#264 How Foundation Foods Became One of SoCal's Most Trusted Grocery Distributors

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1:16we really pride ourselves on our communication our transparency and our willingness to go the extra mile whenever possible for both our customers and our brands. We don't charge for anything besides our margin. So that's one big differentiator. We only have our margin. We don't charge any other fee of any kind, hidden or published. There was nobody speaking up for those brands because the trends are always about, they usually boil down to a diet, right? It's not really about ingredients, sustainability, and standards for overall community wellness and environmental wellness. There's a way to capture some of that broader environmental impact of what we're eating and be a part of the trends sort of naturally because it's a clean product.

2:07Welcome to the podcast, everyone. I'm so excited for today's episode with Lewis from Foundation Foods. They are a beloved distributor in SoCal, and you're going to hear why on today's episode from their reputation and the high ingredient standards that they have, all the way to an incredible founding story involving a rattlesnake bite that inspired Lewis to start Foundation Foods. I know you're going to love this one. I know you're going to want to reach out to them to talk about distribution opportunities at the end. So listen to the end of the podcast to find out how you can actually submit for consideration.

2:40All right, enjoy. Here we go.

2:46All right, Louis, my friend, welcome to the podcast. We have not had a distributor on in a while, so I'm really glad to have you here. You're always a crowd favorite when you come to our events. There is a long line of brands who want to talk to you. I think just because of your guys' great reputation and I think the high standards that you have for brands as well. So now that I've hyped you up properly, could you do the intro for us, please, and just give everyone the foundation about Foundation Foods? Sure. And thank you very much for having me. It's exciting to be here. It's been a very long time since I was on a podcast, but little known fact about me, I actually hosted a radio show and podcast in college.

3:23So that's where this microphone came from. What was it about? It started off as a music show after midnight, as they usually do. And it evolved over time and was a morning show about health and wellness. Oh, all right. That sounds pretty good. We'll have to dig up some of the old music favorites. Oh, yeah, that'd be fun. Yeah. A little bit about Foundation Foods. I actually got my start in the business running around shortly after the podcasting days, trying to do sell-ins and demos and just get small brands off the ground. I didn't know what a broker was. And I kind of found out after the fact, that's sort of what I was doing somewhere between a sales rep and a broker.

3:58but I never really was that. I sort of just was a free-spirited freelancer for a few brands, working in the kitchen to get some extra hours, mostly running around and trying to make sales back in the days when Mo was at Mother's and there was only one Air One. And at that time, I started working for multiple organic first local small brands and kind of realized there was nobody really servicing them in a way that involved distribution as well. And over time, we sort of built a little bit here and there. And in 2018, I got my own warehouse. And that was a really pivotal moment because we suddenly had hands-on control of the inventory, the payables to the brands, which was a huge thing.

4:40It was a huge difficulty before that. And speaking directly with being able to sit down with the buyers and then sit down with the brands and have a hands-on touch to everything in between was really made things so much easier to deliver on the promises that we were attempting to make. And ever since then, we've grown every year. It's been really fantastic. As you've mentioned, our reputation is really strong and I'm so grateful for that. That's how we've grown. I've never done any marketing really at all other than running around myself. And it's been fantastic to get such positive feedback. The nuts and bolts are really that we're very strict on what we carry.

5:19I think we're not quite as strict as a Jimbo's or a PCC, but we're very close. I think we're a little stricter than Air One or Whole Foods. And as far as being organic, there are some ingredients that we must have organic, like, for example, sugar, wheat, soy, dairy. We really need those to be organic on the ingredients label. And that's something we have rejected brands for, even when they're fantastic products. We don't need USDA certification, though. That's kind of something we've seen is a bit of a pay to play. And we try to respect smaller brands that are not there yet. and maybe they just want to be servicing farmers markets and a few local stores and that's the roof that they want to be at and we can be that service for them and also service the bigger brands that don't want to deal with the nationwide distributors.

