Innovative Food Holdings: Questions to Bill Bennett | Value Bridge

Capital Allocation

10/08/2023 Can you comment on the utilization and value of the Pennsylvania warehouse, especially regarding e-commerce and its impact on SG&A costs?

The Pennsylvania warehouse was initially purchased for e-commerce, but over time, it now runs the entire Gate Gourmet business, which has become bigger than e-commerce and keeps the building active. Currently, there are no plans to change the building’s use, though there is definitely opportunity to utilize it more, and we are actively exploring that. Our logistics business, which increased revenue recently, effectively uses underutilized warehouse space. We lease space to several unrelated businesses, including consumer packaged goods companies and even a solar company that stages products in our warehouse. Owning the building gives us flexibility to use the space as needed for our evolving business strategy. Regarding margins, we recognize it would be helpful for investors to see a breakout of the two businesses, and we are considering how to report that going forward.

09/11/2023 Do you have any timing on the potential sale of real estate?

The two properties I mentioned in Florida and Pennsylvania are just being listed now. The timing will depend on the level of interest and traffic those listings receive. We are optimistic about the timing because both real estate markets are strong for the types of properties we are marketing. We expect the process to move quickly and will keep investors updated through press releases as we reach the binding offer stage.

21/03/2024 Can you provide more details on your M&A strategy after stabilizing the core business?

We're actively reviewing a pipeline of M&A opportunities, but we likely won't pursue anything significant until the Pennsylvania building sells and we have additional capital. In Phase 2, I’m not interested in taking on more debt or issuing new equity for acquisitions; we want to use existing capital. There’s precedent in the industry, like Chef’s Warehouse acquiring specialty distributors and rolling them up, but we aim to take a different approach that differentiates us. Currently, less than 10% of our business is in perishable sales, so expanding into categories like meat, produce, and seafood is a good opportunity. Fresh products drive customer frequency, as I learned from my Walmart and Kroger days, so adding more fresh items will deepen customer relationships on the food distribution side.

On the dropshipping side, the M&A opportunity is limited because the model is unique and hasn’t been fully leveraged. The biggest opportunity there is organic growth through boots-on-the-ground sales efforts and better articulating our value proposition to broadliners. So, our M&A strategy includes both category expansion in food distribution and organic growth in dropshipping.

14/05/2024 Is the potential acquisition focused on food distribution rather than drop shipping?

Yes. We discussed this last quarter. There are very few competitors doing drop shipping of fresh products the way we do, so we don’t see many M&A opportunities on the drop ship side. If we find one, we’d consider it, but so far, we haven’t seen much. In contrast, the foodservice industry has thousands of small food distributors nationwide that could be acquisition targets. Many large food service distributors have successfully grown through roll-up and acquisition strategies. This is the best space for M&A for us in the short term, and that’s where we are focusing our search.

14/05/2024 Can you elaborate on the potential synergies between the food distribution and drop shipping businesses?

Certainly. First, we are focused on valuation, ensuring the acquisition price is right before factoring in synergies, to be conservative. Synergies should help accelerate the payback period and improve the EBITDA multiple we pay upfront. We want to test these synergies in this Phase II stage, laying the foundation for growth. The key is how easily we can onboard a business we haven’t worked with before into our sales channels, giving a small local distributor a national footprint overnight. This could drive significant growth for them that wouldn’t otherwise be available and that we wouldn’t pay for upfront.

Another synergy could work in reverse: equipping the small distributor’s sales team with our drop ship catalog as a tool to sell to their existing customers. So, synergies could flow both ways. We want to learn from this first acquisition how large the upside could be for us.

11/08/2024 Can you describe your M&A funnel, what you’re looking to acquire, and why?

Our main M&A focus is finding small distributors we can plug into our sales channels to massively expand using their existing infrastructure. Bonus points if they operate in categories we don’t currently compete in, allowing us to grow our addressable market. Historically, our assortment focuses on imported goods from Europe and the Middle East, so expanding beyond that is a big opportunity. By integrating such players into our platform, we can quickly sell to US Foods, Sysco, Amazon, and local Chicago markets, doubling sales and profit rapidly. This rollup strategy mirrors how big distributors like US Foods and Sysco grew over 20 years, but we focus on specialty smaller players to leverage our existing sales channels and explode their reach.

11/08/2024 How competitive is the M&A landscape for small distributors, and how many buyers do you compete against?

So far, we haven’t faced much competition for the targets we’re pursuing. Many have been approached by larger specialty distributors like Chef’s Warehouse but declined to avoid becoming part of a corporate behemoth. Our advantage lies less in size or financials and more in our management ethos. We aim to preserve the culture of acquired businesses as independent entities while providing new sales channels. We believe this approach resonates with current owners. As we refine our sales pitch, we hope competition won’t be about price but about creating something bigger and more exciting together.

12/11/2024 What was causing losses in the consumer e-commerce business, and how have you addressed that?

The consumer e-commerce business, primarily igourmet.com and mouth.com, was losing money rapidly. We analyzed customer metrics deeply and found that the cost to acquire a customer was about $25, but the first order only generated $20, resulting in an immediate $5 loss. Worse, only 5% of customers repeated purchases, making the lifetime value to acquisition cost ratio horrendous. We tested expanding the product range beyond gourmet cheese but found the brand was too strongly associated with cheese to broaden effectively. Over five years, these businesses lost $12 million, which was staggering for a company our size. Given the outlook, it would have required another $10 to $15 million in losses over five years to barely break even at $30 to $35 million in revenue. We decided to sell the e-commerce businesses last year, closing the deal recently for just over $1 million in total value. The buyer has a broader gourmet business and can better leverage the assets, making it a win-win.

12/11/2024 What needs to happen for the company to reach $100 million in revenue and $10 million in EBITDA?

First, we must successfully stand up the new retail business, which leaves no room for error given the size of the customer. We are on track to scale from 10 test stores to several hundred stores within six weeks, which will rapidly change the company. Retail scales immediately, unlike broadline distributors, which have a slow, multi-year ramp as products gain awareness and regular orders through sales teams. Second, we need to return our broadline distributor relationships to mid- to high-single-digit growth, as they have been flat or declining since just before I joined. This segment is the company’s cash engine, and we expect growth in the back half of the year. Third, our M&A strategy involves thoughtful, conservative acquisitions over the next 12 to 18 months to vertically integrate and grow these businesses, similar to what we did with Artisan Specialty Foods. Lastly, we plan to sell our Pennsylvania warehouse via a sale-leaseback. The warehouse has a $6 million cost basis but appraises at $18 million. We use only about 50,000 of the 210,000 square feet, with half leased out and a quarter empty. Selling it would pay off our $9 million loan, leaving us debt-free with $3 to $5 million in cash to fund growth and M&A. At that point, we expect to be growing double digits, profitable, and debt-free with exciting prospects ahead.

12/11/2024 What profile do you look for in acquisitions, and how do you view vertical integration?

Acquisitions must bring clear synergies, if we can’t add value beyond the acquisition price, investors might as well invest directly. The Artisan acquisition a decade ago showed how combining a local distribution business with a drop-ship business in one warehouse doubled throughput and revenue. We want to replicate that model but focus on distributors we don’t currently have relationships with, especially in categories where we lack presence. This creates bi-directional synergies: onboarding the distributor’s assortment to our drop-ship channel grows our assortment and revenue, while the distributor cross-sells our drop-ship products locally, improving their throughput. Our criteria for acquisitions are: no dilution to preserve capital and learning space; profitable from day one with no turnaround needed; fair price, typically 3 to 5 times adjusted EBITDA; and clear, actionable synergies to pursue post-acquisition. We’ve passed on opportunities with higher multiples to avoid undue risk before proving our integration playbook. When we find the right fit, it will be a slam dunk for the company and investors, and we plan to replicate this playbook repeatedly as we grow.

05/02/2025 What specific catalysts should investors watch for this year?

First, the integration of Golden Organics and Loco Foods, aiming not just to stabilize but to grow these businesses and generate positive cash flow. These are ambitious goals for the first year under our umbrella. Second, scaling the retail business, which we launched in Q4. We don’t expect profitability in Q4 due to scaling but anticipate nice margins in the first half of next year. Investors should watch for that progress. Third, we recently announced a corporate governance and stock management change: renaming the company from Innovative Food Holdings to Harvest Group. This better reflects our focus on working closely with small producers. Alongside this, we plan an uplisting to NASDAQ, which will involve a reverse stock split to meet minimum price thresholds, followed by the uplisting itself. This should increase stock liquidity and broaden investor access.

07/03/2025 What are your thoughts on the Pennsylvania property sale and leaseback

We were surprised by how long the sale took. We hoped to sell before landing the retail business, but in hindsight, it helped us ramp retail quickly since we had personnel and equipment in place. We’re still interested in a sale leaseback to free up cash, but recent interest rate increases led to offers that weren’t favorable. This is our largest physical asset, so we want to be thoughtful and avoid tying up the company without financial benefit. Rates have come down recently, so the situation may change. For now, we need to maintain control of the facility because of the cheese business and don’t expect that to change soon.

07/03/2025 What is the timing, size, and scope of acquisition opportunities you see nationally

 We don’t expect acquisitions this year unless something perfect arises. Our focus is on developing the playbook to integrate future acquisitions more quickly and efficiently. We keep an eye on opportunities through various channels. Once we demonstrate strong returns from the first two acquisitions, accelerating M&A will be a no-brainer. At that point, we’ll articulate a clearer M&A strategy. It’s unclear whether we’ll pursue many smaller acquisitions or fewer larger ones. Our long-term goal is $1 billion in revenue, which likely requires M&A, making this phase two critical to nail the process.

07/03/2025 How do you assemble a group of businesses that generate bidirectional synergies within a single platform?

Exactly, Varyk. We don’t acquire companies just for their financials or as passive investments, that’s not a good use of our time. Capital deployment must be to plug companies into our platform. If we nail bidirectional synergies, we grow acquisitions by listing their catalogs on our other sales channels and vice versa. For example, Golden Organics can sell our dropship assortment locally to their 200 customers, growing both their local business and our dropship channel. All parts must work together, which will define an exciting future for our M&A strategy. We’re still learning during this phase.

26/03/2025 Do you think probiotic or prebiotic benefits in acquired brands might be lost or ingredients changed to appeal to economies of scale?

