GARY: Next on Start Up, we head to Chicago, Illinois, to meet up with Luke Saunders, the founder of Farmer's Fridge, a company that serves fresh, healthy food in vending machines placed in convenient locations.

All of this and more is next on Start Up.

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♪ GARY: My name is Gary Bredow.

I'm a documentary filmmaker and an entrepreneur.

As the country faces significant challenges, small business owners are navigating their way through a changing global marketplace while continuing to push the economy forward.

We've set out for our 14th consecutive season, talking to small business owners about how they started, how things are going, and what matters most to entrepreneurs in modern-day America.

♪ This is Start Up.

♪ ♪ GARY: Vending machines have been part of everyday life since the late 19th century, originally designed to dispense simple items like postcards and cigarettes.

Over time, they evolved to offer snacks and drinks, becoming a quick and convenient option for consumers.

However, many traditional vending machines often lack healthy choices, leaving a gap for those seeking nutritious alternatives.

♪ Today, I'm heading to Chicago, Illinois, to meet up with Luke Saunders, the founder of Farmer's Fridge, a company that serves fresh, healthy food such as salads and wraps in vending machines placed in convenient locations.

I'm excited to meet up with Luke and his team and learn more about this tasty company.

♪ ♪ Was the original name Farmer's Fridge?

LUKE: No, no.

And actually, this is like a story I love telling because the original name, and it's still our name, is Romaine Empire.

Like, if you- GARY: What is it?

LUKE: Romaine Empire.

GARY: Okay, like Roman Empire, a cute little play on— LUKE: Yeah.

Exactly.

Yes.

Um, one of my friends came up with it or something.

We're like, "Okay, it's good enough, let's get going."

GARY: Yeah.

LUKE: That's not the hard part.

My wife pulls me aside.

She's like, our friend pulled her aside and said, "The name is terrible.

Like, what is he thinking?

Like, I would be the first customer of this business."

GARY: Thank you for this friend.

The honest friend that cares.

LUKE: "But the name is really bad."

And so I'm like, "Okay."

She sent me a list of about 100 names.

GARY: Okay.

LUKE: And on there was Farmer's Fridge.

And- and we kind of were going through the list and I was like, "That's the name."

GARY: I wanna learn about you as a person.

You know, where you're from, your upbringing, your family.

LUKE: I grew up in New Jersey.

I'm one of seven kids.

So things were always, like, pretty active around the house.

GARY: Yeah.

LUKE: Lots of things going on.

Um.

Food was a really big part of our lives.

You know, my mom was always- was preparing these big meals for us.

GARY: Yeah.

LUKE: And so we would help her cook for sure.

And we grew up in an area of New Jersey where there was still, like, vegetable stands on the way home from work.

GARY: Nice.

LUKE: And we had a vegetable garden.

So it was like, food was always a really big part of my life and these great memories.

Um.

So I think that's one major through line of, you know, Farmer's Fridge and starting the business.

My wife got into law school in Michigan, so I took a job selling metal finishing for- think of like a nonstick pan for industrial use.

I took this job and yeah, I was driving 1,000 miles a week across Michigan, Ohio, GARY: Wow.

LUKE: Indiana and Kentucky, and then would leave and my only options were fast food or, you know, gas station.

And so I was really thinking a lot about, you know, why is there not healthy fresh food options?

GARY: That was the "Necessity is the mother of invention" sort of a-ha moment, if you will?

LUKE: Yeah.

Yeah.

GARY: You couldn't find fresh food on the go.

LUKE: Correct.

And really was thinking a lot about like, you know, the- the coffee shop in downtown Chicago has a ready-to-eat salad, you know, can grab it and go.

The same coffee shop, you know, 100 miles outside the city, there's no fresh food options.

And so it struck me that there was, like, a supply chain gap.

I would centralize the production.

We'd make everything in one place to kind of get those economies of scale and have the consistency, the safety, but then we would distribute it, um, all over the place.

And I actually went out, I started approaching yoga studios and coffee shops and saying, you know, "You wanna buy my salads?

We'll put 'em in your store."

And it was really challenging to get the distribution.