6:05I love it. We already got our first hot take from you. So USDA, I love it. Starting out strong. And that is true about the marketing because I had to chase you down for about a year to even get you on this podcast. So thank you for finally agreeing. So, Lewis, just as an entrepreneur, where do you get the nerve to go out and get a warehouse? Like, that's amazing. Like, just for someone to start the way that you did, just doing it. And then, like, that would make me so stressed out. Like, oh, I'm going to, like, commit to a warehouse now. But obviously, you did it, and it's gone really well for you.

6:38How did you actually figure it, like, get yourself ready to make that leap? Honestly, it's kind of a funny story. Well, funny in hindsight anyway. I was bit by a rattlesnake. I was bit by a rattlesnake up in the mountains and it was actually very serious. I couldn't walk immediately. And like I said, in hindsight, it's a funny story. At the time, it was very scary because we were pretty remote and it took about two and a half, three hours to get to the hospital. And I couldn't walk properly for about three months. I was in the hospital for a total of 14 days. It was pretty scary. And that was before I had the warehouse.

7:13So at that time, I was contracted with another distributor that's no longer in business. I was sort of their sales and marketing, running around relationship person. And they were supposed to be handling the logistics and the money. And the snakebite experience did a couple things for me. One, it really like changed my perspective on life, to be honest. The closest other time that I had that was doing a meditation retreat for 10 days, a silent meditation retreat. And you just feel this like calmness and oneness and peace with the world. And you're not stressed about anything. and the snake bite had that effect on me.

7:46I was just so happy to be alive. I couldn't believe it that I had been through that. And then the other thing that happened is less fun. While I was away for three months, first in the hospital and then in La La Land, I'm happy to be alive. The other distributor I had been working with stopped paying everybody, including me. So they stopped paying me, they stopped paying all the brands we were working with. And that was really quite bad for my personal finances as well as the brands that we were all supposed to be helping. So that was in August and it was in January. I remember feeling this like, I got to do something.

8:19And my now wife and my girlfriend at the time were laying on the couch. I remember feeling like I was just melting into the couch. I guess I can take out a loan. I guess I could try and get a warehouse and a truck. And I had just gotten this letter in the mail that was like, you're pre-approved for$25 ,000. And that was like, okay, I guess that's my seed money. And I had this one month where I was secretive and it was the hardest month of my life because I'm a very open person. And I went around to all my contacts at the stores and I was like, hey, I'm thinking of breaking up with this distributor.

8:53This is kind of the situation. Would you switch to foundation as a distributor? And everyone was like, absolutely, yes. And all of the brands, with the exception of one who had come on board while I was already in this sort of snakebite land, they all said yes. So that was a really positive feeling to get such a positive feedback at the time. And so I took out the loan that came in the mail and I went and got another loan for my first truck, which was also a silly thing because I got a box truck and we definitely did not need a box truck at the time. We were, I very quickly replaced that with a Ford Econoline.

9:26But that was kind of the genesis of it. It was definitely, this is the time to do it. We didn't have any kids. I had just been through a near-death experience. It was just this moment of, here we go. That's amazing. That's an amazing story. Sometimes I really just luck out with a question that I ask. I get the most amazing response. And this is one of those scenarios. I'm so glad I asked you that. Whoa. Yeah, I'm glad you asked too. I mean, I wasn't thinking of talking about that, but. That's incredible. Oh my gosh. It's been a while since I shared the story. So like, might as well get out there.

9:57Oh, I'm so glad you did. And I think you are now at like maximum 100 respect level. from me and anyone listening to this right now. So get your LinkedIn inbox ready because it's going to, I think, get a barrage of outreach from that. Well, next time I see you, you'll have to remind me to show you some pictures of me in the snake bite because then you'll have a whole new perspective on what a leg can look like. Whoa, you should just put that on the side of the Acana line van. Just a picture of that. I don't think you'd want me at your store. Yeah, like retailers, you think I'll work hard for you?

