Kevin McCray of Kevin’s Natural Foods: 5 Things You Need To Create a Successful Food Line or Specialty Food

An underserved need — The foundation of any successful food brand is identifying an opportunity to help improve people’s lives. There are dozens of unmet and underserved needs that are just waiting for the perfect food product to solve them. Today’s consumer wants to eat healthy with limited time, serve something memorable, and indulge without going overboard all in the same week. What’s more, people’s needs are evolving as different flavors and nutrition claims fall in and out of fashion and as their lives and daily routines evolve. At Kevin’s we saw an opportunity to empower people to eat clean at home by making it easier to whip up a delicious dinner despite the demands of their time-starved schedules. So, whether you have a meal solution that makes it easier to get dinner on the table or a dessert that tastes so good your customers can’t help but go back for seconds, make sure your product is meeting your particular need in a unique and desired way.

As a part of our series called “5 Things You Need To Create a Successful Food Line or Specialty Food”, I had the pleasure of interviewing Kevin McCray, co-founder of Kevin’s Natural Foods, a line of healthy entrées, sauces and seasoning blends on a mission to make clean eating not only taste delicious, but also seamlessly fit into any lifestyle. Co-founded by Kevin McCray, who battled a severe auto-immune disorder for years and cured his condition through clean eating — specifically the Paleo diet — Kevin’s Natural Foods was born from his desire to help other people eat clean. Kevin’s guilt-free, sous-vide entrées and signature Paleo, Keto and Gluten-Free certified sauces allow home chefs to whip up delicious Michelin-style meals in just five minutes. With restaurant-quality ingredients and recipes, Kevin’s products ring in at a more approachable price point and are even available on the shelves of coveted grocery retailers like Whole Foods and Costco and through Amazon. With strict nutritious standards, entrees and sauces contain zero refined sugar, artificial ingredients, grains, soy, dairy, antibiotics or hormones. A true market disruptor, Kevin’s is the first clean refrigerated entrée brand and challenges the notion that proper nutrition can’t be as delicious as it is healthy.

Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a bit about your “childhood backstory”?

I grew up in the suburbs outside of Sacramento. My family was as middle class as they come, and my Dad was a spitting image of the American dream. He owned and operated a thriving small business and, although I never had the latest Air Jordan’s, I never wanted for anything growing up. I did well in school and was an average soccer player. Since I wasn’t an all-star on the field, by the time I was driving age, I was eager to get a job to fund the most important thing in high school — my social life. The day I turned 16 I got my license and the very next day I had an interview at Red Robin, where I got my first job and fell in love with work.

In college things got interesting. While I was pursuing my business degree at SDSU I was hit an auto-immune disorder out of the blue. After being laid up in the hospital for weeks, I was able to rehab back to full health only to end up back in the hospital every few months struggling with the same ailment. This cycle lasted for years. Frustrated and defeated, I happened to stumble on a paper about how the Paleo Diet could be effective in reversing autoimmune disorders and adopted the diet that would change my life forever. I returned to good health, kicked my dependence on conventional medicine, and have been an advocate of clean eating ever since.

Can you share with us the story of the “ah ha” moment that led to the creation of the food brand you are leading?

When I got married and began eating most meals with my wife, she politely pointed out how weird it was that I had been eating the same small variety of foods over and over again every day for the past 10 years. This stuck with me and I started talking to other folks that were working to clean up their diets. Soon, it became painfully obvious that an increasing number of people were adopting lifestyle diets that limited their food choices (i.e. Paleo, Keto, Gluten-Free, Vegan, etc.) and that this move decreased their already limited repertoire of go-to home-cooked meals. This phenomenon was amplified by the fact that the world had sped up and less people were spending the time necessary to become a home cook that could easily whip up a variety of recipes on top of their 50-hour workweek.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

When we first launched our simmer sauces, they were filled into plain plastic pouches that were packed into printed boxes with the product info. Our first customer wanted to cross-merchandise the sauces with their packaged meat. To accomplish this, we ordered a peg system that was designed to display the sauces above the chicken in the meat case. The week before we printed the sauce boxes, our customer said that they were really focused on eco-friendly packaging. Trying to be over-achievers, we made the last-minute decision to print the sauce boxes using 100% recycled material as opposed to the virgin material we had already vetted. The day after we launched, I had 20 missed calls by the time I woke up and got to my phone. Dozens of angry Meat Managers were calling to let me know that they had sauce pouches piled up on top of their chicken display. Apparently, the recycled material wasn’t as strong, and the sauces were falling through the bottom of the boxes. Needless to say, we never rolled out a packaging change without testing it in its proper environment after that.

