by Deborah Jeanne Sergeant
The popularity of food trucks, CSA and meal kit delivery services have provided additional means for farmers to sell what they raise. To enter these various means of sales, farmers need to consider how this type of selling is different from wholesale and other means of retail sales, including strategies, logistics and customer buying trends for these convenience foods. Mid-Atlantic Women in Agriculture recently presented their “Meals on Wheels” webinar by University of Maryland Extension featuring Ginger S. Myers, Extension agent with UM and director of Maryland Rural Enterprise.
“In the farmers market world there has been a lot of angst about the food delivery service,” Myers said.
Meal kits, which deliver the ingredients to cook a fresh meal by subscription, have become very popular; however, some believe that consumer interest is starting to wane.
She said in reality, a CSA share is like a meal kit – and some farmers are tapping into the meal kit trend by trying to include meal ideas, recipes and compatible ingredients with CSA shares. Though some consumers are moving away from meal kits, Myers said she doesn’t see the kits going away.
Instead of meal kits disappearing, she sees spin-off trends and locations, such as grocery stores selling meal kits. One reason is that consumers like seeing what they’re buying.
“We buy things with our eyes,” Myers said. “Whether food, cars or shoes, it helps to see it. That’s one thing online shopping hinges on.”
Competing with a bigger chain or a grocery store may seem difficult for a lot of farmers; however, Myers wants farmers to start to think about what they have to offer. “When chefs purchase from farmers, food is evaluated for flavor, quality and then price. They understand how to compete with the senses when you enjoy a meal, before you even taste it. They’re willing to put price behind them,” she said.
Myers said in 2020, more than half of restaurant spending is projected to be not at the restaurant but comprised of take-out, delivery and drive-thru purchases. People want the convenience of not cooking along with the comfort of eating at home.
She believes the situation is ripe now for the “meals on wheels” concept of what you can deliver. “It is the new convenience model,” Myers said.
To tap into this market, farmers need to plan how they will reach a public eager for food delivery. Myers said the business models include order-only, order and delivery or milk run delivery.
“Pick what you do well and grow,” Myers said.
It’s too difficult for multi-faceted farms to try to sell from each aspect of the farm at first. The order-only model can operate online and/or on a call-in, pick-up basis. “This is the easiest way to start,” Myers said.
Myers said sites like Shopify.com and Grazecart.com can make it easy to sell online. The sites track sales, which can help farmers with organizing their finances for paying taxes.
The order and delivery model requires farmers to either deliver the items themselves or rely on a shipper.
“If you do delivery, do you want those fees in the cost of the product or a flat handling fee or if you’re shipping if you’ll use UPS or FedEx?” Myers said.
Some customers may feel turned off by paying extra for shipping; however, building it into the cost of the product can be tricky. It’s easy for the price to get too high – or, if it gets too low, the farm won’t make enough money to cover shipping.
Offering pick-up dates and times eliminates shipping and helps customer better relate to the farmer.
“Some people host it in their parking lot or at the library,” Myers said. “A gym is a host site for healthful foods like a CSA with fresh vegetables.”
Partnering with another entity for a pick-up site may help farms in remote locations. Plus, it can attract additional customers.
The milk run delivery makes transporting goods more efficient than on-demand delivery. “You’re aggregating products where you have several carries with regular deliveries,” Myers said. “The routes may change and the route may be dropped based upon the number of deliveries in the region. But the truck will start out in the morning and do the whole run during the day.”
There’s no one perfect method for delivering goods to customers. “Think of what works for you,” Myers said.
She advised farmers to start with order-only and then move on to more complex methods of delivery once they’ve established a solid base of customers.
A refrigerated truck traveling several days a week represents “a robust delivery system,” Myers said.
If the volume is sufficient, a food truck may pay off. Myers said the average food truck can cost $50,000 to $200,000, depending upon how well it’s equipped. Though they seem like rolling kitchens, food trucks require a brick-and-mortar kitchen as the home base. Food trucks also need a safe place to set up, which may require a fee for parking, such as at a festival or a farmers market.
“You need to decide if you want the truck to get out three times a week,” Myers said. “Are you doing it for promotion? You may grow customers not only for your food truck but for your farm and farmers markets.”
She said a lot of food trucks partner with commercial wineries and breweries for their events. Myers encouraged those operating food trucks to join an association to stay current with what’s happening in the industry.
A mobile food business can provide another revenue stream for a farm, such as Cow Comfort Creamery in Union Bridge, MD. Myers said two dairymen with Jersey cows joined forces to develop a soft ice cream truck.
“It has been a struggle for them, like many dairy farmers,” Myers said. “They learned to make soft ice cream and found a trailer that was very economical to house their dispensers, equipment and freezers. They bring this out to a popular market site Friday through Sunday. You don’t have to have a $50,000 truck.”
The farmers also set it up at the farm at other times, but since it’s off the main roads only locals patronize it.
Myers said because the product is linked to them, it helps them also promote the dairy industry. “They do a wonderful job at promotion,” she said. “People buy from people they like. It helps put a face on a farmer and make a connection with who’s producing their food.”
Location and timing can make a big different in a food delivery business’ success.
“Customers are always considering added convenience,” Myers said.
When delivering to customers’ homes, offering a general deliver timeframe – not an exact time – can minimize the risk of disappointment.
Myers suggested adding more convenience to a product the farm already markets. “Sometimes we forget that tweaking a product can give you three to four other products,” she said.
In addition to selling whole chickens, a farm could make chicken pot pies, chicken fajitas and chicken soup to sell.
“Think of why they need it,” Myers said.