10:28Well, look what I've already overcome. So yeah, and that thing about like near-death experiences. I've never had one of those, but I have heard that from a lot of entrepreneurs in the space is just really some of the most fervent entrepreneurs have had that in common where they've all had something like that. And I think it gives you just a kind of like, let's go for it mentality. Like there are way worse things that can happen than me failing on this and let's make the most of this time that we have here. So good for you, Lewis. Wow. I'm so glad to hear that. Okay, so it's an incredible start to Foundation Foods.

11:03Can you tell me a little bit more about where you guys are at now? So what are the retailers that you serve, locations, all the stuff that a brand would want to know? Yeah, retailers wise, locations wise, I think it sums up to be the high quality focused retailers in Southern California is really our bread and butter. So people like Air One, Lazy Acres, Jimbo's, those are kind of our main customer base. But I would also add that to that list. A lot of the indies that maybe aren't on everyone's hit list, like a little organic juice bar that we might supply more than 60 % of their stuff on their little retail section.

11:40There's a handful of places like that, or Farm Shop in Brentwood is one that some people may have heard of. It's a small little space. It's mostly people serving lunch, but they have a beautiful retail set and they get a lot of stuff from us. We also work with Whole Foods. It's a new for us in the past year that we've started working with them, but it's exciting for us because that was a longtime goal of mine to do that. And we do work with some retailers outside of Southern California, notably Northern California we've been growing into. It is my intention to open a warehouse there so that we can have a delivery route in that area.

12:15Fully transparently, I have two young kids right now, neither of which are in school yet, and I don't really want to be traveling personally up to the Bay Area all the time until they're in school. That's part of my hesitancy. The other side of it is the dollars and cents. We do have accounts up there and they're lovely accounts. We're not quite at the point where we're selling enough up there to cover the costs of having a warehouse and a driver and a manager and all that stuff. And it's not like the olden days where I could kind of bootstrap it with a$25 ,000 loan and kind of fly under the radar of all the regulatory agencies for the first couple of years.

12:47seen. We're a little bigger now. We kind of have to play by the rules a little more, which is great. I love that. We also work with PCC in Seattle. Stephen is a fantastic human and he's been so supportive of us. I think I just want to mention his name personally because he's really given us a lot of confidence with his feedback and his referrals. We also work with Central Market in Texas. Both of those accounts are more on our body care and wellness and supplement side. So kind of a little bit of a different side of us. We actually are probably 40 % of our business is wellness, body care and supplements, and the other 60 % is grocery.

13:29And those further afloat accounts, especially the chains, are much more likely to order wellness from us than they are grocery just because of the logistics of shipping grocery. With those ones that are not in SoCal, how do you service them? Mostly FedEx, and we cover all the freight costs. And then we do have some that order by the pallet. Some examples would be Happier Grocery in New York. Nude Miami just recently opened. And Levers, Bocavor in Denver. Those guys order pallets from us weekly or monthly, kind of depending. And that way they can access our whole catalog. Otherwise, we have to kind of restrict like water, for example.

14:05We can't really ship that FedEx. It doesn't work. What a lovely set of clientele that you've got there. So can you tell me a little bit more about how should people think about you differently from the other distributors that are out there, let's say, versus broadliners that brands could work with and then maybe versus some of the SoCal-focused distributors as well? Yeah, it's a great question. And I think the best answer is to go and ask some other people that work with us and ask them what it's like to work with us. Because I hate to speak for that necessarily. I don't want to toot my own horn.

14:40It's never been something I like to do. But since we're on a podcast and I have no other choice, I kind of have to toot away, toot away a little bit. we really pride ourselves on our communication, our transparency, and our willingness to go the extra mile whenever possible for both our customers and our brands. And that was something that always came naturally to me back from when I was running around doing sales reps. And I had been a waiter before that. So, you know, to earn tips, you kind of have to do that kind of thing. And we've done that for our brands from the beginning. And it took me about four years of being a distributor to realize that no other distributors really do that.

