Episode 4: Ben Deda
Food Maven founder Ben Deda is our guest for Episode 4. We talk about the challenges of high food costs in the restaurant industry and how Food Maven made a major pivot during the pandemic.
Episode 4: Ben Deda
James: Welcome to episode four of the Food Tech podcast, where we explore the changing nature of the food industry and technology. We give operators quick, actionable ways to improve their business in the new omnichannel environment. I’m your host, James Shea, publisher of Food Delivery News. Our guest today is Ben Deda, CEO of Food Maven. Ben runs a platform that helps restaurants better understand and control food costs. How’s it going today, Ben?
Ben: It’s going well. James, how’s your day?
James: It’s going well. I wanted to start off and ask you about a little bit about the history of Food Maven. Kind of how you started and a little bit of the way that you pivoted and changed your business model.
Ben: Yeah, absolutely. So food that has always been focused on trying to help to build a better food system. I think we all know that food is a thing that’s obviously poured all of us, right? I mean, we all eat every day and there’s so many great parts of the whole system. And you know what you get from getting together with people and sharing food and and how important food service in that is to our community and our society. For the same time, there’s a lot of challenges and we saw opportunities to help to make it more efficient, matching supply and demand. So we could try to both eliminate food waste at one end by the 40 percent to the highest produce gets in our own way. And then also, on the other hand, you know, it’s making impact on food insecurity and how many tens of millions of Americans. And then obviously, you know, exponentially more. We’re why are food insecure and why should that happen, right? Why should there be that disparity between the two? And so we started out actually by not only just matching it and actually doing the distribution of it as well. I guess obviously, it’s one thing to find a buyer and seller. In the case of food, you actually have to then get it to them at that point has some good initial success with it. And you know, we’re active here in Colorado market and it just entered the Dallas-Fort Worth market. But you know, ultimately for us, getting to scale with that, especially with the real asset intensive stuff that you need to do, the actual distribution ultimately had to make the hard call every stop to that business model. At the same time, though, we looked at some stuff that we had built from a technology standpoint, I still saw an opportunity to really help out in the food industry on it and take that as a tool going forward. So that’s what we really pivoted to, is this ability that we could very quickly look at products across all these different systems and actually kind of make it easy to create a single view of that, which is challenging because, you know, there is no common language for food, right? Everyone has a different description, a different SKU number, you know, different acronyms that they use for the different attributes of the product that you’re buying. And you know, the smart buyer understands what it all means, but they’ve got to sit there and manually go through all that, which, you know, time is probably the most precious thing that any of our restaurant operators have, and we wanted to make it easy for them to just have better data so that they can make better decisions for their business. And then ultimately, we think that helps lead to a better food system.
James: Yeah, I would assume that food costs food prices, just understanding food is such a major part of running a restaurant. Now how do you work with them to try and reduce their their food costs and and also collect more data? Yeah.
Ben: So everybody who’s run a restaurant, they always are looking at, OK, what are my costs? What’s going to cost on this product for my vendor? You know, figuring out the right way to construct a menu item and what they think, the cost and margins going to be on that so they can price it. But you know, that’s a lot of work to do that. And so is often done once. And then, you know, from there, you just kind of do your regular purchasing every single week. And you know, folks, a lot of times are wondering, am I still getting the best price? You know? Is there something that I should be doing, whether it’s changing a vendor because I could get a better price over here? Or maybe there’s a substitute ingredient that I could use that is significantly less than what I have been using to try to find a way to mitigate. You know, what we’re looking at right now is a twenty four percent year over year increase in product, which, you know, restaurants know they can’t always completely pass that on to the customer. So how can you try to mitigate that a bit with what you do? And that’s what we do for us. So we have a very simple tool. Is a free browser extension very similar to anybody who’s used honey to help find discounts as they shop and a restaurant operator installs it on the browser and then as they shop and do their purchasing for the week from their vendors. If we can find a similar product at a lower price from one of their existing vendors, we just put a little icon next to it and can click on it, take some rates that lenders page and they’re able to make the purchase so. So we’re really putting the decision making power in the hands of the buyer because they’re the one who knows best if that’s the right product to do. But just making it a lot easier and take that time out of it that they’d have to spend, you know, going into every single source, write it down their mouth and then figure it out where they should be making their purchases that week.
James: I agree with you about restaurant operators. I do think sometimes that they don’t do as good a job of every single week knowing what their expenses are, right, because they’re trying to deal with so many different things. But I imagine a tool like yours that is a continuously checking can really help restaurant operators.
Ben: Absolutely right. And even if it can’t find a lower price, just that validation that, nope, I’ve got the right price. You know, removes that a little bit of concern that a little bit of worry that you have in your back of your head, like, am I doing what I should be for my purchasing? And even that bit of understanding can be really powerful and just make it easier, right? Because it’s, as you said, there’s enough other headaches going on on a daily basis. You shouldn’t be worried about that as well.
James: Now with all of this, you’re collecting a lot of data. What do you do with the data or do you have plans for all this information that you’re building together to do with or ask, what’s your plans for that?
