As long as we’re apart, we’re in this together. For your passion, your hard work, your support, and your spirit. Here’s to you.
The original Mockingbird Distillery shack in Austin, Texas, 2018 The Shack is the first building at the Mockingbird Distillery, and where the whole thing started. For a long time it housed all of the vodka operations before we outgrew the 998 square foot structure. We’re still making vodka on the same land we started and Tito’s office is still at the Shack today.
MAY 2020 COVER IMAGE ONE ROQ PUBLISHER MICHAEL POLITZ Michael@fb101.com EDITOR-IN-CHIEF LAUREN KANE Lauren.Kane@fbmagazine.com NATIONAL SALES DIRECTOR COLLIN MILLINGTON Collin@fb101.com DIRECTOR OF PROGRAMMATIC SALES BARB ROGERS Programmatic@fbmagazine.com PODCAST ENGINEER BRAD JONES Brad@marque.media CORPORATE EXECUTIVE CHEF JOSH GREEN Chefgreen35@gmail.com CONTRIBUTING EDITORS JENNIFER ENGLISH LAUREN MCINDOO MICHELE TELL TARRY HART KAIULANI DELGADO MATT FROHMAN VEDO PITNJAKOVIC DEBBIE HALL
We honor and remember the support of Chef Kerry Simon, Gary Cantor, Robin Leach, Chef Paul Prudhomme, & Gary Coles
Food & Beverage Magazine® is owned and published electronically by Beautiful People, LLC. Copyright 1995-2016 Beautiful People LLC. All rights reserved. Food & Beverage Magazine® and distinctive logo are trademarks owned by Beautiful People, LLC. “fb101.com” is a trademark of Beautiful Peopl,e LLC. No part of this electronic magazine may be reproduced without the written consent of Food & Beverage Magazine. Requests for permission should be directed to: Lauren.Kane@fbmagazine.com. The information contained has been provided by such individual, event organizers or organizations. The opinion expressed in each article is the opinion of its author, organization or public relation firm. Food & Beverage Magazine is not affiliated with any other Food and Beverage or Hospitality publication.
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Cover Feature Story
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“Americ Boston S Larger F Safety of
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a’s One-Stop-Shop for Seafood” Sword & Tuna Announces New, Facility focused on Health and f their Products and Employees “If it swims we have it. From Haddock, and Tuna to live Lobsters that come from our open closed Lobster Tank System. We trade marked our Norwegian Salmon to Perfekt Salmon it’s the best in the world. We also have all the Continued on pg 09 !""#$%$&'(')*+'$,*+*-./'$$ $$$,*0$1223'
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Boston Sword & Tuna (BST) announced April 6th the opening of its 50,000 square foot state-of-the-art processing facility located at 10 Codfish Way in Boston, MA 02210. BST announced in January 2018 its plans to leave its former 33,000 square foot facility on Seafood Way, where it had been since 2001, for the larger facility a half-mile away in Raymond L. Flynn Marine Park, part of a 6.5 acre waterfront property. The company remains less than three miles from Logan International Airport, which conveniently suits its 24-to-48 hour online order and delivery effort. The facility boasts a continuously controlled temperature monitoring system which is managed through energy consumption for maximum efficiency. The company said it has worked in conjunction with a business partner to allow instant access to temperature readings while on and off site at this facility. BST has also installed a completely automated
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ozonated water system with both on and offsite monitoring. BST said, "We are excited to introduce our new completely automated sanitation system which includes door foamers for the proper sanitation of all rolling equipment as they travel throughout our facility. The door foamers are also in place for the BST team members to ensure clean and sanitary working conditions throughout our facility. Each one of our processing divisions are equipped with a wall mounted sanitation system to ensure the most advanced procedures are carried out by our committed staff. Each morning before production begins microbiological swabs are taken to ensure the highest possible standards of cleanliness for our facility and production areas."
