Business Update - February/March 2022: The pop-up is over!
The Smash Brothers Sliders pop-up ended on 3/5! It was undoubtedly a success. As the pop-up was coming to a close, we were faced with a few options.
Keep up momentum and further sacrifice time, money, personal life
Pop up somewhere else (i.e. ghost kitchen)
Reset and make the RIGHT next move
A few people told us momentum was everything. Stopping now is going to make it really challenging to recover.
We don’t want to discount that, and in a perfect world we’d absolutely keep selling every week.
But with so many immovable elements of our personal lives going on now (for example, i’m at the stage of my life where I’m going to 4 weddings in the next 7 weekends), and our business not being at the stage of maturity where we can just hire more people, train them, and let it run without us, we just don’t have the option of continuing weekend services right now. Andy is in a similar boat.
So while it was not an easy decision to make, we stuck with our original plan and the pop-up ended with no concrete next step in place. We hope its not our downfall!
Now, we are laser-focused on figuring out:
Is there a way to make this sustainable for us and our families - we think so
Where is the first location for us to move to permanently - still TBD
What is the timeline to bring our vision to life - dependent on 2
Solving those 3 things is our main priority every day now.
Why do we think the business was a success?
We set out to prove demand. Not only did we do that, but we also turned a profit (albeit a very small one). Its reassuring that we did that while basically ignoring the cost side of the P&L, and choosing to do anything that would generate more revenue and prove that people like our food.
So realizing that the business was profitable even in the most inefficient setup imaginable, the outlook for this business in a more permanent setting looks pretty strong. With a single location, real returns won’t ever be super high. But the upside comes in carrying our brand value to multiple locations over a many year time period.
We also already have planned solutions in place that will:
Reduce labor costs - shifting some prep work upstream like portioning meat for slider patties (yes this increases food costs, but eliminates hidden costs of portion inaccuracies, spoilage, training, etc)
Decrease packaging costs
Changing print method from digital printing to a laminate or direct print
Partnering with local supplier (1 hr away) to reduce shipping times/cost
Utilizing a warehousing offering to get economics of a bulk order but only get invoiced as we release quantity from a warehouse (this is the huge win)
Decrease technology costs - changing online ordering platform and SaaS setup (still not decided on who yet, but we have some better options at least)
Increase customer experience - Same as above, select the right system for the job instead of just using what we have / what gets the job done
Combine the above with the other efficiency gains of a permanent space (not losing 40 hrs a week transporting to and from food services, aka another FTE doing productive work at the same cost), and with increased scale and utilization operating at more day parts, and an already profitable business just becomes more profitable.
But at the end of the day, capital requirements, personal sacrifices, and market timing are going to dictate what comes next + when.
Highlights from the pop-up
$2,340 raised for cancer research
22k upvotes on post that someone shared about us on reddit, 9k on another
Sold 7,540 sliders !!!!
Not a single review on google was less than 5 stars
We 3x’ed our sales from worst weekend (week 2) to best weekend (final week)
We had more preorders on Friday 3/4 than we did TOTAL ORDERS on opening day 12/2
We added 20% capacity at a minimum each week, and sold out each week
Lowlights from the pop-up
On night 2 of the entire pop-up, the parking pawl of the truck engaged because the lot we park in is on incline. The parking pawl is intended to prevent the vehicle from rolling away while parked. Before this night, we had no idea what a parking pawl is. When the parking pawl engages, you can’t get the ignition to turn. The truck was stuck. We tried a ton of things to dislodge it, but we ultimately had to get Andy’s pickup truck parked 30 mins away, line that truck up bumper to bumper with the food truck, and push the food truck backwards to dislodge it from the incline. Then once dislodged, the person in the truck had to engage the truck again to get it to catch. This took us like 2+ hours after getting our asses handed to us. This was night 2.
Our Jalapeños spilled from upright, lost them for service one day
Our key snapped in half inside the ignition
A $2k warming drawer fell during transit and snapped and broke. This sucked
Our sinks and water lines froze mid service - was 13° in January this day
Propane ran out mid service, luckily we had backup tanks
Fryers had air in the lines, wouldn’t stay lit and delayed us 20 minutes on every order the moment we opened up, took an hour to catch up
Generator cabinet popped open while driving - this is extremely hazardous
A crazy snow storm in Columbus led to snow emergencies and led to 2 days of cancelled service (most businesses in the area completely closed, and driving a 2WD food truck in these conditions was infeasible)
Wifi hotspot turned off mid service because of the cold, couldn’t stay on even though fully charged
Delivery drivers just never showed up, even 30 mins to 1 hour after we closed. I would sit in the parking lot in my car waiting on support lines. Eventually I would deliver the food myself because support told me no drivers were going to coming. This happened multiple times from each of the 3rd parties.
