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American Food & Ag Exporter

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CORONAVIRUS INDUSTRY SURVIVAL GUIDE:
Microgreens And Edible Flower Grower Fresh Origins Hunkers Down And Prepares For Future Openings Of Restaurants

Jim Prevor’s Perishable Pundit, April 7, 2020

As the coronavirus pandemic continues to wreak havoc on the world’s food system, we are receiving more and more calls and emails from all sides of the supply chain -- trying to process the tremendous amount of information that changes almost hourly. We already have interviews and messages lined up for publication, but first we still have many foodservice suppliers scrambling to make sense of it all.

We began with a piece, Understanding Risk, to help the industry understand the risk that the coronavirus posed for society.

Then we featured a piece titled, Surviving Coronavirus: Baldor’s Trials, Tribulations And Michael Muzyk’s Goal To Keep Everyone Working, which focused on how a very successful foodservice distributor dealt with a world where most restaurants were closed or doing just takeout. Foodservice distribution suddenly was a much smaller business than it used to be.

We then ran a piece we called, Coronavirus/Produce Industry Survival Guide: Specialty Produce Supplier Babé Farms Put To The Test But Meeting The Challenge, which profiled the tribulations of a grower/shipper of mostly upscale foodservice items.

Then we came out with a piece titled Industry Veteran Chuck Weisinger Shares Wisdom On Staying Positive In Response To Coronavirus

Now, Mira Slott, Pundit Investigator and Special Projects Editor, speaks with a grower of specialty produce, almost completely sold through the foodservice channel, to understand how these types of companies can prevail in such unusual circumstances:

David Sasuga
Founder
Fresh Origins
San Marcos, California

Q: Thank you for finding time to share the impacts you’ve been facing during the coronavirus crisis, and solutions you’re employing within your operation… as well as your hopes and concerns going forward.

Can you tell our readers what are the key challenges that have been thrown your way?

A: This has been the biggest challenge we have faced in over two decades of being in business. Like most of us, we did not see it coming, and we have been hit very hard.

Q: I understand a major portion of your business is supplying restaurants. The foodservice industry has been hit hard, with restaurants across the country mandated to close their doors or limited to takeout/delivery. How has this impacted movement of your product? How widespread is the problem with the customers you service? Does it vary by location, type of chain, demographics in an area, etc.?

A: Our primary business is in the foodservice sector. We distribute throughout North America with typical concentration in all the large metropolitan areas that have lots of restaurants.

Our products, Microgreens and Edible Flowers, are used mostly in Midscale Dining as well as Fine Dining restaurants, catering, and hospitality. As such, our sales collapsed once the restaurants closed their dining rooms.

Q: Are you still moving your products to the foodservice sector in any way?

We have a very small trickle of business going to foodservice.

Q: Could you provide more details on where that business is, which foodservice establishments, and what products in particular?

A: Our customers are primarily foodservice distributors who provide our Microgreens and Edible Flowers to restaurants, hotels, caterers, institutions, resorts, etc. We work with small local distributors, major regional distributors, and national broadline distributors in every region.

Our products provide chefs and bartenders with inspiration to create beautiful and flavorful experiences. Microgreens deliver tremendous flavor and visual appeal to just about any dish. The popularity of Edible Flowers has been surging both in culinary and in mixology due to their beauty and garden-fresh nuances.

Working with restaurant operators, we have helped develop many successful chainwide offerings that feature our unique products. With the switch to take-out only, the challenge now is to help find ways to enhance take-out menus so that folks at home can still experience something special beyond what they would normally cook themselves.

Our products are an ideal solution in this regard.

Q: Could you give us some insights into what restaurants are doing, how much is being diverted to takeout/delivery?

A: It is my understanding that thousands of restaurants have closed their doors for good. Takeout/delivery is generally only enough to sustain a small portion of a restaurant’s business compared to what it was.

