Golden Seafood

REVIEW SUMMARY
Company. GoldCoast Salads
Industry. Food
Key. Develop a sales force so your product reaches customers.

If you've got a great idea, you might as well go big.

Just ask Peter Radno, whose recipe for lobster spread found its way from his small cafe in Naples into the aisles of some of the biggest grocers in the country, including Costco, Sam's Club and Publix.

How Radno accomplished this feat is a lesson in entrepreneurial daring, an inspiration to small-business entrepreneurs to think on a really big scale. Asked to explain, Radno pauses briefly. “I don't know if you can write that,” he says, chuckling. “You've got to be talented and have balls.”

Radno, the president of GoldCoast Salads in Naples, owned a small eatery in Naples called the Berry Patch Cafe from 1996 to 2002. The most popular menu item was the Maine lobster spread, often eaten on a sandwich.

Costco, the giant bulk-food retailer, had a store in the same plaza and Radno became friendly with the staff and manager there. One day, Radno asked the manager how he could supply his lobster spread to the food-distribution colossus.

A few months later, Radno was off to Atlanta visit Costco purchasing executives with samples of his lobster spread in a cooler bag. The supermarket buyers agreed to stock the seafood in a six-month trial in the Fort Myers and Naples stores.

Today, GoldCoast Salads supplies about 500 grocery stores on the East Coast with 2 million containers of lobster and other seafood spreads annually, including 150 Costco stores. Radno estimates sales this year will reach $20 million, up 25% from last year.

“You either go for the whole gusto or stay small,” says Radno, pointing to the company's new 65,000-square-foot, $6.5 million manufacturing facility under construction. “Our goal is to be national and be in every refrigerator,” he says.

Spread it around
Confident that his lobster spread would be a big hit but without any customers, Radno, 41, and his father, Peter Radno Sr., 65, bought some industrial space and invested $500,000 in packaging equipment in 2002. They used cash, credit cards and a bank loan to establish GoldCoast Salads.

Radno's confidence came from the fact that supermarkets didn't carry Maine lobster spread. The fish spread they did shelve was of inferior quality, he adds.

With only his recipe and equipment in hand, the younger Radno didn't test his product in small, local stores. “You think big,” he explains. So he dialed up buyers from Publix and Costco by phone. Within a few months, Publix was shelving the lobster spread at local stores. “Costco took about seven to eight months,” Radno says.

Radno credits that entrepreneurial “all-or-nothing” drive to his father and grandfather, who escaped the Russians when Soviet forces occupied Hungary shortly after World War II. “They lost everything in Hungary,” he says. Radno Sr. subsequently built a successful drywall contracting business in Naples.

The Radnos sold the cafe in 2003 when it became clear GoldCoast Salads would be more successful than the small eatery could ever be. “We dive right into it,” he says.

An army of samplers
When Costco agreed to test GoldCoast's lobster spread at its stores, Radno spent the weekends passing out samples to customers. “On the weekends we'd do road shows while my mom was running the cafe,” he says.

Anyone who has cruised the aisles at Costco on busy weekends knows grazing on free samples is part of the experience. But passing out samples let Radno gather valuable intelligence on customer habits.

For one thing, he realized that supermarket seafood had a bad reputation. Years ago, the often-smelly seafood counter was relegated to the corner of most supermarkets. While that changed in recent years, customers still were reluctant to buy seafood in supermarkets.

But when Radno passed out his lobster-spread samples, customers snapped up the product that retails from $8 to $10 a container. And store managers were delighted with increased sales, which prompted them to shelve the product permanently.

Now, one of Radno's major selling points to grocers is that he'll staff samplers in their stores to help boost sales. “We can go to a customer and offer that to them,” he says.

That explains why only 35 of the company's 280 employees actually work in the production of the seafood spreads. Most of GoldCoast's employees are folks who work full time passing out samples to grocery shoppers. “We've hired our own people and trained them with our knowledge,” Radno says.

Employing full-time and part-time samplers has paid off. “They can sell 50% more than other demonstrators,” Radno says.

Spreading out
Besides lobster spread, GoldCoast Salads offers blue crab spread and smoked salmon spread. The company now sells 2 million containers to grocery stores on the East Coast.

In addition to 150 Costco stores, GoldCoast spreads are available at 100 Sam's Club and 198 BJ's Wholesale Club stores. Radno says the company is profitable and notes that companies like Wal-Mart Stores, which owns Sam's Club, aren't as cutthroat on food pricing as they are with other commodities. “Everybody gets the same price,” he says.

In particular, supermarket operators understand that the cost of ingredients such as mayonnaise and seafood can be volatile. In addition, increased fuel costs have to be factored in to preserve profit margins. While Radno says GoldCoast has been able to raise prices about 5% in the last two years, the margins fluctuate depending on the price of commodities, such as seafood. “We forecast and work with our suppliers,” Radno says. “We price annually.”

Besides the large warehouse chains, GoldCoast now supplies smaller grocery stores including Harris Teeter and ShopRite supermarkets. Locally, Wynn's Market and Sweetbay Supermarket also stock the product.

To handle national distribution, the Radnos are building a 65,000-square-foot facility in Naples near their current 16,800-square-foot building near Interstate 75 and Collier Boulevard. Space was the company's main constraint; the $3 million worth of packaging equipment is sufficient to handle a boost in production.

The $6.5 million building was financed with a loan from Regions Bank and backed by the U.S. Small Business Administration. “It took three-and-a-half years” to arrange the bank financing, Radno says. “It wasn't the bank's fault. It was the economic situation.”

Radno, whose brother Adam, 28, recently joined the business in operations, says he prefers to maintain control of the company with his father using debt. Investors or venture capitalists present “too many headaches,” he says.