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In the six years since they founded Fresco Foods Inc., the Tampa-based maker of the Eat Fresco line of vacuum-sealed, freshly prepared meals, Rob and Tracy Povolny have taken a slow and steady approach to growth.
Thanks in large part to a lucrative partnership with Publix Super Markets Inc., the slow growth days look to be nearing an end. The privately held firm generated $5.74 million in gross revenue in 2019, up 517% from $930,000 in 2018. Executives expect to double that figure in 2020 — even in the pandemic.
Getting its products, which retail for $7.99 apiece, carried in about 160 Publix delis last year was a triumph for the Povolnys. That's particularly true for Rob, who gave up a steady, well-paying career in the food ingredients industry and then raided his severance package and secured loans from family members to launch Fresco Foods.
Getting a product carried by one Publix would be a triumph for most food and beverage companies. Rob and Tracy, both 44, wanted more — and now they’ve got it, with all 1,252 Publix locations in seven states carrying Eat Fresco meals.
“We looked at it, from the beginning, as developing a partnership with Publix, rather than just trying to sell them products,” Rob says. “We wanted to answer whatever their needs were, to help meet their objectives, but it also goes back to our philosophy, which is that we don’t do business with every retailer up and down the street.”
He adds, “As we strategically look at expanding to other parts of the country, we want to partner with the right retailers but also go deep with those retailers.”
But going from 160 or so stores to nearly 1,300 is a huge — and expensive — leap. One example: the Povolnys spent nearly $1 million to upgrade their manufacturing capabilities so they can boost the company’s weekly meal production capacity from 5,000 to 50,000. Their stated goal is to double revenue every year, while growing the brand into a national presence. That will require a challenging balancing act of keeping their biggest, most important customer — Publix — happy while adding new clients and geographical markets.
VIRAL VOLATILITY
The coronavirus pandemic has been a particularly arduous time for a manufacturer like Fresco Foods, with products intended for people on the go and locked into their daily routines, with limited time available for cooking at home.
“The best word to describe our sales during the pandemic is ‘volatile,’” Rob says. “We've had great weeks. We had a record-setting week when things started closing down and people would run to the store and buy up a pantry load of products, but then we've had weeks when the business was cut in half. So, overall, sales have been a little softer than where I think they should be.”
Publix’s partnership with Instacart, a third-party grocery delivery platform, has helped curb some of the sales volatility.
“As buying behaviors are shifting more online,” Tracy says, “it's nice that we have a partner like Publix that has made it easy for people to go and pick up our meals at curbside or have them delivered. It’s been a lifesaver.”
‘As we strategically look at expanding to other parts of the country, we want to partner with the right retailers but also go deep with those retailers.’ Rob Povolny, co-founder of Fresco Foods Inc.
The turbulence resulted in some Fresco Foods hourly workers having their hours cut, but none of the firm’s 100-strong workforce was furloughed or laid off. Now, fulfilling another goal they set last year, Rob and Tracy have added a second packaging line and a second shift for workers as they prepare to introduce a new line of breakfast meals in November. That will launch the Eat Fresco brand into a whole new — and potentially lucrative — food category. The Povolnys expect to add at least 25 employees by the end of the year to keep up with the anticipated demand.
Rob says expansion into the breakfast category fits Fresco Foods’ strategic vision to be a consumer packaged goods company, not just a maker of prepared meals. “We want to provide solutions to the market, whether it’s breakfast, lunch or dinner, entrees, side dishes, family-style [meals],” he says.
Another strategy that has helped stabilize sales, particularly via its Publix channel, is Fresco Foods’ investment in a team of market development managers that work directly with the Lakeland grocer. Market development managers are tasked with being in Publix stores every day, working with store personnel, district managers and retail improvement specialists.
“One of the big things that consumer product companies do is they start shipping the product and then rely on the retailer to build their brand for them,” Rob says. “And we know that we need to continue the partnership, not just make the product and ship it. As we launch into new Publix stores, we visit every one so the product doesn’t just show up on the truck. They know it’s coming, they understand the product, because we educate them. One of our associates talks to the deli manager or store manager about what is Eat Fresco and why they should be excited about it.”
He adds, “It’s a big investment in time and money, of course, but I think it has made a big difference. It makes that partnership stronger.”
TRENDING UPWARD
Although it now has a large, multi-state footprint thanks to Publix, Fresco Foods remains, in many ways, a relatively small, lean company. That gives it the ability to quickly bring new products to market. A key strategic distinction, the Povolnys say, is the attention they pay to restaurant trends, not necessarily packaged food trends.
“It all starts with our product development chef,” says Rob, “who is constantly reading the trends and understanding what's happening. We felt like if we are close to the restaurant trends of flavors and ingredients, we would be way ahead of the packaged food world.”
With that ability to be flexible, nimble and responsive to emerging trends and tastes, Fresco Foods can bring a new item to market in about 60 days — much faster than some food manufacturing giants.
“When you talk about big food companies,” Rob says, “it might take six months to a year, from concept to launch, because there’s just so much red tape and bureaucracy to go through.”
The latest Eat Fresco product to hit the shelves is Latin-style braised beef with cilantro lime rice and black beans, a take on Ropa Vieja, a popular Cuban dish. A Korean barbecue pork meal is in the works, as is an entirely plant-based entree — a response to rising demand for vegan options. The line of breakfast meals will also feature ingredients for health-conscious consumers, such as turkey sausage, egg whites, grains — including quinoa, chia seed and buckwheat — and spinach.
“It’s a lot of good protein, and we make them low-carb as well,” Rob says. “We say on the label they’re carb conscious, because we know that's where people are heading — they're looking to limit their carbs ... not one of the breakfast meals has more than 10% of your daily intake of carbs.”
NETWORK INFRASTRUCTURE
To meet Publix’s demand for Eat Fresco products, Fresco Food made key changes to the way it distributes its vacuum-sealed, never-frozen meals. That required moving away from the direct-to-store delivery model in which it shipped product around the state in a company-owned refrigerated truck.
“We were taking product right to retailers and managing the inventory,” Rob says. “Now we work with Publix and go through their distribution centers.”
Publix’s trucking company comes and picks up pallets loaded with Eat Fresco meals, which then get delivered to the grocer’s warehouses. For deliveries to the 100 or so smaller retailers and specialty stores it counts as clients, Fresco Foods works with a third-party distributor. Getting out of the distribution and stock management side of the business has freed up Rob and Tracy to focus on product development.
“That's something that has helped us grow and expand our business,” Rob says. “It’s given us some efficiencies that we wouldn't have otherwise, obviously, if we were still managing the inventory and going door to door.”
Willingness to completely change the infrastructure of their distribution process is one example of the lessons the Povolnys have learned as they’ve watched Fresco Foods grow, in just six years, from startup to Publix star. Now, as they set their sights on acquiring additional investment that will help them open a manufacturing facility somewhere in the northeast — to further their goal of making Eat Fresco a nationwide brand — they have a blueprint for success.
“You set out initially with your business plan and you try to stick to that as much as possible,” Tracy says, “but then you realize pretty quickly that you need to be flexible and able to pivot as much as possible. I like to plan and know where we're going and what the next steps are, but it doesn't necessarily play out the way you think it's going to, but that’s OK because you're progressing, you're growing and you're making changes that are for the better.”
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