It’s interesting because big consumer packaged goods (CPG) companies are generally poor at creating new successful brands from scratch. Despite deep pockets and extensive R&D budgets, they often miss the spirit that goes into brand creation. That’s why they focus heavily on mergers and acquisitions (M&A) and managing portfolios rather than building new brands themselves. Your concern about whether they might ruin a brand like Poppy is valid. There are examples both ways. For instance, many feel Ben & Jerry’s lost its spirit and sourcing strategies after being acquired by a larger conglomerate about 10 to 15 years ago. However, CPG companies are aware of this risk. If I were a fly on the wall at Pepsi, I’m sure they’re carefully considering how to preserve the brand’s identity while leveraging their sales and marketing resources.

03/04/2025 What are the top opportunities for reinvesting capital, and how would you rank them?

We've approached our reinvestment strategy in three phases. Phase one was stabilization, fixing margins, cutting overhead, divesting underperforming assets, and getting to consistent cash generation. That took the first 18 months. We're now in phase two: building the foundation for growth. This involves defining our long-term model and integrating two recent acquisitions, Golden Organics and Loco Foods. If those integrations go well and synergies materialize, we’ll shift to phase three, which is accelerating acquisitions as part of a broader roll-up strategy.

So far, we’ve reinvested our cash into those two acquisitions. The original plan was to avoid raising outside capital during this phase. But then we landed a major retail contract with a top 10 U.S. grocer to supply their gourmet cheese category. That business launched last fall and did $5.3 million in Q4 alone, driving 44% organic growth. Unlike our drop-ship model, this retail line is capital-intensive, we import and warehouse cheese, which increased our working capital needs. It’s a lower-margin segment, but profit dollars are compelling and it justifies investments like automation machinery. That machinery then opened doors, for example, we're now producing first-class cheese plates for an airline partner. These pieces reinforce each other and build a flywheel. Long term, we want to fund acquisitions through internal cash flow, but once our model is fully proven, we’ll likely raise capital to accelerate roll-up efforts.

23/04/2025 Can you update us on the M&A pipeline and whether the success with Golden Organic and Loco Foods is a one-off or a repeatable playbook?

Good question. We’ve intentionally paused M&A for now. The first two acquisitions were meant to give us something to learn from and to write the playbook. We just reviewed 20 standard operating procedure documents and are holding the Denver team accountable to ensure everything operates as intended, especially under a public company structure. This process takes time, hiring the right talent and establishing the right processes. We’ve taken a very conservative approach because we don’t want to risk the company on a large acquisition before ironing out these details. So, there’s nothing in the short-term pipeline, and that’s deliberate. The goal is to write the playbook with these first two acquisitions so that future deals can be executed faster. That was always the plan.

Competitive Advantage

10/08/2023 How does your platform connect vendors to distributors, and how does this support scalable growth without additional assets?

We connect hundreds of small vendors into a single pipeline of product, inventory, and item information for distributors, so they don’t have to deal with 500 different vendors individually. This is a valuable service that allows the food service business to scale almost indefinitely without adding assets. The only expenses that increase as we grow are salespeople and customer service, which scale efficiently compared to the margins we make on the food service side.

11/08/2024 Why don’t the top broadline food distributors handle this themselves?

They all have their own marketplaces now, but it’s still too hard for them to manage at the detailed level we do. They generally focus on suppliers with 300 to 500 SKUs who are already established. We work with much smaller suppliers and add value by finding and vetting vendors for food safety through a thorough process. We train them on packaging and shipping to meet the standards expected by US Foods or Sysco. For example, one new seafood supplier sent samples that arrived thawed and leaking, so we coached them on proper packaging and shipping with ice, and the next shipment was much better. This hands-on support is a key competitive advantage, allowing us to scale while maintaining quality.

12/11/2024 What is the core competency or “secret sauce” of Innovative Food Holdings?

I’d say there are two core strengths. First is our platform: when we onboard a vendor, we don’t just resell their goods locally; we list their products on all major distributor websites, Amazon, and cross-sell to our local Chicago restaurant customers. With one vendor agreement, we open the entire U.S. market to them, enabling rapid scale. This platform approach is unique in specialty food, where most distributors still sell locally and traditionally. The second core competency will be described next.

12/11/2024 Why do broadline distributors want to work with you on their marketplaces, and what value do you bring?

Not all broadline distributors have marketplaces yet, US Foods launched theirs about 18 months ago, Cisco six months ago, and Cheney Brothers recently. This is a growing space as distributors want to sell more items without expanding warehouses or increasing waste. We’ve been operating as a marketplace for 20 years, offering a ready-to-go platform with thousands of items and categories covered. Instead of distributors onboarding hundreds of vendors individually, we provide a fully baked solution that handles food safety vetting, vendor agreements, and scaling quickly. Because we work directly with producers, fishermen, ranchers, manufacturers, we cut out middlemen and deliver competitive prices while taking a fair cut. This upstream sourcing and platform efficiency is why broadline distributors want to partner with us.

12/11/2024 What is the most underappreciated aspect of Innovative Food Holdings?

The asset-light nature of our core drop-ship foodservice business is hugely underappreciated. Unlike many businesses that require constant capital infusion to grow, this model scales without adding warehouses, trucks, or people. While the new retail business requires significant working capital investment, the core drop-ship business can grow profitably with minimal incremental cost. This scalability means our P&L can accelerate as we grow that business. It’s exciting because a single salesperson can manage enormous revenue through marketplaces, and as more broadline distributors launch marketplaces, this capital-light growth opportunity will only expand.

26/03/2025 How does your company break the traditional food distribution model?

Companies like US Foods and Cisco focus on volume and have to work within warehouse constraints, requiring high order minimums, often $750 to $1,000 per delivery, which is a lot for restaurants. They’ve reduced sales support and pushed customers to websites, creating a cold experience with limited catalogs. We break all three of those constraints by offering a much more extensive and unique catalog, shipping exclusively via FedEx directly from origin points like fishermen in Alaska to restaurants. This cuts out middle distribution, and the product arrives perfectly packaged and fresh. Many restaurants experience this for the first time and find it game-changing, building loyalty in a way traditional distributors can’t.

03/04/2025 How does IVFH differentiate itself in the specialty food market?

Our biggest differentiator is our drop-ship model. Unlike both Broadline and traditional specialty distributors, we don’t hold inventory. That eliminates spoilage risk and lets us expand our catalog limitlessly. Most food distributors, specialty included, have to bet that they can move products before expiration. We don’t. That makes our business far more capital-light and scalable.

This is why one of our key strategies right now is aggressively expanding our catalog. It’s the most profitable part of our business and requires very little cash, we might add two people to manage item creation but no trucks, no warehouses, no inventory. It’s efficient growth.

Another advantage is freshness. Take our new seafood partner in Alaska. He used to sell locally, with all product frozen for the journey. Now, thanks to our platform, he ships fresh, not frozen, seafood straight to restaurants across the U.S. That’s something even Cisco and US Foods can’t offer. I personally ordered Alaskan black cod through this channel, it arrived fresh, perfectly packed, and was excellent. This type of value chain innovation is something high-end chefs typically spend years building through personal relationships. We’re giving them that access at scale.

03/04/2025 What additional advantages does IVFH offer chefs beyond product variety and freshness?

There’s a whole ecosystem in the chef world built on word of mouth, who’s got the best caviar, seafood, specialty produce, and so on. It’s very fragmented and relationship-driven. What we offer is a consolidated, centralized discovery experience. Instead of working off a personal Rolodex built over years, chefs can go through US Foods or Cisco and access our expansive catalog with those same high-end items, fresh seafood, niche ingredients, the works, all in one place.

The third big differentiator is order flexibility. With traditional distributors like US Foods or Cisco, chefs typically need to meet a $750–$1,000 order minimum. That’s a tough hurdle for smaller restaurants and limits how frequently they can restock. We have no order minimum. If a chef wants just $150 of Alaskan black cod, we’ll deliver it, fresh, direct, no delays. Same goes for other specialty distributors who might require $400+ minimums. Our platform removes that friction, making fresh inventory available on-demand with almost no capital risk. That combination, no inventory holding, no order minimums, and on-demand variety, is incredibly hard to replicate.

Competition

10/08/2023 Can you clarify the comment about a key partner switching technology platforms? Does this mean you lost a customer or opportunities?

No, that is not what happened. It is an existing customer with whom we have a great relationship who made a change to the existing technology integration we have with them. This started late last year, but the revenue impact wasn’t apparent initially because we were still benefiting from post-COVID reopening tailwinds. This is just one piece of one customer's business. Our relationship with this customer is actually stronger than ever. We now have a sales team holding in-person meetings with their counterparts and building a growth plan together, which we never had before. They continue to bring us new growth opportunities and invest in the partnership. We consider this a one-time impact that will affect us over the next 12 months while we cycle it, but it is not a material change to our overall business model. This is part of the stabilization phase as we establish our go-forward business model.

11/08/2024 How sticky are your vendor relationships, and what prevents them from bypassing your platform?

Vendor circumvention definitely happens; it’s part of the food service distribution business where everyone tries to get closer to the source. That’s why we maintain strong conquesting efforts to stay ahead of food trends and find the right producers at the right cost. We create loyalty through our training and onboarding, which is unmatched because most vendors have never sold online before and don’t want to. We make it easy for them to grow sales without seeking more partners, they’re happy processing about 10 orders a day by email. On the broadline side, there is more stickiness because once integrated technologically, it’s not easy to walk away. Sometimes broadliners do try to steal vendors, and we see that as a sign of success, it means we’ve grown that vendor to a volume attractive to US Foods. Then it’s time to find the next special vendor to bring forward.

14/08/2024 How do you view Performance Food Group’s acquisition of Cheney Brothers and its impact on your business?

Performance Foodservice Group acquired Reinhart a few years ago, which helped deepen our relationship with PFG and opened more doors. I hope a similar dynamic will occur with Cheney Brothers, but since the news is only about an hour old, there is still much to learn as we engage with Cheney and assess the acquisition’s implications.

12/11/2024 What is your core competency in managing vendors, and how do you prevent losing them to larger distributors like US Foods?

Our core competency lies in finding, vetting, and training vendors. We often lose vendors to US Foods once they grow large enough for direct relationships, which is just part of the game. That’s why we constantly prospect for the next big vendors that US Foods isn’t ready to handle yet. We teach these small vendors how to get the right food safety certifications, pack boxes properly, and ship via FedEx. For example, we once received a seafood sample box leaking fish juice because the vendor hadn’t packed it correctly. That allowed us to coach them on proper packing and shipping, and the next samples were perfect. Big companies won’t do this kind of hands-on training at scale, but we have built the apparatus to do it efficiently and give these vendors a big platform.

12/11/2024 How concentrated is revenue with US Foods, and what new customer additions have you made?

