Traverse City's Cherry Capital Foods is at the forefront of local food distribution in Michigan and is poised to take on the Great Lakes region.
TRAVERSE CITY – It started with a great concept: make it easier to get local food off the farms and into buyers' hands. And it began by selling produce out of the back of a van.
The year was 2007 – the early, simpler days of local food distribution for Cherry Capital Foods (CCF). Today CCF is at the forefront of distribution to new markets, a move that calls for complex infrastructure and a substantial investment.
The Growth Phase
JT "Chip" Hoagland is not the founder, but he's been the driving force since 2008, when he took over as owner shortly after becoming an investor. In 2009, he hired Evan Smith, formerly of Honor-based Food For Thought, as chief operations officer.
During Hoagland's tenure, a single van grew into a multi-fleet operation that distributes produce, meat, cheese and dairy and value-added foods like jams and potato chips to restaurants, schools, grocery stores and small retailers.
The few farms CCF originally contracted with in 2007 now numbers 207 farmers, fishermen and food manufacturers both locally and regionally, distributing 65,864 total cases of food.
These changes have demanded the company's physical growth as well. In 2010, CCF moved from a 4,000-sq.-ft. facility on Rennie School Road in Grawn to its current location on Airport Access.
"We quadrupled our space," said Smith. "And now we're outgrowing this."
Last August, CCF announced it had purchased the former Glacier Dome on Barlow Street. Following renovations and an addition, it will be 47,000-sq.-ft. of space. CCF plans to move during the second quarter of 2014, leasing the ground level to the Grand Traverse Regional Foodshed Alliance – an effort to help build the region's local food economy and facilitate farm-to-school purchasing.
"There is a need for lower cost ag development around processing," said Smith. "The building lends itself very well to it."
CCF has achieved organic growth of 50 percent or more each of the last three years. For this, it landed on the Michigan 50 Companies to Watch list, a group recognized annually for growth in jobs and revenue as well as strength in leadership, community support and market reach.
It was also named a Top 10 finalist for the 2013 Hagerty Small Business of the Year honor presented by the Traverse City Area Chamber of Commerce.
A third milestone was completing its first acquisitions – two small operations that approached CCF with "for sale" offers: Honey Boy Bob, a distributor of Michigan-grown and made specialty products primarily covering mid- and southern Michigan, and Grand Rapids-based Local Brands Michigan.
Both will open up and accelerate growth in new geographic areas for CCF, said Hoagland.
To further foster growth in southern Michigan, CCF recently opened a 12,000-sq.-ft. satellite distribution center in Okemos, which brings its total number of employees to 30.
The Okemos location is a joint facility with formerly Dewitt-based Earthy Delights (after Hoagland bought the other owners out). It is next to a planned "food innovation district," or concentration of food-oriented businesses, services and activities. Led by Michigan State University and other partners, the district's aim is to advance regional food systems and markets in Michigan.
Other states are taking notice of CCF's business model: It was one of nine in the country selected by food systems think tank Wallace Center for a study on best practices for food hubs.
"As a community we're thinking larger about food," said Lee Michaels, CCF operations manager. "That's why we're ahead of others."
Right Place, Right Time
One part of the company growth is something CCF ultimately had little to do with – a cultural shift that has focused on local, farm fresh food.
Growing that awareness and demand at the next level – schools, grocery stores, hospitals and other institutions – is where heavy focus is now, according to CCF. Because food is "contracted" in most all those organizations, it requires a much more intensive and time-consuming approach.
"You have to clear a lot of paths before you can do something," Smith said.
A first step was an agreement with Chartwells School Dining Service, which serves 144 districts in Michigan. CCF provided Michigan-grown apples, peaches, and pears to more than 50,000 schoolchildren last fall.
"This may be the largest farm-to-school project to date in the country," said Kelly Lively, who heads up special projects and is the school liaison for CCF.
Another fall event, "Apple Crunch Day" caused quite a buzz regionally and beyond. In fact, "there may have been more Michigan apples eaten than on any other day in history," said Lively, who estimated more than 74,000 children and adults registered online for Apple Crunch Day.
Involvement with schools is part of CCF's work with the Michigan Good Food Charter (michiganfood.org), which presents a vision for Michigan's food and agriculture system. One of its goals: By 2020, Michigan institutions will source 20 percent of their food products from Michigan growers, producers and processors.
This requires supporting companies like CCF to get involved at the activist level, Smith said.
"While working on the business, we also have to get involved on a policy level or we'll see interests not aligned with others that would stifle our growth," said Smith, adding that the company also works closely with the Michigan Land Use Institute, which also fosters involvement on the national level.
"This is a much bigger animal than CCF delivering local food," he said.
One barrier it is has broken down is related to food safety.
"Food safety is paramount here," said Smith of CCF, which is third party certified. "Food from us is probably safer than anything else."
Yet the local food mantra is something that needs to be constantly repeated, said CCF Sales Manager Stephanie Pierce.
"We've become ambassadors for why people should care, why they should spend the money, justify the importance," Pierce said. "We make the case every day, over and over, all the time."
So with a second major move in less than five years, rapid growth and its first acquisitions, where do the growing pains hit the hardest?
"The two biggest challenges in any business are you're either volatile or you're shrinking," said Smith. "We're volatile in our explosive growth. We have to pour money back into our operations, so we're not just 'eating our own' on the way. That's the balancing act."
Controlling growth and matching supply with demand remain the two biggest tests.
"Right now demand is still exceeding supply," Smith said. "The vendors, the customers…they all want more! We are the monkeys in the middle with giant smiles on our faces."
Cherry Capital Foods' Owner JT "Chip" Hoagland: In His Words
I do not involve myself in the day-to-day operations. That's not my forte. I see my role as long-term vision, arranging financing, putting the pieces of the puzzle together, finding other components to bring into the project.
Although I keep "second guessing" or reevaluating our business, local is here to stay. You can buy organic from China, but you cannot buy local from China.
Michigan is second only to California in variety of agricultural products…and we have water.
Hiring Evan – I would not have taken over if I weren't able to hire him to help manage.
Skeptical customers who don't recognize value in buying local, either nutritionally or keeping funds close to home.
We have several more years of rapid growth ahead of us. We'll stay local to local, but hopefully can begin "exporting" local products to a wider market, maybe the Great Lakes region.
Not to take over the world, not to be a "giant corporation," but to achieve critical mass, sufficient to bring business to our suppliers, slowly lower costs and share savings with our customers.