Dr Steven Smith is the founder of Vegan Fine Foods, a market and café in Fort Lauderdale, Florida. Born and raised in the New York City metro area, he began his career as an engineer at corporate giants PepsiCo and Proctor & Gamble before completing an MBA and PhD at Rutgers University in New Jersey to teach business full time.
He transformed his failing health after switching to a plant-based, vegan diet in 1997.
He has taught and conducted business courses in multiple states, territories, and countries, including the US, Jamaica, Puerto Rico, Brazil, Thailand, Singapore and South Africa.
In its first 15 months since launch in March 2018, Vegan Fine Foods, which stocks more than 4,000 products, has turned over $1.2 million, serving more than 35,000 customers, of whom around 75% are not vegan.
Now, Steven – who teaches business studies at Florida Atlantic University – has ambitious plans to expand the brand through franchising, along with the launch of an online store and private-label products. He’s aiming to create an “all-vegan equivalent of Whole Foods”.
To raise capital for the expansion Steven is running a WeFunder equity crowdfunding campaign.
Equity crowdfunding allows members of the public to invest in small businesses in their early stages. At the time of writing, the campaign has more than 400 investors, including renowned British entrepreneur Heather Mills from VBites.
In this interview with Katrina Fox, Steven shares his vision and challenges – and what he’s learned about the practice of running of a business and how it compares to the theory he teaches.
You left a career in product development and engineering at high-profile corporations including Proctor and Gamble and PepsiCo, to retrain in business. Why?
My first degree is in chemical engineering. In the years I worked for P&G and PepsiCo, I was mainly in engineering-related positions. I began moving into management and marketing positions and felt that I needed training in business. It’s a very common career path for engineers to pursue an MBA, especially if they choose to move into management positions.
Although I learned a great deal about business and management working as an engineer, I felt a graduate degree in business administration would help me develop a knowledge base and skill set I thought I needed. Once I began studying in the MBA program, I decided I wanted to study, research, and teach business full-time, which is when I applied and got accepted into the Ph.D. program at the Rutgers College of Business.
Why did you decide to have both a café and supermarket?
I wanted Vegan Fine Foods to be something similar to an all-vegan version of Whole Foods, or some of the many specialty grocery stores and markets that offered groceries and prepared foods.
We’ve branded the eatery Vegan Fine Café. It’s all part of Vegan Fine Foods. However, when we decided to franchise, we wanted to give prospective franchisees the option of franchising the entire market, or just Vegan Fine Café as a stand-alone business, and/or Vegan Fine Body, which is our health and beauty care store.
Tell us more about the franchising opportunity: Why are you offering franchises and what are the benefits to Vegan Fine Foods and to franchisees?
We believe franchising is the most effective and fastest way to grow our business and brand.
The benefits to franchisees are:
• It provides a tested business model for them to invest in and start their independently owned business.
• Franchisees will be able to tap into the growth in heathy and plant-based eating.
• Franchisees will have a business that will provide their local communities access to healthier foods.
• Vegan Fine Foods franchises will also be a source of jobs and economic growth in the local community.
The benefits to us as a company are:
• It’s the most cost-effective way to expand the business and grow the brand.
• It’s a proven model that will provide a consistent and long-term revenue stream for Vegan Find Foods via the franchise fees and royalties on our branded products.
• It will allow us to expand the distribution of its our branded products to communities around the world.
Our franchising strategy is unique in that we are offering three options to prospective franchisees: Vegan Fine Foods, Vegan Fine Café, and Vegan Fine Body.
This approach will appeal to a much larger group of entrepreneurs. We also believe each option is different enough from the others that it will tap into different market niches and not cannibalize sales from each other, if they happen to be in the same geographic market.
What’s the timeline on when franchises will be available?
We will be a franchisor by the end of September (2019) and are open to hearing from people who would like to run their own vegan business by becoming a franchisee.
The company has turned over $1.2m in the first 15 months since launch. Who are your predominant clients in terms of age, gender, demographics, interests, ethnicity?
We have a highly diverse customer base in our store. Fort Lauderdale and South Florida in general is very diverse based on race, ethnicity, nationality, age, and ideologies. All of these differences are represented in our customer base.
We’ve also noticed that the vast majority of our customers are not vegans. We estimate 25-30% are vegan.
Being in downtown Fort Lauderdale, there are many office buildings in the area, so we get a large lunch crowd that is looking for healthy foods. Many have become regular customers. There are also lots of high-rise apartment buildings in the area, and we get the local residents as well.