Ben: So I mean, the way we are, our data policies are very clear is that the data belongs to the user, right? It’s their it’s their pricing data is their product data. We do see opportunities, though, to start to look at that in aggregate and provide additional insights to folks who understanding, OK, where our cost training in certain categories or potentially by certain geographies. If you’re talking about someone who is in multiple cities and just try to bring as much transparency to the industry so that you can actually then create some actionable insights on it as well, that folks can actually make those changes to what they do so that they can run a better business on it and make it a better system overall for everyone.
‘James: Now, as far as the vendors go, are you talking like major vendors like Sysco and things like that, or also like smaller local produce providers and farms having all of those involved in your in your platform? Yeah.
Ben: So we work with a lot of the major hardliners on it today. You know, we have the capability to really work with anyone who has an e-commerce platform. And, you know, there’s opportunities potentially even make it where we can look at stuff that’s coming in. You know, folks are still using PDF price listing and the rest is here. As we know, the industry doesn’t necessarily move that fast and certain technologies. But what we really just want to be able to do is kind of create for the operator that single view of, OK, here’s my here’s my cost from my vendors. What’s the right decision for me to to do? And as ultimately an opportunity to do the same for letters, right? I mean, I think especially when you’re talking some of the smaller players out there, you know, understanding, how should I price in the market? What’s happening within the market is a challenge in a lot of that leads to inefficiency, and people spend a lot of time trying to optimize because they don’t really have the visibility of what’s happening in the market today.
James: Yeah, especially small vendors, right? They don’t see the bigger issues going on now. How did you establish relationships with the major vendors? I mean, did they give you access to their platforms? How does that work?
Ben: We really leverage the data of the user on it today and working directly with the folks who use our product from that standpoint. So, you know, I do see opportunities. I mean, I think that’s really one of the biggest challenges that faces the food system today is the fact that folks are very hesitant sometimes to kind of open up. You know, I think there’s a lot of opportunity to do so in a way that still maintains all folks private data and their proprietary and what’s going on there and where their advantages are. But there’s also opportunities to help to understand, OK, what’s what’s happening, right? You where is there taking a slightly different view? But where is their access that could be connected with a nonprofit who’s looking to do donations? What other markets could we potentially be pushing product to ultimately try to create a better system overall? I mean, I think today we just it that’s just within commercial foodservice. If you expand that and also then look at the product that’s going through grocery, retail or what’s happening, you know, further back within the distribution channels or within manufacturers and processors. No one knows, right? There’s no view across all of that that can actually help us try to connect products with where it can be put to good use. And so that’s I think there’s a lot of opportunity for folks to help to contribute to that, right in a way that, you know, you still have have your business and make it profitable. But also, you know, overall, let’s see if we can build a better system together.
James: I mean, food costs right now are a major issue for restaurant operators. And I think anybody in the food industry like what are you seeing as far as trends in food and food costs? I mean, I think I’ve seen some stuff on your website where the year over year costs are probably double digits would be my guess, right?
Ben: Oh yeah, actually. So we publish every Friday, we publish our market insights. We look across, you know, a number of different categories and just kind of aggregate what’s happening in average wholesale price units, average having an average commodity pricing. You know, sometimes those things are correlated sometimes or not. And you know, it’s it’s not. I mean, as I just mentioned, we did our fish doing our write up for this week and average wholesale prices up 24 percent year over year. And now commodity spiked even more this week, commodities up 30 percent year over year. And you just see between whether it’s avian flu and challenges around that shell eggs absolutely blew through a ceiling today and driving up other chicken products with it. Obviously, this happened with Ukraine and Russia. There’s a lot of challenges around that as well. And so I think it’s really just looking at continued increases across across the board, right? But the part of this challenge is it’s not always every category. You know, like last week, nine of 11 categories were actually down average wholesale price week over week, but overall it was up because two of them really spiked. So it’s really about understanding, OK, where? Is your opportunity right, whether I can find a better price from a different vendor, whether I can find better prices from my same vendor, but with a substitute ingredient? Maybe this kind of meat is not up as much as others? Or do you need to start looking at making changes to the menu? Are there opportunities to potentially change? Some of your core incentive to plate items are based on how much beef is for support or chicken? Or do you go more vegan you with your offering? And that’s just what we want to help make easy, right? Because those are those are hard decisions to make. It’s even harder if you can’t even access the data to begin with.
James: I would imagine, like a lot of restaurant operators are trying to figure out like, you know, when the bigger trends like, you know, the vegan or vegetarian. But then also, do we modify the menu to reduce the amount of ingredients or amount of food that goes in? If you’re only making five percent profit margins right, and all of a sudden the food’s cutting into that, they’re starting to talk about modified menus or changing or replacing items at this point.
