By the Pound or the Item?
The trend is growing in this country to sell produce by the pound. I've seen lettuce, radishes, and grapefruit sold this way, rather than by the bunch or the item.
This is something to consider when setting your price policy.
The best example of the little guy who beats this system is a farm stand. You, the consumer, can see the produce growing in the fields behind the stand. It comes from the fields directly to the consumer with no middleman, nojobber, no wholesaler, and no expense. The prices are usually the same as or even higher than supermarket prices.
But don't think the local farm is making a bundle. It's difficult to raise crops and clear a profit. Most small farmers have to depend on several other sources of income to make ends meet. If they sell only what they raise, they can offer only a limited selection. Some stands expand, buying whatever they can't raise at wholesale so they can offer more variety. You've probably seen a small farm stand constantly expand over the years until it becomes a mini-shopping center, selling produce, cheese, baked goods, plants — some even have a butcher shop.
How You'll Operate
Your cash gardening business is in some ways the equivalent of the local farm stand. You'll eliminate the middlemen and sell directly to the consumer — in this case, your restaurant. You'll charge farm stand prices. The only difference is, you won't have trouble making ends meet, because gardening is a sideline for you. You won't have to branch out as the farm stands do, because you won't be depending on your gardening business for all your income. As you can see, the system I've developed gives you the best of both worlds. You can charge retail prices, but you don't have to share the money with anyone.
Let's look at your customer. How does your restaurant buy its fresh produce? In a large chain, the parent company often has its own purchasingdepartment. Most individual restaurants buy from a wholesale company which takes their orders, buys at the wholesale market from jobbers, stocks and stores the produce, and then delivers along a truck route. Some of these companies have grown by stocking other food items and finally becoming full restaurant supply houses offering one-stop shopping (the one stop being their truck at the restaurant's back door). Some have anything and everything that a restaurant could want except customers: silverware, tables, furniture, dried flower arrangements-you name it. But most restaurants deal with several services: linen supply for napkins, tablecloths, aprons; bar supply for liquor and mixes. They may choose to deal with specialty companies such as those who supply nothing but fresh fish; or they may choose those who try to supply just about everything. The companies who specialize in one product usually offer better quality and are more expensive than the general suppliers. If there is a demand for their high-quality item, they will prosper. Let's see how you, as a new business owner, can fit into this scheme of things.
As a specialty supplier of fresh home grown produce, you will want to search out the more discriminating restaurants. And believe me, things aren't always as they appear from the customer's viewpoint. I have found that the willingness to pay top dollar for fresh produce often depends as much on the inclination of the owner and head chef as on the type of restaurant. So, investigate the restaurant, then see if the produce buyer (the owner or chef) appreciates and desires fresh produce. Don't hesitate to approach a place that you think might be interested in homegrown produce or gourmet varieties. Go over chapter four again, and then go to it.
Let's go back to the question I posed at the beginning of this chapter. How much should you charge? Now that you've eliminated the middlemen, the jobbers, and wholesale restaurant suppliers, how can you possibly propose to a restaurant that he pay you at retail prices, or farm stand prices? He's probably expecting to save money by buying directly from you. How can you convince him to pay more than he did before? Here is the approach I recommend, and my justification for charging retail prices.
First, if you can find a restaurant that already uses farm-fresh produce and goes to a farm stand to get it, you'll save restaurant personnel trouble and expense by delivering it. No, even better than that, you'll wash it and put it in their cooler at no extra charge. You'll save them the time and effort of shopping, the kitchen help won't have to wash and clean the produce, and they won't have to pack and store it in their cooler. You'll do all this, and at no higher price than they'd pay for fresh produce at the farm stand.
Remember, you're not trying to supply the restaurant with all of its produce, but only with freshly picked items that it can't get elsewhere. And you just want to supply 20 or 30 percent of its needs.
You can think of lots of good sales points if you try. Practice on your spouse. (No, on second thought, don't do that. Your spouse may argue back.) Practice on yourself, posing all the questions a buyer might have and coming up with good answers. Always keep in mind just how important your selling price is. If the retail price of an item is $1, try to get it. If you have to settle for wholesale at fifty cents, you are going to have to produce twice as much to earn the same amount. Remember, though, that even if you produce twice as much, your profit will decrease. You'll be putting in twice as many hours, twice as many plants and seeds, twice as much fertilizer. You're not producing a huge harvest that would justify wholesale prices, so don't settle for wholesale price. You're not in the wholesale business.
It's a good idea to become familiar with current prices. Keep a list of those items you're thinking of growing and enter all local prices as you come across them. Get local supermarket and farm stand prices at least once a month. Then, as you make contacts in the business, inquire about the wholesale market and vendors' prices. They will all fluctuate as the seasons pass, and, more than likely, as the years go by. You don't want to charge last year's prices. Keep abreast of current prices in case your buyer questions anything. It would be very embarrassing to find out that lettuce is selling in the supermarket for forty-nine cents and at the farm stand for fifty-nine cents while you are still charging seventy-nine cents. Conversely, you don't want to cheat yourself by undercharging.
If you rely on current wholesale prices to establish your sales price, you might want to subscribe to one of the government services. Many states, as well as the federal government, publish current wholesale prices for all kinds of goods. They are published either daily or weekly, depending on what state you live in. You can compare these with the supermarket and farm stand prices and establish your price with more certainty. If you don't have a farm stand nearby, check your supermarket for retail prices, then boost
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