The company noted that Its staff, including sales, office and production staff, have all been trained in all required areas as per FDA Seafood HACCP and the Food Safety Modernization Act as well as in process of earning a Global Food Safety Initiative (GFSI) certification in this calendar year. The company stated, "We pride ourselves on providing the freshest seafood available to our customers, our seafood is caught delivered to our facility, processed and is presented to our customers for immediate access. We have one of the most dedicated staffs in the industry where no detail is to small and no customer request will not be thoroughly vetted to ensure complete customer satisfaction.” Meanwhile, the new facility, located on Codfish Way, in Boston, boasts several new safety 444567*+*-./'58"7
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features that better position the company to battle with any concerns related to the coronavirus as well as more traditional food safety worries. It boasts a continuously controlled temperature monitoring system which is managed through energy consumption for maximum efficiency. It allows instant access to temperature readings while on and off-site. Each one of BST's processing divisions are equipped with wall-mounted sanitation systems. Each morning, before production begins, microbiological swabs are taken to ensure the highest possible standards of cleanliness for our facility and production areas, the company said.
ees and our customers and our family. We'll get through this, believe me.” Like everyone else in seafood, the coronavirus has definitely slowed the company's roll. Retail sales are way up and the CEO remains confident it will bounce back to normal as soon as the country gets back to normal.
Boston Sword & Tuna has been growing 10% to 22% every year for past seven years and now has over 150 employees. The 48-year-old company remains thankful to still have all 152 of its workers healthy and employed despite the worldwide pandemic. Michael Scola, the CEO and controller of Boston Sword & Tuna (BST), had planned to host a big reception with lots of fan fair at its brand new 50,000 square-foot facilities in conjunction with Seafood Expo North America both the opening along with the conference have both been postponed. ”It was supposed to be a happy time," Scola said. "We had the party all organized. We were going to have an open house at the new building ... and you know what, some things are just out of your control. But the most important thing is the health of our employ!""#$%$&'(')*+'$,*+*-./'$$ $$$,*0$1223'
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“I wish more consumers didn’t trust my products.” - Said no health food brand, ever.
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Convertible Debt For Early Stage Food and Beverage Companies Market Update 2020
C
onvertible debt remains a key tool in the arsenal of early stage food and beverage companies. But like all innovations, whether in food or financing, things change over time. Over the last two years, the market for convertible notes has shifted, with the financing instrument becoming a more sophisticated, and in most cases, a less founder-friendly financial tool. Convertible notes still have the same structure: a loan by an investor with a nominal interest rate and a maturity date typically between 12 and 24 months that will mandatorily convert into equity upon a negotiated qualified financing. Additionally, notes typically convert into equity voluntarily upon a non-qualified financing, and these days, mandatorily at maturity. But in each case, the pricing of the conversion may vary. In connection with a financing event, the conversion will typically be priced at the lower of a discount (typically around 20%) applied to the price applicable in the financing event or a fixed or floating capped price. In the case of maturity or upon a sale of the company, the cap is usually set at a negotiated amount which may be lower than the cap which would apply in a financing event. So what has changed? What’s new over the last few years is what happens after the notes are issued. Traditionally, the risks of notes for entrepreneurs were focused upon the behavior of the holder of the notes – the risk that, at maturity, if
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there was no forcible conversion, the noteholder would be in a leverage position to foreclose on the company and snatch the company for the value of the debt. But even where you have true “friends and family” and such foreclosure risk is not meaningful, there remains a problem in the current market. And that problem is: that the days of “free equity” are over. In prior years, the next investor – the one in the qualified or unqualified financing who represents the real equity round – historically treated the notes as if they were an advance on new money. This means that the notes were treated as part of the “post-money” and not the premoney capitalization of the company. As an example, if an entrepreneur raised $2 million in notes, and then found an equity investor to add $5 million at a $10 million premoney value, it was treated as if $7 million dollars was being invested at the $10 million premoney value. In such deal the shares issued upon conversion of the notes would typically be issued at the discounted or capped price. This led to a few odd outcomes. First, the investor who thought they were buying one-third of the company would find out in that scenario that they owned a substantially lower percentage. Second, the value of their investment actually decreased at the moment of their investment, because while they were buying full price shares, the noteholders were buying shares at a discounted or capped value. Today’s market is different. Many investors are 444567*+*-./'58"7