My family has a small Japanese restaurant where we’ve been able to showcase how well microgreens and edible flowers can enhance this type of cuisine. Unfortunately, we have had to lay off almost the entire staff. The restaurant is working hard to build up its takeout business, but this is not easy in this environment with so many people losing their paychecks.

I also believe people are uncertain about how long this will last and are being careful with their spending. Restaurant owners are rolling up their sleeves and doing the basic jobs like cooking and dishwashing, etc., that they once had paid staff to do.

Restaurateurs are resilient, resourceful and dedicated. Everyone is working hard to get through this. The better operators, the ones with good management and strong determination, will come through this.

Q: How much percentage of business is there now compared to what you were doing before restaurants closed?

A: Fresh Origins was continuing in a long tradition of growing and building business in the double-digits. Our company pioneered the Microgreens category, and our national presence is based on a strong foundation of quality, experience, innovation and service.

We were on a very impressive trajectory that has obviously been interrupted. This, of course, is temporary. We will regain our momentum as America wins this battle. We believe that folks will be very glad once restaurant dine-in resumes, and they’ll be anxious to get out of their homes, to get back to work, and to go out to eat. That is what we are planning for at Fresh Origins.

Q: What percentage of your business is in retail… are there opportunities to expand in this area, or divert your product through other channels? Are you selling to wholesalers...etc.

A: Our sales to the retail sector are less than 10% of our normal overall business. BrightFresh® Microgreens is our retail brand. It is available at multiple retailers coast to coast including Safeway, Sprouts Farmers Market, Whole Foods and independents.

We are working to further support our retail brand with an upgraded website for BrightFresh® Microgreens, which is targeted specifically at consumers. Our sales to retail were steadily growing before, and continue to do so during, the recent crisis with little change.

Q: That’s interesting. In what ways?

A: One of the reasons for the success of our BrightFresh® Microgreens is based on the quality of the product. Because we are growing in ideal conditions with bright natural sunshine, rather than inside a warehouse with artificial lighting, our microgreens are more robust and have better flavor and improved shelf-life, which is a key differentiator for microgreens that have typically suffered at retail due to quality and shelf-life issues.

The rapidly changing situation makes it very difficult to navigate. The crisis and the sudden upsurge in business is causing logistics and staffing challenges for retailers. Many retailers are reducing SKU’s in order to keep shelves stocked with the basics, which makes it difficult to pivot more of our unique products to retail.

Q: Could you provide insights on what’s happening particularly with your products at retail… realigning inventories, ways you might be able to help?

A: Much of the retailers’ volume now is in more of the durable, staple items like potatoes and onions. Nevertheless, our current retail product line is doing very well! We see our BrightFresh® Microgreens as a way for retailers to help consumers to kick up their home cooking to create better dishes for their families.

Q: Are you involved in any new industry partnerships being formed, such as with foodservice and retail combining forces?

A: We are offering some of our other products, especially larger greens — such as our Petite®Greens and TenderGreens™ — to our foodservice distributors who have an ability to get these out to retailers or consumers.

A few of our distributors do have direct-to-consumer sales online. We are seeing some of the distributors begin to open their warehouses to consumers and even offer truck deliveries to consumers. Our distributors are scrambling to survive and we are all faced with trying to find opportunities in a crisis environment. It hasn’t been easy.

Q: There’s also been a surge in consumers shopping at farmers markets. In New York City, new social-distancing rules were just put in place to control crowds at outdoor farmers markets. (I enjoyed looking back at your insightful letters we published related to our coverage in the Perishable Pundit on farmers market food safety and fraud issues, local, organic, etc.). Are any of these issues more relevant now?

A: Sanitation and proper food handling are more important than ever, especially for farmers markets where these things have historically been lacking and for the most part ignored.

It appears this crisis may have sounded the alarm to begin the adoption of basic regulations regarding sanitation food handling and overall consumer safety for farmers markets. Anyone in the food business can affect the entire industry. Farmers markets should not be exempt from basic food safety and health rules that provide protection for all of us and our families.

