Food as Medicine
Alice Chu, CEO of Territory Foods, on what personalized nutrition actually requires operationally - and why the data behind a dietary claim has to be trustworthy before food can be medicine.
About this session
Food as medicine sounds like a nutrition problem. Operationally it is a data problem. The moment you promise someone that a meal fits their condition, their allergies, and their beliefs, every ingredient claim behind it has to be right.
Alice Chu, CEO of Territory Foods, walks through what personalization looks like at scale: why conventional SKU math works against it, how fast a diet trend like keto goes from fringe to Costco, why a word as simple as vegan needs a shared definition, and how they build a partner ecosystem they can actually trust the data from.
Key takeaways
- Why personalization and data - not recipes - are the backbone of a food-as-medicine model.
- The SKU math that fights personalization: with a limited menu, niche dietary needs never earn their own line.
- How quickly a diet goes mainstream, and what that volatility demands of a supply chain.
- Why a term as ordinary as "vegan" needs an explicit shared definition before you can promise it.
- What it takes to trust an ingredient claim when no third party is checking it for you.
- Building a high-trust partner ecosystem, and monitoring partners in and out over time.
- Why clean, structured food data is the precondition for any personalized nutrition promise.
Transcript
Full transcript
auto-generated from the recording · click to expand0:02Good morning, good afternoon, actually for most of the country. Now, I don't know what time it is. I was on an airplane at three 30 this morning, or four o'clock This morning. Get yourself that coffee. We're gonna worry for a riveting conversation. So Caffeinate, Hello to everybody out there in Zoom land. For those of you that I don't know, my name is Jason Gunn and I am heading up marketing here at Galley Solutions.
0:25And you can see I am joined by my good friend Alice Chu from Territory Foods, who I will let introduce herself in just a second. couple of housekeeping items for everybody out there. We're gonna talk obviously about Territory foods, who they are, what they do, and the whole focus of today's conversation is food as medicine, which Ellis has been at the tip of the spear driving that conversation.
0:48We were just talking about all of the conferences and all of the places where she's out there educating the world. So I look forward to hearing more about that. And then we'll get into a little bit about the data of it all. Obviously that's my jammy jam. We're gonna talk about how data plays a role in everything that territory does. I want to touch on people and process, and then we'll close it up with Culinary Operating Systems.
1:11So, with that, my dear friend Ellis, please let the world know where did you come from? How did you arrive at Territory Food? What's your favorite color? my favorite color is orange, so it's a great way to start it off a very bright, sunny color. Hi everyone, I'm Ellis McCue. I'm the CEO here at Territory Foods in Short, territory Foods is a direct to consumer fresh food platform.
1:32Each week we connect thousands of health seeking customers with delicious, healthy, fresh, prepared meals made locally in their community through a network of chefs, caterers, and restaurants spread all around the country. So a really special business that is accessing a really special segment of the direct to consumer food world. So you can see this beautiful photo of a delicious meal on the left side. These are things that are completely cooked, so ready in 90 seconds in a microwave.
1:58This is not meal kits, it's not logistics, groceries or anything like that. We're talking fresh prepared meals. And the way that we create them is really the magic of the business. So we work through a distributed network of producers. 36% of our chefs are Bipoc, Latinx owned businesses, 42% are women owned businesses, and they're all small businesses. So this first slide is really about our ethos and our mission.
2:22And we believe that territory exists to improve the health, focus on the health and drive the health of our consumers and their body, our planet, and our community. So we work to bring healthy pe healthy food to people. We work to enrich the economic communities that we work by driving those dollars into small businesses. And then we have one of the most sustainable, if not the most sustainable products on the direct to consumer fresh prepared meals market from the materials that we use in boxers, liners, everything like that, to the fact that because we use a multi local business model, the food travels less.
2:55So about 92% of our food is made within 250 miles of where it will end up. And that is so powerful when we think about the supply chain and the sustainability story that I really believe we should all be thinking about. The more food you can get out of those FedEx UPS boxes with 60 hours of cold keeping, they're heavy, they drive a heavy cover carbon footprint, it's bad customer experience, but we really focus on real food.
3:18So this is fresh food that is cooked from fresh by experts, and the proof is in the pudding and the end product because it just tastes much better. We believe about making healthy food that is delicious and making delicious food healthy, and that you shouldn't have to make trade offs in your lifestyle to get the sort of result that you want. I say that this category of fresh prepared meals is a very intention focused customer.
3:41This is a customer who's looking to solve something in their life. historically our business was built outta the paleo CrossFit movement, very connected to the fitness community in the early 2010 timeframe. We'll talk about fitness and nutrition in a second, but really this high need state where you had in the commercial space people who believed in the paleo movement and there was no way to get the food because in 2011 when the company was founded, whole Foods didn't have an o nom Whole Foods, paleo bar.
4:07There weren't D two C companies like this. There weren't even meal kits and certainly no restaurants. Were talking about the world of Paleo. And so we were founded in this moment of true need. Our business model was developed because the founder, Patrick was a software engineer and he basically said, well, I'm not gonna learn how to cook my own food, who makes great food. He went out to Craigslist and found a caterer who was making paleo food and said, do you wanna make me meals every week?
4:29And she said, sure, but not just for you. And he took it to his gym. And the first week, six people signed up and then six became 10, became 20 became a business. And he basically said, okay, how do I build this software that does this at scale? So we're rooted in this nature of technology and relationships but really related to the sense of how do we bring people to food that helps them reach their goals, and how do we do it in a high integrity way that we feel good about?
4:54So the backbone of all of this is personalization and data. And that's why I'm so excited to talk today because we're gonna talk about food as medicine, which is super intimate to me and super personal. But then really when you think about the ecosystem of information and systems, we are living at a time in direct to consumer food where we have more technology than we've ever had before.
5:15Right? I was just thinking about this with some some folks, like if you think about the changes in technology that we've had in the direct to consumer, anything movement from 2010 to current, we have so many more logistics capabilities, we have so much more information about what we put in our mouths. We have so much more supply chain capabilities, sourcing capabilities, waste capabilities. It's really the crystallization of bringing those things together.