So I backed into this idea for using a vending machine because then I didn't need anyone to really give, you know, participate in the sale at all.

GARY: And the core purpose or your North Star was provide fresh food in a convenient location.

LUKE: Yeah, how do we make fresh, healthy food as accessible as a candy bar?

It was that simple.

GARY: Got it.

LUKE: And... GARY: I love that.

LUKE: You know, if you're gonna- if you're gonna do that, like a vending machine is a great way to make things more convenient.

GARY: It is.

Step 1.

LUKE: Yes.

GARY: What did you do?

LUKE: I was living in Ann Arbor at the time.

There was a great little café that had like ready-made salads.

GARY: Sure.

LUKE: And so I knew they could taste good.

And I actually contacted the owner and said, "Would you be willing to let me come work in your restaurant?

I'll pay you $15 an hour."

GARY: What?

LUKE: So I spent the next few months learning a little bit about the business, understanding how do you get a license to make food?

GARY: Sure.

LUKE: Where would I buy the vending machine?

We incorporated around April and then spent the next few months, I was moving to Chicago, so that was always part of it, was we're gonna start the business in Chicago.

GARY: And this was when your wife graduated.

LUKE: Yeah.

GARY: You were planning on moving.

LUKE: So that was a big part of it.

She was saying, "Hey, look, We don't have any kids.

I'm gonna have a job.

Like, this is your chance to start a company."

GARY: Yeah.

LUKE: "And kind of go for it."

GARY: Talk about the very first vending machine.

LUKE: Originally, I thought this- "I gotta build a custom machine.

I'm gonna make this thing super cool."

GARY: Sure.

LUKE: "It's gonna be totally different and new."

So I went, I met with some industrial design firms.

I think the starting bid was like a million dollars to design... GARY: Oh, perfect.

LUKE: ...a prototype, which was about 20 times more money than I had at the time to get started.

And so that wasn't an option.

I was really upset.

I went home, and I was actually talking to my father-in-law and saying, you know, "I was trying to get this machine built.

I don't know if this business is gonna work, 'cause I just don't..." And he's like, "Well, isn't there like a vending machine show or something you can go to?

Like a trade group?"

GARY: Trade show, yeah.

LUKE: Um, and I was like, "That's an interesting idea."

I googled it and there was.

It was like a month later.

GARY: There's a trade show for everything.

LUKE: There's a trade show for everything.

GARY: Literally, yeah.

LUKE: And so I googled it, I found it was in Las Vegas.

So I- I.. GARY: Of course.

LUKE: ...spent the money to get to Las Vegas.

There were people selling touchscreens, and one even had a salad on it.

And I went up to him and said, "Do you sell salads in this vending machine?"

He said, "No, of course not."

So like, why are you— GARY: Yeah, salads go bad in like five seconds, yeah.

LUKE: Yeah, like this is just kind of marketing buzz.

GARY: Yeah.

LUKE: Um, so, what we ended up doing, we were able to buy the electronics from someone, a machine from someone, and kind of mash that together.

GARY: Frankenstein'd it.

LUKE: Frankenstein it.

GARY: Yeah.

LUKE: And then we went, um, it looked terrible.

We covered it in reclaimed wood and plants and all kinds of stuff that we could never do at 2,500 locations.

And frankly, when it broke, I would just empty out all the food and pretend like we had really good sales that day.

And it was just that popular.

GARY: How was it received?

LUKE: We went around to all the nicest locations in the city, and everybody said "No."

And because, like, all I had was like a mockup of what this could look like.

GARY: Sure.

LUKE: And then we finally found a food court.

We put it right in the middle of the food court.

And again, like- so, on the first day, almost nobody came.

And I was really pretty devastated.

And I remember the guy who was running the food court said to me, you know, "Give it a couple of days.

A lot of people actually make up their mind what they're gonna eat before they get here.

So I bet you a lot of the people that you talked to yesterday..." GARY: They were looking at it.

LUKE: "..will come back.

Like, they meant that."

So, sure enough, the next day, like a few more people came, and some of the people I talked to came back.

And so, after about 2 weeks, I had- I had people that were bringing their friends... GARY: Oh, wow.

