to sell to 500 people versus selling to all of those people individually. So that was something we knew was going to be an opportunity upfront and that was one of the first things that we knew we were going to do is just go in and promote this with companies, especially a lot more companies having wellness programs and things like that. It’s made it easier for us to become a thought leader in the space and drive wellness within the companies, not just with food but with information. So, we’re constantly bringing our partners along. Like we might partner with a gym and have them come teach the company about fitness and we’ll teach them about nutrition.

Felix: What made you decide to acquire a competitor? 

Spencer: This company came to us and they were struggling financially, but they had a great customer base in the fitness space. We can capitalize on their customers. They’ve got a decent retention rate. They’ve got customers coming back. The other thing was just the knowledge from that company. They had been doing it for two to three years ahead of us. So we actually brought in one of their founders as our COO and took that knowledge and used that to grow.

Felix: What are the challenges that you face when you are integrating another company into yours?

Spencer: It was probably the hardest week of business because they were on a quick timeline, we were on a quick timeline to get the deal done. And basically we brought them into our kitchen and ran both processes side by side for two weeks and figured out the weaknesses in their process, but also where we could improve, which helped us in the transition but the biggest thing is the expectations of the customers may be different. So you have to realign on the marketing side and on the communication side. You have to realign thoughts on the product in general. They were expecting one type of product, more of the fitness-related product and we were focused, again, more on flavor, less just plain chicken and brown rice. So for us, we had to re-educate them on the fact that food can have spice and it can have flavor and still be healthy. It’s not like you just have to eat plain chicken and brown rice every day, every meal. So we had to realign those expectations and that was difficult for a while. We did lose some of the customers that we brought on but kept a majority of them. So it ended up working out well.

A group of three customers eating Eat Well Nashville meals on a picnic table.
An opportunity to acquire a competitor came up and Eat Well Nashville went through the process of syncing up two different processes, menus, and customer base into one. Eat Well Nashville

Felix: What is the development process to build on the menus and make sure you’re always staying fresh with your products?

Spencer: Most restaurants and other companies that do what we do, they start with the kitchen. They let the kitchen come up with all of the ideas around products, but we do it where our marketing and customer service teams look at the information of those surveys that we spoke about. And then they distill that into ideas and then they give that to the chefs and then the chefs come up with all the other menu items and options and we’ll come up with tasting menus for us all to try within the company. And that’s how we’re adding things to the menu.

Felix: How long ahead of time do you need to be basically doing all of this before it actually hits the shelves ready for customers to purchase?

Spencer: It took a month, two months, whatever to get the products ready. But now we have such a database. We have over a thousand different menu options in our database with all of the nutritional information, all the ingredient information lined up. So now we can bring in some old top sellers for us. So it makes it easier where we might be on a two-week turnaround versus a one-month turnaround on those menu items.

The logistics system behind the scenes 

Felix: How do you work with local farms as well to source the ingredients?

Spencer: As much as we can. We’re at a scale now that it’s been difficult for us to obtain enough product from local farms. So we’re working with regional distributors for the most part and we work with some local farms as well.

Felix: How do you handle the delivery of food products?

Spencer: It operates very much similar to like a Postmates or Uber Eats model where the drivers are coming in and picking up a certain amount of bags and then dropping those off at customers’ houses. And we have routing software and a way to track all of the deliveries so we make sure everyone is delivering to the right homes and that kind of thing. But yeah, it’s a very complex process, especially on the weekend. That’s when a majority of our work happens at Eat Well because our order cutoff is Friday for delivery on Sunday or Monday. So it gets very involved late Friday into Saturday and Sunday when we’re getting everything ready for delivery. We’re delivering everything in cooler bags, with ice packs to keep the food nice and cold. But that’s all a process. Bringing in the ice packs, bringing in enough bags, getting the bags out, scheduling the drivers. That’s all something that we’re managing within our company. So for us, that adds basically another aspect of the business. But luckily we’ve got a pretty good system locked in now. Originally, we’d have issues where drivers would drop the bags at the wrong houses and things like that. And we haven’t had that as of recently because of our delivery tracking or delivery software and the way we manage our drivers.