now laser focused on the post-money valuation and treat all preexisting notes or other convertible instruments as part of the premoney capitalization of the target company. Using the prior example, the new investor would treat the $10 million pre-money valuation as including not just the value of the equity but also the value of notes. This means that the preexisting equity holders absorb 100% of the dilution not just from the principal and interest under the notes, but also the value consumption effects of any cap or discount. In this scenario, the post-money valuation does actually equal $15 million, and the investor gets the one-third they bargained for. Correspondingly, the preexisting equity might represent only $7.5 million in value or so, given that the principal, interest and discount or cap effect of notes are being treated as the remaining $2.5 million. If the clock was wound back in time, and the entrepreneur could have raised the initial note investment dollars at between $7.5 million and $10 million, they would have suffered less dilution had they done the deal as equity and not as debt. There is also no doubt that the second scenario is more economically rational. If the notes were not convertible, the company would have a $2+ million obligation. It would be strange if an identical company without such debt was valued in the same way. Treating the notes as a deduction against enterprise value is both rational and consistent with how more mature companies are valued by private equity markets. One key problem with the change in the market is that there is often a lack of early communication about these issues. While entrepreneurs and investors may agree on the $10 million premoney valuation, the investor is talking about enterprise value (before the deduction for the debt), and the entrepreneur is talking about equity value. This
can lead to disconnection and misunderstandings between the parties that can blow up deals. Most importantly, this change by Series A investors in the treatment of the notes means that entrepreneurs should anticipate that the company will have to build value fast enough to overcome the debt itself, as well as the interest, discounting and cap effects of the notes. If the company is not on a high growth trajectory, the notes which were selected to permit the company to build equity value, may actually serve to create more dilution than had the company initially accepted an equity investment.
This article was prepared by Jeremy Halpern, the co-leader of the Food and Beverage Group at Nutter McClennen & Fish LLP. For more information, please contact Jeremy or your Nutter attorney.
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Three Strategies for S COVID: A Case Study
Scott Landers, Co-Founder and Systems Engineer, Figure E
The uncertainty surrounding COVID-19 has taken a life. What was once a celebrated experience of dinin been limited to takeout and delivery, upending the r in a way we have never seen before. Through this rants have had to reflect on who they are as a bra operating decisions, and implement many changes model - whether that is to invest, pivot, or comm restaurants have made the decision whether to close is the time to embrace that decision and focus on long-term results. For those who have temporarily closed:
1
Invest: Use this time to ask, what does need to reopen with delivery as a core part ing model? While daily operations are on can look ahead and invest in the restau Based on conversations with multiple resta there are two common goals for investmen
1- Faster Reopening: Investing in an online ketplace and last-mile logistics now can reopening once social distancing restriction
2- Streamlined Operations: Redesigning delivery is an opportunity to eliminate low and maximize cross-utilization of ingredien
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Pivot: Change your business model to highlight what the market needs now. While the location of your business hasn t changed, the trade area and community surrounding it likely has. Customers that used to commute are now at home and tourism has dropped to near-zero. Naked Farmer, a Tampa Bay restaurant serving vegetables and meats from local farmers, decided to pivot their business model. While staying true to their mission of increasing access to locally sourced food, Naked Farmer pivoted their restaurant business and created a digital farmer s market. The menu is based on the same supply chain that is used in their restaurant and created a more
Commit: Mexicue, a restaurant with five locations throughout the northeast made the decision to commit to their current business plans. Mexicue had spent the six months leading up to the pandemic creating a new delivery experience, MexiCrew, based on friends and family dining together at their homes and offices. With Mexicue s commitment to remaining open, they have doubled down and are addressing the question of what do people need now. Their delivery menu enables easy group ordering with food that is designed to be delivered, and alcohol delivery available in NYC and DC. By committing to their core brand identity, Mexicue is serving as a convenient and delicious option for families and roommates
For any restaurant that is offering delivery, it is important to protect your brand reputation and profit margins even during the pandemic. In the short-term, restaurants need to generate cash flow, but in the long-term it will be brand and profits that keep the lights on. While each restaurant is unique, meaning no one solution fits all, Figure 8 s biggest recommendation is to build a business that will be sustainable after the pandemic ends - whether through investing, pivoting, or committing.
