How to Build a Private-Label Food Business
It all starts with a high-quality product and extensive market research, says Lenny Rago of Panino’s Pizza.
U.S. Pizza Team premiere member Lenny Rago, co-owner of Panino’s Pizza in Chicago, has been around the competition circuit for quite a while. Competing and winning both domestically and abroad, he knows how people think of pizzas and ingredients. Which is probably why he and his partners at Panino’s have been so successful at marketing their own products and recipe blends for the pizzeria owner as well as the consumer. With a bevy of products available from their brands, Via Pizzeria 1-2-3 and Bib’s BBQ Sauce, I knew Lenny would be the one to inform us about the steps pizzeria operators can take to start making, branding and selling their own products.
Hernandez: So how did you get started creating and selling your own products?
Rago: Via Pizzeria 1-2-3 started out of a need for availability and consistency. We are marketing products that, in our industry, are time-consuming and sometimes hard to make. We wanted to bring that to market because we felt there was a need for it. We produce dough mixes, premade dough skins, arancinis, panzerottis, pizza sauces, BBQ sauces, and even giardiniera.
Hernandez: How do you know when you have a product worth selling?
Rago: Market research. Of course, you must like your product and think it’s worth selling, but you should also see what needs are in the market currently—easy-to-make dough mixes, no-prep pizza sauces, certain appetizer items. We created great recipes for all of these, then went around the industry to our friends—and to other pizzerias—and asked them what they would like. From that, we started refining what we could offer to the industry and the consumer.
Hernandez: Should private-label startups make those products in-house or outsource production?
Rago: That all depends on three things: what you’re selling, growth and volume. If you’re selling meats, like we do with our sausage blend, I recommend outsourcing to make sure you are hitting all the FDA and insurance requirements for production. If you’re doing a cheese or sauce, you can do it in-house, but once you reach a certain level of growth and demand, you have no choice but to outsource to meet your volume requirements. Do your research. Make sure you get an accredited production facility with liability insurance. You need to protect yourself in case of the rare contamination incident. Make sure your business is not liable for something it didn’t do. Also make sure the third-party company can produce the product consistently and to your specifications. After all, it is your name on the label.
Hernandez: Marketing, distribution, sales—it’s kind of like the chicken and the egg. Which do you tackle first?
Rago: Well, you need marketing to get the distribution, which leads to sales. However, first come up with a name, a look and definitely a trademark. Then you know what you are marketing. You have to hit those streets. You are your best marketer and salesperson in the beginning. Hit your local market first, then expand. Once you have a loyal customer base, your volume will increase, and then you can expand outside that particular circle. Hiring a marketing consultant at the beginning is also a good thing. They can help you with a lot of the legwork and guide you in the right direction.
Hernandez: What about connecting with large distributors?
Rago: First you need to have a recognizable and desirable product. You can go to trade shows and hawk your product all day. You may even sell it to someone who lives on the opposite coast. Now you think, “Oh, how do I get it to them?” You can ship it yourself for a while, but that will get expensive. Have a plan for expansion before you get to the large distributors. It’s not a bad idea to go to the shows and test the waters for your products. You should definitely make the industry connections. Create the demand. At the beginning, you should be selling your product as hard as possible so you can show the distributor there is a demand. Then the distributor can start helping sell it as well, aside from just distributing it.
Hernandez: If you have only one piece of advice to give someone trying to create a marketable private-label product from their pizzeria, what would it be?
Rago: Don’t be afraid to call someone who is already selling a product and pick their brain. This industry is very cooperative, and there are people out there who will help you with advice, connections and just overall firsthand experience. If they say no, call the next guy. Also, research who your competition is and will be. Do the legwork.
To learn more about Via Pizzeria 1-2-3, visit viapizzeria123.com. For details on Bib’s BBQ Sauce, visit bibsbonedry.com.
Brian Hernandez is PMQ’s test chef.