People gave us feedback that we “forgot their free cookies” when the cookies we add to each box are literally free, not-advertised, and an attempt by us to do something nice. We accidentally trained people to expect a free surprise, and when we ran out of cookies people chastised us. People are wild.
The first weekend back after our pause for Christmas/New Years, I went to the ER mid service. I was running quickly from handing someone an order, and jumped back into the truck. I’m somewhat tall, and by moving quickly and jumping up, I hit my head on the frame of the door. Split my head open, blood started falling down my face. Immediately had to go to the ER and get stitches in my head.
How demand changed throughout the life of the pop-up
In week 2, we had a night where we sold 150 sliders total with 3p apps turned ON
In our last weekend, we sold 422 sliders in a single night, with third parties off
This is absolutely influenced from the fact that it was the last weekend to try us and there was artificial scarcity
But we might try and re-launch without 3rd parties… our thinking:
Our contribution margin is several dollars negative on 3rd party delivery orders
We’re seeing no signs of converting people out of those channels, so might be smarter to let the business sink or swim as a first party only business
If we saw any signs of life of conversions, I’d keep at it, but all we see is expensive headaches
Negative contribution margin is of course a significant hit on the P&L, but what I think others underestimate is the significant hidden costs of stress on the “FOH”
Issues with orders
Constantly on the phone with support lines for 3p app companies, unhappy customers, late deliveries, food that never gets delivered
This results in lack of attention to native channel customers
The amount of issues that come up every night drains morale
Learnings from pop up
Social media marketing directly influences sales. DIRECTLY. The more you post online, the more sales you will get. Not immediately, but with a few week lag time you see results
Rain doesn’t have that big of an impact on us. Snow/icy roads does.
And possibly one of our biggest learnings → We’re not at the point yet where we can launch additional concepts
Running many concepts is theoretically a good idea when demand is a challenge, but when demand is strong its infeasible
This is the challenge we faced, we nailed this brand and it would be impossible to have been running 2-3 other brands along side it.
We’ll likely start with just Smash Brothers Sliders first, see how demand plays out over a more consistent set of operating hours, and re-consider adding in other brands later
There is a world where we bring our multi-concept virtual food hall vision to life… there is also a world where Smash Brothers Sliders is a homerun itself and we try and become the Dominos of Cheeseburgers
Unit Economics
Our unit economics on 3rd party delivery orders are negative, even with increased price
Because 3rd party apps are a percentage fee and not a flat fee, you have to almost double your prices to arrive at the same margin… which you would never do (you’d price everyone out)
So just a $1-2 increase per item adds like 30 cents back to your significantly negative order margin? Whats the point
Our unit economics on native website delivery orders are negative on small baskets, positive on high baskets with current flat rate payment
This is because its a flat rate, not variable. So if someone orders $12 of food, we’re paying $3.49… or if someone orders $186 of food, we’re paying $3.49
Its $3.49 because we pay $1.50 per order no matter what, and then it costs $6.99 per order, of which we eat $2 and pass $5 onto the customer, so its $1.99 + $1.50 which is $3.49
This can get better if we can negotiate the doordash drive rate down, or change online ordering softwares to a different provider that already has this rate negotiated down (Likely what we’ll do)
Our unit economics on native website pickup orders are pretty strong, and carry our business
Summary of reviews
Google - 5 stars on 52 reviews, most of which are people we don’t know
Uber Eats - 4.8 stars on 37 reviews, all people we don’t know
Doordash - 5 stars on 26 reviews, all people we don’t know
Ovation - 146 customer feedback surveys, 4.9 average satisfaction
Summary of Social Media
Instagram followers 2200
Instagram posts 90
Highest liked post - 270 likes
Instagram reels - 12
Total views on Instagram Reels - 23k
Marketing tactics that worked for us
Partnered social media content with influencers
Inviting to pre-launch event
Giving away $30 off an order in exchange for a post
Usually just cold dm’s that we send over, just telling our story, saying who we are, and asking if they’d like free food and if they enjoyed it if they would be willing to post about us. We knew our product was good, we just needed to get people to try it.
This gave us almost real-time feedback as to which social media influencers “move the needle” in Columbus…. theres hundreds of them, and we partnered with about 20 or so, and of those 20, about 4-5 really drove followers to our account (50+ followers). The most impactful share led to over 250 new followers in one day
Organic social media content on Instagram
Reels are best for discovery and relevance - do these 1x to 2x a week minimum, if not more
Funny phenomena - the less time you spend on a reel, the better
We got more views on the reels that I spent 2 mins or less on than the ones I spent an hour on
Posts are table stakes - consistency of sharing posts is critical, we were doing about 4-5x a week throughout the pop-up.