US Foods still accounts for about 50% of our revenue, which is a significant concentration. That’s why we’ve focused heavily on adding new customers recently. In the last few months, we signed Cheney Brothers, a Southeastern broadline distributor, and another top-five broadline distributor. These are the first new customers in seven years for the company. While the drop-ship business will take time to ramp, each new customer represents potentially tens of millions in revenue, which dwarfs smaller initiatives like a gourmet cheese Advent calendar. It’s about focusing on material opportunities that can move the needle for the company.

12/11/2024 Does having your own brands create channel or partner conflicts with big distributors, and how do you manage that risk?

We are very careful not to step on the toes of our big distributor partners. Everything we do is designed to be complementary, not competitive. For example, we have the Artisan Specialty brand in Chicago, which we sell both on our distributor partners’ sites and locally through Artisan’s sales team. While sometimes our brands might compete head-to-head with restaurants, it’s rare. The specialty food industry is highly fragmented beyond the three big players, who still represent less than 50% of the market. Because of this fragmentation, we mostly build new or incremental relationships where broadline distributors have less presence. We also tend to give distributor partners preference to maintain strong relationships.

26/03/2025 Do you provide a list of restaurants you work with? How do you approach your customers?

Our customers are really US Foods and Cisco, since they sell to the restaurants. We have to be careful not to market directly to those restaurants because it’s their relationship. However, we focus heavily on understanding the end customer, the chefs. We did extensive primary research, spending days talking to restaurant owners, chefs, and salespeople to understand the industry. We target “choosy chefs” who aren’t content with normal dishes, they innovate with unique ingredients and seasonal, rotating menus. These are often white tablecloth and independent restaurants, not chains, and they appreciate the specialty products we bring.

03/04/2025 Which companies, if any, do you benchmark IVFH's financial performance against?

The most comparable public company would be Chef’s Warehouse. Let me quickly define “specialty foods”: it's essentially anything the Broadline distributors don’t carry, products like specialty mushrooms, caviar, fresh seafood, or imported pastas that move slower and require more variety. Broadliners like US Foods, Cisco, and Performance Food Group dominate the commodity side of the foodservice industry, over 50% combined share, and operate like the Walmarts of food distribution: high volume, low margin.

Specialty food distributors exist to complement them. Every market has 10–15 of these firms. What Chef’s Warehouse has done well is execute a roll-up strategy, buying the largest specialty distributor in each key market. That’s a model we watch closely and, as mentioned earlier, one we aim to replicate once we reach phase three.

03/04/2025 Why do you benchmark against Chef’s Warehouse and what other companies do you monitor?

We look closely at Chef’s Warehouse because they’re a public company operating in the same specialty food segment as us. Like us, they focus on independent and high-end restaurants rather than chains, and they’ve executed a roll-up strategy across key U.S. markets, which aligns with our long-term vision. Financially and strategically, they’re our closest public comp.

That said, we also monitor players like US Foods, Cisco, and Performance Food Group. Even though they’re Broadline distributors, they shape the industry landscape. We watch Amazon’s food segment and Walmart’s B2B e-commerce platform closely, too. On top of that, we track startups entering adjacent markets, not just to remain competitive, but also to identify future acquisition opportunities. We’re very deliberate about understanding the full market picture.

Growth

10/08/2023 How many more partners like Gate Gourmet are out there, and how do you plan to acquire them? How does this scale with the asset-light nature of your specialty food service platform?

We are very excited about the relationship with Gate Gourmet, which is a great case study on how a new business can scale. We believe the platform we’ve built has value to a tremendous number of retailers, distributors, and a wide range of customers across the country. Our longer-term strategy, which we will discuss later this year, will intentionally focus on adding customers to the specialty food service business. Regarding the asset-light model, the majority of our specialty food service business does not even own the inventory. The value we add is connecting hundreds of small vendors who otherwise would not be doing business with a big distributor. This approach supports scalable growth while maintaining an asset-light platform.

10/08/2023 Can you explain the decision-making process behind the reductions to the digital advertising budget and your approach to e-commerce customer acquisition and retention?

The cuts to digital advertising are not a cost-saving measure but an opportunity to rethink our go-to-market strategy and improve how we convert new customers into long-term loyal ones. Currently, we retain very few new customers acquired through igourmet and mouth.com. Unlike a mattress company where you only sell once, food should encourage repeat purchases. We need to increase customer retention to raise lifetime value.

Historically, e-commerce has been leaned on for growth despite losses, but many companies have recently reallocated resources due to profitability challenges. With my background at Walmart and Kroger, I know e-commerce is tough to profit from. We are rethinking the profit profile to make e-commerce contribute positively.

On acquisition costs, we are evaluating marketing strategy, creative, and promotions to attract customers more efficiently. Improving site experience has already increased conversion rates over the past 9-10 months, lowering marketing expenses per acquisition. On lifetime value, we are driving higher frequency and retention through new initiatives like a points-based loyalty program and entry into specialty meat categories, including exotic meats like rabbit, kangaroo, and alligator, to encourage repeat purchases beyond specialty cheese.

Our goal is to push the lifetime value to acquisition cost ratio to 4:1 or 5:1, making marketing investments self-sustaining and eliminating the need for cloud capping.

09/11/2023 Can you elaborate on the changes with the key customer and whether they are taking more products in-house or broad line items?

We experienced a change in the technology platform with this customer, which resulted in a change in item numbers for part of the assortment we supply. This caused us to lose the entire sales history for those items, which is significant because in foodservice, chefs typically order from an order guide based on historical purchases. Essentially, years of order history with these restaurants were lost overnight due to the product number changes. Despite this, our partnership with the customer remains strong, and we continue to pursue new growth opportunities together. However, this part of the business has been impacted, and we expect to begin lapping that impact in Q1. These headwinds will persist through the year, and rebuilding this portion of the business will take time.

09/11/2023 Are you making changes to how you track customer history to prevent this issue in the future, or are some customers lost?

Yes, this is fundamentally a technological challenge. While the restaurant is the end customer, our direct connection is with the broadliner distributor. We have the restaurants' contact information, but historically, we have done business through the broadliner, so we cannot bypass them to rebuild the business directly. This reliance on the broadliner is the cause of the headwind. The team we work with has been very helpful in seeking new growth opportunities, but in the B2B space, everything takes time because relationships and contracts are involved. Restaurants do not make sourcing decisions overnight. Our focus remains on rebuilding the business, and we expect to return to sales growth next year.

21/03/2024 What is the status of your revenue growth and new customer acquisitions?

We're really excited about the revenue growth we've been messaging for a while. We have to be careful not to count our chickens before they hatch, but we want to be transparent about the progress. As Brady mentioned, the four new customers include three large broad-line distributors with nationwide presence and one airline caterer similar to Gate Gourmet. These customers fit squarely within our value proposition and expertise. We've had top-to-top executive conversations and alignment, though contracts are not yet in place; we will announce them when finalized. This additional breadth helps de-risk our customer portfolio and shows that our value proposition, flexibility, and technology integrations resonate with new large customers, which bodes well for future dividends.

21/03/2024 How do you view growth opportunities related to the Chicago warehouse and dropshipping?

We still see opportunity in Chicago and are exploring options for the warehouse there, including potentially expanding or acquiring a bigger facility. We're being careful about capital deployment, coordinating with asset sales to generate cash before making moves. We've added new salespeople to the Chicago sales force and have big aspirations for that business. Once the e-commerce ramp-down is behind us, the business will separate into dropship, where we don't hold inventory, and food distribution, which we do in Chicago. Both have large opportunities. Dropship offers better margins due to lower operating costs, but food distribution also has compelling returns and expansion potential through M&A and new markets.

14/05/2024 Are there updates on the four new large customers mentioned previously, and has anything changed in the pipeline?

No significant change in the pipeline. We continue to aggressively pursue the same four customers mentioned before. Today’s press release highlights that Cheney Brothers is now a contracted customer, and we are actively integrating with them. Additionally, one potential customer is entering a test phase in a small geography, which we will discuss more later, and another is very close to launching. We are making progress with these customers, and you can expect further updates as we hit milestones. There is a lot to be excited about on the new customer front.

14/08/2024 What makes the Chicago model unique, and how can it grow locally and be replicated in other cities?

The Chicago model is unique because it combines local distribution with a drop-ship business, creating a vertical integration play. When we acquired the Artisan business 10 years ago, it was our largest supplier for drop-ship, mostly with US Foods. Since then, the business has doubled from about $10 million to $20 million, split roughly half between serving the local Chicago market and the drop-ship business. This synergy is a key part of our M&A strategy, where we seek small regional distributors that fit our portfolio. We aim to list their assortment on our drop-ship channels to generate incremental sales, improve warehouse throughput, and leverage their assets more effectively. This model is compelling and continues to offer growth opportunities both locally and in other regions.

14/08/2024 Can you elaborate on growth rates and revenue contributions within Specialty Foodservice sub-businesses?

We haven’t previously released detailed growth rates or revenue splits for the sub-businesses. However, as I mentioned in my prepared remarks, both the Artisan Specialty Foods and airlines businesses are growing in the high single digits. Despite this growth, the overall net effect remains negative due to the size of our largest customers. These growing segments are key to our plan to return to growth in the second half of the year. We are also reconsidering how we segment revenue in public filings, especially as e-commerce winds down, and will provide more visibility on this in the future.

12/11/2024 What new business opportunity have you secured following the e-commerce sale?

Just days after completing the transition on igourmet, we signed a new business line with a top 10 retailer to manage their gourmet cheese assortment. This retail business uses the same warehouse capabilities, sourcing relationships, and equipment but shifts from a loss-making consumer model to a profitable retail model. It’s exciting to see the company transform overnight from selling $100 gift baskets to shipping thousands of pounds of cheese daily. This new business will be game-changing for us.

12/11/2024 What secular tailwinds and trends support growth in the specialty food segment?

One major trend is the long-term growth of food consumed away from home, which has been rising for 50 years and recently crossed 50% of total food spending. Despite COVID disruptions, this trend is back on track as consumers seek convenience and new flavors. Another trend is evolving American tastes, moving from traditional meat-and-potatoes to more adventurous, international, and specialty foods. Independent restaurants are growing as consumers seek unique offerings beyond big chains. Our company aligns well with these trends. For example, in our gourmet cheese retail pilot, we focus on unique cheeses like truffle gouda and blueberry Stilton rather than basics like cheddar, and these products are flying off shelves, showing strong consumer demand for specialty items.

07/03/2025 Is the Amazon business a niche opportunity or a meaningful revenue source you can leverage going forward?