15:19And a lot of them say they do on their website and they actually don't. Or they don't even say they do and they just charge you for it. So that's kind of the nuts and bolts of it. We don't charge for anything besides our margin. So that's one big differentiator is we only have our margin. We don't charge any other fee of any kind hidden or published. And then the other side of it is that we do provide a pretty good amount of support. And I actually have a whole letter I wrote for onboarding vendors that I won't get into right now. But it's a fine line between we're not a broker, and we don't claim to be, and we're not a sales team.

15:55We don't claim to be. However, sales happen or relations happen because that's kind of what we do on a day-to-day basis. We work on building relationships with our stores. We have meetings with our buyers as often as they'll see us quarterly or so. We'll show them new products we're excited about. We'll give out customer contact lists to brands that are interested. We'll be copied on emails and kind of introduce people. So there's a level of networking and selling that happens without being like an official sales team that's getting extra sales commission or charging your retainer. And it's a gray area and I recognize that.

16:31And I've kind of always told brands, if you're in a hyper competitive space, like say you're in beverages or chocolate, you probably need additional support beyond us. If you're in a relatively unique category, you're in a kind of a niche and you might not need support. If you have a really involved team that's doing some of those things, you might not need additional support. You might be able to just get away with using us. It kind of depends on the brand. That makes a lot of sense. And that is exactly what I was going to ask you about as well. Because I think when brands are looking at distributor, I mean, their hope is always like, are you just going to service the distribution that I have or I have to go out and get it all?

17:05Or are you actually able to help me get some distribution? Because that would be pretty awesome too. So it sounds like you're probably not going to promise that to anyone, but your goal is their goal, which is to deliver more cases of product that is high quality product to your customers to service them well. And so you will be showing them your catalog and you will be showing them products that you're excited about that you think could be a fit for their stores. So brands, it sounds like, could actually gain additional distribution that way in a way that you probably don't get stuff like that from some distributors out there who are really just more like conduits.

17:42Especially SoCal is such a hot area for brands. It's very competitive. There is a lot of pay to play that happens there. There are a lot of these quote unquote incubator programs out there that charge brands an enormous amount of money for seeding product in a certain amount of locations that some brands are extremely happy to pay because it will force them into a couple hundred tastemaker kind of slots there. But it's a really expensive way to grow your business. Yes. So honestly, the way you're talking about it, like I would have dreamed to have been working with someone like you where you can get some of that distribution, especially some of those really cool off the beaten path type places like Farm Shop.

18:24Like that is the dream, obviously. So that sounds really cool. As a brand, I probably would have tried to work with you and then pair that up with a salesperson who can hit some like kind of follow along and hit some of the places that you're distributing to to see if we could get in, open up some more of those doors. But that sounds really amazing. So let me ask the obvious question then, which is based off what you're saying, everyone wants to work with you. I know it. and how are you going to decide which of all the brands that are going to reach out to you after this, if they fit your criteria, could be a good fit for you?

18:56It's challenging to keep up with. And yeah, I think one of the reasons I kicked you down the road at the beginning is we needed more warehouse space. And we always need more warehouse space, but that's part of it. We definitely are strict on the ingredients and you'd be surprised how many brands don't meet the ingredient standards. Non-organic sugar is so everywhere. It's disappointing to me. you can go to costco and buy that stuff by the bag it's available people switch your sweeteners to organic please they need a key account we do need somebody ordering consistently i'd love to have every possible brand in there but if we can't reliably sell what we have is our minimum order quantity in about a month it's not going to be good for the brand it's not going to be good for us the retailers aren't going to get fresh products that's important so right there a lot of brands do get filtered out by that.