Ben: We’ve seen that, you know, some are having opportunities to pass some of the cost along to their customers, and they know that customers are willing to and able to. You know, how far that goes is always a question on that. And then some folks are taking on other ways of it of like, you know, do we add a automatic gratuity and use that essentially to cover some of what we’re seeing on the food cost side versus trying to put it straight to the price of the products? Yeah, on that, you know, it’s a hard thing, right? I mean, I don’t I don’t necessarily know that there’s a single right answer to it. I think the key thing is is that, you know, each operator is, you know, taking a look at what is the situation for them and then determining, OK, what are the right things that we can do here to to make sure that we’re all still here 12 months from now?
James: Yeah, I know, like five, 10 years ago, the local food movement thing was a big part of the restaurant industry. You still get a sense that locally sourced local food is a big part of the restaurant industry.
Ben: We still really see quite a bit of it, especially in the higher end independents that are there is actually something where we’re in the process right now of wrapping up a benchmark study with the Colorado Restaurant Association. And that’s one of the questions that we’re looking at, right? Is, OK, if you look across the entire market like what is the price differential between local and between a more national type of product? Because I think a lot of people would would love to do local. There’s obviously a lot of great things about it. But ultimately, right, you’ve got to run a successful business that makes money. So what’s that price differential? And I think folks see in a lot on an individual product basis, what really kind of known across the board is a charge. So we’ll see. I definitely do think that it’s becoming a question. A lot more folks are having to ask themselves is, OK, is the premium that I’m paying for a product ultimately worth it and what we’re trying to do? And again, that really varies by who the business owner is and what’s important to them.
James: Yeah, I just always think of the Portlandia episode where the one guy asked, ‘what’s the name of the chicken?’ And they go out to the farm and, you know, just kind of making fun of that whole thing. But I mean, people do want to know the source of their food a lot more than they did maybe 20 or 30 years ago.
Ben: Yeah, I think there’s that part. There’s a pride part of it too, right? I mean, if you’re part of a community, you know, knowing that you’re helping to support your neighbor on it, I mean, you know, that definitely has been something over the last, you know, a challenging couple of years that people do want to try to support. Those are around and what they can do there. So I think folks absolutely want to try to do that, which is then again, the question of ultimately, does it work for everyone?
James: Now where do you think food costs are headed over the next, say, six to 12 months? I mean, it generally up.
Ben: Oh yeah, I know. I think there’s still going to be pushed out beyond a couple of big macro. I mean, one, you’re still just, we haven’t, you know, worked out all the logistics challenges and supply chain challenges that probably caused you. Add to that. Like I said before, the avian flu challenge is going on right now, what’s happening with Russia’s aggression in Ukraine? All of that is just going to continue to drive everything overall up. You know, will we be up another 24 percent year over year? I don’t think so. Is likely going to be a little lower than that. But the challenge is, even if that’s half of it, it’s up 12 percent. I think you just saw a stat that they’re projecting that food away from home prices. So the price of the customer is all going to be about five or six percent in the next, you know, in 2022. So if you’re taking out, you know, 12, you’re taking a 12 percent increase or a 15 percent increase in your food costs, but you’re only increasing your prices by five or six percent. OK, where how is that going to work right? And what ultimately, how does that, you know, are you’re able to make the financials work for your business?
James: Yeah, I mean, you can pass some of it on. But I mean, I know here locally, like some of the restaurants that I go to, they definitely have edged prices up. But you know that they haven’t edged up the, you know, the twenty seven percent that you’re talking about. So but you can only absorb that for so long.
Ben: You do have the type of portability in your menu. If you do have, you know, a staff that’s able to, you know, because there’s so much that goes into it, right? I mean, if you you can’t just go out, choose a different substitute product if your staff doesn’t know exactly how they should, best work with it. So you’ve got to kind of figure out, you know, what are your options? But if you do have that flexibility, finding lower cost options for whether it’s a substitute ingredient with an. Same menu or making changes to the menu is definitely something I think folks know if they’re not looking at already, they definitely should, because it’s we’re not going to see the increase in food prices go away anytime soon.
James: And just to wrap up here real quick, what advice would you give to operators right now who are operating in this kind of inflationary increased expense environment?
Ben: I think the biggest thing is, you know, understand for your business, you know, where are there opportunities to potentially make modifications? You know, like I said, whether that’s in who you buy from, you know what substitute ingredients are potentially available or can you make changes to your menu to bring your overall food costs in line with what you think? You can actually charge your customers with it and to to take the time to do it. You know, again, thankfully there are tools that are out there. You know, we help with a few costs, you know, there’s definitely a lot of other ones out there as well to help we make it easier, right? And that that investment in time is something that will help pay off dividends definitely over the next six to 12 months.
James: And where do you see Food Maven going over the next year or two? I mean, what what are your plans for it?
Ben: Right now, we’re really just about trying to get out there and help as many folks as possible, you know, so we we were freemium model, so we want to always make it free for anyone to be able to compare cost across their own vendors and really try to bring something overall to the industry. So we really just want to get out there and help as many restaurant operators and foodservice operators as we can.
James: All right. Well, thank you so much for your time today.
Ben: Yeah, absolutely. Thank you. James, have a great day.
James: Yeah, you too.