The balance between helpful reminders and marketing communications 

Felix: What are these multiple touchpoints throughout the week that allows you to not rely on a subscription model for your business?

Spencer: Our biggest things are email marketing and engaging in some drip process. I definitely recommend for any business where anyone who hasn’t ordered is getting a reminder to order into later in the week because most people are procrastinators. So what we’re finding is most of our orders are coming in on the last day that we allow orders. So for us, we have to stay on top of them. So that comes down to email, drip marketing and then we have this really cool tool called Emotive that we’re using now, which allows you to drip market via text which we’re seeing some great results with.

Felix: What is the email process and frequency? 

Spencer: We’re sending them roughly about five emails a week right now, but the thing is if you’ve ordered early in the week, you’re not going to get all that communication. So at the beginning of the week, we’re introducing them to our new product items showing them customer testimonials, introducing them to our new gym partners that we might be cross-promoting with that kind of thing. And then by the end of the week, it’s more like a timer countdown, And then the same thing via text. It’s introducing them to the product and then telling them that the timeline is getting closer and driving that sense of urgency in the ordering process.

Felix: How do you systematize the content that you’re sending out over email and text?

Spencer: Yeah, we have it all templated out and we set it up ahead of time. It is a full-time job for our marketing and community coordinator. And he’s doing a great job with it. Coming up with creative content, cross-promotions with other brands. But it’s tedious, it’s a lot of work, but you can template it out. You just want to make sure you’re adding value via whatever communication channel you’re using, whether it’s text or it’s email, make sure that you’ve got some value to add. I think that’s the biggest thing there, and then the other channel that we’re utilizing is push notifications via web browsers and that seems to be working pretty well for us. If you haven’t ordered until the end of the week, you might get 10 messages from us. What we’re working on right now is allowing our customers to pick and choose how we’re marketing to them. That way it’s not intrusive. If they don’t want to receive a text, we’re letting them opt out and make sure that we’re not intruding on them.

Felix: Are there any limitations that you are presented with via text compared to email?

Spencer: There are not as many limitations as you would think. I mean it’s just getting the opt-ins for text and so like if you go to our website, you’ll get a pop up that says, “Hey, would you like to receive a 10% discount? Opt-in to our texts list.” And then they get a 10% discount texted to them. From that point they’re opted-in to the drip and then we can start, sending more offers, showing them more menu items. But this tool is great. It gives us a lot of flexibility, gives us a lot of functionality.

A meal of chicken, brussel sprouts by Eat Well Nashville.
Text, push notifications, and emails, all ingredients to how Eat Well Nashville contact their customer base. Eat Well Nashville

Felix: What are some of the pros and cons of web notifications to your customers?

Spencer: So with push notifications, it’s really just about frequency because some customers will opt into it and then they get upset that they continue to receive those push notifications. You just have to allow them to opt-out. And with the tool we’re using push out, it really allows us to do a great job with that. So we haven’t seen too many limitations with that either.

Felix: What are the most important pages or parts of your website for getting conversions, whether that be the first time customers or returning customers?

Spencer: All comes down to the menu, and a lot of it honestly is just photography. Your eyes have to have a response to the way the menu items look because we’re introducing a lot of new items and if those items don’t look great, we’re not going receive orders even if they taste great. So our menu pages, we’ve got a handful of menu pages. We’ve got our regular breakfast, lunch and dinner menu, which is our highest converting page. But we also have build your own options where customers can pick the protein and the two sides they want for their meals. We’ve got family-style options, we’ve got kids options, bulk options. So all of those pages really convert well. But it’s all on the main menu page and then the sub-menu pages are where all the conversions happen.

Eating with our eyes and the importance of photography 

Felix: What changes have you made to improve the conversion rates by improving photography?

