After successfully launching High Road by keeping a singular focus on food service clients, CEO Keith Schroeder was presented an unexpected opportunity to move into retail. High Road was also unexpectedly kicked out of their original commercial home.
Ironically it was High Road's narrow focus on providing high quality ice cream products to food service clients in Atlanta that created the retail opportunity Keith wanted to avoid. Retail meant investment in new equipment, new processes, new employees and moving into the brutal world of grocery frozen foods. Ice Cream is one of the most difficult grocery areas to win.
As High Road's retail momentum started to grow, Keith was faced with another unexpected development, eviction from his commercial home because the new owners planned to tear down the entire property.
Proof that fact is stranger than fiction, this discussion dives into the mindset of an entrepreneur faced with change that brings tremendous risk to the business. Keith shares the real story on how High Road made that leap into retail, how they raised the capital to purchase the new equipment and then how he went about moving his entire company while still delivering quality product to his customers.
This discussion is all about leap of faith for those of you looking to take that next step. Move your home based business into commercial. Grow your commercial business into retail. Grow your business from small to medium or large.
This is the second of a three part overview discussion on the launch, expansion and future of High Road Craft Brands.
This episode features host Walter Biscardi, Jr., Executive Creative Director for High Road Craft Brands and CEO Keith Schroeder. In addition to listening and watching Minus Twenty here, you can also find the podcast on most audio streaming services and YouTube. Full Transcript below.
Full Transcript of the episode. Apologies for any typos.
Walter Biscardi 0:05
Hey folks, welcome back for another episode I'm Walter here with Keith.
Keith Schroeder 0:08
Walter Biscardi 0:09
So in the first episode, we talked a little bit about how Keith actually got started with High Road and we left it off with with you guys in the old facility and I thought what would be neat with the second episode is to pick it up. You guys, High Road Craft Ice Cream was only a food service brand.
Keith Schroeder 0:29
Walter Biscardi 0:29
No intention going into retail.
Keith Schroeder 0:31
Never. In fact, we talked about that business plan competition. And when we won, one of the judges said if you had mentioned retail, you wouldn't have even been in the top three.
Walter Biscardi 0:45
Really. So they knew how brutal retail was.
Keith Schroeder 0:48
Yeah retail's such a bad idea (laughter) that we would have been out immediately had you mentioned retail.
Walter Biscardi 0:55
So here we are. So that person probably laughing now as he watches the See I told you
Keith Schroeder 1:02
Walter Biscardi 1:04
But so what actually happened was kind of neat. And I would actually one of these people.
Walter Biscardi 1:09
Restaurants actually started putting on their menus Proudly serving High Road Craft Ice Cream.
Keith Schroeder 1:14
That's correct. And we didn't know, we didn't ask for it. They just did it you know it like in anything else you would name you know, the source of the brand of your wine or you buy a specialty cheese. You might mention it. So why not? Why not mentioned that it's High Road Ice Cream. And yeah, it ended up on menus all over the southeast. It was really cool.
Walter Biscardi 1:38
And then what happened was fans like myself started looking up in the phone book at the time, and calling and saying hey, can I come by ice cream?
Keith Schroeder 1:48
And we only made containers that big, the big tubs. And so the the phone call cadence became so incessant,
Walter Biscardi 2:02
We can be very annoying and when we want to buy really good ice cream.
Keith Schroeder 2:06
I, you know, I'm hospitable to a point, but I'm more of a back of the house guy. So at some point I just made up a story since I was there Saturday cleaning up and coming up with new flavor ideas anyway. I'll be here, I would say I'll be here from 10 to 2 on Saturday. And you can come by ice cream then. So we had a little folding table and a piece of white paper like this, and I would write four or five flavors on it. And I wrote $80 on a piece of other paper and three gallons, $80 and a shortlist of flavors. And I thought that would be enough to ward off the consumers. And it didn't work. And people would, started coming with their own coolers, their own dry ice, bloggers started to come, video professionals, you know, aspiring food entrepreneurs, engineers. You know, just kind of startup geeks.
