Webinar Takeaways: Food As Medicine — Leveraging Tech to Deliver Healthy Choices
Many prepared meal delivery companies are vertically integrated, handling orders, food production, and fulfillment. Territory Foods, on the other hand, has taken a completely different model to become a marketplace that connects demand for highly niche/personalized food with supply of chefs and restaurants that are local to the end customers. It’s a wild and complex model, and diving into the details was a blast.
In this webinar, our own Jason Gunn talks with Ellis McCue from Territory Foods about the company’s ‘Food As Medicine’ mission, why outside chefs and restaurants do all food production, and how technology and processes come together to make it all profitable.
Meet Territory Foods
Territory Foods is, at its core, a prepared meal delivery service that’s lasered-in on nutrient-dense foods that work for a variety of diets and lifestyles. However, unlike most services in this category, Territory Foods does not own or operate a central kitchen. Rather, the company partners with 50+ chefs and restaurants in cities across the United States to ensure their recipes are produced fresh and locally.
“We asked, how do we enrich chefs, how do we enable local food communities, because that’s the backbone of a local community. And how can we use our advantage as a large, scaled, and stable company to support those local food systems? That’s the magic of what we do.”
Given this added layer of operational complexity in comparison to a single central kitchen, we knew speaking with Ellis McCue, CEO of Territory Foods, about how they manage it all would lead to a fascinating conversation.
Key Takeaways from the Episode
Ellis shared way too much incredible insight to fit into one article, but we’ll summarize some of our favorite highlights.
Personalization in food and CPG is finally possible, thanks to new ways of wrangling data with technology
Enabling people to eat food that’s nutritionally appropriate for them as individuals is a core aspect of Territory Foods’ mission. Due to the realities of food production, however, it’s never been possible to create personalized recipes for customers—at least not at scale.
For Ellis and Territory Foods though, this is changing. Ellis shared her excitement about being able to bring advances in logistics, storage, ingredient clarity, and nutrition personalization under one roof.
“We asked, 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 so it's really exciting to take our business model and continue to enrich it as the Technologies around us grow.”
That question is what ultimately led Ellis to Galley Solutions.
“That’s 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.”
Clear food trend data directly translates to customer retention
Territory Foods considers a variety of food trend data vectors such as protein trends (red meat vs plant based), culinary trends (stylistic salads vs hearty casseroles), and health and wellness goals (keto vs diabetic) to find niche needs that are high in demand, but low in supply.
Because local chefs and restaurants handle the creation and fulfillment of these dishes (along guidelines set by Territory Foods), the supply model for Territory Foods is not limited by the production capacity of a commissary kitchen or equipment. It’s virtually limitless, capable of scaling up and down quickly. This allows them to do boutique procurement, seeking out the correct supply side for each unique need. This specificity has had a major impact on customer retention.
“We have the highest retention rate curves in the DTC industry. The reason is that we get so specific in the meals we create. We can only do that because we are not a vertically integrated food manufacturer.”
Ellis gives the example of a food manufacturer running 35 SKUs per week, and needing to optimize each SKU slot for maximum demand.
“If somebody says, ‘I need diabetic Somalian food,’ you’re never going to dedicate a whole SKU to that because it’s not going to hit the general population. And when you have a manufacturing plant, you have to get as many units through on as few SKUs as possible—that’s just how CPG is built.”
By carefully pairing demand-side data with supply-side data, Territory Foods is able to offer customers hyper-specific meals that wouldn’t work in a typical restaurant or centralized kitchen setting.
The food production industry is terrible at keeping an accurate “bill of materials”, but it doesn’t have to be
In manufacturing, a bill of materials is a document that lists all the raw materials and components that are required to produce a product. It also includes information such as quantities, part numbers, and descriptions of each item. It’s a critical tool in production planning, because it provides a clear overview of the required materials and helps ensure that the right components are used at the right time—and most food companies don’t operate with one.
“Clean, easy-to-use data is the core of our business, so it’s surprising how little accuracy and transparency most people have into their food products. For example, most caterers can’t predict the gross profit they’ll have at the end of the day. When it gets into ingredients, and people don’t know what exactly is in the food they’re making, that’s when things get risky.”
For Territory Foods, an accurate bill of materials isn’t just a good idea, it’s how they make sure they are really delivering on the promise of personalized food made for often very specific dietary needs. The company uses Galley as their culinary operating system to enable that crystal-clear bill of materials that gives the team clarity into every dish prepared.
“Our customers are coming to us and saying, ‘I don’t want peanuts, I don’t want cilantro, I can’t eat shellfish.’ And it’s so important that we maintain that trust. That’s why we’ve been so happy to work with Galley, because that’s where we build that trust from data to support the consumer in their needs.”
Chefs are responsible for sourcing ingredients locally, but Territory Foods plays a consultative role to make it profitable
Territory Foods prides itself on offering customers ingredients that are sourced locally for them. Working with 50+ chefs and restaurants, this is a major feat, as each location’s buyer has to be tuned-in to local producers and prices.
“We hold all of our chefs to a very high sourcing standard that is localized, but we offer a lot of support. We make an investment into our chefs, we want them to feel they have a real partner for growing their business. So we know their cost pressures, we know their production staff. We help make sure they are sourcing exactly what they need, in a way that makes sense for them.”
One way they accomplish this is by creating enough volume that chefs can approach local suppliers—which tend to be more expensive—and get better pricing than they would be able to without the added volume of Territory Foods orders.
“Our chefs are doing all their own procurement, part of it for their own business, and part of it that serves Territory Foods. Now you have an additional x amount of volume, so they get better prices with local producers. This is why nobody wants to leave our network, because it pulls levers for them and creates more profitability for them.”
Chefs are able to apply for non-local variants for ingredients if necessary, and Territory Foods monitors broad-level commodities pricing to help partners procure ingredients that are cost-effective.
“It’s really about an ecosystem of trusted partnerships. It’s incredible to build a data backbone underneath it that solidifies those relationships and creates a safe and stable structure for us to all build together.”