Worlds of Healthy Flavors Napa Valley, California January 22, 2015

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1 Worlds of Healthy Flavors Napa Valley, California January 22, 2015

2 Case Studies AVI Foodsystems Yale University Dining Successful Sourcing Audience Response Survey & Town Hall

3 Multi-Generational Produce Family Founder PRODUCE BUSINESS PerishablePundit.com PerishableNews.com New York Produce Show and Conference London Produce Show and Conference PRODUCE BUSINESS UK Writer The Wall Street Journal Teacher Cornell, UC Davis, Michigan State Analyst Wall Street, the City in London and Media

4 Largest Family-Owned Foodservice Contract Business in the US Segments Education 28% Corporate Services 27% Healthcare 15% Vending 30% Grew Out of a Vending Supply Company John Coker, Executive VP of Marketing, Corporate Strategy and Brand Development

5 Change Cooking Method and Consumer Presentation Increase Plant-Based Foods and Increase Local Sourcing Change Eating Habits: Students, Employees and Patients

6 Seasonality Worked Against Their Goal To Use Local Sources for Schools and Universities

7 Move from Steam Tables to Heated Plates Improve Taste, Flavor and Appeal Cut Animal Protein Procurement Free-Up Budget to Buy More Fresh Fruit and Vegetables Emphasize Regional Sourcing Freshness Use More Whole/Unprocessed Product Undertake Educational Efforts Especially K-12

8 Composed Plates on Heated Shelves Roast/Bake not Steam/Fry Reduce Protein Size from 4 to 3 Ounces Introduce Produce 365 Item of the Month Identify and Highlight Local Growers

9 Vegetarian Vegan Macrobiotic PURE Gourmet Organic Raw Food

10 Cooking Training Corporate Chefs Classes for Operators Recipes for Item of the Month Videotape Upgrade Salad Bar Shaved Ice Double Wall Chrome Plated Containers Create and Produce Own Dress Add Equipment Ovens

11 Retrain Staff Prep Whole Produce Scraps for Stock Inventory Control Ordering Procedures Cooking Competition Cooking Matters! Adjust for K-6 Separate a la carte line Local Supplier Development Invest in High-Tunnel Agriculture

12 Resistance Education Key Produce Purchases Up 5.7% Produce 365 Expanding Serving Tastier/More Nutritional Food Reduced Animal Protein Consumption Expanded Local Growing and Procurement Right Direction

13 Scale on Roll-Out Sporadic Purchasing Distributors Growers Measureable Business Justifiable

14 14,000 Meals a Day 5,200 Students on Meal Plan 29 Foodservice Operations 13 Residential Dining Halls Convenience Stores Cafes Catering & Banquet Moved from Contract to self-operated Rafi Taherian, Executive Director

15 Plant-Based Menus of Change

16 Chef Joyce Goldstein A Perfect Greek Salad A Hard Look at the Salad Bar Poor Combinations Lots of Dressing

17 Challenge the American Love for Choice No More Chopped Celery Amateurs vs. Experts Tilt-Telescope Steering Wheel Raw Broccoli, Cauliflower, Shredded Cabbage Overcome Limitations Local Seasonality Local Volume Labor with Whole Produce

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19 Three Composed Dishes One Deconstructed Dish Roasted Vegetables Not Steamed Cost Went Up Due To Labor Reduced Protein Purchases to Compensate No Trays Re-Train the Consumer Compensate for Short Local Season Canning Sauces Freezing Suppliers IQF

20 Some Objection To Loss of Items Profiteering Allegations Education and Time Growing Sophistication Labor a Big Challenge Cost Availability Liability Butternut Squash Impact of Cooking Technique on Yield Raw vs. Roasting Triumph! Produce up 30%!

21 Yale Local Sourcing Collaboration Symposium Supply-Chain Communication Price vs Local Industry Salad Bar Question Food Safety Is It A Good Tool To Increase Consumption?

22 Understand Your Own Needs And Motivations Understand Produce Shipper Motivations Understand Produce Shipper Limitations Note CIA Sponsors Are, by Definition, Exceptional Understand the Produce Category Recommendations For Success

23 Retail Gets The Attention 50% Consumer Food Dollars Perhaps 20% of Produce Sales Perhaps 10% of Identifiable Produce Volume Brand Building Is Important Consumer Brands Trade Brands Food safety, sustainability, Traceability, Genetic Differentiation Fiduciary Responsibility To Growers Often Don t Own What They Sell Fear of not Realizing ROI

24 Low Transparency Sales through Foodservice Distributors Sales through Wholesalers Limited/Non-Existent Culinary Expertise World Class Grower/Packer/Shipper No Expertise Recipe Development, Menu Planning, etc. Limited Budgets Commodity Trap Marketing Sales Product Development

25 You Are A Stranger 50/20/10 Rafi/NY Produce Show/Bananas PLOT 70% You Don t Help When Needed Grower Profitability and Moving Surplus You return Less to the Grower Big Cuts for Distributors, Purveyors etc. You are Quite Demanding Reputational and Legal Risk

26 The right distributor, and knowing what they can and cannot perform, and a true partnering approach, otherwise it is each trying to screw each other. If the chain is large enough to contract with growers, most really aren t, they need to involve the distributor up front. A new grower/item that we already carry means a new slot in the warehouse. That s prime real estate and costly. Logistics is huge for us. We don t ship to large warehouses in truck load volumes of citrus, lettuce, etc., like retailers. We have a rolling inventory of mixer trucks. So, while we may find a bargain from a grower in Santa Maria, or Oxnard for example, moving it to LA or Salinas where we load trucks is costly and erodes the value. Often it is just about where can we get a truck and load product not just about the preferred grower. Know the right product for the application in which it s being used. Fancy or choice, #1 or #2, 70 or 90 count potato? Seek advice from the distributor or grower they actually know more about the products than you may give them credit for.

27 Realistic drop size is critical for broad liners. In 2009, the last time I remember seeing the number, Sysco was touting that it only took them a $500 drop size to make margin, whereas their competitors needed closer to $550. Whatever the numbers today, it takes a lot for a distributor to stop a truck. Produce distributors need probably closer to $150 to stop a truck (numbers are sales dollars for each drop). They can do it cheaper but most will then lack the systems and sophistication for web ordering, electronic transactions, traceably, etc. But they can make a smaller drop. Most operators can live with two drops per week, unless it s a heavy produce user like a PF Changs or Cheesecake Factory. More than two is just spending more money as it costs the distributors more to have smaller drops.

28 Contract Your Key items Get fresh produce bulk or processed -- to the restaurants as quickly as possible. Ensure the Cold Chain is maintained from Field to Fork. I see entirely too much product on docks and staging areas at that 50-60f vs f. Evaluate Real Cost Reduce deliveries to a minimum Redundancy of Supply

29 Work with Natural Supply Chain for Maximum Efficiency for All Size Variety Grade Geography How important is variety? Many distributors have 200 produce items, some have1,000. You need to find your match All players must understanding each products unique logistical needs.

30 Be prepared to deal with weather. Will you maintain ample supplies of good - not great - quality produce during tough markets that are typically a result of bad weather. If an item is on your menu - are you expected & required to have it available? Several years ago, Tomatoes reached $50+ per case & quality was fair at best. Some chains kept tomatoes on the menu, allowed the use of Roma's as a backup and continued to serve them. Several national & regional restaurant chains temporarily discontinued them. Is there a commitment to serving what is on your menu? If not, what is plan B? A sign? Product replacement?

31 Join the health/taste/flavor revolution and put more fresh on your menus!

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