Walter Biscardi 3:17
I mean, this was right on the leading edge of social media.
Keith Schroeder 3:19
Walter Biscardi 3:20
Bloggers were out there. And of course, we're all interconnected going have you had this ice cream? Have you had this ice cream?
Keith Schroeder 3:24
Yeah. And I was using, I'm not sure if it was Facebook or Twitter at the time, kind of regularly, probably Facebook. And had my phone and would just take pictures of what I was doing. And share it.
Walter Biscardi 3:40
Keith Schroeder 3:41
You know, in a very innocent I don't know, if anybody's out there in internet land, listening or, and yeah, it got it became, it became a thing.
Walter Biscardi 3:52
Yeah. And then the Saturday stories literally became a total thing where you would make flavors for various restaurants or whatnot, and then they would just run these extra points.
Keith Schroeder 3:59
Walter Biscardi 4:00
So whatever they're making, so we will show up there be a big wall. These are all flavors, we have.
Keith Schroeder 4:04
Yeah, we would take big, big rolls of butcher paper and markers and just write stuff. My kids were small at the time. And it was a little family affair. And, you know, sometimes they'd have an employee or two there that I was training and they'd get to connect with, you know, the early the earliest adopters of High Road.
Walter Biscardi 4:12
And then we'd get the tour, which was a room like the size of what we're sitting in right now.
Keith Schroeder 4:27
I would talk to empty spaces like like a delusional person. (laughter) Remember, I only had one batch freezer a table in a hardening cabinet. And that would just be this is where this fancy machine is going to go. And this is where I'm going to put my pasteurized but it was really just a blank spot on a plastic wall.
Walter Biscardi 4:46
Yeah, but we were all Woo. And then...
Keith Schroeder 4:50
Use your imagination,
Walter Biscardi 4:52
Use your imagination, and still, you're still not in retail. You're only in food service. The Saturday factory store kind of became legend amongst the family, if you will, those of us who knew about it.
Keith Schroeder 5:03
Walter Biscardi 5:03
And we would start dragging other friends to it. And then one day, a buyer actually showed up, but you didn't realize, somebody from Whole Foods actually showed up.
Keith Schroeder 5:11
Correct. So I was so busy making ice cream that I think my co-founder was, you know, hitting the phones trying to let people know we existed.
Walter Biscardi 5:24
Keith Schroeder 5:25
And somehow, some way he had connected with folks at at Whole Foods Market but you know, hey, hey, we exist I was the extent of the sales pitch.
Walter Biscardi 5:36
(laughter) We make ice cream!
Keith Schroeder 5:38
These guys just showed up on Saturday, and we would retain all of our samples in these little three and a half ounce cups so we can go back as we were iterating through each of the formulas we were creating because we were very novice at an ice cream mix formulation at the time, and we would go back in and taste last week's version of Bourbon Burnt Sugar. Are you know and just keep keep retaining these little three and a half ounce cup samples. And those were really the only non three gallon samples I had in the building. (laughter) So the guy showed up and, you know, we want to taste a whole bunch of your flavors. And so I just brought this giant bin full of random crap thrown in a in a container and laid them all out on the table, put spoons out, tempered them got to know these guys, I still didn't know who the hell they were and they could have been, you know, cashiers at Whole Foods. I had no idea. You know, we're just hospitable. You know, if they were industry inside folks, if they were cooks or kitchen people like hey, you know, maybe they want to be employees or part timers.
Walter Biscardi 6:45
Right, right, right.
Keith Schroeder 6:45
We had no idea who these guys were. So they tasted the product. And by the end, they started speaking in kind of grocery lingo. I didn't know what the hell they were talking about. And at the end, they're like this would be great in our region. I didn't know what that meant. And so by the end of the conversation, we basically had an agreement in principle to create a line of pints, which we promised ourselves we'd never do, for Whole Foods Market for a region of which we didn't know what that meant. With equipment that we didn't have. So that's how you say yes and figure it out. And, and so we did explain that. We didn't have the equipment, right.