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Launches COVID Relief Fund Donation Feature For Online Restaurant Orders BentoBox, a hospitality platform that empowers restaurants to own their presence, profits and relationships, today announced that it has launched a COVID Relief Fund feature for online ordering customers. The checkbox enables guests to instantly contribute $1.99 to their takeout or delivery order as part of a relief fund that goes directly to the restaurant. Bento Box does not take any commission or fees from these contributions. The feature aligns with BentoBox’s core mission of creating an effortless experience for restaurants while driving high-margin revenue and elevating every interaction between the restaurant and its guests. Restaurants can add this function to online ordering in under one minute, and it is instantly reflected within the guest experience.
“We knew that we had to move quickly to support restaurants that have been profoundly impacted by the COVID-19 pandemic,” said Krystle Mobayeni, Co-Founder and CEO of BentoBox. “The donation feature is easy to use and should serve as an instant source of relief while we work to attain substantial industry-wide relief measures.” BentoBox launched this feature in response to firsthand insights into COVID-19’s impacts on the restaurant industry from running over 5,000 restaurant websites in the United States. Over the past three weeks, BentoBox has seen a 50% week-over-week increase in online orders, making this a prime channel for driving relief fund donations. The company is also in touch with leading advocacy groups for restaurants, having created
pro-bono websites for the national Independent Restaurant Coalition and ROAR , an organization dedicated to helping New York restaurants. About BentoBox BentoBox empowers restaurants to own their presence, profits and relationships. The hospitality platform disrupts third-party services that come between the restaurant and the guest. BentoBox puts the restaurant first and offers tools that drive high-margin revenue directly through the restaurant's website. BentoBox is trusted and loved by over 5,000 restaurants worldwide including Union Square Hospitality Group, Eleven Madison Park, José Andrés' Think Food Group, Manresa, Dominique Crenn Dining Group and H-Town Hospitality (Hugo's, Xochi). Based in New York City, BentoBox is one of Inc. 5000's fastest-growing companies . Ranked 305 in the list, the company's GAAP revenue has grown 1,479% over the past three years and maintained over 98% month-over-month retention. BentoBox has successfully raised over $30 million in funding, including backing from EHI , Danny Meyer's investment fund.
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;"/*<'2$,")'$=>*/$?@AAA$B*)2$"C$D3<$&3<<')$<" $$EF$;*(.2$,'#.8*G$F'/<')$<"$!3'G$H")I')2$;3)./+$ FJK1;LMN$O*/#'7.8 The Nutty Gourmet, affiliate of Grower Direct Nut, and family-owned walnut farm and processing facility, now features a delicious lineup of locally-grown nut butters. The Nutty Gourmet features six nut butters to suit a multitude of tastes. The products feature four varieties of walnut butter including a classic roasted version, sea salt, honey, and maple cinnamon. The company is also launching a delicious salted pistachio butter and a praline flavor pecan butter. Each walnut butter is made with the company’s very own non-GMO and sustainably grown walnuts. The roasted variety is for those that want the simple walnut flavor, while honey and maple cinnamon add a touch of sweetness that goes great as a topping. For consumers that want that roasted/salted balance, the sea salt variety further enhances the deep flavors of the walnuts. The pistachio nut butter is lightly salted to accentuate the unique flavors without any added sugars. It’s made with California-sourced pistachios, is keto-friendly, and is gluten and preservative free. The
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Nutty Gourmet’s pecan butter is praline-flavored, so it has a touch of sweetness to balance the pecan taste. Packed with antioxidants, the pecan butter option gives consumers a boost of healthiness without any preservatives. “We stand by our great selection of nut butters, which we proudly consider the very best available today,” said Aaron Martella, CEO of The Nutty Gourmet. “The flavor profiles in each nut butter reflect the care we take in offering products that are not only environmentally-friendly but also delicious. And we produce consistent quality because we’re a family-run business, so everyone involved is vested in consistency and the highest standards. We encourage our customers to expand their snacking horizons and try one of our walnut, pistachio, or pecan flavors. “ The lineup of nut butters is all produced with The Nutty Gourmet’s strict sustainability and quality practices. The company’s processes include drip irrigation and micro sprinklers for reduced water usage, solar panels to supply 80 percent of energy needs, and good farming and manufacturing practices.
