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Why are new food companies booming in a recession?

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Tim Hayward Tim Hayward | 15:33 UK time, Friday, 24 June 2011

When the idea for a show on the new wave of food entrepreneurs was first suggested by The Food Programme team, I’ll admit I had some preconceptions. I had received hundreds of eager press releases about the launch of food ‘start-ups’. Each told a similar wonderful tale of a couple of bright people quitting the corporate rat-race to move to the country and produce... well insert your own ‘artisanal’ product here. I confess, I was more than a little cynical.

Woman arranging bread in artisanal bread shop


In my own, previous ‘corporate life’ I’d weathered the dotcom boom and what I thought I was seeing, as droves of middle-class life-changers plunged lemming-like into the food business, was another big, wobbly bubble.

But meeting the young entrepreneurs changed that opinion rapidly. Our first discovery was about the nature of the food industry itself. As a business with low ‘barriers to entry’ but with a potentially fair reward for hard work, cooking, serving or producing food had, it seems, been the first rung on the ladder for young entrepreneurs throughout the generations.

The new kids on the block are bringing a lot into the food sector. They are creative, clever, enthusiastic and many bring skills from previous lives in marketing, management, technology or finance - skills that have historically been rare in small independent food businesses. Many lack experience - though for most this simply manifests itself as a refreshing inability to believe that there’s a single way to do things.

But the most striking difference, the one that really separates these new whizz-kids from the previous generation, is a complete lack of an exit strategy. These people are not in it to make a fast buck and move on. The decision to work with food is often tied to a desire for a better quality of life or - and this was very common amongst those quitting the corporate world - a desire to have actually made or produced something at the end of the working day. Most of the people we spoke to, having made the jump, imagined being in the food industry for the rest of their lives, not selling to a multi-national inside five years and retiring on the proceeds.

Banks and investors, of course, can have little interest in businesses run on love and enthusiasm, particularly those that intend to grow organically. This probably explains why so many of these operations are being set up without the help of outside finance, using savings, redundancy cheques or family money. It’s odd perhaps to see this as a benefit but actually it does represent a substantial net injection of money into the food sector and, let’s just remind ourselves that what caused the dotcom bubble to burst was not a drying up of ideas or drive but a huge surge of greedy and overoptimistic investment.

As a result of the new wave of food entrepreneurs, new food businesses are generating exciting new ideas, bringing in new money and growing sensibly and organically. Far from being the bubble I’d anticipated, this seems like a solid base from which the commercial side of the British food renaissance can continue to grow. In a time of recession and bleakness in business that’s a pleasantly positive conclusion to reach.

But what do you think? Might this still turn out to be a bubble or is there a growing market as our national attitude to food continues to improve? Are more small independents a good thing or will the High Street become clogged with shops full of hand-whittled cookies and organic yogurt lassis? Are you tempted to take the leap into an independent food business? Listen to the show this week and tell us what you think.

Tim Hayward is a food writer and blogger, and presents this week’s edition of The Food Programme.

Comments

  • Comment number 1.

    Dear Tim,
    What an interesting subject for your programme. I am running an independent Scandinavian restaurant in London and our Nordic cuisine is definitely seen as different - often listed under "World food" rather than "modern European". Not surprisingly it is both an advantage and disadvantage to offer a new and different product. At times it seems it would be a lot easier to offer pizza, pasta or more well known dishes to attract more guests. However, our team takes great pride in what we do and whilst we take guests' comments into consideration we also try to stay as true to the original dishes as possible. It is not easy times for independent operators so I think it is great that you help raise awareness and interest in smaller producers and food concepts.
    Charlotte

  • Comment number 2.

    Hi Tim,

    What an interesting and timely programme!

    Having made the leap from corporate "rat race" to running my own catering company here in south Oxfordshire due to one too many reduncancies I find myself after nearly two years not only involved in creating food but creating new projects.

    The key elements that have made the last two years so exciting have been getting involved with local markets, creating a food festival from concept to the event in ten weeks, having a regular food slot on local radio, planning for Internet TV filming and so much more. Somewhere in there is cooking as well. I have been able to build up a local customer and client base, both private and business. I trained in 2003/2005 gaining a Diploma in Professional Catering and I have had to work hard to develop the business and I am still working very hard. The economy is squeezing margins and customers are expecting so much more for their hard earned cash, but if you can offer and provide quality food and service based on locally sourced food you will create a following. I believe that we are going to have to look to the local food producers in the not too distance future. It may mean more seasonal food, it may mean new developments in production, growing etc will keep the exotic and unusual ingredients available and the key interest is the story behind the food. Working with a number of local producers I am able to cook food with a local history and value which my customers want and demand in many instances.

    I am able to respond to my customers quickly through the markets. I can test new ideas and get feedback almost instantly helping me tune my products to my customers. I use the web, Twitter, Facebook and many other onlime social media tools. I use networking groups to meet new businesses and communicate my business messages and values. As a mix it has worked incredibly well so far and I find that the only disappointing part of the mix is traditional advertising, it really doesnt work in my experience.

    Creating the Wallingford Food Festival this year was the most fun I have had in a long time work wise! getting 30 stall holders, 6 sponsors and 1 Patron together for an event in 10 weeks was fantastic and I am determined to build on its success later this year. There were over 1500 visitors on the day and the feedback was positive. There is an opportunity to showcase local food through festivals and markets - it is both an educational opportunity and a commercial one which many county towns are begining to under

  • Comment number 3.

    As one of this new breed of food producers, I found this article very interesting. After years of planning and research I decided to take the plunge and now I'm running a small business making delicious hand made cakes.

    Like many other small producers, my emphasis is on the quality of both the end product and the ingredients that are used. Baking the best cakes is my passion and there is no exit strategy in place - I'm in it for the long haul.

    Whilst the current financial climate is pretty grim I see this as an opportunity rather than a disadvantage. Although most people are reducing their spending, many are allowing themselves a regular luxury treat as a reward for tightening their belt and one of my cakes ticks all the boxes for a spot of self indulgence.

    Attracting customers is one of the biggest challenges for a new business and my solution was to go out and find them, rather than waiting for them to find me. This was done by establishing a weekly delivery round, calling at offices and workplaces in Derby with a selection of cupcakes and individual slices of cake. The theory was that once a customer has tasted one of my cakes they would then tell other people, and this is what has actually occurred. I now have a solid customer base who not only recommend my cakes to other people, but also go on to order cakes for special occasions such as birthdays and weddings.

    It's not easy starting a luxury food business at the moment, but with determination, hard work and a high quality product I believe the opportunity to succeed is there and I hope that this trend for new small producers will continue.

 

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