Walter Biscardi 7:29
And just in the state of Georgia, you cannot hand pack ice cream for retail.
Keith Schroeder 7:34
Walter Biscardi 7:35
It has to be packed by a machine,
Keith Schroeder 7:37
Right. And so we needed a machine
Walter Biscardi 7:39
They need a machine, a very expensive machine.
Keith Schroeder 7:40
I didn't have any money,
Walter Biscardi 7:41
Okay. Which is why you didn't want to go into retail in the first place.
Keith Schroeder 7:44
Walter Biscardi 7:44
They were happy doing the
Keith Schroeder 7:46
Walter Biscardi 7:46
Walter Biscardi 7:47
Simple, simple ice cream for the chef community that we understood well,
Unknown Speaker 7:54
So Whole Foods says we want to put you in retail.
Keith Schroeder 7:56
I need a machine Mr. Whole Foods. (laughter) And they said Well, how much does that cost? And, you know, I recall having done some research and said, I think an entry level was like 50 Grand, I don't have 50 grand. They said, Well, we can lend you 50 grand. I said I should have said 100 grand! (laughter) And, yeah, Whole Foods Market was kind enough, insightful enough to know that they could be very influential in incubating
Walter Biscardi 8:25
Keith Schroeder 8:27
better food businesses, and made us part an early part of their local producer loan program and very benevolently and inexpensively and patiently provided the capital for us to purchase, you know, our first industrial, industrial filler that was run by compressed air and a pedal. And we would sit on a like a drummer's throne and you'd grab off of a table a pint and put it under a single head on this acrylic spinner that would spin in circles because it had two hoppers, one for the caramel or the chocolate and one for the ice cream. And it never worked right. And it would fill like a quarter or a half over the top. Yeah. And so when the first time it came, we're all excited. We lined it up, put the lids on this spinner rolly thingy with the conveyor and he had the pass the pint from one hand to the other hand to the conveyor down this thing. And it all looked like it was supposed to work well but what happened the first time I did is I stepped on the pedal and five gallons of caramel emptied on my leg. Ice cream overflowed over the top of the container. I used many expletives, the whole team is ready to make like a couple thousand pints. Nothing is working. And all the ice cream is sitting in like five gallon buckets ready to go into the hoppers.
Walter Biscardi 10:07
Keith Schroeder 10:08
No. And then we got the we got the filler to work properly. And we would hand down the line to this conveyor to the lidder. And instead of putting the lid on, it would just knock the pint over and the ice cream would run out onto the belt. (laughter) So we we got to the point where someone just stand there with a hot water hose to when they would say man down. And so what you'd hear constantly at High Road would like every hear, shhhhh, kkkkk, man down. Shhhh, kkkk, Fuck god damn it. Man down. Shhhh, kkkk, Man down. And for every 20 pints that we made, there were 100 in the trash can.
Walter Biscardi 10:58
That's not good odds
Keith Schroeder 11:00
So prudent use of early working capital.
Walter Biscardi 11:05
Yeah, and for those of you watching this on video, you've been seeing some of the highlights. I actually was at the original factory filming one day for a little promo for you guys. I affectionately called it the I Love Lucy machine.
Keith Schroeder 11:15
It was terrible.
Walter Biscardi 11:16
It really was little pedal, pass it down, somebody catches it.
Keith Schroeder 11:19
It actually should be illegal. It's a good, I want to bill back the company that made that thing for for pain and suffering. And then you'd call them up and they'd go, well, Keith, you have to have a level on it 24 hours a day. And you know, it runs perfectly here up at the factory when we run jelly beans, through it and then you actually tried to run real ice cream through it and you had to call the suicide hotline four times a shift to keep yourself from shutting your business down.
Walter Biscardi 11:53
Just reinforcing Why you didn't want to go into retail.
Keith Schroeder 11:55
Yeah, t was a terrible idea. (laughter) Don't do it.
Walter Biscardi 11:59
Don't do it cause you'll end up building a bigger factory. (laughter) It was so much fun to watch back then.