What are the most common mistakes you have seen people make when they start a food line? What can be done to avoid those errors?

Many great young products die because they are priced too high. The creator passes all of their inefficiencies on to the customer in the early days, which never gives the product a real shot to succeed. For many products, it is important to find a way to absorb the margin hit early on to price the products with the market. This will give your line a fighting chance in an uber-competitive landscape. However, it’s just as important not to price the product so low that you can never achieve a sustainable margin. At Kevin’s, we spent the time to model out what our ingredient costs, labor, and freight fees would look like when our volumes grew to make sure we understood how much business we would need to secure to achieve realistic margins. For example, we knew how much a container of coconut milk shipped directly from Indonesia cost — to the penny — even when we were still buying small pails from our local distributor.

Let’s imagine that someone reading this interview has an idea for a product that they would like to produce. What are the first few steps that you would recommend that they take?

First step is to conduct a very basic analysis to make sure that there will be a salient need or desire for your product in the market. Honestly ask yourself the following questions:

• What problem am I solving for my customers that is not already solved by direct or indirect competitors? (or how am I solving it better?)
• Why would people spend their money on my product instead of _____________? (run this analysis for all viable alternate solutions)
• How big is the prospective market?
• Is there a viable distribution channel that services this market effectively?

Next, figure out how to make a basic prototype. At this stage, you need to make your creation tangible so that you can start a dialogue with your target end users and potential production partners. Many founders are starting in their home kitchens at this stage.

Then, it’s time to get in front of customers in focus groups. We held dozens of focus groups over dinner where we served ample food and wine to get people comfortable and talking. These have been and continue to provide critical feedback we use to shape our product line. Every group discussion is different based on what needed to be evaluated at the time. We’ve covered topics ranging from brand/product naming, packaging design, flavor, cooking instructions, pricing, retail preferences, shelf life, etc.

After the product is vetted and you are happy with the initial prototype, it’s time to figure out what options are available to get it co-manufactured. After you identify and establish a dialogue with a co-packer, you can begin to understand shelf life, costing, and minimums, which will arm you with additional info to model out pricing and distribution.

Many people have good ideas all the time. But some people seem to struggle in taking a good idea and translating it into an actual business. How would you encourage someone to overcome this hurdle?

I am not especially talented. Many founders will admit the same thing. The difference is action. If you don’t act, your idea will never see the light of day no matter how good it is. People tend to hit a stop sign and never punch the gas pedal again. Every week we deal with some hurdle that requires us to do something resourceful, creative or uncomfortable.

What’s more, I notice a lot of folks lose steam once they have one aspect of the business figured out. A good idea only leads to a successful business if you figure out how to manufacture it, price it, distribute it, sell it, and market it. Each aspect of the business is mission critical and should be handled with the same level effort and attention.

There are many invention development consultants. Would you recommend that a person with a new idea hire such a consultant, or should they try to strike out on their own?

In my experience the founder can strike out on their own mainly because there are expert service providers in each field that you can lean on. For example, your packaging supplier can consult you on packaging design and your co-packer will help with sourcing and recipe development. However, there are hundreds of high-stakes decisions you will make along the journey and having experience in your corner in some fashion is a smart move. Whether it is a share group, mentor, or board member, someone that has done this before can see landmines that may be invisible to you when you are first starting out.

What are your thoughts about bootstrapping vs looking for venture capital? What is the best way to decide if you should do either one?

Bootstrapping is becoming more feasible as direct-to-consumer selling is becoming more ubiquitous. You can side-step a lot of the high dollar costs and associated with wholesale distribution and web development costs have come down.

