How to Start a Meal Kit Business

It was a tough year for Susan Devitt and Tom Gallo of Asheville, North Carolina. First, Tom lost his highly specialized ceramics engineering job.

To find another job in that field, Tom and Sue knew they would have to leave their home in Asheville.

At the same time, Sue—a graphic designer—lost her biggest contracting job for an Atlanta company.

She knew that there were no jobs close to home for her, either.

Instead of looking for a traditional position in another part of the country, however, Tom and Sue decided to start their own business making organic pizza kits

They’re not alone. According to Robert Litan of the Kauffman Foundation—a non-profit which studies entrepreneurship, “The Great Recession has pushed many individuals into business ownership due to high unemployment rates.”

According to the Foundation’s research, 0.32% of the population decided to start a business in 2011, continuing the trend of growing entrepreneurship since the recession began in 2007.

But just how difficult is it to become a small business owner after losing a more traditional career? I had an opportunity to talk with Sue recently about their transition from unemployment to entrepreneurship:

How did you decide to become an entrepreneur and start making organic pizza meal kits?

After he lost his job, Tom immediately began brainstorming ideas to start his own business, and I wanted to be on board in any way I could.

Pizza Kits were not even on our radar. Tom was working on designing a better bike rack for cars and making more affordable residential masonry stoves.

While he was working on various projects, he was making pizzas (using a new bread maker) and decided he wanted to make a healthier pizza, one with a whole-wheat crust.

He was using his grandmother’s Italian family sauce recipe—and constantly inviting friends over to eat all the extra pizzas.

Friends were encouraging Tom to open a restaurant because the pizzas were so amazing. But we didn’t want to open a restaurant.

However, I came across a summer class being offered at the local community college on How To Start a Food Business. I suggested we take it, thinking we might jar and sell the amazing family sauce.

The 6-week course covered all the basics, which was important for us since we didn’t know anything about the food industry.

We also found out that Asheville had a non-profit shared use commercial kitchen for start-up food businesses and farmers.

Instead of needing our own kitchen we could rent space and time as needed. As the summer went on, our idea evolved into a homemade pizza kit that would be both convenient and healthy.

What obstacles did you face in trying to get your business off the ground?

There are obstacles along the entire way that you don’t see until they’re right in front of you. Learning a business from the ground up means that you are ‘moving forward in the dark’ so to speak. You’re bound to make mistakes and spend some money unwisely.

We made a point of picking the brains of anyone we met who might have advice for us. One person would lead to another to the point where we now have a few mentors and consultants we can call with questions about the wholesale/retail food industry, which is very specialized.

In 2009, after getting the Pizza Kit to the point that we could sell it, it was time to test the market, so we started at the local market with overwhelming success. We also started selling to local specialty stores.

Then I tried to get into our local large natural grocery stores: Earth Fare and Whole Foods. Phone calls and e-mails went unanswered, which was very frustrating.

It’s difficult to be a pest and relentlessly call on grocery buyers. But that’s what I did, and it eventually paid off: I got the pizza kits into our local and regional larger stores.

As tough as it is to get into a store, the biggest obstacle we faced, and continue to face, is the ‘sell-through’. People need to know about our kits before they buy. The best way to sell is to do in-store demos, but the more stores we are in, and the further away the locations are, the harder it becomes to demo.

Social media and word of mouth help, although learning to use that technology presented us with another obstacle.

And that illustrates one of the biggest obstacles for a new business: We only have 24 hours in a day, and as a grassroots company we do it all. Production, sales, distribution, marketing, PR, social media, graphics, packaging, and demos.

Finally, determining a price point for our Kits has proven to be another difficulty. Cost of goods for production—whether it’s the packaging or the raw food ingredients—need to be low enough to bring the Pizza Kit to a wholesale price that can make a little money, and retail it at a comfortable price-point for the consumer market.

In the beginning, we couldn’t order enough goods to get a reasonable cost, but if you sell too high, people won’t buy. As sales build you get closer to making the formula work, but it’s a difficult conundrum.

Did any aspects of your former career (experience, contacts, background, etc) help you in creating and growing your meal kit business?

Tom’s engineering background is a huge benefit, and he uses it every day. Cooking is chemistry, so that translates well. His ability with kitchen production and machinery are also a huge benefit.

His research into packaging (glass or plastic? what kind of plastic will give a long shelf life?) has been an on-going project that is finally working itself out.

Tom’s engineering ability and research experience are HUGE factors in our success.

As for me, I’m a graphic designer. Packaging design, marketing, company identity (logo, consistency in visual communication, etc.) are what I bring to the table. Both of our skills and experience are vital.

What do you wish you’d known when you started?

If we had known how hard it is I can’t say if we would or wouldn’t have taken this path. It’s extremely rewarding but extremely difficult. Not just the exhausting ‘hard work’ of it all, but the obstacles of the expectations of the food industry (they are used to working with BIG companies that have deep pockets). And frequently the common perception of consumers is that ‘food is cheap’ and it isn’t. We fight against that.

How were you able to finance your business?

We’ve been self-financing with retirement funds and savings, so there either won’t be any retirement, or we will be a well-known brand (or at least sell well enough for us to make a living!)

At some point in our growth we will need to borrow money, but so far we have not.

What advice would you give to someone interested in becoming an entrepreneur?

Have time and money to last for several years. Listen to feedback and be extremely open to change. We’ve gone through many changes, and I wish that with each one of them we had jumped on it earlier instead of fighting them!

Where do you see your meal kit business going in the future?

We are growing all the time. This year will be a great year for us. At our rate of growth, we may be looking for our own kitchen/production facility. We have several other pizza kits in development to add to our line.