5:40And what we've built at Territory that's really special is we've sort of said, how do we take all this different data on specific attributes of food and how do we make it more special and more personalized for every customer? How do we take the micro information data and about the food and connect it to the micro information data about the customer and bring them something that's specially curated for them?
6:01So it's really exciting to take our business model and continue to enrich it as the technologies around us grow. And that's largely how we came across Galley and how we started working with Galley because there's such a strong values alignment in building the foundational data structures of the future of the food system. And I'm super excited to tell you about how we're bringing that to the food as medicine space and how it's really changed our business as well.
6:24So in short, just a little bit more about territory, like we really think about just making it so easy to eat well. And as we think about different people who need support in eating well, the better you can make it, the faster you can make it to eat well. And and just like lower friction, the better, right? As we think about the world of food as medicine, it's a very nebulous space.
6:46Some would say that all food as medicine, I would definitely say that all food as medicine as a long time to healthy eater. But the more simple you can make that world of good choices, the better you can be. And we have been in business since 2011, 12 years of operating experience. I'll say. That's the biggest insight that we have. The faster and easier you can make it to eat well, the higher stickiness you'll have with those good habits and the world gets healthier.
7:08So we really think about that simplicity in that ease. And part of the way that we do that is through our operational mechanism and the operation that lives underneath. We operate a hyper complex supply chain operation. You can probably imagine with a distributed network of 55 different chefs, caterers, different types of businesses, they all have different needs, they all have different cost structures, they all have different sort of internal working.
7:32And part of the richness that we have built is actually building true partnerships with those folks. The pandemic, it's 2023, some would say it's over, some would say it's continuing. We've seen a tremendous amount of commodities fluctuation across all of our chefs. I think anybody in the food industry has seen that in the last 12 to 18 months. And we've really thought about our business model to say, how do we enrich these communities?
7:56How do we enrich these chefs? How do we support them? Because the backbone of your local community is your food community. If you think about the thing that makes your community special, the things that makes it diverse, how do people find jobs? Everything like that. Your food community is so integral. And so a big part of what we think about is what is our role as a direct to consumer platform in those local communities to drive that value?
8:19And how can we use our disproportionate advantage as being large and being scaled and being very stable and operationally capable to really support those local food systems? That's the magic of what we do. And it's it's definitely the most complex part of it, but it's super exciting because we see the impact in a real way. And thinking back on the pandemic in the early days of 2020, we got calls from restaurant partners, right?
8:43Great scaled restaurant partners, fantastic brands, and they said, we have a retail footprint of 16 units that aren't open. We are closing our doors and we as a business aim to be between 15 and 25% of any chef partner's business. We want to utilize the assets they've already invested in. We wanna leverage, we don't usually call it like dark kitchens, but if you are familiar with that term, you could use it there.
9:05We actually just think about how do we help chefs double utilize the investments that they've already made in their space, in their staff, in their expertise, and use it to bring a really high quality product at scale. Anyhow, we got called during the pandemic that we were quickly becoming 85, 95, a hundred percent of people's businesses, of chef's businesses. And I'll tell you that we were not designed that way as a business.
9:31And so it was a really great moment for us to think about the investments that we wanted to make as a business and how we wanted to build the value to our supplier partners and our chef partners and say, what does it look like if a hundred percent of your business does run through territory? And how do we make sure that the economics are there? and that is also another reason that we chose to make the investment in partner with Galley because we really wanted to have that transparency to costing, to velocity, to sourcing everything like that.
9:56And so not just for the end consumer data and all the cool and interesting things that we'll talk about in a second, but also to provide a backbone of support for all our supplier partners and allow them to to operate their businesses more scalably and with more transparency to their economics. Because small businesses, they get lost really focusing on how do we build a better environment.
10:17And then a, the last sort of part of this, which is these last three bullets here, is very much focused on sustainability. We are in such an important moment for the sustainability movement where there's a lot of people thinking, how do I do this better? How do I use food scraps to create new dishes? How do I create a circular economy? How do I reduce my packaging utilization? Things like that.
10:37For us, there's also a big focus on how do we how do we encourage people to eat more plants? We're not asking anybody to be vegan. We're not asking anybody to be plant-based. We're saying, how do you eat more vegetables to get higher biodiversity, more nutrients into your diet? And how do we be the change that we want to see from a sustainability perspective?
10:56So a very interesting business rich business, and so lucky to work with a network of high quality producers that provide their own expertise and come to the table with their own ideas so that we're really moving the community forward together. As we've developed the company the last few years since I've been here, it's been a very salient moment for direct to consumer food for health and wellness.
11:18So I came to territory in 2018. I'm not the founder. I love the founder. We have great strong relationship. I think I stopped there because I think sometimes when you hear non founding CEOs, it's sort of like, what's the story there? The story here is that Patrick, the founder and I stay close, he brought, built this amazing business that was so connected to this high purpose and high intent moment of food as medicine in the commercial space in the paleo CrossFitter space.
11:43And it's been my absolute privilege to think of how we bring it to the broader community and how we utilize this incredible thing that we've built. Because if you look at the major cultural narratives around the integration of food into the body and into the wellness system, it's largely been focused on weight loss. And if you think about the messages that you've had in like the nineties, the early two thousands, it's very much around, you can use food for weight loss.
12:03It used to be low fat, then it was low calorie, now it's high fat, right? A lot of different information there. big like the food pyramid, everybody knows that. And then I think what's really interesting is there started to be this oh, if you have heart disease, you should eat vegan. I don't dunno if you remember when this narrative started in like the eighties and nineties.
12:22And it's interesting from a cultural perspective because I think the message didn't quite land. I think people said, oh my God, my dad had a heart attack and now I have to eat vegan. We're eating vegan. It's this horrible thing. Think about where we are right now in 2023 and how different that is and how different the way that we talk about food as medicine is, it's not that eating vegan is a punishment because you had heart disease, right?
