Build for Consumers, Not Supply Chains: Mastering Your Manufacturing

The food and beverage space is incredibly competitive. There are new brands launching every day and the failure rate is consistently over 90 percent within the first two years. Given those odds, how do you build something that is successful?

At Union Kitchen, we believe that it all starts with creating a product people want, not something that is optimized for supply chains. It doesn't matter if you can manufacture 100,000 units on day one if no one wants it anyway.

Building great products also comes with their own set of challenges. For one thing, traditional co-manufacturers are not designed to build towards consumers. They want to find ways to produce your product as efficiently as possible, usually at scale, regardless of the impact on taste, texture, or quality. All of which makes sense for their business model but not yours.

When you own your own manufacturing, you become an expert over all the intricacies of what makes your food product so special. You are able to adapt and build towards what people want. It creates defensibility, allows you to dictate your products' quality, and control how much inventory you have to carry on hand. 

The idea can seem daunting if you don't have a manufacturing background. But in reality, it's a series of incremental steps. Think about it this way. If you're a home baker, it's going from a 5qt countertop mixer to a 60qt stand mixer likely in a shared manufacturing facility.

Quality & Control

You are in control.

Being able to control how frequently and how much you produce means you don't need to commit to 10,000 units to start and then spend months trying to sell it. In fact, you get to do the opposite. You are free to innovate and build your product towards what people want. You can make a batch just large enough to get feedback. Improve the product based on that feedback. Rinse and repeat.

On the other hand, carrying too much inventory leads to:

• Storage Fees - you need a place to store all your inventory!

• Tied up Capital - You need to pay to produce the large amount of product upfront

• Longer Repayment Cycle - A lot of inventory means a long time until you work through the inventory to fulfill an order and get a return on your investment

• Perishability - Ingredients might go bad if you don’t cycle through your inventory quickly enough

• Inability to Make Changes - You have to wait too work through your inventory before you can make changes OR eat the cost -- neither of which scenario are particularly desirable

Maspanadas is a great example of this. Margarita Womack founded the company as a catering business in 2017. She leveraged these events and farmer's markets to learn what people want from the size of the empanadas to the level of crunch -- and of course, the fillings. As she grew, so did her manufacturing and her expertise over her product. She went from producing out of her house to Union Kitchen and eventually her own facility in Rockville, Maryland. Maspanadas is now the fastest growing empanadas company in the country with accounts including Whole Foods Market, Costco, and Fresh Market.

Agility as a Competitive Advantage

When you manufacture, you decide when, what, and how you want to make changes to your products. You can iterate quickly with what consumers tell you they want. 

Let's look at the example of Compass Coffee, a regional coffee chain in the Washington, DC area with 20+ cafes and nationwide distribution. When Compass Coffee first opened, they were only offering light roast coffees. In spite of these options being delicious to light roast fans, the founder, Michael Haft, received lots of feedback that their customers wanted a medium roast option.  Fortunately, Compass Coffee was roasting their beans in house and making their syrups out of Union Kitchen's shared facility. Because of this, they were able to incorporate the feedback that they heard and develop a line of light, medium, and dark roast coffee beans. Today, Compass Coffee manufactures everything out of their 50,000 sq ft roastery in Washington, D.C.

Why don’t more people manufacture given all of these advantages? 

Manufacturing is challenging. That is what makes it defensible. Not everyone can make the same product. It takes a lot of work, understanding product formulation, and executing!

But that doesn’t mean you shouldn’t go for it. In fact, we believe that is exactly why you should go for it. Whenever something is hard, that means other people aren’t doing it.

Build something for consumers, not supply chains.