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The Nutty Gourmet announced its donation of 6,720 nut butter jars to UC Davis Medical Center. The company dropped off several hundred cases to the hospital. "UC Davis is very close to our hearts," Vice President of Sales & Marketing Tony Varni added. "As a fellow alum, I wanted to make sure our company did something to put a smile on the faces of these nurses and doctors who are risking their lives for our community day in and day out." While The Nutty Gourmet continues to operate during the COVID-19 pandemic, the company adopted multiple new safety protocols. This includes social distancing measures for staff members, protective gear for manufacturing employees, increased hand washing and sanitization, and remote work when feasible. The Nutty Gourmet donated thousands of 10 oz. Pecan Praline Butter and Honey Walnut Butter jars that will be passed out to medical center staff.
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Finest Soda on t h e Mot h er Road www.route66sodas.com
SodaJerk@route66sodas.com
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Increased recycling regulations
Hyperfocus on food waste Food waste costs the hospitality industry over $100 billion a year, and over 70% of food waste occurs before it even gets to a customer’s plate. Traditional thinkers may attribute food waste as a natural and inevitable part of the industry, but addressing this inefficiency can be a fruitful strategy for both saving the planet and increasing a restaurant’s bottom line. Considering that food costs are a substantial portion of a restaurant’s COGS, understanding where and why that waste occurs can prove to be extremely beneficial. Throughout 2020, customers will expect restaurants to address their food waste through thoughtful, strategic solutions. One example of this approach is NanoPack, a startup that’s tackling food waste head-on with nanotechnology. Its high-tech food packaging film extends the shelf-life of its products by inhibiting microbial growth. This improves the safety of food, and, thus, reduces food waste by allowing kitchens to keep ingredients longer. While keeping ingredients fresh can prevent some waste, there will likely still be edible food that cannot be sold. Traditional thought might lead to this food being tossed in the landfill, but several organizations have other ideas. For example, the nation’s largest hunger-relief nonprofit Feeding America created Meal Connect, a technology-based platform that makes it even easier to connect donors with surplus food to local food banks and charity partners. Whether you are a small, family-owned establishment or part of a large corporation, Meal Connect combines sustainability with charity to keep large volumes of edible food from emitting greenhouse gases.
As the nation begins to become recycling and responsible waste m follow. Spurred by market cha historic influx of big bills that h change sustainable policies. For e tic Pollution Act proposes to e deposit system and enshrine ext packaging. Further, controversial bags, styrofoam containers, and Food and beverage operators sho lative shifts to anticipate change resource to monitor the trending
Overall, restauranteurs can expec emphasis on food waste, eco-frie lations throughout the coming y seek out sustainable businesses competitive edge by being prepar operators can ensure that they are demands of the food and beverag
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more aware of the importance of management, more legislation will allenges, lawmakers have seen a have the potential to dramatically example, the Break Free From Plasestablish a nationwide container tended producer responsibility for l single-use items, such as plastic d straws, would also be banned. ould stay abreast of potential legises. Waste Dive has a convenient legislation in your area.
ct to see more of an industry-wide endly packaging, and further reguyear. As more customers begin to to support, restaurants can gain a red for change. By planning ahead, e ready to meet the quickly shifting ge industry.