12:43It's that hey, you can change the inputs to your body and have a better output. I really think that there was a catalyst moment in that early 2010 timeframe, very much when territory was founded around the naturalistic movement led by Mark Sissen led by the amateur biohackers, Dave Asprey and things like that. I think it really attacked the Gen X and millennial sort of working professional, just great like start of the cultural consciousness around, Hey, if I put more natural things into my body, how do I have better results out of it?
13:14And I think that catalyst movement around naturalistic food, obviously Paleo became primal became whole 30, whole 30 became keto and a lot of fragmentation from there. But I think it really brought into the common cultural narrative, this idea that you could use diet to get better results that are not just about weight loss, they're about things like inflammation. They're about things like brain fog. And that's when things get really interesting because once the general cultural movement of the United States specifically, and then I'm taking a very US centric approach here.
13:42Just as a caveat, once the general US consumer starts hearing that their friend had great results with paleo and feels better, or somebody is trying the keto diet, people start to ask, they start to do research. I think the catalyst on like, there's a great moment where Al Roker shows up on the Today Show in 2019 and has lost a ton of weight and it's doing the keto diet.
14:04And everyone's like, wait, what happened? What's this keto thing? And now if you go to the grocery store, keto is everywhere. You go to Costco right now, there's snacks that say the word keto. This is a medical diet that was used to prevent epilepsy. And now you walk into Costco and have the snacks are brand new keto, like we are in a different world of food as medicine.
14:23And so it's exciting for me because as a nerd in this space, I've been watching it for a really long time, obviously, and sitting at the helm of such an incredible company that has built out the infrastructure in the mechanism of direct to consumer food, in high quality production methodology and the correct format for the moment to now be sitting at this cultural nexus point where we have awareness, we have interest, and we have the right to win in food as medicine in both the commercial and the public space, which we can talk about a little bit and have made a massive investment and focus over the last 18 months specifically to make sure that we have the architecture and infrastructure to drive this in the future.
15:00So just a really interesting moment for us as a company to crystallize the legacy of territory, foods and legacy of the D two C food movement plus the new space that we sit in, the cultural consciousness of food as medicine and where we think it can go. I wanna unpack that a little bit. So obviously the data's gonna play a role and we will get to parts of that, but tell me a little bit more about this idea of bringing commercial to local.
15:29Yeah, so you touched on a couple of things quickly in your intro about the food is medicine evolving, right? Mm-Hmm. Because it's always kind of been there, but now it's like, okay, how do we take some of the infrastructure and some of the things that have been laid out by traditional like kind of medically driven diet structures? Like you were just saying, keto is developed for combatant to epilepsy.
15:53What is happening now? What are you guys doing now to try and bring some of those types of medicinal qualities of food into the local infrastructure A hundred? Like such an interesting like, question. And what's so funny about food is that like any food can be considered medicine, right? Like controversial, hot take, everyone, every investor asks me, what do you think about medically tailored meals?
16:18And I'm like, what do you mean medically tailored meals? Any meal that is designed with intention is tailored for something, right? Like, and if you've designed meals for diabetes or you've designed them for paleo, you've designed them for keto, you are tailoring the meal towards a medical outcome, whether you wanna call it a medical outcome or not. the way that we think about this in localization is very much about adoption, right?
16:39Food is intimate, food is community, food is love. I often say to our team, if you have grown up eating red beans and rice your whole life and then a doctor tells you cannot eat that thing, or a person tells you cannot eat that thing for whatever reason, doctor says you can't eat it 'cause it's unhealthy person says you shouldn't eat it because it's bad for the environment, whatever you want it to be, you're asking the person to make a cultural shift and change who they are.
17:03And I think like that is the, that's the truth around food. Everyone has a moment of the thing that the olfactory of like the thing that reminds them of their parents' home, right? Like the home cooking moment or the thing that you bite absolutely that like is in for you. And when you ask someone or tell them that they have to abandon that cultural identity and that personal identity, it just makes it hard, right?
17:25You create an internal friction that shouldn't be there. So when we think about local, we think about bringing food as medicine, as local communities. It's very much about adoption and it's about saying who are the people that we are trying to serve? And not just what do they need to do medically, but we look in many different vectors and we're gonna start talking about the data.
17:40We look in many different vectors because we say, what is the protein trend we're seeing? Right? Red meats, non red meats, plant-based, so on and so forth. We say, what is the culinary trend that we're seeing? So Somalian food, east Asian food, Southeast Asian food, stylistic salads versus broths, whatever it is. And then what is the health and wellness goal of the meal? So it's a ketogenic meal, it's a diabetes mitigation meal, it's CKD friendly meal, whatever it is.
18:06And we actually look at those three vectors and we attribute all of our meals and our data that way so that we have the information and then we can broad base assort that across different needs states. but what we, the reason, the reason we do this is that what we have seen in our data from 12 years of operating experience and a lot of consumer and competitor information is that we have the longest and highest retention curves of the entire D two C industry.
18:33And the reason we have it is because we get so specific in the meals center made, the reason we can do that is that we're not a vertically integrated food manufacturer. If you are a food factory, God bless you, I'm sure your life is very hard right now carrying that asset load, but you have 35 SKUs you can make a week, right? That's it. Because you have limitations to your manufacturing plate plant that are basically based on your factory size or based on the technology equipment that you've invested in, right?
18:59You can make 35 kus. Somebody says, I need diabetic Somali food. You're never gonna attribute a whole SKU outta your 35 SKUs for that 'cause it's not gonna, it's not gonna hit the general population. And when you have manufacturing plant, you have to get as many units through on as few SKUs as possible. Like that is how CPG is built. We have a limitless production model, and that is incredible.
19:18And what that means is that we do boutique procurement against different stylistic trends, diet trends protein trends, everything like that. And we go find the correct supply side for it. And we actually go out into the community and we say, Hey, we are looking for diabetic, which means X, Y, Z. 'cause a lot of like small producers don't actually know what that means. That's what we bring the expertise.
19:38And we have in-house dietician, nutritionists, data scientist, so on and so forth. And we actually go and procure that supply boutique for that need. The chefs own the creation of the meals. Chefs are amazing. you tell a chef, you say chicken center of the plate, do it in your own style or you like think it needs to look like this. And then they just build and they, that's where the love is.