Thanks for the question, JD. We’ve been surprised by the growth there so far. Most of our dropship sales channels have intermediaries like US Foods and Sysco, so we don’t own the customer relationship or have marketing control, which limits growth levers. With Amazon, we control everything, the assortment, content, pricing, and marketing. We can build a dedicated store and tell our story, which gives us much more control. We’re on pace to do just over $1 million this year, so it’s not large scale yet, but there’s little competition in our specialty food category on Amazon. We have about half a person working on it, and as we get our full catalog up, we expect continued growth. It’s an intriguing opportunity to sell more specialty food on Amazon.

07/03/2025 What is the growth outlook for the Artisan business in Chicago and the potential to replicate it in other metro areas?

Specialty food distribution has high barriers to entry, especially because food is perishable and you need enough inventory and customers simultaneously, a cold start problem. Artisan’s success is a model to copy, but likely through acquisition rather than starting from scratch in new markets. That’s the thesis behind our Golden Organics and LoCo acquisitions: bringing them under the IVFH umbrella to sell on our other platforms and push their local growth, creating synergies that didn’t exist before. We added a salesperson at Artisan this year, which drives growth, more salespeople find more opportunities. Artisan has significantly more salespeople than Golden and LoCo combined, so investing in sales teams and building out our market-level platform is a big opportunity.

07/03/2025 How are you leveraging bidirectional synergies from acquisitions and creating incentives for new managers?

We’ve talked about bidirectional synergies in our acquisition press releases. These companies operated locally for years, so local growth is one opportunity, but the bigger one is listing them on our other platforms like US Foods, Sysco, and Amazon to build dropship businesses they didn’t have before. For example, Artisan does about $20 million in Chicago, half dropship and half local delivery. We aim to replicate that dropship mix with new acquisitions to drive growth and asset returns that didn’t exist before. We’ve focused on relocating LoCo Foods and brought in a strong leader, Taeshaud Jackson, who’s managing the relocation from Fort Collins to Denver. Now that’s done, we’re shifting to synergies.

07/03/2025 Are there plans to expand retail beyond cheese and add more retailers?

We used a broker to find the retail cheese business, which fits our overhead-conscious approach. The broker, with a national footprint, is now helping us pitch similar capabilities to other retailers. The main capability is centralized labor, which reduces waste and labor costs at the store level, a big issue for gourmet cheese categories. From my Kroger experience, it’s very expensive for grocers to operate this locally.

We’re also exploring additional retail categories with the broker’s help. No announcements yet, but this is why we launched the new airline business last week, leveraging the same equipment and sourcing to run a First Class cheese plate business. We want to leverage our warehouse and equipment to pursue cheese and gourmet food opportunities beyond retail.

26/03/2025 How are you applying AI to grow the business, especially in vendor and catalog management?

Our biggest growth lever is expanding our product catalog, but the current process is painfully manual. We require new vendors to fill out huge spreadsheets with product data, but many vendors are small, focused on their craft, and unwilling to complete these forms, leading to a high fallout rate. Currently, it takes 6 to 12 months to onboard a new vendor, which is ridiculous. Last year, we added 700 new items but lost 1,000, so our catalog actually shrank, which is the opposite of what we need. We’re working on applying AI to simplify and automate this process, aiming to reduce vendor onboarding from over six months to just two weeks. If we achieve that, we can onboard thousands of items annually and enter a much steeper growth curve. Our vision is for vendors to upload catalogs in any format, PDF, Excel, and have AI handle the rest.

Outlook & Guidance

10/08/2023 Do you expect calendar 2024 to be a growth year for the specialty food service business?

Yes, we expect 2024 to be a growth year for specialty food service. When segmenting the foodservice business across various customers and areas, we are seeing very nice growth in several segments. After facing some headwinds this year, we anticipate returning to a growth trajectory next year. This is where our operating profit will come from going forward. We plan to focus much more on food service than historically. The strategy is to grow the profitable foodservice business while managing the losses in our e-commerce business to get back to flat. If we can achieve both, it will have a dramatic positive impact on operating income.

10/08/2023 When can investors expect an Investor Day and what are the next steps?

We haven’t set a date for Investor Day yet, but it will be later this year, aligning with our longer-term strategy discussion. Thank you all for your questions and engagement. I encourage investors with further questions to reach out to Richard Tang, whose contact information is in our press release, to schedule a touch base. We look forward to our strategy presentation later this year and our next quarterly update in November. Have a great day.

21/03/2024 What does moving from Phase 1 to Phase 2 look like for Innovative Foods?

I want to see a smaller gap between reported net income and adjusted net income as the business stabilizes and delivers a consistent model. Two key milestones before declaring victory on stabilization are returning to revenue growth and selling the Pennsylvania building. Proving our value proposition outside the existing customer base by adding new customers and growing the professional chef business shows headroom for growth. Selling the Pennsylvania building will unlock capital to pay off about $9 million in loans, effectively making us debt-free. Combined with proceeds from the Florida sale and other cash generation, we'll have $8 to $10 million in cash to grow revenue debt-free. That, to me, defines a stabilized and healthy company investors can trust.

21/03/2024 What might capital allocation look like once you reach a comfortable profit margin and net cash position?

Phase 2 is about defining where growth will come from. We have two businesses: food distribution and dropship. Dropship looks more attractive from an operating margin perspective, but we need proof it can grow to multiple hundreds of millions before focusing fully there. If dropship growth plateaus, we expect more growth from food distribution, which is highly fragmented and ripe for roll-up strategies and new business models. Investing in food distribution is more capital-intensive due to warehouses, trucks, and labor. Capital allocation will differ depending on which business or combination we lean into. Phase 2 is about defining our long-term strategy and identity as a company.

21/03/2024 How has the market responded to listing the Pennsylvania facility for sale?

The response has been good. This is a much larger sale compared to the Florida building. We listed the Pennsylvania building for $18 million in a remote area, Mountaintop, Pennsylvania, so we didn’t expect an immediate sale. However, the feedback from our broker, CBRE, has been strong interest so far. While no one can predict exactly when it will sell, the building is in a strong distribution corridor in the Northeast, and we remain confident it will sell for a decent price over the next several months.

11/08/2024 How does the asset-light drop ship model scale from $50 million to $70 million in revenue?
The drop ship business has no inventory risk, no trucks, no warehouses, and minimal staff. For the 55% of our business that is drop ship, we have a four-person customer service team, one logistics person handling FedEx, and two sourcing staff. As we add more broadline partners, who themselves have thousands of customers, we mainly add a salesperson to manage those relationships. This side of the business can scale indefinitely with no capital investment or marketing expense because we rely on broadline partners to market to their customers. We train their salespeople to advocate for us, so we don’t spend heavily on advertising. Additionally, our acquisition of Artisan Specialty Foods in Chicago doubled their local distribution business by giving them access to broader sales channels, showing the potential for strong returns through M&A.

11/08/2024 Can you discuss the expectations and scale for the two recent distribution agreements relative to $100 million revenue?
Our US Foods business is huge, making up about 50% of our revenue, roughly $35 million, built over 20 years. That concentration is a risk, so we’ve been pushing to find new sales channels and customers. The new contracts we signed should scale faster than 20 years, but it’s still a multi-year ramp, not overnight. There’s an education process partnering with their sales teams to get them excited about the expanded assortment. I view scaling these new partners as a multi-year process, not a six-month sprint.

12/11/2024 Any final thoughts on the company’s transformation and future

 The best takeaway is understanding the context of where we started, the changes we’ve made, and the exciting path ahead. We’ve moved from a complex, fragmented company to a focused, scalable business with strong growth prospects and a culture built for innovation and ownership.

05/02/2025 Looking ahead, what are the main value catalysts investors should focus on for Innovative Food Holdings in 2025?

When I arrived, we laid out three phases for the company. The first was stabilization, which involved divesting, cutting expenses, and focusing on the core business. We are now in phase two, building the foundation for growth, with the two acquisitions, Golden Organics and Loco Foods, being key. The goal is to develop a playbook for integrating acquisitions so we can become a successful platform company, acquiring multiple small distributors and plugging them into our national sales channels to drive outsized returns. This phase should last 12 to 18 months, after which we plan a more aggressive acquisition strategy to start a rollup plan.

07/03/2025 How was the 25% organic growth in Q1 distributed across business areas?

We’ll provide more detail with the Q1 financial release. The 25% growth reflects the retail business launch and supply chain fill in Q4. It’s significant growth we expect to continue until we lap the retail launch. We’re not releasing category-level details yet, but Q1 results are coming soon.

07/03/2025 What is the expected cadence of the cheese business throughout the year?

This is our first calendar year with the cheese business, so we won’t release detailed projections. Generally, gourmet cheese sales skew toward the holidays. Launching in October was nerve-wracking because we went straight into the holiday season with no warm-up. Typically, summer is slowest, holidays are busiest, and other periods are average. The recent expansion into more stores will likely distort these trends, and we hope continued success will create more opportunities.

07/03/2025 Can you comment on normalized revenue post-integration of the second acquisition?

We’re still early in the process. We’ve focused on relocating LoCo Foods and stabilizing operations under one roof in Denver. When we acquired LoCo, they were struggling with vendor back payments, which we prioritized resolving to maintain critical local vendor relationships in Colorado. Now that’s addressed, we’re shifting focus to growth. We haven’t identified any customers to drop yet but will learn more as we deepen our understanding of the customer base and keep investors updated.

26/03/2025 Is the future of food e-commerce heading toward boutique brands or corporate consolidation?

Consumers are becoming more exploratory with the foods they eat and make. Big corporate giants have noticed this trend, as seen in acquisitions like Poppy Soda, showing that basic colas won’t dominate forever. Unique foods continue to attract consumers, and big companies have been acquiring small niche brands to stay current. During my time at General Mills, the company focused on classics like Cinnamon Toast Crunch and Progresso soup, but over the years, they shifted to acquiring smaller, trendier brands that meet evolving tastes and cuisine variety. Specialty foods are a trend that isn’t going away soon, and I’m excited about our company’s future because we’re focused in the right place.

26/03/2025 How will AI handle unstructured vendor data and improve your internal processes?
Our AI platform will be able to extract all necessary information from any format, even a scrap of paper with handwritten notes, and categorize it into our internal templates. It will then automatically trigger and assign all the next steps internally to fully set up a vendor. Currently, the process involves a huge volume of emails coordinating each step, with bottlenecks and handoffs causing lost information and manual errors. It’s crazy that in 2025 we still operate like it’s the 1990s. We’re about a month or two away from having this AI-driven platform in place, which will let us move at a completely different pace. This next chapter will be much more AI-driven than our first.