LUKE: ...to come to the vending machine at the food court.

GARY: Yeah.

LUKE: And I was like, "Okay, this is going to work."

GARY: Where and how were you making the actual salads and the food?

And was it only salads?

LUKE: So- No, we had salads and we had some breakfast items and some snacks.

We didn't do any sandwiches at that time.

GARY: And where and how were you making these?

LUKE: So, we had, about a block from here, we were renting a table in a shared kitchen by the hour.

GARY: Okay.

LUKE: So- GARY: Like a commissary kitchen, if you will.

Yeah.

LUKE: Yeah, now this would be called a ghost kitchen.

Back then, it was a shared kitchen.

GARY: Sure.

LUKE: And actually, like, we would drive down to the produce distribution center because we were not big enough to place an order, but we wanted the best prices.

So we'd go there at like 3 or 4 in the morning, get the produce, bring it back, cut everything up... GARY: Sure.

LUKE: ...mix it together, and then get it to the fridge that morning, was the original, like, me and 2 other people.

♪ GARY: What goes into the perfect salad?

EMILY: We spent a lot of time thinking about what flavors are going to taste best, right?

So we're doing a lot of- a lot of testing, a lot- asking our customers what they want.

We're looking at the market and figuring out what's trending, but we're also really concerned with how appetizing and how delicious we can make the food look in the jar.

GARY: Sure.

EMILY: You can tell someone... GARY: Yeah.

EMILY: ...that something's fresh, but they're going to look at it and they're going to GARY: Of course.

EMILY: ...see like, okay, that's green, that's- that's- that's crisp lettuce.

I want to eat that.

GARY: Yeah.

EMILY: And so we really want to layer things in a way that kind of captures your eye.

How can we make something that somebody says, "Wow, that was a delicious lunch," not, "That was a delicious lunch from a vending machine"?

GARY: How long does a salad like this last?

What's the max perishability of something like that?

EMILY: We're going to every single fridge... GARY: Yeah.

EMILY: ...a minimum of three times a week in order to make sure that that food is as fresh as possible.

It's 8 days max is- GARY: Okay.

Emily: ...is what our current items are, and it depends a little bit.

There's obviously some that are a little bit less.

GARY: What's so special about this company for you?

EMILY: First and foremost, I really believe in our mission, um, and that's something that is contagious.

He's so passionate about what we're doing, and that's something that's really easy to follow.

GARY: Sure.

EMILY: The other thing is there are- our business is so complex that it's really fun to work on.

GARY: Yeah.

EMILY: You know, sometimes it's really challenging.

GARY: It's like a puzzle.

EMILY: You have good days, you have bad days.

Yeah.

GARY: Yeah.

EMILY: But it's- it's been really fun to solve problems that nobody else has and kind of change- I mean, we're changing the way the world eats and... GARY: Yeah.

EMILY: ...that's really exciting to me.

♪ ♪ GARY: You have a spot, you know that people want this.

What now?

LUKE: Uh, the- the biggest thing from there was trying to figure out, like, how many locations could we put this thing and actually make money.

GARY: Okay.

LUKE: Our first kind of big break, a very- a high-end mall in Chicago called us and said, "Hey, would you put one in the mall?"

GARY: Wow.

LUKE: We have an empty space in our food court.

And so we went up there and we came up with this plan to cut a hole in the wall of the food court, insert the machine into that, and then build like a whole branded space around it.

So- GARY: Cool.

LUKE: We still have those decorations up down at the plant, but then once we sort of had a couple marquee locations like that, it started to click for people.

And the hospitals started to call and the offices started to call.

From there, it was all operations.

Like, how do we actually produce food in a scalable, safe way?

How do we get it to all these machines?

How do we hire drivers and train them?

GARY: How did you begin to tackle those challenges in terms of supply chain and logistics?

LUKE: Chicago is an amazing place to start a food business.

GARY: Really?

LUKE: So much knowledge here about food manufacturing, food safety, supply chains, logistics.

So, I had a few mentors that were helping me now think about how does this look when it's not in the shared kitchen and what our first kitchen should look like outside of that.

