Striking It Rich: Oil and vinegar tasting rooms were scarce, but Jim Milligan took the plunge
Looking back, it’s almost unbelievable that the idea worked: A specialty shop stocked with premium olive oils and vinegars, opening its doors in downtown Traverse City just as the global economy was cratering, founded by a guy with no culinary experience.
Such is the origin story of Fustini’s, a brand that now boasts four store locations, 23 satellite tasting bars, six cookbooks, dozens of varieties of oils and vinegars, and a presence in a slew of restaurants throughout Michigan.
The Early Days
When Jim Milligan started sketching out the plan for Fustini’s in 2007, the business model was almost unheard of – at least in the United States. In the years since, oil and vinegar shops have become more common. At the time, Milligan says Fustini’s was “one of the first 50 olive oil and vinegar tasting room businesses in the United States,” and perhaps the very first shop of its kind in the entire state of Michigan. Milligan, who retired to Traverse City at the age of 55 after a lengthy corporate career with 3M in the Twin Cities, got the idea traveling overseas for business.
“During my career at 3M, a lot of what I did was business development that involved traveling to other regions of the world,” Milligan said. “In my travels to Europe, I had seen all these types of retail tasting room concepts, whether it’d be olive oils, or mustards, or spices, or vinegars. That’s where I got the idea (to open Fustini’s). I had absolutely no experience in the culinary field, other than loving to eat good food.”
While a specialty olive oil store may not have seemed out of place in Italy, Milligan encountered plenty of people in the early days who thought the shop was a long-shot for success in northern Michigan. When the store officially opened in June 2008, Milligan would duck outside during his lunch break, take off his apron and listen to what customers were saying as they exited the shop. Most of what he heard was enthusiastic, but skeptical.
“So many of them would say, ‘That was really great store. I sure hope they can make it!’” Milligan said. “Fortunately, most of those people that were walking out the door were walking out with bags that had our oils and vinegars in them.”
Rising Fortunes and Cautionary Tales
Despite the early uncertainty, Milligan felt that he’d struck gold. The original small storefront was regularly packed wall-to-wall with customers. Even as the 2007-2008 financial crisis gave way to a recession, Fustini’s continued to grow. Rather than stymie the unusual business model, Milligan says that the recession boosted business because families were doing more home cooking. Fustini’s – with products that served healthy eating and fine dining sensibilities – was well-positioned for at-home chefs.
For the first three or four years, Fustini’s sales and customer traffic grew in the double digits. Soon, Milligan’s pipe dream had turned into a sure bet. As other olive oil and vinegar tasting rooms started to open around the state, the Fustini’s team raced to stay ahead of the curve. Just two years after launching, Fustini’s moved beyond its Traverse City roots by establishing a second location in Petoskey, which opened its doors in June 2009. Store number three opened in Holland in the spring of 2010, just two weeks ahead of the town’s world-famous Tulip Time Festival, while number four launched in Ann Arbor that same July.
It wasn’t all an unmitigated success. Along the way, Fustini’s opened and closed three additional stores, including two others in Michigan – in Mackinaw City and Boyne City, respectively – and one on the Hawaiian island of Maui. Those stores failed for different reasons. In Mackinaw City and Boyne City, the highly transient and seasonal nature of the consumer foot traffic made it difficult for Fustini’s to build a local, year-round customer base. The Maui store, meanwhile – which Milligan retroactively calls his “craziest and stupidest decision” – had trouble turning a profit because of the massive costs of doing business on a Hawaiian island. Between rent, transportation costs and employee wages, it proved nearly impossible for the store do the sales volumes that would justify keeping it open.
Diversifying the Brand
Though the failed stores hurt, Milligan kept looking for ways to continue growing the Fustini’s brand, motivated by a slowdown in the company’s year-over-year growth figures after the first four years.
In 2012, Fustini’s published its first cookbook, both as an answer to customer demand and as a way to encourage consumers to use up their bottles of olive oil and vinegar so they would come back and buy replacements. Next, the brand expanded beyond oils and vinegars and began stocking other pantry products, from pastas to spices to salts and beyond. A full online store launched soon after – a part of the business that tends to be particularly profitable around the holiday season.