Spencer: Plate setting has been big for us. We’re very conscious about the colors on the plate, which you wouldn’t think about, but you got to have a variety of colors. So that changes the entire architecture of a dish essentially. You’re putting different things in the dish to make it. So there are hints of red, there are hints of green, garnishing. Those things are very important. Making sure you’ve got a good lighting studio’s important because the lighting is the number one key to a great photograph and making those images really pop. So for us that has been key is just building out that lighting studio and just adding in little things that add pops of color.

Felix: Has the store design been the same or have you guys also made tweaks to the actual layouts or to the different pages that you’ve created?

Spencer: We’re constantly changing the makeup of the pages. Originally, we didn’t start on Shopify, we migrated to Shopify and it’s been really easy to use and great for us in terms of just being able to quickly make small edits, like having the breakfast, lunch, and dinner on the same page, having them on different pages, testing out different ways of combining the menu. That’s been really important to us.

Felix: How did you know to categorize products together in different meals will help with conversions?

Spencer: It was all feedback from the customers, they basically gave us all the feedback we needed and told us, in terms of diets, like the keto diet, we didn’t carry until this past summer and we got an overwhelming response from our customer base asking to have the keto menu on there. If you’re creating that communication level with your customers, they’re going to tell you exactly how they want the site and how they will convert.

The ever-changing role of the founder 

Felix: Since you guys have grown so quickly, what do you spend your days working on these days?

Spencer: A lot of it is the strategy and then coming up with larger deals in terms of sales. Working with companies to roll out programs where they may be buying meals for their employees. I’m still doing a lot of sales and I still do a lot of the day to day because I think it’s important as the CEO of the company to continue to see all aspects of your business because it’s so easy as a manager or CEO of a company to not understand the thought process of your team. Myself and my COO will operate in all roles at some point throughout the month. And that gives us an idea of where we need to improve because another challenging aspect of the business is just hiring. Finding great people, especially when unemployment rates are so low and when we have such a labor shortage when it comes to hospitality and restaurant jobs in Nashville. So for us, we really need to understand how the employees can thrive and what they’re going through. So we’re still doing a lot of that stuff. I think it’s very important to see where your employees are coming from.

Felix: What are some of the early signs that you recognize in a high performer or hire that will do well at the company?

Spencer: It might sound obvious, but the number one thing we look for is attitude. It’s very easy to see upfront whether someone has a great attitude or not. And we feel that we can train anyone to do a great job within our business as long as their attitude is phenomenal. So we don’t take that by chance, we actually bring in our candidates for test drives and allow them to see how the work is before they actually sign on and come in as an employee. And that allows us to test drive them and them to test drive us to make sure it’s a good fit. That way we’re not wasting our time bringing someone into the company who’s unhappy.

A group of four friends eating Eat Well Nashville meals together.
Even though Spencer Donaldson’s role is everchanging, his main commitment is to stay close to customers’ feedback. Eat Well Nashville

Felix: So what do you focus on these days to scale to the next level?

Spencer: Really it comes down to the biggest thing is just hiring and then scaling outside of our market. So adding more and more communities within the middle Tennessee area. Right now we’re serving about a 60-mile radius around Nashville. But we’re constantly adding new cities because we’re getting requests on our website from folks who are like, “Hey, please bring your service to our city.” So we’re focusing on building out those communities, but really we just want to do an amazing job here before we start thinking about scaling to a new market for instance.

Felix: What are some of the challenges that maybe you didn’t see coming when it comes to expanding to another market?

Spencer: How we do it, might be a little bit different, but we start with a pickup location. So we’ll go into a market and open a pickup location. So I have it delivered to a gym in a city that we want to market to. And then we have the gym promote it, see how that does and then decide whether or not the response is good enough to open it up as a city we’re going to deliver to. And so once we see that, if we see the response’s great, then we’ll open it up for delivery. But it isn’t always that clean-cut and it’s not always that easy. And sometimes the cities you go to just don’t work out for whatever reason. They’ve got other competitors in the market or maybe folks aren’t as interested in healthy natural options as you would hope.

This article originally appeared in the Shopify blog and has been published here with permission.

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