19:45From there, we try to say yes as often as possible. There are certain categories like beverages or maybe bulky things like chips and popcorn that are harder to squeeze into the warehouse. And we have to be really careful. This one, we might hit the boxes, but it just doesn't feel like a fit. It feels like maybe they're venture backed and they're just going to leave us for Unify the first moment they can. Or maybe it's just five years ahead of its time and it's a fantastic product but is it really going to sell that's a judgment call that i don't want to be the one to make i think that's should be on the retailer and the consumer to make that judgment call and as often as possible we try to do that and what that would look like is like hey you have this amazing beverage we need a really low moq because we're not sure about it and we will carry it for you but we cannot bring in a full palette because we just don't see the movement happening and if the brand can make it work then great but if we can't make it work on those details, we have to pass sometimes.

20:41And it's heartbreaking. I hate to say no to brands, but it does have to happen. So Lewis, I could imagine that it's more likely that a brand would come and start working with you first. And then maybe they would add on like a broadliner or something after that versus the other way around. Because like if they're already with broadliners, they may have a little bit more coverage to start. But if they come and start working with you and based off everything that I've heard about you guys, they're probably not going to want to leave. I'm guessing. Also, I'm looking through your website. I'm just seeing so many great brands from our community that you guys work with, like Joey Nordic Seed Crisps and Imlakesh Organics, Olamicha, just Gato Dates, like so many great brands on your website from our community.

21:23So I guess just thinking a little bit about what their journey with you probably looks like, it's probably because they really are trying to go pretty deep in the SoCal region. So they come and approach you guys, hopefully get in some doors, and then they're pounding the pavement, getting into a bunch of those Tastemaker SoCal doors that they're looking to get into. If they eventually add on maybe a broad line or something like that, probably in prior days, it might've been because you weren't servicing all of those accounts, like when you didn't used to hit Whole Foods. But yeah, I mean, I imagine, does that sound about right?

21:58It does. And I think it's very rare that we have a brand asked to leave. In fact, I can't even think of one that called up and said, we're not happy. It's much more common that there wasn't communication around it. And that's kind of something we've learned over the years. It's really important to communicate with your distributors when you're adding more distributors in that same region. And this doesn't just go for us. I would say this should apply to all brands across the country and beyond. Communicate with your regionals because they are going to own that niche really well for you. But the broadliners can undercut us on price and they can charge the brands in other ways.

22:34So they'll make the same amount of money off the brand, but they'll advertise a lower margin than they'll charge the brand in other ways. So what that looks like as far as communication is typically we'll ask the brand like, hey, give us a little bit of sales commission type of arrangement. And really it works out to just being like a slightly different margin arrangement for us or a different FOB price so that the broadliners are getting charged a little bit more and then the brand can absorb the cost of those billbacks from the broadliners and then we can compete on price so then when air one comes to us and says hey this product is now available in if i why should we stay with you and i can say well i can price match or no problem we'll just adjust our pricing a little bit and then the stores love working with us so they're happy to do that and when we were smaller we couldn't maybe afford to do that or i didn't know to do that that's sort of some of the industry savvy that comes along with some of the experience over the years.

23:32But nowadays in our contract, we put there like brands must communicate with us when they sign up with our distributors. And that catches brands off guard sometimes. And I have to clarify, like, this is the reason you guys want to use us for these regional chains and stores. But if we lose all of our chains to Unify, then we can't keep carrying the brand for our little indies because the volume might not be there anymore. Right. So it really comes down to like that whole transparency, the communication and the clarity around it that we try to maintain. There's one thing I wanted to ask you before is the standards that you have on ingredients.

24:09Where does that come from for you? Because obviously you're pretty passionate about that. Like when did that become part of your values and like you just decided this is what our standards are going to be? I would say at the very beginning, actually that radio show I mentioned, I hosted that with Scott, the owner of Sun Potion, which is an herb company. that was around many, many years ago. And their whole thing was, we're going to sell a single ingredient. It's going to be just chlorella. It's going to be no capsule, no filler. And at the time that was kind of revolutionary. Now there's a lot of brands doing that.