19:58And what's exciting is it's really bringing together the demand side data with the supply side data together to find that perfect equilibrium and bring those dollars into those local communities. So it's an incredible business model that we've built. And as I think about the applicability in food as medicine, we're able to bring real localized options to the consumer that's not just made locally, which is better from a supply chain perspective, but also has a higher adoption rate because it is more in touch with the local flavor and can reach that community more directly.
20:28So how are you arriving at the markets you serve? Is that driven by let's say a somebody's going out there and trying to target a particular cultural note? Or do you have clients that kind of move around that go, Hey, I'd really love to be able to get my hands on this. Like, what inspires you to go and attack a particular segment or a particular diet type or cuisine?
20:54What I would say is that we do a lot of customer listening just through our own brand territory foods.com and watching the market and just saying sort of what are the broad based trends? And we have incredible like, legacy of building like the absolute most beautiful products across like hibiscus and like all these like very trend items, like fantastic. in terms of demand sourcing, we actually operate and work with over 15 different partners that are all bringing fresh prepared meals to their communities through through different websites and different integrations into our core platform.
21:25And it's fantastic because as we've started to work with those integrations and work more closely with those partners, they're reaching into their communities and they're, they're sourcing demand based on their own population. So we work with a partner called Season Health, and we have just, if you have not heard of them, they're fantastic. food as Medicine Marketplace, they go out into the the provider space and they basically pre-negotiate reimbursement for healthy food.
21:50And then patients sign up in their portal, they're preloaded with the amount of pre reimbursed dollars, which is so powerful when you're talking about duly eligible Medicare, Medicaid. And everything that's shown in the user interface is pre-filtered based on their data science for healthy, for that, for that patient. So if somebody with CKD comes in, all they're gonna see are things that have the correct amount of potassium in them.
22:11And it's exciting for us to be partnered with someone like c because obviously they're reaching into our marketplace, they're reaching into our data and they're saying, how do we sub assort the things that are correct for these different populations? But it's also helped us access and just see a broader base than we ever would've seen with Territory foods.com. Territory foods.com is an incredible consumer brand, very premium, very focused on, working professionals, fantastic legacy.
22:36And it's amazing to see the demand pockets across different groups that we would never be able to reach through one consumer brand. But doing it through these different partnerships has made it really scalable. And then what we do, and then this is the hard part, is that we take the consumer data and we actively add to our product goal, and we actively add, say we say, through season we are seeing in demand for X, Y, Z in a specific location.
22:59Our business is made 10 times as hard as everyone else's business because we do localized procurement, because we do localized production, because it means that to a, to access a dietary style or a price point or a protein trend, we're actually doing that sourcing across the entire country, across every local market. So we try to make it as data informed and as turnkey as possible because we want it to be easy to do this.
23:21And if anybody works in the world of, meal development and things like that, I hope your eyes are falling out right now because if we boutique created each of these meals in the way that, vertically integrated manufacturer would, we would never be able to do it because we would have to be doing so much r and d constantly. But what we have done is we've created the data structure so that we leave the r and d to the experts, which are the chefs, we guide them on the nutrition side, we have all the information for them, and then we have a completely integrated supply chain that makes it really easy to participate.
23:51So I've spent a bulk of my career in the manufacturing and the distributor world specifically moving data around. So as I hear you describe this and everything that you guys are doing to create localized, focus on cultural relevancy and those areas and giving the chefs their own creativity and allowing that to kind of blossom as you develop these programs, the data nerd in me is cycling going, holy crap, you have a massive amount of information and I'll just like oversimplify it, allergens nutrients Mm-hmm.
24:24Dietary claims. Like there's some very critical components that the consumer on your website needs to see, needs to understand as they're selecting meals. And what I'm hearing is you have a massive complex ecosystem of recipes and ingredients and things that you have to keep track of and have confidence in which, spoilers i think is what had you arrive at Galley eventually, but like, tell me about that journey.
24:52Like what was the light bulb moment that said, Hey, we're not gonna build this ourselves. We need to find somebody to help us. Yep. And what were, some of the, like considerations you guys had to make in order to like pull the trigger on that? I will say you, I have a strong bias in my background towards buy versus build, right?
25:09I used to deploy Oracle systems, like I'm not a huge fan of custom development, but our CTO our head of product, we have a big engineering team at territory and it's a good healthy balance. but I think that for me it's about what you can be excellent in, right? And it's where do you want to find the partners that want to do it with you and who has the excellence in the marketplace and what are they building and how do we do this together?
25:31Someone asks in the chat around for medically support or medically tailored meals, how do we look at territories as a potential partner instead of potential competition? It's a phenomenal question. We are not your competition. We are your infrastructure. We are your infrastructure to help you do this lighter, faster and better so that you can focus on what you are passionate about. Because what we're passionate about is the operation and the data and the technology to make it easy to have fresh prepared meals.
25:55And so I really view us as like a market maker, especially in food as medicine as it grows. I see no one as competition because I really believe that we are at the forefront of new technologies to make the food ecosystem and the logistics models and the fulfillment models faster and faster. how we got there, it was running our own business and it was running territory foods.com and just the challenges of what that consumer actually wanted.
26:23I think one of the biggest things in data analytics is what you can read and what you can't, right? And how do you learn the right things about the consumer? We built a super complex data structure for territory foods.com because the legacy of the business was a paleo CrossFitter with a lot of preferences. And if you go, if you ever shopped us in like 2019, the first thing we asked you was all of your restrictions.
26:49And what an interesting user experience, not to say what do you want to eat? Right? But what can't you eat? Yeah, Okay. It's an interesting, like if you go to DoorDash, it's like, do you want Chinese or do you want Thai? Right? Like, what do you want to eat? This whole business was built from a framework of you have trouble and we are here to make it easy for you.
27:08And I love that from a consumer design perspective, because when somebody has problems and you solve them, you build loyalty and you build love. But let's be super clear. We are a direct to consumer fresh prepared meals subscription service. Nobody wants to buy meals in advance. Everyone wants them just magically show up. Nobody wants to buy food seven to 10 days in advance. By nature. A subscription format of pre-prepared and pre-ordered is not a format people want.