26/03/2025 What one piece of advice would you give to the next generation of CEOs, especially regarding AI and the future?
My advice would be not to shoot for the moon initially with AI. Many who lay off entire teams and replace them with chatbots are missing the impact on customers because most technology isn’t mature yet. Using AI as a support tool for current employees is a much more cautious and successful approach. Also, culture management and evolution are critical alongside AI adoption. At IFBH, we emphasize a mindset of constant evolution, never doing things the same way for 15 years. I shared a TED Talk with the team about an Indian entrepreneur who innovated using flip phones and texting to implement advanced e-commerce, showing that high technology isn’t always necessary to innovate. The key is having a mindset that constantly seeks better ways to work, integrating simple tools like automation thoughtfully. Culture evolution must go hand in hand with technology evolution because employees are the ones who will deploy, accept, and drive these changes.

03/04/2025 What metrics will you use to evaluate whether this new growth phase is successful?

Organic growth is key. Acquisitions will help headline numbers, but we care about what’s happening in the core. It’s like comp-store growth in retail, you need to know whether the base business is healthy. We just introduced new revenue breakouts in our 10-K to help investors track each segment, which aligns with our commitment to transparency. We’ve talked openly about drop-ship softness, and we expect that to reverse as the catalog expands.

Another major KPI is acquisition performance. Our first step is stabilizing those businesses, Golden Organics and Loco weren’t well-run, so we’ve had to relocate operations, shore up customer bases, and start integration. Our goal is to list Golden’s assortment on our platform, just like we did with Artisan Specialty Foods, which now does half of its revenue via our drop-ship model. If we can do that, Golden could potentially double its $7M topline in 3–5 years. We’re also working on the reverse synergy: pushing our platform’s catalog into Golden’s local customer base in Denver. If both sides of that play out, it’ll prove our M&A model and create a highly scalable playbook for future roll-ups.

03/04/2025 What synergies are you tracking with Golden and Loco, and how will they shape your M&A playbook?

We're tracking three buckets of synergies: commercial, strategic, and operational. First, there's catalog synergy, listing Golden’s organic products on our national platform and seeing how they perform with partners like US Foods. That’s straightforward. The reverse is more experimental: selling national catalog items like wild-caught Alaskan black cod to Golden’s local Denver customer base. It’s a different product type for them, so we need to test it.
Second, we're centralizing back-office functions like HR, accounting, and legal to remove duplication and reduce costs. That’s already in motion. Our goal is that, by the end of this 12–24 month phase, we can quantify these impacts clearly, cost savings, revenue growth, margin lift, and use them to build a repeatable model for future acquisitions. We’ve said publicly we want to build a $1B revenue business. You don't get there organically alone, M&A will be critical. But this phase is about proving that our playbook works.

03/04/2025 What are the expansion plans and scaling challenges for the retail cheese business that generated $5.3M in Q4?

We went into that business fully aware it would have lower margins than our drop-ship model. But when a top-10 grocer gives you a shot to own their gourmet cheese category, you make it work. Even at lower margin rates, we expect strong profit dollars, and we’ve already seen that play out. It also unlocked other opportunities.
For example, we originally planned to sell our Pennsylvania warehouse after divesting igourmet. But the retail business launched right after that and used the same infrastructure, coolers, vendor relationships, even some of the same equipment. It was a seamless transition. That facility now supports not just the retail cheese line, but also our Gate Gourmet business (>$10M/year). The added retail volume let us negotiate significantly better shipping rates, which reduced costs across all business units operating from that site.
Now we’re thinking about maximizing that space: bringing in a tenant, shifting other business lines into the warehouse, or offering 3PL fulfillment for third-party e-commerce brands. We already have the infrastructure, packing stations, dry ice, cold chain capability. If we run it as a 3PL without owning the product, that’s pure margin. So while the cheese retail business may have lower rates, it opens high-margin adjacencies and strategic leverage points that make it very attractive long-term.

03/04/2025 You reported 25%+ organic growth in early Q1 2025. What’s driving it, and how is it distributed across business units?

We're between quarters, so I can’t share too much detail yet, but we mentioned on the last call that the growth drivers remain consistent with Q4. The retail business is still growing, expanded SKUs and store counts from January are contributing incremental sales. That’s been the core engine of our organic growth.

We also launched the new airline cheese business this quarter, which is entirely incremental. Artisan, our legacy foodservice distributor in Chicago, continues to perform strongly. On the flip side, the drop-ship segment remains soft due to the earlier catalog contraction. But we're addressing that with the new AI-driven item onboarding process, so we expect a rebound over time.

What I’d encourage investors to watch now is profit expansion. This is our first full year without the drag of the consumer e-commerce segment. We’ve added profitable acquisitions and launched a positive-margin retail business. The focus isn’t just on top-line growth, it's on driving real profit dollars, which is what long-term investors ultimately care about.

15/05/2025 Can the cheese retail business become profitable at its current scale, or does it need significant growth to break even?

We believe we can achieve profitability at the current scale. Although investors only see quarterly snapshots, we only completed the ramp-up of this retail business in January with the additional rollout announced then. So, we had just a partial quarter at full scale. We continue to learn daily how to improve efficiency. For example, I recently visited the Pennsylvania facility and saw new processes reducing labor by over 30% per unit. We're also finding efficiencies in shipping and contracts. We expect to reach profitability within the current scale, but we are also pursuing additional top-line growth opportunities. Having these capabilities opens many new doors we didn’t have before.

15/05/2025 What is the current weekly number of new products added to your catalog compared to last year, and where do you want it to be in 12 months?

We haven’t yet implemented the AI platform that will accelerate catalog additions, so year-to-date, we are on pace with last year. Once the system is in place, we can aggressively pursue more vendors. Currently, our sourcing team is very selective because onboarding vendors is time-consuming and requires completing a 150-column spreadsheet. Many vendors are hesitant, but we assure them it will be worth it to get on the US Foods platform. In the future, we won’t need to scrutinize vendor selection as much, though we still want the right vendors and products. There are hundreds of vendors I’d like to add but can’t due to manual processes. US Foods is excited about accelerating this pace and has even discussed pushing smaller vendors they want to work with but can’t justify to set up on our platform. Additional acquisitions will also help grow the catalog faster, reinforcing our key relationship with US Foods and supporting business growth.

15/05/2025 Can you provide more color on the potential for further growth in cheese retail versus airlines and what other categories could be opportunities?

We continue exploring expansion within Sam’s Club and other retailers, focusing on adjacent categories to gourmet cheese such as cured meats, olives, and other gourmet shelf-stable products that complement cheese. We’re also looking at fresh seafood and fresh beef, leveraging connections with artisanal vendors to offer unique products to Sam’s Club and other retailers. B2B sales processes are long, and most retailers reset shelves only once or twice a year, so new product sales typically start six to twelve months after shelf resets.

Risks & Macro

21/03/2024 Can you update us on the lawsuit related to your i gourmet business?

The lawsuit, which we've been dealing with for about five years, involved a car crash caused by one of our trucks in Pennsylvania. It was resolved recently, announced in late December or early January. The settlement was handled by our insurance carriers with no cash out of our pockets. The claim was for $50 million, and our insurance coverage was about $20 million, so we had significant uncovered exposure. Settling without cash outlay removes a major risk that had hung over us for a long time.

07/03/2025 What exposure does IVFH have to the on-again, off-again tariff environment?

Good question. So far, tariffs have affected Mexico, Canada, and China, which are not major product sources for us. We just received our first tariff-related price increase on some oysters imported from Canada, a very small part of the business. Our imports mainly come from Europe, especially for cheese, so we’re watching that region closely. If tariffs arise, we pass them through to customers since we’re a middleman. Fortunately, we operate in premium categories that are less price sensitive, so we’re not overly worried but remain vigilant.

03/04/2025 Could tariffs on European goods make IVFH a better-value alternative?

It’s a valid concern and something we monitor constantly. If anyone had a crystal ball on what tariffs might come next, we’d all be wealthier. But historically, U.S. policy has protected categories Americans love, like European wines and cheeses. So far, our core imports haven’t been impacted significantly.

We source food globally, domestically, from Europe, Asia, and elsewhere. Our catalog includes 10,000 items from hundreds of vendors, so we’re agile. If tariffs suddenly hit a category, we can pivot quickly. For example, I just spoke with a Canadian cheese importer whose products replicate many French cheeses thanks to Canada's French heritage. That gives us optionality.

Unlike a traditional retailer, we don’t own our customer traffic. We operate through platforms like US Foods, so there’s no disruption to the end-customer if we swap out catalog items. We’re a broker, not a brand. That flexibility is strategic. And to be clear, we won’t absorb tariffs, they’ll be passed through 100% to customers, and we’ll adjust based on how their purchasing behavior shifts.

23/04/2025 What percent of your expense base is food versus flavors, considering cost and food inflation?

Thanks, Tom. With all the tariffs affecting imports, a significant portion of our portfolio involves imported goods, so we are watching closely, especially with the 10% European tariffs now in place. We’ve already seen some increases come through, but tariffs only apply to the cost of goods at the port. Additional supply chain costs like processing, packaging, shipping, and labor are not tariffed. For example, in the retail cheese business, we saw only a 6-8% increase depending on the SKU, despite the 10% tariffs, because transportation and labor are included in the final cost. After applying our labor, packaging, and transportation, we pass along only a few percentage points of increase to retailers, who then pass on a small increase to customers. In restaurants, roughly a third of the menu price is food cost, so we expect very little impact on menu prices from the current 10% European tariffs. Asia, especially China, faces higher tariffs, which will make Chinese food more expensive, but while tariffs are a challenge, we don’t see them as insurmountable.

Financials

21/03/2024 What are your margin expectations for the B2B part of the business after e-commerce is gone?

We haven't released exact margin numbers by business, so I won't give a precise figure. However, looking back to 2016-2017 when we had no e-commerce business gives a sense of the food service business economics alone. As e-commerce ramps down, you'll see how margins manifest in the rest of the food service business. Our gross margins should be in line with industry peers, especially on the dropship side where labor and operating expenses are lower. It's an attractive business, and we want to continue focusing on it.

11/08/2024 What does adjusted EBITDA mean, and how much does depreciation and amortization (DNA) affect it?

Two quarters ago, we started providing detailed, consistent breakdowns of our adjustments in press releases for clarity. Adjusted EBITDA excludes stock compensation, one-time severance costs, and similar items to measure core operations and business health. The $10 million EBITDA target reflects this core operation focus. Any acquisition or new business must be accretive to that number. Regarding DNA, our only assets are warehouses in Chicago and Pennsylvania and a few trucks, which don’t significantly impact the P&L today. This could change with future acquisitions, but currently, DNA is a small part of adjustments.