Keith Schroeder 12:06
We eventually got it right though.
Walter Biscardi 12:07
Yeah, you did well obviously,
Unknown Speaker 12:09
But never, never enjoyed the, if anything is is semi-automatic just keep saving your money to get the fully automated version. It's like having a car with a radio but no engine. You know. And you can do a little flint Flintstones flap in the bottom.
Walter Biscardi 12:29
Without... just going back to Whole Foods, was that kind of a unique thing for a grocery retailer or somebody like that actually having a long program for small business.
Keith Schroeder 12:38
It was the first and only that that I was aware of and the amount of autonomy that Whole Foods Global which is their corporate headquarters gave to their regional leadership was pretty impressive. And I think it led to Whole Foods having a really beautiful culture and providing literally dozens and dozens probably hundreds and hundreds of startups to become viable around the country. I don't know how many ultimately benefited from the loan program but I know a ton of startups in, in like, the 2010 to 2014 era were just put on the map by Whole Foods. That was a big deal.
Walter Biscardi 13:21
That's pretty cool.
Keith Schroeder 13:22
They were like the CBGBs of food food company
Walter Biscardi 13:25
CBGB, I just watched that documentary with Alan Rickman.
Keith Schroeder 13:29
Walter Biscardi 13:30
Yeah, he plays the guy who started CBGB
Keith Schroeder 13:33
Oh, yeah, yeah, Hilly Kristal
Walter Biscardi 13:36
Highly, highly recommend that.
Keith Schroeder 13:38
Walter Biscardi 13:39
Okay, so now now we're in retail, and retail is working
Keith Schroeder 13:43
You wanna know how we distributed High Road?
Walter Biscardi 13:47
I bet our audience really wants to know how you distributed...
Keith Schroeder 13:50
There was a new Whole Foods Market opening up in advance of us getting the product to the distributor, And so we had to fill one store worth of product amidst this caramel explosion debacle. (laughter) And so we we were the last product on the shelf they were calling us and threatening to put something else in our spot
Walter Biscardi 14:15
In the spot..
Keith Schroeder 14:16
because we couldn't get the damn ice cream done in time. So we got there at like 11pm as they were ready to shut the door and then open the next day grand opening. And we bribed the security guard with baconators from Wendy's. (laughter) That's true. I'm real hungry. I want to go did, what would you like? Go get him get him baconators
Walter Biscardi 14:45
whatever he wants.
Keith Schroeder 14:45
So, yeah, which is sort of the irony that we were putting probably the most fattening, sugar laden product on the shelves at Whole Foods Market while bribing
Walter Biscardi 14:56
a guard with baconators
Keith Schroeder 14:58
a guard with Baconators But I, my wife and my two children. In fact, I let my kids put the products on the shelf. So our first shelf stocking was by my, my son was probably seven or eight and it's really cool. There's a photo somewhere.
Walter Biscardi 15:15
Keith Schroeder 15:16
Yeah, Nicki might have some.
Walter Biscardi 15:18
If we find it, you're seeing it right now for those of you who are watching
Keith Schroeder 15:21
If not, I'll do a stick drawing.
Walter Biscardi 15:24
Stick drawing of what Jackson looked like at the time and Madison policing it up there. Yeah, we can we reenact it right now.
Keith Schroeder 15:34
with a big smile.
Walter Biscardi 15:35
And Jackson, by the way, is now going to be an opera singer. He's in college in Boston. That's how long ago this was. Yeah. And Madison is a business major locally.
Walter Biscardi 15:46
21, she graduates in a couple months, and works in sales here in High Road.
Walter Biscardi 15:50
So that's how long all of us have been going on.
Keith Schroeder 15:52
Walter Biscardi 15:53
quite a while now. Okay, so now we're in retail. Things are rolling. Then you're basically going to get kicked out of your home.
Keith Schroeder 16:05
Yes. So, so this was sometime in 2013. I had an office with an Ikea futon in it because it wasn't uncommon. In fact, I probably slept there three out of seven days a week.