However, I recommend securing capitol if your desire is to sell to grocers. Costs related to LTL freight, mandatory promotions, slotting, spoils, etc. all make it difficult to grow your business on a tight budget. This tends to slow down expansion and leave the door open for your competitors to move in and capitalize off your idea. What’s more, I’m big on being priced competitively to give your product the best shot to succeed, which will mean sacrificing margin while you are building buying power and economies of scale in your production. This is difficult when you have limited funding and bills to pay.

Can you share thoughts from your experience about how to file a patent, how to source good raw ingredients, how to source a good manufacturer, and how to find a retailer or distributor?

1. Sourcing Raw Materials: In my experience, finding suppliers has become much easier over the years. The Institute of Food Technologists (IFT) show is a staple for us and most suppliers are also easily searchable online. However, beyond finding suppliers, negotiating good prices on our ingredients was a game-changer for our company. When you first start out, you need your key suppliers to treat you like a big customer or you’ll never drive the sales necessary to become a big customer. We spent a lot of effort pitching our vision to prospective suppliers that had the largest impact on our cost in order to persuade them to “bet” on us. We wanted volume pricing, even though we didn’t have the volume yet. Most suppliers can spot a good idea and FOMO will kick in. There are a few suppliers that really gave us a jumpstart when we could barely meet their minimums and they will enjoy the rewards of our growth for years to come.
2. Finding retailers/brokers: Retailers are incentivized to curate a product mix that reflects the latest trends and delights their customers. They want to be found by brands with unique products. As a food company, we just need to get the meeting and have an effective story to tell. To get initial meetings with retailers, we have relied heavily on brokers with existing relationships. A good broker will secure the meeting, brief you on the Buyer’s expectations, and put the Buyer’s mind at ease that your brand has been vetted before the meeting. When you are ready to start selling, hunt for a brokerage firm that aligns with your values and be sure they have a long, established relationship with your target retail customers. I found all of our brokers simply by searching online and networking at food shows.
3. Finding a good manufacturer: A good manufacturing partnership is all about alignment. They need to have the proper expertise and the capacity to service your business. When you are first starting out, they also need to have the appetite to partner with you as you get your product off the ground. This can be challenging because you have to convince them that your project is worth their time. Consequently, you are probably going to have to talk with quite a few prospects. I recommend starting with searching online and making calls. You will inevitably find some that aren’t a fit. They all know each other, and they are typically happy to give you references to other players in their industry if you ask. There are also directories you can purchase from associations like California Food Processors to expand your search. Once you find one that seems to be a fit, remember, you are the customer. Make sure to evaluate their current work, tour their facility, and ask for their 3rd part audits and certifications before diving into a relationship.

Here is the main question of our discussion. What are your “5 Things You Need To Create a Successful Food Line or Specialty Food” and why? (Please share a story or example for each.)

1. An underserved need — The foundation of any successful food brand is identifying an opportunity to help improve people’s lives. There are dozens of unmet and underserved needs that are just waiting for the perfect food product to solve them. Today’s consumer wants to eat healthy with limited time, serve something memorable, and indulge without going overboard all in the same week. What’s more, people’s needs are evolving as different flavors and nutrition claims fall in and out of fashion and as their lives and daily routines evolve. At Kevin’s we saw an opportunity to empower people to eat clean at home by making it easier to whip up a delicious dinner despite the demands of their time-starved schedules. So, whether you have a meal solution that makes it easier to get dinner on the table or a dessert that tastes so good your customers can’t help but go back for seconds, make sure your product is meeting your particular need in a unique and desired way.

2. Infectious enthusiasm — Given the amount of competition in the food space, it is hard to imagine an emerging brand make it without creating enthusiasm. Even if you are solving an unmet need, enthusiasm is an important gauge for how successful your brand can become. To generate enthusiasm in today’s landscape, brands are marrying multiple benefits that would have seemed impossible 10 years ago. For example, at Kevin’s Natural Foods, we aimed to not only make dinner easy to prepare, but we also made sure it tasted amazing while still meeting the standards of today’s most popular lifestyle diets. By solving a combination of needs, we created a passionate following that identifies our brand as a good “fit” for their lifestyle and are so proud to be associated with us that they spread the word to their friends. This effect is necessary to put your brand on the map in such a crowded environment.