14/08/2024 How do you see the company’s revenue mix evolving with US Foods, especially regarding diversification?

Our goal is to reduce reliance on US Foods as a percentage of revenue while still growing the dollar amount of business with them. This diversification is healthy for the company. Although our sales with US Foods have been shrinking in recent quarters, they remain our largest customer. We are focused on strengthening that relationship and reversing the decline, but the strategy is to grow other parts of the business at an exponential rate so that US Foods’ share drops as a percentage of total revenue. This approach balances risk and growth effectively.

12/11/2024 How do you balance pricing power given the size mismatch between your company and large broadline distributors?

When I arrived, we were simply catching up on pricing due to inflation, not trying to increase margins beyond prior levels. There was broad understanding of that in the market. Over time, I don’t expect to grow profit by raising prices repeatedly because we are essentially a middleman buying from vendors and reselling to distributors. If we push margins too high, it ruins the value proposition for customers, especially with multiple layers of margin. Instead, we aim to grow profit through revenue growth and leveraging expenses. For example, the broadline distributor we added this spring requires only one account manager, no customer service, tech, warehouse, or trucks, because it plugs into our existing drop-ship platform. This asset-light model allows us to scale profitably without margin expansion.

13/11/2024 Can you discuss the gross margin effects from the new retail cheese and how much e-commerce is impacting?

Yes, thanks for that question, Brian. Our gross margins did take a dip this quarter. The e-commerce business typically runs 50% to 70% gross margins because of the high expenses to fulfill orders. Once you factor in packaging and FedEx costs, we actually lose money, which is why we've exited that business. As we ramped down e-commerce, it lowered our overall corporate gross margin rate. Regarding retail cheese, during our 10-store test, we didn’t have the scale to purchase cheese at the cost of goods we expect once scaled. We chose to take a loss during that test period to win the business, which materially impacted Q3 gross margins. However, in Q4, now that we have scale, we’ve reduced the cost of goods significantly and are at the gross margins we need for the cheese business going forward. We expect gross margins to return to a healthy level.

13/11/2024 Can you explain the financial model around the Amazon business?

Sure. On Amazon, we operate a third-party seller store like other sellers, paying about a 15% commission to Amazon on the retail price of products sold. We set pricing based on our internal models. These are food service products, so the margin on those items is higher than on consumer products, allowing us to cover shipping, commissions, and other costs. The cost model is similar to our business with US Foods and other distributors, where commissions or margins are paid. It’s a low-cost, no-capital way to leverage our existing assortment and vendor relationships. I hope that answers your question, JD.

13/11/2024 Have any competitive or other factors impacted Specialty gross margins since 2017?

You’re referring to the period before we had an e-commerce business when it was purely drop-ship. We don’t believe anything has impacted those gross margins since then. As the profit and loss statement cleans up and we lap the ramp down of e-commerce, those margins will shine through again. Drop-ship is our highest margin business; food distribution where we handle inventory is lower margin, and retail tends to be the lowest. The business mix will shift more toward food distribution with our Golden Organics acquisition and Artisan & Specialty Foods growth, and also toward retail as it scales. Corporate margins will fluctuate, but drop-ship margins will remain strong as e-commerce impact fades.

13/11/2024 Should inventories be trending lower in dollars given your business model?

On the drop-ship business, we don’t own inventory, so as that grows, inventories shouldn’t increase. However, we are ramping up the retail cheese business, where we do own inventory. We’ve purchased a few million dollars of cheese to start that business, which is causing the current inventory increase. Most of this increase hasn’t hit Q3 numbers yet but will show more in Q4. Inventory trends depend on the mix of businesses scaling, and since much growth is in retail, we expect inventories to grow accordingly. I hope that answers your question, Carlos.

07/03/2025 Will the cheese business gross margin improve as it ramps up, and what margin should we expect once ramped?

We expect improvement but won’t release a specific target. Early on, everything is inefficient, it’s essentially a startup. We’re producing cheese at a scale and with equipment new to us, very different from the old iGourmet.com business, which cut cheese for one customer at a time with a $100 average order. The first quarter’s retail business performance reflects this learning curve. Brady and I are deeply involved in every process detail to drive improvement. We’re confident gross margin and its drag on overall numbers will improve, but retail will always have a lower gross margin than our other businesses.

26/03/2025 Your company’s stock rose over 700% in two years. What’s the secret behind that success? How much was leadership versus AI decision-making?

I might be biased, but our success so far has been largely strategic and not AI-driven. The company was founded about 25 years ago by a chef who ran a restaurant consulting business. He realized there was value in monetizing his vendor network for solid ingredients, making it available nationwide. Early on, we partnered with US Foods, one of the largest food distributors, which focuses on basic, high-volume items but doesn’t carry unique specialty products. We complement their offerings by operating like a marketplace for specialty items they can’t justify stocking. Over the years, my predecessor made several poor acquisitions of direct-to-consumer e-commerce companies, which nearly sank us. For example, a meal delivery company bought in 2014 was sold for pennies 18 months later due to an unsustainable operating model. By 2023, we had lost $12 million on two consumer gourmet food acquisitions, which was disastrous given our market cap was only $12 million then. We did a deep strategy dive and concluded it would take years and more investment to make those profitable, so we sold or closed those entities and refocused on our profitable food service core. While we use AI extensively for tasks like writing press releases, earnings calls, and managing to-dos, strategy creation remains a human-driven process. Now, as we lean into growth, AI will play a bigger role.

15/05/2025 What financial metrics do you consider most important in potential acquisitions, and what makes targets attractive?

The most important metrics are sales and profit. For the acquisitions we made, we believed we could bring synergies they couldn’t achieve alone, though we didn’t include those synergies in the valuation, we paid fair value for the businesses as standalone entities. Our focus is on getting them back to growth and profitability. Beyond revenue and profit, strategic KPIs are crucial, such as how quickly we can scale Golden Organics’ catalog on US Foods to generate meaningful revenue and profit, how fast LoCo Food distribution can find new retailers, and the overall demand for Colorado-made products. These qualitative and quantitative KPIs will guide our pursuit of future acquisitions.

Operations

14/08/2024 Can you explain the 10-store test with the large national retailer involving gourmet cheese?

We have been working on this pilot for about 12 months, starting early in my tenure. Our goal is to have many opportunities in the pipeline, knowing many won’t succeed, but increasing the chances of a big win. This pilot leverages capabilities and supplier relationships from our igourmet business to implement a cheese business with the retailer. We physically take ownership of the inventory, cut and wrap the cheese, and deliver it to the 10 stores. The assortment is focused, unlike igourmet’s 600 varieties, which helps with forecasting, ordering, and storage. This focused approach aligns with our B2B strategy of building deep partnerships rather than broad marketing efforts. Retail shelf space acts as built-in marketing, reducing customer acquisition costs significantly compared to e-commerce.

14/08/2024 What is the delivery frequency for the cheese in the 10-store test, considering its perishability?

Currently, we deliver about once a week, but we have the capability to ship faster due to our e-commerce logistics. Our partner values that we can overnight products to avoid stockouts, which is critical for accurate measurement of the pilot’s success. Long term, we aim to move product efficiently through the retailer’s supply chain to minimize costs while maintaining availability.

12/11/2024 How did you approach leading the company through its financial crisis and what actions did you take?

I studied companies in similar situations to understand common challenges, especially that employees often don’t realize how critical the situation is, which hampers decision-making. So, I was transparent with the team about the cash constraints and empowered them to make the right daily decisions. We immediately froze all hiring, including an open executive position, to save costs. I leveraged my deep pricing experience from Walmart and General Mills to address margin erosion caused by inflation. When I joined in March 2023, we hadn’t raised prices despite rising costs, resulting in a 400 basis point margin decline year-over-year. We quickly implemented price increases, which led to a significant margin improvement in the second quarter and helped cash flow. Additionally, we scrutinized every expense, reviewing every check to cut unnecessary costs, such as ending an expensive printer lease and replacing it with a low-cost alternative, saving about $30,000 annually. This granular cost management was critical to stabilizing the business.

12/11/2024 How did you balance expense cutting with maintaining necessary spending during the early turnaround?

It was necessary to save expenses early on to set the right tone that we wouldn’t spend money unnecessarily and would be smart with resources. However, we didn’t cut off our nose to spite our face, we still invested in things that were important during that tough period. This approach helped us get through the early challenges without sacrificing critical needs.

12/11/2024 How has the board evolved since you joined, and what impact have new members had?

Since I joined, three new board members have come on, including myself and Brady Smallwood, my Chief Operating Officer, who also has a board seat. Brady and I have a strong partnership from years working together at Kroger and Walmart, and he has been instrumental in driving key projects, including the gourmet cheese business and the e-commerce sale process. Another new member, Denver Smith, is a long-term shareholder and activist investor who advocated for changes before I arrived. He’s been a fantastic partner focused on our long-term success. Overall, the board members are true partners who support me rather than dictate or push their agendas, which has been invaluable.

12/11/2024 Where does Innovative Food Holdings fit within the specialty food segment of the foodservice industry?

Foodservice includes all food bought outside the home, excluding grocery stores. The largest players are Sysco, Performance Foodservice Group, and US Foods, which I liken to the Walmarts of foodservice, they focus on broad assortments of basic goods at the lowest cost. However, specialty foodservice plays a distinct role, representing about 20 to 30% of the overall foodservice market, which is tens of billions of dollars. Specialty distributors carry a limited number of fast-turning items, but there’s a long tail of specialty goods that don’t turn quickly enough for them to stock. That’s where we come in: we act as a marketplace connecting many small purveyors, manufacturers, farms, fishermen, into a single platform that sells nationally through the big distributors’ websites. When a restaurant orders a specialty item not stocked by their distributor, the order routes through us to the appropriate distributor who ships directly to the restaurant. This tech-driven, capital-light model requires no warehouses or trucks on our part and scales efficiently with minimal investment.

12/11/2024 What other business lines does IFH have beyond the core marketplace?

About a decade ago, we vertically integrated by acquiring Artisan Specialty Foods in Chicago, our largest vendor, which remains a key supplier to our drop-ship platform. We also serve large customers like Gate Gourmet and LSG Sky Chefs, airline caterers, where we physically ship food to their kitchens nationwide. In some cases, we take ownership of inventory to better control flow. Recently, we traded out the e-commerce business and brought in a new retail business with a top 10 retailer, which will significantly increase throughput at our Pennsylvania warehouse. To support this growth, we are investing in automation and machinery to reduce labor costs per unit and handle the volume and speed required.