In the past two years, Milligan says Fustini’s has “embraced wholesaling” as a new option for expanding the reach of its footprint. Rather than try to open any additional stores, the Fustini’s brand has shifted to establishing small “tasting bars” at restaurants, bars, and small businesses throughout Michigan – particularly in small towns that tend to see a lot of tourist foot traffic in the summer. In northern Michigan, Fustini’s tasting bar locations include Alden (the Alden Mill House), Boyne City (Boyne County Provisions), Elk Rapids (Cellar 152), Kalkaska (Cherry Street Market), Suttons Bay (The Front Porch and Hansen Foods), Glen Arbor (Northwoods Home & Garden), Charlevoix (The Lake House), and several others. The tasting bars, which Milligan says allow customers to try tastes of popular flavors and purchase top-selling products, have made it easier for customers to discover the Fustini’s brand.
One of the most crucial steps in Fustini’s journey was Milligan’s decision to hire his brother-in-law, Andy Stewart, to help him steer the business into the cooking class niche. As the Fustini’s corporate chef, Stewart consulted on kitchen designs for each of the four Fustini’s locations and helped Milligan develop a cooking class curriculum that would, in part, promote adventurous uses for Fustini’s products.
“Andy’s classes were designed to show our customers new, unique applications for olive oils and vinegars,” Milligan said. “So, not just salad dressings or sautéing, but also everything from appetizers to main dishes to desserts and even cocktails. (The cooking classes) helped us get closer to our customers and added more value to help differentiate Fustini’s from other oil and vinegar shops that were starting to pop up around Michigan.”
Weathering the Storm
On April 7, Stewart passed away suddenly and unexpectedly – a shock that Milligan says sent the Fustini’s family reeling. Stewart’s death, along with the economic blow dealt by COVID-19, has made 2020 a difficult year for Fustini’s – though the business is actually holding steadier than expected. Fustini’s stores closed on March 23, following the stay-at-home order from Michigan Gov. Gretchen Whitmer. Since then, Milligan says the company’s online business has been extremely strong – to the point where Fustini’s is currently tracking at about 50% of the sales it was doing at the same time last year, when all four physical stores were operating at full speed.
“I feel very fortunate, blessed, and thankful that our customers are finding us easy to buy from online right now,” Milligan said. “Starting at the end of the summer 2019 and right up to the start of this pandemic, we were experiencing double-digit sales growth in all stores, after having had single-digit sales growth every year for the last six or seven years.”
Nonetheless, Milligan remains upbeat about the future.
“It was difficult to see everything shut down in March because it felt like we had really good momentum going. But I think as things start to reactivate, we can get back on track,” he said. “We probably lost some momentum, but we’ve also definitely developed momentum with our online business. I intend to carry that forward.”
Jim’s Favorite Flavors
Milligan may not have been a culinary guy when he started Fustini’s, but you can’t spend your days surrounded by cookbooks and premium-quality olive oils without developing some chef-level knowledge. We asked Milligan to share some of the “greatest hits” of Fustini’s, from the most popular flavors to his personal recommendations.
The most popular olive oils: Milligan says most customers gravitate toward the Fustini’s line of infused extra virgin olive oils, with the most popular varieties including the Tuscan herb, the garlic and the Meyer lemon. For a more classic, non-flavor-infused olive oil, he recommends the Arbequina SELECT Single Varietal olive oil, a delicate oil that the Fustini’s team just brought in from Spain last November.
The most popular vinegars: The big hit in the balsamic category is the 18 Year Traditional Balsamic, a dark balsamic that Milligan says outsells every other Fustini’s vinegar by a fair margin. The distant runner-up is the Sicilian Lemon, a white-style balsamic.
Jim’s favorite recipe: Milligan recommends mixing the Herbs de Provence infused olive oil with the grapefruit white balsamic.
“It makes for a really bright, fresh flavor as a chicken marinade or salad dressing, particularly with a sweeter lettuce leaf or a sweeter salad,” he said.
Jim’s Tips for Entrepreneurs
How do you take an idea that inspires almost universal skepticism and turn it into a successful business model? Entrepreneurs have been asking this question for years. Milligan doesn’t claim to have all the answers. He says his status as a “boomer-preneur” – a boomer who went from his corporate career into his own business, armed with the savings necessary to largely finance himself – made things easier.
Below he shares three pieces of advice:
- The first one is simple: Be prepared for long hours and hard work.
- Focus on getting good people involved with you in the business. What I did that turned out to work really well is that I didn’t hire store managers. Instead, I hired people that I thought had the qualities and the drive to be leaders and managers, and then I worked side-by-side with them for two to three months to find the best fit. That was an important part of getting really good leaders and managers. All the managers that we initially hired in each of the locations are still with me, which is a sign of how we have been able to get buy-in from the managers to what we’re trying to do.
- Listen to your customers and look for unique business offerings that are unlike what customers can find anywhere else. If you are in a commodity business, figure out what it is you can do to differentiate yourself from others that are in the same category.