Walter Biscardi 16:22
I mean, if you're going to start a company you know, you're, it's 24/7 you, you don't turn off the clock when you go home.
Keith Schroeder 16:28
No, no. I would say I worked seven days a week, 18 hours a day...
Walter Biscardi 16:33
and this is three years in, 2013. 3 years in, in your original facility.
Keith Schroeder 16:38
Yes. And so I'm I'm waking up one morning in my office and I open the blinds I hear some noise out in the parking lot and there's a surveyor out like kind of doing the what the land grading is going to look like. And trees being marked with these plastic bows, and I said I don't think this is a memorial going on here. I think A; The economy was still kind of crummy. I think the property had been foreclosed upon. I didn't know I was just a renter.
Walter Biscardi 17:13
Keith Schroeder 17:14
And so yeah, the the, someone had purchased the property. And a couple days later, we got the, you know, you're one of the last standing businesses that that industrial, light industrial park was basically vacant, except except for us and like a collections agency.
Walter Biscardi 17:33
Keith Schroeder 17:34
And then some drug dealers behind the dumpsters was effectively...
Walter Biscardi 17:38
So you get your ice cream with something extra
Keith Schroeder 17:40
our business community. We had a small chamber of commerce. (laughter) And, yeah, so it was at that point, lucky enough to have a very good friend who understood the nature of where High Road was at and its life cycle and was very familiar with how to raise capital for that particular growth stage of a business's life. And kindly did some calling around for us and we stumbled upon a very, very cool guy who ended up being a primary investor for a family office that provided capital at a very, very critical time in our history. I don't know if we would have made it I would probably maybe we would have moved open an ice cream shop, but I don't know that we would have scaled without the serendipity of meeting the person who knew about raising money.
Walter Biscardi 18:44
Keith Schroeder 18:45
And the family office gentleman who so kindly believed in what High Road was all about, and you know, a handful a million dollars later and some negotiations and you know, the typical lengthy process that goes into raising real money like that. We had secured this property in Marietta, beautiful, again, light industrial space. And started building ice cream plant in late spring of 2014.
Walter Biscardi 19:20
And what all went in cause I mean you you've got, you've got a very successful business running and the original space. And now you're going to have to uproot your not only moving but you're adding more equipment, you're expanding capabilities. I mean, what was that, like from a business standpoint? I mean, there's a lot of companies, I'm sure, especially in the food space, you're a small company, you're growing, you're kind of like at that point where you're kind of outgrowing your space but you're scared to take that leap because of I overgrow, and I don't know what what was involved in actually, and what what was your mindset saying, okay, not only am I going to move but I'm going from what like five or 6000, 10,000 feet and then building..
Keith Schroeder 20:01
At max,. I mean that, the manufacturing space was probably just a few thousand square feet.
Walter Biscardi 20:06
Yeah, and this is a 75,000 square foot building just to give you a sense of scale and less than 10,000 square foot up to 75 that's a big jump.
Keith Schroeder 20:13
Walter Biscardi 20:14
So what is your mindset there cause obviously, you had a lot of faith that not only are we going to move, but I need a lot of space and we're going to expand.
Keith Schroeder 20:21
Well, my belief was we the economics are you either scale or fail?
Walter Biscardi 20:29
Keith Schroeder 20:29
right. And if you don't achieve that critical, top line, volume you know, the economics of running a food manufacturing business don't really make sense. You have to make a lot of something if you're going to price it in a mainstream fashion. And so, you know, it was either we're doing this or or we're not and I guess from you know, my personal Is that I don't do anything halfway. Was lucky enough to surround myself with some very, very wise advisors. There are a lot of just kind kind souls out there who believe in entrepreneurs who show up and offer counsel advice, help. Oftentimes for really nothing in return other than the intellectual and human joy of helping one another. You know, I've got a skill and I'm glad to allow you to, to put it to use.
Walter Biscardi 21:38
What for anybody watching this who was at that critical point where I'm going to scale I'm going to. One; What was your biggest piece of advice for that person who's going to take that next step to scale. Two; what was your biggest surprise or your biggest challenge that you were not expecting when all of this happened?