And giving me a lot of, like- there's a lot of public resources available.

We were working with state-funded trainers for food safety.

So just taking any available resource that we could to learn how to do these things.

And then the logistics kind of was the easiest part.

We only had like one driver for a few years.

GARY: Okay.

LUKE: So managing one driver was really easy.

The food was gonna get to the fridge, we just had to make it.

And then, once we got a little bigger, I was able to hire someone to help come in and run the operations that had experience scaling a company from, like, where we were to where we wanted to go.

GARY: Talk me through the growth trajectory.

LUKE: We got an amazing salesperson in, and that was really the end of like me as the- the main salesperson and- and someone who was out there thinking about this all day, every day.

So that was kind of phase one, was, like, offboarding it... GARY: Sure.

LUKE: ...and getting somebody better than me to do the job.

Consumer demand started to get stronger.

So the people that worked at the hospital or worked at the airport were saying... GARY: We want this.

LUKE: "Why don't we have this option?"

It sort of changed the competitive dynamic.

And I think that was like the second big inflection point was when our credibility had gotten to a place where the partners stopped saying no and started saying yes.

GARY: Yeah, and contacting you.

LUKE: Yes.

GARY: Okay.

LUKE: And then from there, it really was hiring a few more salespeople to start to increase the velocity of placements... GARY: Sure.

LUKE: ...and being able to duplicate what we were doing at a small scale.

And then our national expansion was probably, like, the biggest change.

It's a completely different go-to-market.

You have to go to each place.

And- and now we're just in a phase of kind of like, continue- the models really hasn't changed in eight or nine years.

We have the same head of sales as we did eight or nine years ago.

GARY: Awesome.

LUKE: And we just, we now place 15 or 20 fridges a week because we have more sales reps that are around the country.

So it's that national selling motion.

♪ GARY: You were the first salesperson, right?

SYED: Yeah.

GARY: Are largely responsible for the- for the growth of this company.

Talk- talk about that and the trajectory and how you were able to continue to be successful selling.

How does that feel?

SYED: I think I was really lucky that I had a leadership team that was willing to let me take risks... GARY: Yeah.

SYED: ...and let me learn from my mistakes.

Again, when we joined and when we started doing this, there wasn't like a playbook to sell salad out of a vending machine.

GARY: It didn't exist.

SYED: It didn't exist.

So we definitely messed up a lot.

And I think that's where we're lucky, where we had a lot of buy-in from our leaders and our teammates to go try things, to explore things.

And like, that's one of the other things I love about Luke.

If I have a crazy idea, he's probably the first person to say, "Go try it."

GARY: Okay.

SYED: I mean, whether it's launching New York City or launching Los Angeles with one machine.

GARY: Yeah.

SYED: So it's a lot of trying things, getting teammates who are willing to try with you, and failing fast.

GARY: Is the model you go in and you say, "We're going to pay you..." Is it a cut, a percentage of the food sold in the vending machine?

Is it a flat-rate monthly rent?

What was the pitch?

What were you selling?

SYED: Some places we'd give a flat rate and we'd actually pay storefront rent.

And then other places we do more of a flat fee, where it's- or a variable rent, where, like, they got a percentage based on what we sold.

GARY: Sure.

SYED: And now it's pretty much all of the above, like, airports we definitely pay to be in, versus, like, we're now in some accounts where traditional food service can't really belong there.

There might only be 50 people, and the employer makes a contribution to bring Farmer's Fridge in.

GARY: Interesting.

SYED: So it's really c- it's really cool how much we've evolved as far as that.

GARY: How many machines, how many markets and states are you guys currently in?

SYED: We're in 20 states, we have about 2500 machines, another 1,500 retail doors that we're in.

GARY: Okay.

SYED: We partner with retailers such as Walmart and Target, growing with both of them this year.

GARY: Amazing.

SYED: So, yeah, it's been really, really fun.

♪ GARY: What do these things cost, if you don't mind me asking?

LUKE: So, today, we make them for about $10,000.

I think the first one that I made was probably $25,000.

GARY: Was this all self-financed, or did you take any loans on?