12/11/2024 How have you prioritized investments and divestitures to focus the company?

We’ve significantly streamlined the company, divesting or shutting down many non-core or unprofitable businesses, leaving four core entities. Our criteria were profitability and future potential. Many prior initiatives were losing money or flat with no growth prospects. Early on, I met with the team to stress focus and avoid chasing every new idea. For example, a gourmet cheese Advent calendar idea sounded fun but would have required months of work for minimal profit, equating to about $23 an hour for the team. We use weekly “laser focus” meetings where leaders commit to their top three priorities, ensuring alignment with our core strategies. This discipline has helped us concentrate on professional chef and retail businesses where profit and growth potential are strongest.

05/02/2025 What is the primary difference between the old Innovative Food Holdings and the new one under your leadership?

I’ve been CEO for almost two years now. My background is with big companies like Kroger, Walmart, General Mills, and SC Johnson. When I arrived, the portfolio had many stagnant or unprofitable businesses that didn’t fit the long-term strategy. We spent the first year cleaning up the profit and loss and asset base, selling or closing eight entities, including the consumer e-commerce businesses igourmet.com and mouth.com, which lost $12 million over five years. We completed the divestiture of e-commerce last fall, freeing up the core B2B specialty food service business to grow profitably and generate cash. Another big change is the launch of a large retail business, the first time we’ve sold products on retailer shelves. We announced this last summer and scaled it in Q4. While we haven’t released revenue numbers yet, it should be worth tens of millions of dollars and provides a new sales channel that leverages our assets, knowledge, and vendor connections effectively.

07/03/2025 What are the practical steps to harness these synergies?

he synergies are straightforward: capital investment is minimal, a card table, label printer, and boxes to get started on dropship. We’re reviewing assortments to prepare products for shipping. Historically, packaging was suited for local delivery, so we’re revisiting packaging, labeling, and branding, especially to promote the Golden Organics brand on other platforms. Much of their product is in large 40- or 50-pound bags, so we need to ramp up repacking operations to break those into smaller bags suitable for dropship. There’s a lot of logistics and tactical work ahead, but the team is excited and ready. This will be our focus for the rest of the year.

07/03/2025 Have you standardized pricing, distribution, and automation processes across acquisitions?

Not yet, but we’re in the process. Phase two is focused on building that playbook. These are still small businesses, so we’re cautious about overhead. We’re using headquarters personnel to create a pricing framework that acquisitions can work within to meet profitability goals. Brady mentioned using Asana to automate processes and handoffs, and we’re applying similar technology at the entity level to improve efficiency. Artisan’s sales team is a best-in-class model we want to replicate at Golden and LoCo, including designing incentive plans, regions, territories, and reporting structures. Our goal is to have a standardized package to implement quickly in future acquisitions.

We’re also upgrading data and reporting. Most small companies operated on QuickBooks with limited insights. We’re bringing in Power BI for automated insights to guide business leaders on priorities and efficiency. We want to maintain a local feel, our Denver-based leader Tae has deep local connections, while leveraging national scale, know-how, and technology. This year is about developing the playbook; we don’t plan more acquisitions soon because our focus is on execution.

26/03/2025 How did your cooking evolve, and what have you learned about ingredients?

I’ve always enjoyed cooking, but a few years ago something clicked, and I started making everything, from sushi to smoked brisket. It even surprised my family how far I went. I quote Sherlock Holmes’ attic theory: I created space to experiment, and now my family eats better, and the kids are past the chicken nugget phase, which is great. Cooking helped me appreciate the value of ingredients and how hard it is to find the right ones. I realized I often applied techniques to improve lower-quality ingredients, but when working with high-quality ingredients like a good steak, those same techniques could ruin the natural flavor. I had to learn to enhance rather than cover the ingredient’s taste. For example, I once tried to make a Roman pasta dish and had to find cured pork at an Italian grocery store because it wasn’t available elsewhere. There’s definitely a market for people who want to elevate their dishes.

26/03/2025 How does your AI system work with vendors using plain language?

Yes, vendors can simply tell the AI in plain English what they have, and the AI will process all their documents, populate our internal systems, and move the process forward automatically. It’s a practical and effective use of AI. Many companies expect immediate, massive ROI from AI, but that’s unrealistic. You have to start with small, manageable improvements, work with your team and culture, and evolve processes bit by bit.

03/04/2025 Why did the product catalog decrease from over 7,000 SKUs to over 6,000, and how will AI affect catalog growth?

Our catalog naturally flexes, vendors go out of business or exit drop shipping, while new ones come on. But the catalog decline last year was the number one driver of softness in our drop-ship segment. I’m now personally overseeing this business, and I’ve gone into what I call full “founder mode” to fix it. Our item creation process is ancient, designed in the late ’90s, and takes 6 to 12 months to onboard a vendor. That’s unacceptable. We lose vendors halfway through because it’s so painful.

We’re aiming for a two-week onboarding timeline. Imagine telling a vendor at a food show, “I can get you live on US Foods in two weeks.” That’s powerful. To get there, we’ve just signed with a SaaS provider using AI and computer vision tech. Vendors will be able to upload whatever they have, PDFs, Excel sheets, handwritten notes, and the AI will extract, structure, and validate their catalog data. It’ll fetch UPCs, manufacturer codes, and normalize everything for our systems.

This change alone could dramatically reverse last year’s decline. The same way a shrinking catalog pulled down revenue, a rapid expansion, driven by automation, should fuel real growth over the next couple of years.

03/04/2025 Why is the US Foods channel still in decline, and what’s being done to reverse it?

In addition to the catalog contraction, which I’ve spoken about at length, there were structural issues in our relationship-building efforts. We hadn’t added new sales reps in years. We also used to participate in dozens of US Foods division-level food shows and sales meetings annually. COVID disrupted all of that, and frankly, it never fully came back. That distance weakened relationships over time.

We’re changing that now. We've added field sales reps and re-engaged with US Foods’ divisional events. Our team is back on the road, actively participating, educating reps about our latest vendors and assortment. We're producing updated marketing materials and rebuilding those critical sales-side relationships. Combine that renewed effort with an expanding catalog and we have a clear playbook to turn this around.

23/04/2025 How do you manage vendor relationships, especially when U.S. Foods goes direct to vendors

That happens all the time, which is why we must always be the best at finding the next great vendor and product source. We see it as a sign we did our job well when vendors graduate past us. Our biggest concern is when U.S. Foods goes direct to a vendor, but we constantly hunt for the next great vendor. The food industry is always changing, with new trends and unique products, so there’s always a role for us to play.

15/05/2025 What lessons have you learned from recent acquisitions?

One key lesson is the importance of process. Small businesses often have founders wearing many hats and are overworked, leading to operational gaps like missed invoices. Now that these businesses are part of a public company, we must implement controls expected at that level. This has been more challenging than anticipated. We’ve identified about 15 core operational processes at the facility and created standard operating procedures for each. We track these daily with our president, which helps us make significant progress. Another lesson is that many decisions in small operations are made by gut, which we want to change. For example, inventory ordering was done by walking the warehouse and guessing what was low, with no formal forecasting or reorder points. We are building scalable tools to make operations turnkey, so future acquisitions will be easier to integrate with a full playbook covering order acceptance, invoice approvals, purchase orders, forecasting, and reorder points. It’s a learning process, but we’re confident we’ll get these businesses where they need to be.

15/05/2025 Can you describe the cheese fulfillment process? Is it standard for each store, customized, and are portions cut individually or at the store level?

A key value we add in our cheese relationship with Sam’s Club is central processing. All cutting, wrapping, and preparation happen centrally, so there is no in-store labor required to offer fresh-cut cheese. This centralization allows us to invest in machinery and automation to maximize efficiency and reduce costs compared to in-store processing. The retailers requested a fixed weight program, meaning each piece of cheese is exactly the same weight. Many retailers use a variable weight program, charging by the pound, but we have worked to reduce trim to meet Sam’s Club’s precise cut requirements. We distribute to their distribution centers, not directly to stores, which improves efficiency and helps us meet the cost structure they need.

Personal Questions

12/11/2024 What attracted you to take the CEO role at Innovative Food Holdings after leading a large e-commerce business at Kroger?

After running Kroger’s $10 billion e-commerce business, I was looking for something smaller that I could fully own end to end and leave my own stamp on. Innovative Food Holdings, at about an $80 million size, offered that opportunity. The company had strong, profitable foodservice operations for 20 years but had recently leaned into a consumer business that lost money and masked the foodservice profits. I saw a chance to clean up the structure, refocus on profitable businesses, and drive profit growth fairly quickly. It was an exciting chance to lead something on my own after 20 years in large corporations like Walmart, General Mills, and SC Johnson.

12/11/2024 What has surprised you about IFH since becoming CEO, both positively and negatively?

On the positive side, I was pleasantly surprised by the quality of the board. We have a fantastic group with deep food industry and capital markets experience, including our chairman James Papis. The board owns over 50% of shares, so they are true partners committed to long-term growth and patient strategy execution. On the negative side, I underestimated how dire the financial situation was when I arrived. We were burning cash hand over fist, and it felt like a four-alarm fire from day one to stabilize the company. Despite fewer resources and data than at a large company, the smaller size allows me to wear many hats and act more like a general manager, which is rewarding. We get to “eat what we cook,” meaning the daily work directly impacts results, without the bureaucracy of bigger firms.

12/11/2024 What cultural changes have you implemented since joining IFH?
When I joined, the company operated as disparate, independent entities like a holding company, which limited management oversight and growth potential. Leaders of different businesses often didn’t know each other. We launched a rallying cry called “One IFH” to foster teamwork and collaboration across entities. We encourage people to think beyond their own P&L and share opportunities across the company, like passing along a product that could benefit another business unit. Early on, we also established a consistent bonus program with clear metrics for the whole company to replace the prior discretionary and inconsistent system. This created alignment and a shared sense of winning or losing together, breaking down silos and turf protection. The cultural shift has been transformative.

12/11/2024 How has establishing a formal culture and corporate values impacted the company?

We had a fantastic first year where everyone received bonuses, which dramatically improved morale and collaboration. Recently, after completing the cleanup phase with the sale of AET, we held a company-wide town hall to instill a more formalized culture. We introduced a mission statement, vision statement, and ten corporate values. We launched “IFH University,” a monthly program where the entire company focuses on one value at a time, diving deep through discussions, TED talks, and reading assignments to embed these values into daily work and behavior. This structured approach is helping us pivot the company culture toward where we want it to be.