27:34They just want it to show up, right? But the consumer trades that for the convenience of not having to think for the trust that when they tell us they don't want artichokes, they don't want cilantro, they can't have anything with over 25 carbs, right? Like they give us that long list that there is enough choice for them to have newness and variety and interest, and that what they get will always have those parameters.
27:55And so it's such an interesting thing because when I think about the way that we built the business from, from founder through probably like my first two years in the company, it was very much like we have built this thing that is so complex and we have so much information on every single meal. How do we actually use it? And how do we actually use it?
28:14And this is my big thing about direct to consumer companies and how they actually use data or not. If you're not using that data to drive a tremendous amount of consumer value that is obvious to the consumer, you are wasting your time. And you really have to look at yourself and say like, do am I, like, there's so many companies that like I'm a data company.
28:31Like are you really a data company or are you doing something else? And the thing is, we're venture capital backed company. we have about $44 million in the business. I've raised about 34 US in the last four years. I look at the flow of venture capital in the food space, and I think that preposterous at times is what I will say. And what I think that has created is this narrative that every food company needs to be a technology company and they have to like prove that they're using data.
28:58My god, think about where you really wanna take those dollars, especially in this funding environment, right? Think about what you can really invest in and where it's really worth your time. And that's the big thing. And that's why I love packaged solutions, because it takes money to build software. It takes money to build teams, it takes money to build factories. Like your money goes to a fixed amount of places.
29:16You have to be so intentional about how you deploy that capital. and so you should be real with yourself about where it's going to provide you value versus finding a provider who has already built that has already deployed that capital to build a service that you can utilize. Well, it doesn't surprise me that we found each other, because You guys found us Because we have brilliant sales team.
29:36You have a very persistent outbound sales team, and I have to tell you loved them from the first time I met them, loved them. Absolutely. We're looking at you, Jonathan. the whole impetus to build Galley was built around one of our co-founders Benji's dietary issues, and he was having to figure out literally something that was mislabeled Yep. Or didn't correctly identify something made him, ill enough to land in the hospital.
30:05And, from that day on, he's been unpacking this problem. And that's why I fell in love with it because, I've been a culinary my whole entire life. So I'm like, okay, we have to make sure that the information is present and it's reliable. Yep. and it's gotta be easy for the people that are actually making the food and doing the things to curate it and manage it, otherwise they just don't.
30:26Right? Yeah. If the systems are hard and, if it's all clunky spreadsheets and stuff like that, like it just doesn't happen. So you guys decided to leverage Galley for what parts of the culinary operating system? 'cause I know there, you're probably not using everything but there are pieces of it that are a little bit more intentional towards your use case so that you can keep your data organized. One Of the most shocking things to me about working more directly in the food production space was the lack of transparency to what we'd call the bill of materials in manufacturing, right?
30:59The bill of materials, like what you are making anything is the components that make the thing. And there's so much work in minimizing the cost of those components and adding the labor rep and like, this is how product costing is done. And when I first came to the food tech industry and the food production industry, I was shocked to see that there wasn't a standardization of the way those build materials were built.
31:20And that's effectively how we use territory how we use Galley, right? We basically said, and I definitely said to the team, like, do we really need to build a bomb system ourselves or is there somebody who has made an inventory management system? Like we don't keep inventory. So what that means is that we are a flow through model because you Don't make Anything. We don't make anything. We are one of the fastest tightest supply chains like out there.
31:42So somebody asks, do the meals arrive frozen, chilled or ambient? They're chilled, which is what a delicate supply chain that chilled supply chain is. shelf life is three to five days. These are not map packaged products by and large. We do have a specific line that travels a little bit further that is map packaged, but 95% of the volume isn't. And what that means is that we're working with a very tight shelf life, right?
32:04And when you have a tight shelf life in a cold chain, it means you have to focus on speed and accuracy and safety of that. And that's really, if I look at where we spent a lot of our dollars in the first 10 years of business is very much building out that infrastructure. and building best in class logistics partners that know how to handle packages. Some of that we do on our own.
32:21We build out cold keeping, standardization, everything like that. We build out fulfillment centers, so on and so forth. So very fast. so when we think about the things and the way that we want to deploy our capital to build the things, that's the proprietary thing is like the speed through the supply chain. When I tell people that we execute a multi-time a week, like 24 hour fresh supply chain at a 99.84% accuracy rate, people are just like, oh my God, that's unheard of.
32:50And it is unheard of. And that's where our expertise is. So as we thought about our software solutions, we thought about specifically around the data science that we need to do from a nutritional capability and from a like a e-commerce capability, we wanna spend our time there. We wanna spend our time building that. And so we said, can we find somebody who has already done the hard work in building sort of what we would think of as the bill of materials or the inventory value of the meals?
33:12And can we leverage that because there's so many different places of information that you wanna pull in and how can we do it? We met the galley team through persistent Inbounds. because originally we were just sort of like, well, we can probably figure this out on our own. And what we found, and the reason that we chose to work with Galley was that it was a very values aligned team.
33:30Very, that founding story around why Galley was built is incredibly important to how we work together. And what it has created is fluidity of ideas between the companies we share very openly, like what we have built and how we're using Galley. And we bring often, probably more than you'd like product ideas of how we can use it more for what we do, and really have had the privilege and pleasure of building the businesses together over the last few years and saying, how do we build this with tight integration?
33:56And Galley sits at sort of the heart of what we do from like a, from a product development perspective, which I think is really powerful. And as we look towards the future, we have a long roadmap of the ways we'd like to more deeply integrate to leverage the features that Galley has already had on roadmap or just like things that we've learned from working with different formats of chefs, restaurants, caterers, industrial producers, across a lot of different types of food manufacturers.
34:20Because we see that starting with a baseline of clean, easy to use data is just the thing that we need to do as the core of our business. And I think what's always been surprising to me about the industry is that how little accuracy and transparency folks really have into what goes into their product. And it can be things like, most caterers don't actually know the gross profit that they're getting at the end of the day.