LUKE: No, I mean self-financed in the sense that, like, I used all my credit card and my savings.

GARY: Okay, you didn't go to venture capital or have a big investor?

LUKE: No, for the first few years... GARY: Okay.

Yeah.

LUKE: ...it was all kind of like that money that I had saved.

And then we got to a point where, in order to really grow it, we realized we're gonna have to invest in infrastructure.

And so that's the manufacturing plant, the technology to bring the waste down, people to teach us how to do food safety, all of these things that were gonna cost money.

So we did- we ended up raising venture capital.

GARY: What was your mindset?

Was there any fear, apprehension?

LUKE: Oh, for sure.

You know, it's a very tough balance because, like, any of these step functions, a very simple one for us would be we could get 20 stops on a route, and then the next day, if I wanted to get a 21st stop, I had to hire a second driver.

GARY: Yeah.

LUKE: So now all of a sudden I have two drivers at half capacity instead of one at full capacity.

And like, examples of that all across your business.

So, you know, the hardest part of any business is trying to triangulate, like, those investments that you need to make to grow with how quickly you can absorb that investment.

GARY: Timing.

LUKE: I had nothing to lose.

I wasn't gonna- GARY: Right.

LUKE: Like, we didn't own a house.

We didn't have any assets.

It was like, you know, worst case scenario, I was gonna be a little embarrassing with my friends and stuff like that.

GARY: Yeah.

LUKE: So, I think, you know, that was very helpful.

GARY: What was it that you did with the funds, lastly?

LUKE: Yeah, so when we took on that money, I would say it fell into like three main groups.

GARY: Okay.

LUKE: The first thing that we were able to do, um, was get out of the shared kitchen and into a dedicated production space where we could have a lot more room to grow and be more efficient on the day-to-day operations.

GARY: Got it.

LUKE: Uh, the second thing is we knew we needed to build our own software.

We were using software from another company.

There was some indications that company may not exist forever.

And so we were like... GARY: Sure.

LUKE: ...we gotta figure out how to get onto it.

So, we were able to hire one engineer.

And then the third piece was to hire somebody that could help me think about how to scale the business.

So, I had done small business before.

I had a vision for fresh, healthy food as accessible as a candy bar, but actually scaling a company is a really different exercise.

GARY: For sure.

LUKE: So I hired kind of the first senior person to come in and help me think about how to do that the right way.

♪ GARY: We are heading to the kitchen.

What is it that takes place there?

LUKE: We're gonna do all the food prep, so that's getting whole ingredients in, cutting them, chopping them, cooking them, mixing them, and then assembling the finished product.

GARY: Okay.

LUKE: And then we'll sort all the finished product into its destination location.

So, where is it actually going to go?

And then we do use part of the storage for, like, the vending machine kind of transformation.

So the Farmer's Fridge that you see... GARY: Yeah.

LUKE: ...we kind of get all the parts in and assemble it there.

GARY: Oh!

You guys actually control the vending machine?

LUKE: Yeah, basically we- we- at the beginning, we bought, like, an off-the-shelf shelf vending machine.

And over time, we've partnered with the manufacturer to create, like, the whole look and feel.

GARY: Yeah.

LUKE: But we still get in like a kit and then we have to assemble it here.

GARY: You have to assemble it.

Okay.

LUKE: And then, all the electronics are ours.

So we've designed those to work perfectly with the machines.

So we have to add all the electronic components and the branding.

GARY: Are you happy?

Are you happy with what you've built, with your life right now?

LUKE: Yeah, I love- the thing that's been so great, I've been doing this for 13 years... GARY: Okay.

LUKE: ...and I've done every single job at the company.

The thing that keeps me motivated is really two things.

It's the people that I meet every day that are telling me, like, "Oh my God, thank you so much for doing this."

GARY: Yeah.

LUKE: And the other one is the team just keeps getting smarter and better and harder working.

GARY: Yeah?

LUKE: And so the ambition for what we can solve or accomplish as a business just continues to grow.

And I love that, like, problem-solving element of it.

♪ ♪ ♪ LUKE: Making this chicken or, um, breaking- like, those potatoes have been cut, roasted.