Eco-friendly packaging with an emphasis on zero-waste The world produces more than 300 million tons of plastic every year, over half of which is only used once, according to Plastic Oceans. A significant amount of plastics each year ends up in our waste streams, whether that’s in oceans, landfills or elsewhere. Great volumes of plastics, including six-pack rings, water bottles, containers, single-use bags and microplastics from manufacturing waste are generated by the more than $12 trillion global food and grocery retail market. Luckily for restauranteurs, consumers also want to do their part as they increasingly seek responsibly packaged food and beverages. Growers and manufacturers throughout the supply chain are rethinking their packaging use to incorporate renewable resources, reduce waste and lower emissions of greenhouse gases. A great way to grab consumer’s attention would be to convert your in-dining experience to using reusable dishes, silverware, and cups instead of disposable items that may be in place. Not only will this help reduce your environmental footprint but it will eliminate the cost of those disposal items from your COGS.
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The First Commercial Kitchen Marketplace
With the COVID-19 shutdown turning the entire food and beverage industry on its head, kitchen owners and food operators are reimagining what the future holds for their businesses. With hundreds of thousands of facilities essentially becoming ghost kitchens overnight, countless opportunistic models, services, and technologies will be emerging as the ecosystem resets. Enter Kitch, the world's first commercial kitchen marketplace connecting underutilized spaces with food businesses. With the online marketplace launching mid-May 2020, we are excited to announce that Kitch has just started pre-signups with kitchens from hotels, restaurants, nightclubs, supermarkets, country clubs, commissary and ghost kitchen facilities. Kitchen owners can now generate new revenue streams by renting out their space to experienced, permitted, and insured operators. On the Kitch platform, kitchens create their
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profile that is searchable by criteria such as location, equipment, price and availability. Virtual delivery-only restaurants, caterers, mobile food vendors, manufacturers and menu testers search for the kitchen that meets their operation requirements and aligns with their financial models. Food businesses are looking to tell their story through the food they cook and create profit generating opportunities. Our marketing engine, consultants, and platform tools match professional operators with their ideal kitchen partners. Owners vet food operators on a variety of levels and once confirmed, payment is made through Kitch's online reservation system. Kitch manages all ongoing payments, contracts and documentation including permits, licensing and insurance. Kitch supports the entire marketplace with value-added services and resources promoting a positive rental experience. 444567*+*-./'58"7
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As our country continues to unite with full effort to defeat COVID-19, hospitality consumers have grown eager to get back to traveling and rooting for their favorite sports team. Sports help heal and temporarily pause the troubles in many lives. We know the teams have been busy planning, ensuring all players are secure to compete for their communities and loyal supporters. Though sporting teams are eager to take to the field and airlines are growing impatient to put more planes back in the sky, it is equally necessary to ensure that these business can create a sense of comfort and protection for each fan, traveler, employee, and partner while visiting entertainment venues and airports. It is essential to extend business to the community, supporting the small businesses heavily impacted by the shut-down of many industries. We are asked every day by many, including neighbors, "What is the new normal in sports and travel hospitality?" The "new normal" cannot be predicted this early in the planning process of reopening the airport or entertainment venues. However, it is our job to ensure we create a safe, empathetic, and enjoyable environment for consumers. Are the days of fancy buffets, reusable items, lavish food offerings, and crowded clubs and lounges over? Of course not. We need to temporarily adjust to create a sense of security as our businesses attempt to heal from the pandemic. Buffets can easily be reconfigured to action stations served by a trained culinary representative using protective equipment and trending fresh packaged food items such as salads and desserts in a jar. Sporting suite operations can see the same level service with different presentations using single-serve offerings and moving away from the extensive food displays. Quick Service Restaurants can quickly adapt by using different serving containers and better offerings of fresh packaged food and beverage items. It is also important to create smaller grab-and-go markets to ensure that consumers have accessibility to prepackaged food and beverage items quickly. Mobile ordering and the delivery process will be a crucial component for many including clubs and lounges as you will need to keep consumers to smaller gatherings to help avoid crowded lines at quick service restaurants. First Star Solutions can help evaluate business readiness, including safety and sanitation practices, before reopening your doors. A walkthrough with a comprehensive report and action plan will educate your teamin order to provide the security consumers will require and also ensure the spread of this virus does not continue Written by Luis D. Rivera, Founder of First Star Solutions
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