3. Competitive pricing — No matter how good your product is, price is part of the value equation for your customers. No start-up is going to have the buying power of the big food companies; however, it is still important to work cost out of the system to make sure you are delivering your product at the best possible value you can achieve. One approach that helped Kevin’s in the early days was to get our key suppliers on board with the vision for the brand. Showcasing our strategy and helping them “buy in” was crucial to persuading them to invest some of their margin and give us lower prices for the chance to be involved in something that would eventually be successful. Many of our suppliers today are reaping the rewards of betting on us and helping us get our products on the shelf at a competitive price.

4. Stand-out merchandising — One symptom of being a new brand is that you don’t have the mega marketing money that the large CPG companies have. Consequently, shoppers are going to have to “discover” your product on the shelves. Unfortunately, the shelves of a supermarket are one of the noisiest consumer touch points with thousands of products competing for their attention. Never-the-less your product has to be noticed. The old school marketing principals are the guiding light tackling this challenge: effective packaging design, disruptive merchandisers and shippers, POS signage, and cross promotion. There is no one way to get this right, however there is one thing that many brands fail to do — try it! At Kevin’s, we would create packaging mockups, pop into our local supermarket, place them in the display, and visually see how impactful the various designs were. After dozens of iterations, we found that adding a lot of white space to the packaging actually helped it jump off the shelves. This was an inexpensive method and sure beat finding out we needed to change our design after we were already sitting on thousands of packaging units.

5. Retailer partners — We still live in an age where the vast majority of food products are sold through retailers like supermarkets, club stores, specialty grocers, etc. The good news is that retail competition is so fierce that many potential partners value being “early” into something new. At Kevin’s, there are two rules that we live by that have been critical in fostering retail partnerships: (1) full transparency no matter how bad it hurts and (2) “capacity first”. When your business is young, you don’t have the redundancies and experience that other companies have, so things will inevitably go wrong. Whether it is a machine that went down and put you behind or issues with LTL deliveries, we always advise communicating the situation honestly and quickly. We have learned that every minute you wait, you give the retailer less options to pivot and address whatever hole you may be creating for them. While they might not always seem understanding, they have seen most situations before, and they will not ne the nail in your coffin. When it comes to capacity, if you are trying to “find” capacity to hit a launch date, you are asking for trouble. Securing capacity first and then committing to launch timing will save you loads of hard and costly conversations down the road. Rushing to produce tends to lead to quality issues and rarely goes as planned.

Can you share your ideas about how to create a product that people really love and are ‘crazy about’?

The more you help people improve their lives, the stronger their affinity will be for your product. The Kevin’s Natural Foods team learned early on that many health-conscious people struggle to get a healthy dinner on the table every day. Because of demands on their time, their dinners became bland and monotonous. So, when our entrées and sauces helped them spice up their menu and add more flavor into their life, while also keeping their nutrition plan on track, they became “crazy” about our brand.

Additionally, it was always our hope to become the type of brand that people want to be associated with because it reflects their core values. By taking a hard stance on good nutrition, our customers are proud to be eating Kevin’s and are happy to spread the word to their friends, family, and online connections.

Ok. We are nearly done. Here are our final questions. How have you used your success to make the world a better place?

The central reason for starting Kevin’s Natural Foods was to help as many people as possible eat clean. We know that the majority of people want to eat better and that life makes it hard to stick to good eating habits. It is our hypothesis that if eating clean was easier and tasted better, the likelihood that people would stick to their good intentions will increase. We are only a year in, so most waking hours are spent working on the business. However, feel honored to have been able to donate over 40 thousand of pounds of food to our local food banks over the last year.

You are an inspiration to a great many people. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.

I firmly believe that basic nutrition knowledge paired with a higher degree of efficacy related to cooking at home could be a catalyst for improved performance and confidence. I want our society to re-embrace a reformed version of Home Economics in schools. This class can skip baking cakes and making pasta. It would be focused on how to meal plan and prepare high protein, low sugar meals safely and efficiently. It would answer questions like: How do I cook meat, seafood, and vegetables so they taste good? How do I store pre-cooked food and how long is it good for? How much of each item should I eat in a serving and why?

We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US, with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.

I’m a big Robb Wolf fan. His blog and his first book (The Paleo Solution) were instrumental in setting me on the path to cleaning up my diet and reclaiming my health.