34:44What does that do to them from a production perspective, from the stability of their business perspective, from the way that they allocate costs, right? For the solvency of their business. when it starts to get into ingredients and people don't know what is in the food that they're making, that's when you get into risks. And for us, having a transparency into what is in the ingredient profile is so important because our customers trust us and they're coming to us and they're saying, I don't want peanuts and I don't want cilantro and I can't have shellfish.
35:11And it becomes so important that we maintain that trust. And so we've been so happy to work with Galley because that's where the value alignment is huge. It's building that trust from data to support the consumer and their need. Who's managing it? Like who own who owns the data? this is like a hot topic at our company. I mean data stewardship, here we go, Jose.
35:32Data stewardship is tough in this industry, right? And we have a network of culinary managers that manage the relationships with our chefs, right? And they manage and they understand what goes into every single meal and they maintain recipes and things like that. And we maintain accuracy of them. And it is a very tough thing because when the cost of chicken goes up, 20%, what happens?
35:57Chef wants to sub chicken, they wants to have a different chicken, right? So we're constantly managing through velocity, high velocity changes to recipe development. And that's why it's important to have a really flexible system. 'cause you need to be automatically re-rolling reprinting labels, re-rolling costs, there's a lot of downstream impact to that. And for us, the focus on this, because we are not a vertically integrated manufacturer, we don't go out with a procurement team that says, I'm gonna get stabilized chicken pricing, for my factory.
36:25So we have a completely different model to manage the ups and the downs of the food industry. And so data stewardship is a challenge for us, and we have to manage it at the micro level and then roll it up with a macro level strategy. And so we have multiple layers across culinary and data science and technology to do that. So it's like a whole company thing, right? I find that a Whole company thing.
36:47I find that a lot of companies, and this isn't unique to operators versus distributors or manufacturers, but in my tenure playing in this space, they, it tends to get looked at as a project, less a process. Mm-Hmm. The ownership seems to be muddy. And I think there's a sense that like, I need to have one person be the data governor of all of the things.
37:10And that you want somebody at the top of the pyramid, right. That's stewarding it. Right? And I love that you used the word steward, but you may need multiple stewards that Mm-hmm. Kind of level up into the most important asset that you guys probably have is your data. Absolutely. And I think it's, it's multifaceted. And I think that in the food production industry, there's this feeling that when you say the word data, it's like, oh, that's it.
37:35That's not me. Mm-Hmm. That's it. Right? But data is everything. Data is everywhere. Data is the way products get sold. It's the way they're designed. It's the way they're built. And so every person, because we have access to tools, because we live in this world where we can, every person should be the steward of their own data. And that is, that is the hot take of it for me, is that as we've had new tools and tools like galley, as you have more tools, it's your responsibility regardless of where you sit in organization to own that.
38:05Because the days that it's dating somewhere else, where there's like a third party that's like checking something, those days are gone. And it's, it's a different type of role. It's a different type of interaction. so we have multiple layers, but it is a hot take. It's a, it's a hard thing. but it's hard and it yields so much richness because when you have that stewardship at the, at every level, like, I don't wanna say the lowest level, I wanna say every level, you have a better product that yields a better return to the customer, right?
38:32You're adding complexity in the back end of your business to get a better product to the customer. And the customer can tell, and the customer understands and they buy more and they buy more frequently and they buy with less discounting. And that's really what everybody wants, right? You wanna drive more customer orders, more customer orders come out of a great product that they loved, comes out of a high trust relationship.
38:50And what that means is better economic stability for our business and all the businesses that we touch. So it's absolutely paramount that we as a industry understand that data is not an IT function, it's integrated into everything that we do. And it's, it's an the empowerment, right? It's the passion and it's the, for me also, data accuracy is like the living embodiment of your values coming to life.
39:15Like what do you actually, like, how do you actually want this to show up? so big transformation. We are lucky to be a very flexible and values driven team and say like, we wanna take care of our customers no matter what. Right. That's the most important thing. And so that value at the core of taking care of people's health has really been the thing that has allowed us to catalyze this POV and drive better stewardship across every level of our company.
39:41Well, I think food data is the most accessible of the datas, if you will, right? If you're a finance nerd or if you're, a programmer or if you're a data analyst, there's all sorts of versions of data. But when you think about food data, you're right. It's all of the inputs to your body. It's everything that you know you're shopping for, it's all of the things that you're looking Mm-Hmm.
40:01To understand from a either a marketing perspective or dietary perspective, allergens, all of that stuff. So when you make it easy to collect and move the data around the buy-in, I think is a little bit easier. You know? And that's why oftentimes it gets tossed into, oh, that's an IT thing, have the it guys do it, but there's context in data. Yeah, that's right. Nuances to data and there's understanding things like, hey, if you tell me that it's gluten free, but it also has soy in the ingredient statement, like, one of those two things are wrong.
40:34Yes. And that's in constant evolution. Like I just learned this week at a conference that I was at that pea protein can simulate aller allergic responses that people probably aren't even looking for at this stage. I think that's like hot off the press last week. there was some study that came out. that's, this is how things are changing though, right?
40:56Like this is why, this is why it's so important to have this information be and have the tools to be able to synthesize that information quickly. Like what do you do with that information now? Like, what's your action as a business? How do you communicate it? But like, this world is changing and we have so many new biometrics and connected fitness and everything to understand how the body responds to different nutrients and different pea proteins, different attributes, everything like that it's so important to be able to move quickly and you need to have systems in place to move quickly.
41:24You need to have transparency to do it. it's so funny when you're talking about the soy sauce thing. I think if we take 50 steps back, does the average American consumer understand that soy sauce by definition is not gluten-free? And that if they want a gluten-free product, they should be eating something that has tamari instead. Right? I do not think they do. I do not think they do.
41:42So there is always a commerciality aspect to it. I think some do. But the average consumer who's like, I'm gonna eat gluten-free. Like, what do they actually need? So I think we can also over solve. I think we can overly nuance. and it's important to know when you're doing that and the purpose, because you don't wanna cause too much complexity or or just convince yourself that you need more than you have.