Q: With your products being more perishable than other items like potatoes or onions, are you looking to build or develop other product areas? Are you getting requests for other produce items?

A: We are a very specialized business that is designed to produce high quality microgreens and edible flowers in the most efficient way possible. We are open to growing other products if they fit into our operation, perhaps such as full-sized herbs or salad greens.

We have about 1.4 million square feet of greenhouses in one of the most ideal climates anywhere combined with over 20 years’ experience in growing. We are certainly open to requests for growing other products that would be suitable for greenhouse production, but for now, our first priority at this point is to hunker down and get through the crisis, looking forward to better times ahead.

Q: Could you elaborate on your business, production/harvesting schedules, warmer weather/rain issues, and strategies going forward? What’s going to happen to the items you harvest that are not sold? Will there be an outlet?

A: Our crop has a very short growing cycle, so we have great flexibility to manage our production and inventory. Normally, we plant 6 days a weekly throughout the year. Naturally, at this point, our production is greatly reduced. We are ready to ramp up very quickly to meet demand as the business returns.

Fortunately, we do not rely on a seasonal commodity, so we are not subject to many of the issues inherent to many traditional crops. We are well positioned for when the restaurants reopen and the distributors resume supplying them.

Q: Do you have any key pieces of advice or lessons from your experiences to pass on to the industry?

A: This is a sobering event for all of us. We are, of course, saddened by the harm this is doing to our friends and families across the country and the world. All of us are affected in our every day lives.

It is encouraging, though, to see the massive efforts being made to address the crisis and because of this I am very confident in our future. Like the Great Recession of 2008, and like 9/11, this is a crisis that we will get through, and in the long term we’ll all be much stronger.

For the business, I think we are all learning that having an up-to-date crisis management plan is a very important part of being in business. We should manage for the best but be prepared for the worst. The produce business has never been easy, and I think there are some companies that will not survive this. The ones that have built a strong foundation of good management, that are tied well to their communities or their business constituencies and have strong balance sheets, will survive.

Those that do will see a very strong resurgence. And there will be less competition. Although there will be less restaurants out there, there are still the same number of people who want to eat. I think people are wanting to get back to the social aspect of gathering together to enjoy a good meal outside of the home, and this will also play a big role in our business recovery.

Those restaurants that provide a great dining experience with quality, creativity and service will give people a reason to get back out. At Fresh Origins, we are poised and ready, and we look forward to continuing to be a part of helping chefs and restaurants to serve great tasting experiences.

Our industry will come through this with tough lessons learned in dealing with the unexpected. We are fighting hard, and and we are grateful to be a part of this dynamic industry.

******

We thank David for his calm demeanor in times of great stress.

Nobody can argue against having up-to-date crisis management plans but, in truth, if anyone came up and asked “What if the government intervenes and requires that all restaurants, hotels, cruise ships, theme parks etc., close down for an indefinite period? How can we be prepared?” The answer is… you can’t.

A firm could build up emergency financial reserves, but its return on invested capital would be so low that someone would buy it out for the sole purpose of stripping out those emergency financial reserves!

One could argue for more diversity — serving retail and foodservice — but few companies are actually great at everything. In any case, it is not clear that being so diverse that you can absorb everything actually produces higher returns than having separate organizations, acknowledging that some might go bust from time to time.

So, maybe having separate companies and thus isolating the more profitable ones is the smarter strategy over time.

For people involved in the produce industry, these stories are tearful. Good people, who have worked hard, are just struck down. It is like an asteroid crashing down from the heavens. It is not clear there is anything they could have done.

And we know so little about the effectiveness of our efforts. How many lives were saved by making people buy at retail as opposed to eat at foodservice? These are not questions with obvious answers.

So what can we say to people like David Sasuga other than we are rooting — and praying — for him and his organization.

We hope that the whole industry will try to help them get through this. And it is true that the strongest and most innovative will endure and prevail. We will be waiting to cheer them back on the other side. Many thanks to David Sasuga for taking time to share the moment with the broader industry.

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