Salad Salvation

By Christina Le Beau
March 13, 2006

It was a Friday in October 2001. Judd Rosenberg was calling on a customer for Alliant Foodservice Inc., the Deerfield food distributor where he worked. The customer, the owner of Cafe Descartes, was planning to make sandwiches and salads for his 10 area coffee shops, and he needed them by Monday.

Mr. Rosenberg picked up the phone and called Alliant co-worker Bret Schultz. "Get over here," Mr. Rosenberg told him. And another small business hit the ground running.

For the previous two years, Mr. Rosenberg, now 35, and Mr. Schultz, now 34, had been plotting to leave and start their own company. Fed up with the politics of sales jobs and territory battles, they'd spent nights and weekends trying, as Mr. Rosenberg puts it, "to learn what we needed to do to make money in this business."

They chatted up consultants and other entrepreneurs, scoped the competition and nailed down numbers. One niche that stood out was gourmet grab-and-go foods: fancy-looking products that sold for only $5 or $6. So when the coffee shop owner mentioned his plans, they jumped.

That weekend, the pair rented a kitchen in a Lincoln Park bar, hired two workers and set up enough of an operation to meet the Monday deadline, delivering 75 sandwiches and salads. Two weeks later, they quit their jobs at Alliant (which later was sold to Royal Ahold N.V. of the Netherlands).

Then Mr. Rosenberg sold his house and both of them tapped savings, credit cards and family members to come up with about $100,000 each.

The company born that Friday was Food Evolution, which now has 87 employees, $10 million in annual revenues and a plan to reach $15 million by year's end. The early days were spent bringing samples door to door. "Little convenience stores, hospital coffee shops, health clubs — everywhere," says Mr. Rosenberg, the company's director of sales.

Their first big account was Rush University Medical Center. By mid-2002, they were preparing 400 items a day for a dozen clients. Later that year, the company hired as head chef Jeronimo "Momo" Maldonado (now also a partner) and moved to a bigger location. And it added a catering business to its already thriving operation, built largely through old-fashioned cold-calling.

Food Evolution moved again in early 2004 to its current location, a 25,000-square-foot former meatpacking plant in Schiller Park, where it now produces 7,500 items a day for about 325 customers. One of those customers is White Hen Pantry Inc.

"A lot of other companies generalize about a big customer and assume we want something cheap and easy," says Carol Ann Sandell, a former White Hen fresh foods manager, who hired Food Evolution last summer to provide salads and fruit cups for the Lombard-based chain's 217 Chicagoland stores.

Ms. Sandell appreciated the little touches — a garnish of red pepper on a salad, for instance — but also credited Food Evolution with treating her large company like a small business, able to respond quickly with no red tape.

It's what Carey Cooper calls "servicing the heck out of the customer." Mr. Cooper, who used to own Redi-Cut Foods Inc. in Franklin Park, has served as a mentor to Messrs. Rosenberg and Schultz and plans to invest in the company. "The challenge is continuing to maintain that service while they grow," Mr. Cooper says. "But these are guys who persevere. I expect them to be around for a long time."

Last year, the partners turned their focus inward. Until then, Mr. Schultz and Mr. Rosenberg had been working up to 80 hours a week, wearing too many hats to count. Now there's a trucking manager to oversee drivers, and supervisors to manage the plant and quality control, among others.

A Midwest expansion is in the works, and a nationwide push may be next. "But right now we just want to take care of our current business," says Mr. Schultz, the CEO. "We don't want to grow too fast."

Yep, still 20/20: lessons in hindsight

Food Evolution's founders look back at what worked and what didn't.

Research big purchases. "When we started, we were buying coolers for our customers, and we made about a $20,000 mistake," says Judd Rosenberg, the company's director of sales. The company bought four new coolers at $5,000 each, when it could have bought used coolers for $1,000 apiece.

Have patience. They'd been calling on a multi-store chain for six months when Mr. Rosenberg walked into one of the stores and saw another food producer's sandwiches for sale. "I freaked out," he says. But rather than rush to the customer's corporate office and make their case, the partners waited it out, giving the customer time to see whether the competitor was best suited for the job. Six months later, the customer called looking for an upgrade, and Food Evolution got the account.

Say no. It's been their hardest lesson, but one the partners learned early. If they get wind of a potential customer being slow to pay or overly aggressive on pricing, they prepare themselves to walk away. "Sure, we can do it at $1, but does it fit into our business model?" asks Bret Schultz, the company's CEO.

It's all negotiable. Most of their clients pay their vendors in 60 days, but Mr. Schultz got 50% of them down to 15 days. "The way we do that is with quality and service," he says. "We're small enough that they see the owners making decisions, but large enough that we can do any volume they need."

Know thy market. After more than a few products flopped, the guys got wise about marketing new food items. Instead of creating, then trying to sell, they started doing more work upfront. Now they scour the trade press, talk to customers and keep ideas flowing internally.

©2006 by Crain Communications Inc.