You’ve launched an equity crowdfunding campaign on WeFunder. Why did you decide to go this route to raise more capital?
Equity crowdfunding has become an effective way for small businesses to find investors locally, regionally, nationally, and internationally, that might support their businesses. This is very new.
Historically, small businesses did not have access to investors in the early stages of their businesses, unless it was through personal or family connections. When the US government changed the law to allow for equity crowdfunding, it created incredible opportunities for businesses like ours to pitch to prospective investors around the world.
I decided that this was an effective way for Vegan Fine Foods to raise the capital needed to grow the business, fund our initiatives, and ultimately implement our expansion plans.
How has the company been funded to date?
When I started Vegan Fine Foods, I funded the company 100% from my own funds. As we began operations, I’ve borrowed money for working capital and for equipment. At this point in our development, we need additional capital to fund our growth.
What are the benefits for people who decide to invest in your WeFunder? When do you expect they will receive dividends on their investment?
The benefit for people who invest in our Wefunder campaign is that they will own a piece of Vegan Fine Foods in the early part of our history. As we grow and expand, the value of the business will also grow. Our investors and their the value of their investment will grow as well.
We anticipate that our investors will realize a significant return on their investment. We expect that they’ll begin receiving dividends within two to three years.
The other benefit is that they will be investing in a company that will do more than its share to make the world a better place by supporting and increasing access to vegan foods and accessories to customers everywhere.
Although the company has turned over $1.2m in the first 15 months and raised $734,440 from 21+ investors since it was founded, it’s also sustained a net loss of $352,243 and has debt of $683,536 mostly in the form of loans. Can you explain this?
The reasons for the losses and debts are common for new and startup businesses. Our first year was really an incredible learning experience. Once I started the company, found the retail space, and then got it open, there was not much working capital left.
Being in uncharted territory, we have to learn many things through trial and error. We overcame all of the challenges and continued to grow and reinvest in the business.
Now we have our most important systems and processes in place, and we know what we need to do to continue moving forward.
We want our investors to know that the most successful companies and brands in the world, such as Apple and Amazon, lost money for many years before turning a profit. Some even had to get emergency funds from various sources to continue their operations.
We do not anticipate operating at a loss any longer. Based on our forecasts, knowledge of the market for vegan foods, and the explosive growth in the industry, we project that Vegan Fine Foods will be profitable in its second year of operations and beyond.
Why are you planning to launch your own, private label products? What are the advantages to you and to customers?
We are launching our own private label products for a number of reasons:
• It will allow us to differentiate ourselves and our products from our competitors..
• It allows us to partner with high-quality companies to develop and produce unique products that are potentially better than what is currently in the market based on our deep knowledge of vegan foods and the vegan market.
• It also allows is to increase our margins on these important retail products, which will lead to better financial performance. This will allow us to meet and exceed our financial and strategic objectives, which will ultimately benefit our investors.
You’ve been teaching the theory of business for some time. How is running a business different? What have you learned from the experience?
It’s certainly been a baptism of fire becoming an entrepreneur! I do believe that MBAs are still relevant, even for entrepreneurs. Although the practicalities of running a business are vastly different to the theory I teach my students, having a basic foundation and understanding of business concepts and theories provides you with useful tools to run a business.
I didn’t have any retail experience and the biggest challenge in the beginning was learning how to run a retail business, especially one that sold both groceries and had a café with prepared foods inside it. I made major mistakes, such as the point of sale system I chose.
I found out that it’s much more difficult to understand and control costs in an organization and no amount of business theory can prepare you for budget blow-outs.
Although working with people and building a strong team is the most important factor in being successful as an entrepreneur, it’s also the most difficult and far more challenging than I envisaged.
I learned that when staff are happy and feel like their lives are changing in a positive way and that they’re part of making an impact on the world as a result of something the business is doing or providing, they’ll express that appreciation in the most amazing ways. This also applies to customers.
Building, shaping, and maintaining culture in business is much more important than most people realize and it’s something that has to be factored into every decision I make as an owner.
Finally, one major realization is that at no time in my life have I felt it more important to have people who love and support me through thick and thin – this is more powerful than I could have ever imagined.
For more information on the store and franchising opportunities, visit the Vegan Fine Foods website
Find out more about Vegan Fine Foods’ WeFunder equity crowdfunding campaign