business-legal Have you ever bought a recipe?

[mslater]

Background: I've been in business 4 1/2 years, last 2 years full time. The business has grown organically, which I'm happy with. Starting at smaller markets, now in small retailers across Canada with wholesale growing well. Nothing national, yet, but doing very well with our brand recognition, manufacturing in place in federally inspected facilities (far cry from cooking out of our kitchen!).

We have a “competitor” that is going out of business. I put that in quotes only because we’re in the same category, otherwise we have a great relationship. The owner just isn’t dialled in anymore, I could almost see this coming.

I received an email from a retailer of hers and I verified with her that this was indeed a fact before I replied. Seems like she's referring us as an alternative to her products, which is so dope.

So there’s an opportunity for us. I’d really like to get some of her recipes and get x amount of products to expand our offering almost immediately. I just don’t know the approach. I can’t afford to buy her business and rebrand, nor what that entails.

Any thoughts/experience?

 

[The Hot Pepper]

My suggestion would be a trade. Offer to carry on their legacy by using the recipes and their story on the label. This way their recipes live on through your brand. The story (on the romance panel) could be about the family, the company, or the recipe itself, citing individuals etc. You might even keep some of the sauce names, or not.

"This sauce was originally developed by Eli Smith, in his kitchen, in 1993..." blah blah blah.

You would want to write up a contract that hands over full rights to the recipes in perpetuity and the "trade" would need to have language that the stories may not be applicable to all bottles (sizes) and marketing. And make sure the sale (trade) includes the rights to use the stories. You might want an IP lawyer to help.

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[salsalady]

If you do get to the pint of taking over the sauces and recipes, make it a condition of the agreement to have them make a batch of each flavor, have someone video the whole process while you participate. There are a lot of little nuances that might not be evident in a written recipe. 1 Tbsp could mean one flat Tbsp or 1 heaping Tbsp. Maybe they have a certain coffee cup that they use for measuring that is not exactly one cup. A friend of mine making her dad's peanut brittle recipe ran into that.

Sounds like a good opportunity to save some sauces or brand. I always hate to see a good product go away because of burn out or similar. Hope you can work a deal to keep the sauces alive.

One option to get product immediately is on commission. That's is kind of sketchy on their side because they have to give you the product on the trust that you will pay them when you sell the product. I got burned on that many years ago, sending product to someone who was going to sell it at a BBQ festival.

I like what the Boss said about keeping their brand and story. That's a good sales point for someone who has built up the product and doesn't want to see it all the way gone.

Good Luck!

SL

 

[mslater]

Thanks for all the input.

In talking to a mentor of ours (she's in a different category, but is hugely successful), she said my focus should be on obtaining her retailer customer list more than anything. My BIL owns a private equity firm, so he knows about this on a completely different scale, but he had the same sentiment.

Given the limited real estate on the labels, I'm not sure I want to go with the legacy route, but I'm open to anything. I have a call with her this afternoon, and I'll let her talk and see what she envisions. I have no idea what sort of data she has available or how it's organized, which will be a factor.

I'll let you know how it goes!

 

[The Hot Pepper]

Check the legalities, you most likely have to buy the company for that. Depends on their privacy agreement with customers. If they have stated they do not sell their data, then they cannot. But the company can be sold with the data, of course.

 

[mslater]

So we had an initial talk yesterday, no numbers.

During the talk, they mentioned that they're in around 100 stores, I'm already in 40ish. So out of those stores, how many are actually profitable?

My thinking has switched, while I still think its a slight possibility, in all honesty, I can get into another 60 stores pretty easily on my own. Recipes I can also do myself, so I don't really see that there's a value on me spending any money on this.

We talked about a couple of various options, like if I continue with my brand and have theirs as a "special collection". They also have rubs and jellies, which I don't offer, but again, I can come up with recipes for that as well, not that hard.

I left it with them to talk to whoever they talk to and send me their options. But at this point, I don't see the value on throwing any money their way.

 

[salsalady]

Good reasoning on your part. Especially on the sauces. There are thousands of sauces, something for every taste and heat level. You are developing your own sauces. Unless there is something absolutely super special about their sauces, kind of hard to justify the money.

 

[mslater]

I have a mentor that is in another category, but very savvy and experienced. She did some digging before we talked today, turns out there's some sort of litigation going on with their name, and as mentioned they wanted us to explore doing a separate line under their name. Dodged a bullet seems like!