GARY: Yeah.

LUKE: Everything here is made from scratch.

GARY: How many people are actually working to make all this come together in a space like this?

LUKE: Yeah, so, this facility will run two shifts.

GARY: Okay.

LUKE: A night and a day.

And across each shift, there's about 150 people.

This is a 24-hour-a-day, 7-day-a-week, 365-days-a-year operation.

GARY: And as a founder, for you to get in here and get your hands dirty for the first three years and really understand the work.

I mean, what kind of value exists in that?

LUKE: There's so much value in it.

GARY: Okay.

LUKE: I know exactly, you know, when we're talking about something in the office and thinking like, "Oh, this will be easy for somebody," I really understand what those pain points are going to be.

GARY: Yeah.

LUKE: I can really understand what those tradeoffs are, what's realistic, how long something is going to take.

And so I try to give the teams room to operate, but they know that I really understand the business well and can push back when things don't make sense.

GARY: Has there ever been a moment where you just wanted to say, "I'm done"?

Like- like, where it just became so difficult you wanted to walk away?

LUKE: There have been many of those in 13 years.

GARY: Yeah.

LUKE: The first one I remember was I had been trying really hard to get into this, um, very important building in downtown Chicago, and he's like, "Oh, I already have one of these."

I said, "What are you talking about?

I'm the only, like, salad vending machine concept.

There just- what do you mean another one of these?"

And he said, "Well, these two people, they want to start one.

I'm going to be their first location.

And I already said yes to them."

And I was just laid down on the couch and I was like, "That's it."

Like, I'm going to have a competitor.

GARY: Yeah.

LUKE: It's super early.

And I, you know, this could be- I'm out of business, right?

GARY: Yep.

LUKE: Because I didn't get this location.

About two to three weeks later, I get a phone call from the guy.

He says, "You know, I thought about what you said.

I started getting bad vibes on this.

They haven't really done it before.

I found out, like, I'm a science project.

And if you can- if you sign this, like, this week, I'll do it with you."

And so just kind of that- things, you know, these ups and downs, and there've been hundreds of things like that over the years where you think like... GARY: Yeah.

LUKE: "Oh, this is the worst thing that's ever happened."

GARY: "I'm done."

Yeah.

LUKE: And you just keep going and it works out.

We had survived a pandemic and all kinds of other stuff.

GARY: Well, I mean, you hit a lot of roadblocks, learned a lot of lessons over the years.

But you persevered.

And I think that's an incredible thing that a lot of people can learn from.

Any advice to somebody else out there with a dream?

LUKE: I think my biggest advice is get started.

You know, it's- GARY: Just start.

LUKE: Just take the idea, do something today, then do something tomorrow.

So this was just an idea on a piece of paper.

And little by little, 13 years later, you can see the scale and all the people and what we as a team have accomplished.

But it didn't happen overnight.

It was like, you know, that list became a list of to-dos, and then it became, you know, actually doing, and then I got to hire one person, and then two... GARY: Yeah.

LUKE: ...and then, you know- so just, I think, take it one step at a time, and, you know, you'll figure it out as you go.

♪ GARY: I really enjoyed spending time with Luke and his team, and what he's created is truly remarkable.

What seems like a fairly simple concept is one of the most logistically complex businesses that I have ever encountered.

Not only are they on a race against the clock with perishable food, they have to meet rigorous safety standards and still have the meals look and taste amazing.

And they're nailing it on all fronts with grace and poise.

And I believe that Luke is just one of those people who would likely be good at just about anything that he chose to do.

But the fact is, he chose to do this, to offer healthy, delicious food options so people that are on the go can feel better about what they put into their body, regardless of time constraints.

And I think that that is a noble cause that's well worthy of the success that he's earned.

For more information, visit our website and search episodes for Farmer's Fridge.

Next time on Start Up, we head to Alexandria, Ohio, to meet up with Lauren Beck, the founder of Girls Gone Raw, a company that specializes in raw food diets for dogs and cats.

Be sure to join us next time on Start Up.

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For 60 years, we've partnered with millions of businesses, and now we're proud partners of Start Up.

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