Instagram’s Stories feature is helpful to stay top of mind
Use these for stuff that’s not “post or reel” quality, but still cool
Use them to nudge your audience
“Pre-order now” or
“leave a google review”
Use as “Social Proof” - when someone shares us in THEIR story, we re-share it to ours thanking them (I don’t think that many people read or keep track of this, but its a volume thing and a validation thing… Day in and day out, you’re seeing that Smash Brothers Sliders keeps re-sharing posts from tons and tons of happy customers… you get some FOMO, you get a sense that “the crowd has validated that this is a good spot to eat”
Another takeaway → Its really hard to remember to film content night in and night out — has to be fresh, always need MORE FOOTAGE
Being friends with other local businesses
“We’re in it together mentality”
Teams supporting each other, tagging each other, pumping them up
We eat their food, share it to our story
They eat our food, share it to their story
If a consumer already trusts THEM, and see them posting about YOU, it can drive followers and views and shares to your social profile
Valpak Mailer
45 conversions at $30 basket size, that’s $1350 attributable sales, could lead to more if this created a return customer, don’t have enough data to tell…
investment was $450, that’s about a 3x ROAS, could go up over time, basically a $10 CAC. I’ve heard that this gets better the more consistently you’re in a Valpak
Saw almost all of this hit within 2 weeks of Valpak distribution, and then it stayed flat… coupons are still active, but nobody used them the longer time goes on since the distribution of the valpak
Marketing tactics that didn’t work for us
Bag stuffers for 3rd party orders
0 conversions on several hundred bag stuffers placed
Either our offering wasn’t compelling, or they’re simply not effective
In-app marketing in 3rd party apps
Promotions in these apps “work” in terms of driving sales, if driving sales is your goal
Driving sales is not our goal: Our goals have to be
Drive unprofitable sales that convert to a profitable LTV
Drive profitable sales
We know that number 1 didn’t work based on above (no conversions out of 3p app channel into our native channel)
And number 2 we did not find to be feasible during the pop-up
The average costs to run an effective 3rd party app promotion were 10% of sales (aka we pay $60 in sponsored listing ad spend, and it generates $600 in sales)
Thats 10% of my margin + 30% commission on the order, which means these apps get 40% of the sale
I can assure you, we do not have 40% to just giveaway like that
So even if we get more sales, they’re all a negative contribution to our profits… we were literally paying people to eat our food and getting nothing in return
Tik Tok
We never got Tik Tok to take off at all
Ended up with only like 30 followers and minimal views
Every video we posted got less and less views, and by the end of the pop-up we felt like we’re shoved into the basement of the algorithm. No idea why
Same posts on both Instagram and Tik Tok
My hunch is that we’ve done better authenticity / storytelling through IG and generated more shares from our stories and our posts that our general account score is higher in the IG algo than in the Tik Tok algo… aka because of our engagement on posts and stories, we get a headstart on our reels whereas tik tok does not have posts or stories, just the “reel” type content
Reaching out to apartment complexes
We thought that apartment complexes with >100 units each would be a good channel to access potential customers
20 complexes with 100+ units each with ~2 people in each unit is 4000 people
We targeted mid-higher end apartment complexes that had the disposable income to consider our brand
1 total person used any of these codes… ONE
Its just not an effective channel to spin your wheels against. Took like 1 day of work. Won’t be doing this again
Posting codes in Facebook groups
Posted 20% off first order codes, only 2 people ever used them -> not effective
Facebook is basically dead to me. I haven’t used it for personal reasons in years, and I assumed it was probably only relevant for businesses and groups… Now, I don’t think its relevant there either.
Marketing tactics we didn’t try:
Instagram ads
Facebook ads
Yelp Ads
Google Ads
TBH just didn’t feel the need to try these — while im sure they might drive sales, demand generation wasn’t our immediate problem. Probably should have done some tests here but out of a list of 100 things to do, these never became priority.
On location
Our initial hunch was exactly right. We drew on a map where we thought we would sell to, thought there would be positive reception in Grandview, UA, Downtown, German/Merion Village, Dublin, Clintonville, Hilliard.
After week 10 we did a zip code analysis of CC data on file and it was exactly the same map we thought it would be.
My takeaway is that its not rocket science - ask yourself “who can afford it, who is the right demographic, where do they live”.
Some takeaways from our analysis:
About 30% of our sales come from within a 1-2 mile radius of where we are located
The other 70% of sales come from more affluent neighborhoods (Grandview, UA, Downtown, German/Merion Village, Dublin, Clintonville, Hilliard as opposed to Hilltop, Grove City, Anything on I-71 Corridor)
We think this concept can succeed in many locations, and once you pick a location, a chunk of sales (30% feels right?) will come from the people nearest that location, but others have no problem driving to pick it up if its not SIGNIFICANTLY out of the way
NOW WHAT?!
I’m pretty sure the next time I share a longer post, we’ll either be:
In progress closing on a property/renovating it to our needs
Choosing to wind down the business
Whats cool is that we created a business that works. But timing will indicate whether it works for us.
Time will tell!