42:04But I think the power is the information and how you bring it to the consumer. And I think, being the marketing guy, I am probably not doing myself a service here, but I think some companies have gotten a little too creative with it, right? You start seeing like gluten-free soy sauce, which inherently isn't true. Or we were talking about, I was having a conversation about vegan diets and the way that we characterize things in air quotes, you know?
42:30Mm-Hmm. Always kind of like trips me out, you know? It is what it is. Yeah. So why don't you just call it that? And once we start kind of getting creative in that way, and you say things like, gluten-free soy sauce, it's like, no, we have tamari, we have, these other alternatives, but it's not, that's not what it is. You Know? So it's super interesting because it's not always so simple.
42:52Let's talk about vegan for a second. Like, what does vegan mean to you? It means no animal products. Well, now I'm probably gonna divulge a bit of who's Interviewing who now, huh? Yeah, right. Oh, it's hot in here. so my sister-in-law's vegan and she characterizes herself as an ethical vegan. So, okay. It's more, it's less around like, oh, I'm, completely opposed to people eating animals or whatever.
43:18It's more around the environmental impacts to it. So to me, I did always characterize it as like no animal products or animal byproducts. Yeah. So now educate me, what am I missing? No. I think this is like, it's just a great example because I think most people would say no animal products, no, by animal byproducts. And then for us, when we filter to vegan, we do not show anything that has honey, because honey is an animal byproduct from bees.
43:48Yep. And it's amazing because like some people don't think that's true, right? If you look at like a bunch of like Clif bars and things like that, they're marked as vegan because they're using a vegan pea protein to make their bars and they're sweetened with honey. And so just interesting because we're in this world of definition, and like the FDA and USDA are all over this in like different ways and really starting to think about like what healthy means and like what do all these things say, but there's no standardization of any of this.
44:14Okay, that's vegan. Let's talk about diabetes. What is a diabetes friendly diet? Who defines that? Who makes that rule? And I think that is where, it's just so interesting. there's some interesting companies that are starting to aggregate clinical trial information and come up with like their best recommended based on clinical trials of what nutrient loads should look like for diabetes medication. Like I think that's very interesting.
44:41The way we do it is we have a dietician is nutritionist who has also master's science in nutrition sciences. Right? And she provides her guidance, and that's how most companies do it. But it's been super interesting in the world of food as medicine because like I was talking to a diabetes mitigation partner of ours who really wants to do some clinical trials to reverse type two diabetes, right?
45:01Great. Love it. Happy to support. And they said, oh, the food has to be all organic. And I said, well, why? And they're like, because that's impactful. That's how you reverse diabetes. And I said, is it? No. So it's just, it's just interesting because like when we talk about data, like we should always know what are facts and what aren't. And, but we should also know that like there's, it's actively changing and there's actively like new definitions coming out.
45:23And so how do we use systems like gal quite frankly to rapidly change and evolve? And then how do we explain to the end consumer through labeling, through marketing and things like that so that the end consumer has that trust? Because that's really what we wanna build. We wanna build that trust of relationship and a really great product at the end of it. That's diet Talk radio. Thanks for joining this show.
45:43No, that's brilliant. And that's kind of my point is the velocity at which things are changing. We're finding out new things. I remember when all of these elements started to surface, and at the time I was running the data team at US Foods, and it was like, I need to understand all of the marketing and dietary claims about my products. And to go back to like my marketing callus a little bit, I had a coffee company sending me attributes on their data around like, is it antibiotic free?
46:12Mm-Hmm. It's a coffee company. Why would you put antibiotics in your coffee? You know what I mean? Like mm-Hmm. That's, that's just trying to be a little too clever for me. So it's it's definitely something to double click into and further the conversation on. Is there any closing thoughts that you wanted to to offer up before we hit the q and a? No, I think in terms of just macro level is that now you know about us, so check us out.
46:37I will always hear to answer questions. We have very special business model. We have a very different way of working and would love to just continue the conversation with this community because if you're on this podcast, you're highly engaged. You're thinking about data, you're thinking about the food system. and I think that we as a community need to come together to build a cultural consciousness and build a, the conversation out.
46:57Awesome. Well let's see. Some more questions around the logistics. So do the meals generally arrive by a local Instacart type provider? Do you have like local transit? What does that look like? I kind of had that question in the back of my head too. How do you get it from point A to point B? You said, do you have this complex yep. Supply chain?
47:17So what I'll say is that we are a network of highly valued partnerships. So we do not use sort of like randomized labor in any part of the supply chain. So whether it's logistics, certainly not production or fulfillment, and to be part of the territory network is a very lucrative thing for our partners. We actually make sure that they have strong profit margins. This is like a very unfavorable stance to take, but we work with small businesses, so we want to guarantee them profit margins this very different than a vendor relationship and traditional vendor relationship, whether it's logistics or production or something like that.
47:50And so basically what we do is we want to build a sustainable ecosystem of high trusts, partnerships. We monitor partners and we bring partners in and out as we need to based on performance and things like that. For logistics labor specifically, we actually only work with like one to three high trust logistics partners. And the reason we do that is the food has, they arrive in very good shape.
48:12So we do not use Instacart because of the nature of the like 10 99 sort of like random driver who just picks something up and drops it off. Mm-Hmm. I think those logistics models are interesting and we definitely have experimented with them in the past, but we want, food is sensitive. We operate a cold chain. It's very important to think about the safety of the product.
48:31And on the flip side, there's a couple questions here on like how we work with chefs and how do we make sure that they are following their recipes and how do we help 'em with sourcing and everything like that. And what I'll say is that we are a marketplace, but we are a, like a locked marketplace. Not everybody can be a chef with territory. and it's a very intensive vetting process.
48:51The reason it's so intense is that we make a tremendous investment in human capital and technology and sometimes in hard assets in the kitchens that we work with, because we want the product to be made in a high trust environment. And what that means is that we are doing weekly monitoring with the chefs on what they're seeing from a recipe perspective. If they need to make a swap, if they have to change their chicken, we're doing audits, we're doing a lot of data work with them and all in the spirit of partnership because we want them to stay chefs with us for a long time.