Keith Schroeder 21:56
Wow. I think I have anticipated number one that building an industrialized plant with much larger and more sophisticated equipment was going to come with a pretty steep learning curve. But I never really understood the level of skill required to be a machine operator. I thought that you bought equipment, you spent a lot of money on the equipment, and the equipment made your life easier. That's not the case. This equipment is very challenging to operate. You know, it's like you know, you have a NASCAR, you know, you just get in and start driving and it requires a certain amount of expertise and, and a knack and an interest and I realized really fast I can't stand machines. I have no interest in them. I have no you know, I like what they do. I like the fact that I can make more product. But I don't like running them. I'm not a tinkerer. I'm not a handyman. I'm more of, you know, creative type. I'm better off in the R&D Lab than on the manufacturing floor for sure. Yeah. And so looking back, I wish I would have found someone one person that just loved machines and knew machines. And we were a pack of chefs and designers trying to run very sophisticated equipment.
Walter Biscardi 23:34
Keith Schroeder 23:35
And when we would call the you know, 'oh shit hotline.' This thing isn't working at two in the morning. All of the questions that these technicians would ask of us. We didn't even understand the lingo. Right? And so we were significantly fish out of water at that juncture, but you know, what you you plow through and you, you, you learn things that may be outside of your normal realm of interest but you become more of a renaissance person by by figuring it out.
Walter Biscardi 24:07
And then what would be your biggest piece of it, obviously, that was a huge challenge. Anybody who's ready to take that next step, I've got my small, especially food-based business and I'm going to take that next step, consider, something that they need to consider your best piece of advice before they make that leap.
Keith Schroeder 24:23
Raise twice as much money as you think you need. Right away. Twice as much. Assume when you're modeling when you're doing your financial models, your pro forma, so to speak, assume you're going to make a lot more mistakes than the model reflects when you're being rosy. Starting of a manufacturing facility from scratch requires some cash burn so that you can figure out how to run your equipment.
Walter Biscardi 24:58
Wow. And so you You made a successful move up to here. We're going to stop it there, because the next thing that happens in the history of High Road is actually you go from running one company to actually buying another. And that that, that that's called
Keith Schroeder 25:13
Walter Biscardi 25:13
really growing up, you know, he doesn't know what he's doing with machines anyway. So why don't we buy another company?
Keith Schroeder 25:18
Walter Biscardi 25:18
Yeah, yeah yeah. So we'll pick up in the next podcast with that part of the story.
Keith Schroeder 25:23
I do want to caveat that I've hired some very bright people. (laughter)
Walter Biscardi 25:28
Because he wouldn't have been able to do this all by himself for sure. I mean that but you know, I think I think you brought up a great point, though, is you can't know everything and you've got to hire people who are smarter than you.
Keith Schroeder 25:40
Yes. And to be humble enough to just allow people to be out front in the spotlight in their lane be the decision maker. As the CEO doesn't have to know it all do it all. They have to set set the tone for the organization and certainly have the the general overall category and financial acumen. But you know, you don't need to be the NASCAR driver.
Walter Biscardi 26:10
No. And I think that's a really important point as you grow to understand you don't have to be everything.
Keith Schroeder 26:14
Walter Biscardi 26:15
You do want to hire the right people.
Keith Schroeder 26:18
Walter Biscardi 26:19
But then turn over their duties and let them do what they need to do.
Keith Schroeder 26:24
Walter Biscardi 26:24
You keep running the company.
Keith Schroeder 26:26
Yes, you do have to be infinitely curious though. You just because you know. I'm not naturally machine inclined. But that did not permit me to be completely disinterested in all things industrial. you have to learn.
Walter Biscardi 26:42
Right. So with that will stop here because the next step is High Road Craft Brands, owning another company, and really growing up.
Keith Schroeder 26:53
Walter Biscardi 26:54
Yeah. So thanks for joining us. I'm Walter. This is Keith. See you next time.
Keith Schroeder 26:57