The Juicebox/Soup Peddler Project II

"Do you see that building over there?" asked Matt, pointing across Lamar to a tired old shopping center. Tired. Looked like nobody had so much as picked up a paintbrush there since 1964. The kind of place that you drive by a hundred times before you ever see it. Shifting his gaze, he said, "That right there is going to be the new Amy's Ice Cream and Phil's Ice House and they also bought that crappy old shopping center, that whole triangle. See that little building over there? It's for rent for $500 a month. My buddy Wes has the lease on it but he's probably not going to use it."

"Hm," I thought to myself. Then, again, after a pause, "Hm."

I repaired to my thought cave and began working on a business plan. Pro formas are great. Pro forma is the "beforehand" version of a Profit & Loss Report. It comes from the Latin for "No Fucking Way." It's a layout of your best guesses of how a business is going to work. When a banker or investor asks for your business plan, they're talking about this one sheet. You don't need a cover page, you don't need an introduction, you don't need a competitive analysis or any of that other B.S. They just flip right to this page. The pro forma is also the way you begin to mold the idea. A spreadsheet is good for getting information out of your brain, but its best purpose is to answer your questions. What if the rent is this? Looks good. What if the debt service is this? Okay, we can afford to spend this much on the remodel. How many people can we afford to employ and what can we pay them? Okay, that's reasonable. What does our Cost Of Goods have to be in order to make it work? Okay that means our pricing can be like this.

But most importantly, the biggest pie-in-the-sky question is: how much money is going to come in the door. That's what you're betting your house/marriage/happiness/reputation/future on. How much money is going to come in the door. The pro forma is all about "If this, then this." But it all comes down to the top line. The revenue line. There are different ways of calculating that top line. Seated restaurants have a fairly set formula based on the number of tables, the average ticket, the average number of table turns. Essentially, how fast can we get people chew and swallow? It comes down to that. Other businesses have different ways of guesstimating that top line.

But ultimately, it comes down to this: Is it going to work or not work? If it works, there's very little a reasonably responsible person can do to fuck it up. If it doesn't work, there's very little anyone can do to change it.

I'm really saying "it all comes down to this" a lot. I need an editor. Or you could make a drinking game out of it.

So I worked my way through the pro forma, bugging Matt for various stats and vital signs from his current shops on Barton Springs and Lake Austin. We sketched a menu. I had my General Manager, Pat Brown (for those of you wondering, yes, The Pat Brown), work out the food cost for a bunch of our most popular soups.

We found out that our most profitable soups also happen to be our easiest-to-make soups also happen to be our most popular soups also happen to be our best soups also happen to be our oldest soups, more or less.

I had always been under the impression that one of the keys to our business model was that we "owned the channel." That is, we own our sales channel. Restaurants own their own channel. Food manufacturers generally do not--there's generally at least one other person between them and the end customer, taking a slice of the proverbial pie. In a way, we have sorta had the labor advantage of the manufacturer (cooking in bulk as opposed to restaurants who cook a la minute), and we have sorta had the cost advantage of owning the channel. Those are good fundamentals, but every silver lining has its cloud: like I mentioned in Part I, our volume is pretty teeny because of the inherent drag coefficient of our model. Those middlemen take their slice, but they also hold the keys to the Volumizer.

Objection! Relevance!

I am simply trying to establish the thought process behind the design of the new business plan.

I'm going to overrule the objection. Proceed.

Basically, our discovery about our food costs combined with the thinking above made me realize that I could "afford to" sell Soup Peddler soups on a wholesale basis to this new venture. That way, Soup Peddler kitchen could get some revitalization as a benefit of this side project. The kitchen would be the manufacturer, the store would be the middleman, and it would be mutually beneficial. And while we're at it, why not open the door to wholesaling city-wide? Why not steer back towards what we do best? Making soup. Making those old recipes that are still sitting dusty, grease-stained, in my accordion recipe file, still hand-written in Sharpie... those old recipes from the early, naive, magical phase of the Soup Peddler story. Blow the dust off those old magical spells and see if they've still got the power.

Seems obvious, doesn't it? But sometimes it just takes a little serendipity to throw some new light on a situation. That serendipity was my decision to go to lunch at Phoenicia that one day. The fact that I didn't stop on the way to drop off some checks at the bank. The fact that Matt didn't get waylaid by an emotionally-distraught employee. The fact that everything happened that day just like that... my own little South Austin, decidedly non-action-packed version of Run Lola Run.

(to be continued)