49:20This is not DoorDash where you just like list, right? You can't, there's like, there is an inbound form, but it's goes to a human and the human shows up at your kitchen and says, talk to me about your values. So it's a little bit different. and the reason is that we want to make that investment with our chefs and we want them to feel that they have a real partner for growing an aspect of their business.
49:40And we also know when their other businesses are not going well. We know their cost pressures, we know their production staff, so we don't run the kitchens, but we definitely, and we don't wanna run the kitchens, but we provide a lot of support in infrastructure. and then in terms of sourcing this is, and sourcing and local and things like that we hold all of our chefs to a very high sourcing standard that is localized.
50:03We do have them sort of like apply for variances when needed. And we also keep our pulse to the ground on commodities pricing and things like that. And then we do broad-based work with our chefs to say like, Hey, we've seen a 20% increase in chicken. How are people like approaching this in the balance of their business? Where do we need to approach it? So it's a very integrated model.
50:21We have a strong bias towards small producers and strong bias towards small local farms and things like that because quite frankly, great commercial message food tastes better, like lots of love there. And so it's a balance across, local versus more national distribution and things like that. And we just partner with the chefs, honestly, on a meal by meal basis to understand, we set the standards at the macro level and then they sort of say like, Hey, for this concept, like I'm gonna boutique, procure hibiscus from this farm.
50:50And then we often think and challenge ourselves, how do we leverage the fact that we are a scaled business to get them better pricing? And what are the systems that are out there to help them? Because this has been a year of price, right? Like everyone who works in this industry has been talking about price of labor, price of commodities, price of like raw materials.
51:07And so as we look towards 2023, we're excited to make an investment and support our chefs in that way. but it's really about the ecosystem of partnerships. Like you can go back to like the brand overview slides. It's about an ecosystem of high trust relationship based partnerships. And that is the magic to the business that we've built. and it's incredible and it's incredible to build the data backbone underneath it that solidifies those relationships and creates a safe structure and a stable structure for us all to build together.
51:35Yeah, it's a lot to keep track of and I feel like you have to have that real strong buy-in from your chefs in order to maintain it. So two more questions. One is really quick and then we can close out with one from my good friend Mr. wasa on the galley team. first one is, can I filter meals for nightshades? Oh, Patty, hot question.
51:58So we talk about this from a commercial perspective a lot on the new customer experience. You cannot but on the returning customer experience you can. So basically we have two digital experiences for territory foods.com. The new customer experience is very simplified because we wanna just help people get food quickly. The returning customer experience has an incredible amount of restrictions that you can add on the back backend.
52:18So the answer is yes. and basically if you wanna, if you actually love to go into it, just ping our customer service, we best in class customer service, they'll walk you through how to do it so that you can see things without nightshades. But we are seeing an uptick in FODMAPs and nightshades as like a big consumer trend. Chris Washer closing us out with a strong one.
52:38Do you help your partners supply the local sustainable products and how far does your impact go down to the local food movement furthering to help the local economy and maintain those high fresh ingredients? So I think it starts first and foremost with choosing the right chefs, right values, aligned chefs. We obviously we provide guidance with on like standards and things like that. The chefs bring forward their producers that are their suppliers they like to use, we integrate with them as we do chef onboarding and things like that.
53:04And that's really around how do we create the right local economic system. I think the power of the local food movement is lower carbon footprint, fresher product, and that is special. And so it's very core to what we do to say how do we keep the supply chain as tight as possible? Pricing is obviously an aspect to that. And so if you're gonna use a small boutique producer or small produ boutique supplier localized, it tends to be more expensive.
53:31And so for us, what we're trying to do is actually create volume enough that our chefs can go and like get better pricing, negotiate and things like that. If you think about the way our business model works, our chefs are doing all of their own supply procurement with local producers and they're doing it with the part of their business that serves territory and the balance of their business.
53:50So you're a caterer, you do catering business, now you have an additional X amount of volume on top of it. So they're getting better pricing with local suppliers because they're part of our business model and this is why nobody wants to leave. This is why the chefs are like, don't kick me out of the network. Like, I really need this because it's volume. And then for us it's also as we grow and as we create additional pockets of demand and additional levers, it creates more profitability for them.
54:15It creates more volume for them better, like better negotiating everything like that. The things that we do own are honestly things that are outside of the chef's capabilities or their purpose packaging. And we do not want chefs to think about packaging. We wanna do it for them. So we actually go out and we negotiate best in class packaging rates with sustainable packaging. We have a whole team that works on it from a materials perspective and thinking about what's the right material from a cold keeping perspective, from a safety perspective, from a visual perspective, from price perspective.
54:43And we do that on behalf of all of our chefs and provide them with best in class products there. So it really depends on what it is, but from an ethos perspective, we want chefs to be chefs. We want them to love what they make. we want them to have their network of suppliers they believe in. We want them to have strong love of what they create because food tastes better when it is created with love.
55:04Food tastes better when they believe in what they do. And so for us as we build on our business model, it's been very much focusing on how do we make it easier to be a chef, how do we make it better? And then how do we build the data and information layer in partnership with the chefs so that we can have the commerciality and saleability of the product that we need without putting that burden on them.
55:24And that's largely what we've done with Galley to build that system and that infrastructure to help chefs reach all these different pockets of demand. Well, I like that we're going to wrap it up with that. All of the, all of the cool things going on at territory Foods and the impact you guys are having on the Food is Medicine movement. I feel like we could do two or three more of these and still not get it all out of your head.
55:49You've been such a delight to talk to and listen to and I appreciate you spending time with us and I'm sure the folks out in Zoom land do too. So thank you very much for making time and I hope you'll come back and spend time with us again. Absolutely. Thank you so much for having me. And thank you to the whole galley team for the incredible partnership that we've had so far.
56:08And again, to everyone on on Zoom land or listening to this, we are building a better ecosystem of food as medicine, foodist health, and we have a responsibility to do together. So feel free to reach out to me from lsm@territoryfoods.com and let's build a better future together.