Why Buy a Food Product Business | Pat Lazure Interview

Business Model

Flavor Crisp operates with an asset-light business model, relying on co-packers in Nebraska and Illinois to manage inventory and production. Pat Lazure explains that the company does not own any equipment or real estate, and the inventory is owned by the co-packers until it is shipped to customers 1. This model allows for scalability without significant capital expenditure. The strategic positioning of Flavor Crisp is akin to a crucial, low-cost component in a larger system, making it indispensable to its clients despite its minimal cost 2.

There's 10 cents left in that bill of material, and that is where Flavor Crisp comes in. That's what the relative cost is. And yet it is disproportionately important to the restaurant operator because that is the flavor that they're known for.

--- Pat Lazure

This unique positioning ensures that Flavor Crisp remains a vital part of its customers' offerings.

   

Acquisition Process

The acquisition of Flavor Crisp was a complex process, marked by valuation challenges and financial risks. Pat Lazure recounts the initial valuation of $700,000, which was later challenged by an $800,000 offer from the accountant who conducted the appraisal 3. This unexpected twist led to a stressful negotiation period, but ultimately, Pat and his wife Kara were able to secure the business at the original price. Managing financial risks was crucial, as the asset-light nature of the business made it ineligible for conventional loans, leading Pat to secure an SBA loan 4.

I feel like as an entrepreneur the most important thing you can do is manage risk and downside. And I don't think people talk about that enough.

--- Pat Lazure

This focus on risk management has been a guiding principle throughout the acquisition process.

   

Growth Strategies

To grow Flavor Crisp, Pat has focused on expanding sales and maintaining strong customer relationships. He has increased revenue from $700,000 to $1 million by leveraging the long-term loyalty of customers, some of whom have been with the company for decades 5. Pat is cautious about growth, preferring to stockpile cash before making aggressive moves, but he acknowledges the potential for hiring sales staff to further expand the business. Competition remains a concern, but the unique taste of Flavor Crisp products provides a competitive edge 6.

Taste buds come first and then the economics come second.

--- Pat Lazure

This focus on quality and customer satisfaction is central to Flavor Crisp's growth strategy.