12/11/2024 Can you highlight a corporate value that exemplifies the culture you want to build?

This month’s focus is on an innovation mindset. We watched a video about how the Utah Department of Transportation revolutionized bridge construction by challenging assumptions and accelerating timelines. We encourage everyone, from cheese cutters to accounts payable, to constantly look for ways to improve efficiency and embrace change. When asked if working yourself out of a job is a risk, I said that’s exactly the mindset we want. Automating, innovating, and improving processes leads to promotions, raises, and recognition. We want to grow smarter every day, not just add headcount.

Another key value is “own the outcome.” Inspired by a Harvard Business Review article about leaders avoiding taking on others’ problems (“monkeys”), we emphasize that employees must take full ownership of their responsibilities and outcomes. We also use concepts from the book The Founders Mentality to reinforce that everyone should act like an owner, with no one else to lean on. This ownership mentality is central to how we want the company to operate.

12/11/2024 How receptive is the company to cultural change after so much operational and financial transformation?

The company has experienced significant change, so people are somewhat acclimated and hopefully open to cultural evolution. The recent initiatives and structured programs are designed to build on that readiness and deepen engagement with the new culture.

26/03/2025 Are you a good cook? What’s your cooking background?

I have no classical chef training, but I’ve always enjoyed cooking. When I was 19, I served for my church in Italy for two years, and being there sparked a passion for food and cooking. I used to arrive an hour early to dinners to learn how people made their dishes and made recipe cards from those visits. I now have a homemade recipe book from Italian grandmas who taught me how to make things from scratch. Most of my career has been tangentially related to food, but this role is especially fun because we focus on specialty foods, gourmet, higher-end, interesting items not available through typical channels. It’s a really fun place to work.

26/03/2025 How do you manage team buy-in and culture change with AI implementation?

We’ve been clear with the team that AI is not about eliminating jobs but accelerating work. People who did manual data entry will now focus on reviewing AI outputs and refining them, because AI won’t be perfect. This shift is very different from their previous roles. Getting the team excited about this evolution is crucial. We’ve emphasized that catalog growth is our top priority for company growth. We can’t just keep adding people to scale; that would increase costs and slow us down. The current process relies heavily on individual knowledge, which is not scalable. Training more people to do it consistently is impractical. So, culture management and winning hearts and minds are as important as the technology itself. Leadership plays a key role in motivating and guiding the team through this change.

26/03/2025 How did taking the risk to join a struggling company affect you personally? What sacrifices and mindset shifts were necessary?

I’ve had a risk-averse career, always with big companies that seemed stable. I’m the sole breadwinner for a family with three kids and a spouse, so risk is a big deal. When this opportunity came, I felt I had enough of a network to fall back on if things went badly, but it was still scary. In hindsight, I’m surprised I took the risk, but it’s worked out so far. I lean on several support systems, especially our fantastic board with strong capital markets and operating experience. Their balanced support and accountability have been invaluable. I’ve also been fortunate to bring on close friends as part of the management team, including my COO Brady Smallwood, whom I’ve worked with for over a decade, and our CFO Gary Schubert, whom I knew from Walmart days. It’s a team effort, not just me.

26/03/2025 Is the idea of a visionary CEO a myth, or do leaders just make the right calls at the right time?

I think it depends a lot on the industry and business model. I don’t see myself as a tech startup CEO who’s going to change the world. This is a company in a very old-school industry where we have something incremental and differentiated enough to build a compelling business, but we’re not inventing the future. For those types of companies, you probably need a visionary CEO. But in many traditional industries, the biggest growth opportunities come from improving long-standing business models. That’s what’s fun here, taking a business model that doesn’t really exist today and inserting it into an industry that’s been doing things the same way for a long time.

26/03/2025 How did you rebuild leadership and culture at the company

When I started, there was no clear leadership team. I had to pick and invite people to form one, and they hadn’t even met each other before. The company was siloed and disconnected. We launched a rallying cry called “One IFBH” to break down walls and encourage collaboration and idea sharing. We created a company-wide incentive program focused on total company metrics rather than individual goals to foster teamwork and avoid turf protection. We also started “One IFBH University,” a monthly town hall where we dive deep into one of our 10 company values, assign homework like readings and TED talks, and have employees share learnings in a company chat. This helps uplevel our culture and how we work together.

03/04/2025 Why did you decide to join IVFH, and what trade-offs did you weigh before making the move?

Yeah, really good question. If you look me up on LinkedIn, you'll see my career has mostly followed a pretty risk-averse path. I spent 20 years in large companies, General Mills, SC Johnson, Walmart, Kroger, and that gave me excellent training, exposure to top-tier leadership, and a strong sense of how businesses should be run: HR, FP&A, goal setting, incentive structures. Over time, I developed a well-rounded skill set, especially after completing my MBA at Duke, which deepened my financial understanding.

I wanted to apply everything I’d learned in a setting where I’d be fully accountable. It took me nine months to find the right opportunity to leave Kroger, where I was leading a $1 billion e-commerce business growing at triple digits due to COVID. IVFH wasn’t my original target; I was actually looking for something larger. But when I looked deeper, I saw a profitable B2B foodservice core, even though the company had major issues: years of losses, public investor criticism, and failed consumer-facing e-commerce acquisitions like igourmet.com and mouth.com that had lost $12 million over five years.

My hypothesis was that we could shed the unprofitable pieces, refocus on our strong B2B segment, and drive a turnaround quickly. The downside was leaving behind the stability and perks of big corporate life, but the upside was the chance to truly lead. I haven't regretted it for a second. It’s been an incredible journey, especially with the team we’ve built. My longtime colleagues Brady Smallwood (COO) and Gary Hubert (CFO) joined me here, and we’ve got a deeply aligned board that owns over 50% of the company. The ingredients for transformation are all here.

03/04/2025 What are some of your favorite mistakes as CEO, and what did you learn from them?

One of the most important lessons I’ve learned is around team building. I’ve made the mistake of waiting too long to make personnel changes. I tend to give people a lot of runway, but when someone clearly isn’t performing or aligned, the longer you delay, the more it costs the business. Every leadership change we’ve made has unlocked massive improvement immediately. The key is acting sooner, even when it’s hard.

Another big area was investor communications. At a large public company like Kroger, you have full IR and PR teams. Here at IVFH, it’s just me and my CFO. We write our own press releases, run our own earnings calls, and make all the messaging decisions. That’s been a steep learning curve, understanding what investors actually want to hear, how to explain the strategy in ways they can track, and how to deliver clarity when all they get are four quarterly updates per year. I’ve had to get very intentional about how we tell our story.

03/04/2025 Have you ever had to stop and learn something entirely new in this role, any technical or strategic gaps you had to close fast?

Absolutely. AI is one of them. It’s new for everyone, and we’re applying it everywhere, from drafting press releases and earnings call scripts to streamlining vendor onboarding. But it’s not just about using tools, it’s about continuously learning which models are best for which tasks and how to increase personal leverage. I don’t even have an assistant; I use tools like Calendly and AI apps to manage everything from scheduling to research.

Another major learning curve was legal. I had no background there, and I was immediately dropped into a major litigation process when I joined. Since then, I’ve had to get fluent in contracts, SEC filings, and legal workflows. You can’t read every document, so I’ve learned how to scan effectively, what to delegate, and how to build trust with legal counsel. And yes, I’ve used ChatGPT more than a few times to make sense of dense legal text or prepare responses. Legal’s not glamorous, but for a CEO, it’s non-negotiable.

03/04/2025 Where do you see yourself in 10 years?

I took this job with the full intention of being here for the long term. My goal is to help build IVFH into a billion-dollar revenue company. It would be incredibly fulfilling to look back and say, “Look what we built together.” That won’t happen in two or three years, it takes meaningful tenure. And honestly, this is the most fun I’ve ever had in a role. Yes, I report to the board, but I don’t have a boss telling me what to do every day. We move fast, we make decisions with speed and ownership, and we live by one of our values: “we eat what we cook.” That kind of autonomy, paired with accountability, is exactly where I want to be for the next decade.

03/04/2025 What do you enjoy doing outside of work?

I have three kids, two teenage boys and a six-year-old girl, so I spend a lot of time split between sports practices, school events, and playing Barbies or swimming with my daughter. I live in St. George, Utah, near Zion National Park. We spend a lot of time outdoors, hiking, skiing, and exploring. There’s a ski area about 90 minutes away that we love, and we take advantage of that often. I travel quite a bit to manage the business, but when I’m home, I make the most of the family time and the incredible landscape around us.

03/04/2025 Are you a fan of the Utah Jazz?

Not really anymore. I was a fan during the John Stockton and Karl Malone era, but since then I haven’t followed them closely. I do follow college basketball though. I went to BYU for undergrad and Duke for my MBA, so I’ve been following both programs closely. It’s been fun to see BYU do well in March Madness this year, and Duke is back in the Final Four, so I’ve definitely been locked in on that.

03/04/2025 Who are your role models, and why?

I’ve had a lot of influential mentors, especially during my time at Walmart. Some of the mid-level leaders there taught me everything from strategic thinking to people management. One standout was Greg Foran, who was CEO of Walmart U.S. at the time. He’s now CEO of Air New Zealand. Greg led by asking questions and actually listening, so many leaders don’t do that. I learned a lot just watching how he built trust and alignment.

Outside of people I’ve worked with, I’m a huge admirer of Elon Musk, setting aside politics, for how relentlessly he drives execution and innovation. I’ve read every biography on him. He doesn't accept "no" as an answer. I love the story where his team said it would take six months to move servers, and he had them do it in a weekend. That kind of bias for action is inspiring. I also really enjoy historical figures like Ben Franklin. He was an inventor, thinker, and innovator ahead of his time. His mindset and adaptability are still highly relevant today.

03/04/2025 How often do you check IVFH’s stock price?

Way too often. My leadership team gives me grief about it. It’s like a minute-by-minute scoreboard, even though we’re only reporting quarterly results. I try not to assign too much meaning to short-term swings, especially in a thinly traded stock like ours, but it’s hard to ignore. When it’s going up, I tell myself it’s because we’re doing everything right. When it’s going down, I blame it on one random seller and say it means nothing. But yes, I check it more than I probably should.

Other

26/03/2025 Can you share an example of a specialty product you offer?

I recently ordered Alaskan black cod from a fisherman in Alaska. It’s considered the new Chilean seabass but more sustainable because it matures in one year versus 15 for seabass. It’s a delicate, flaky white fish that takes on flavors well and is popular in top New York restaurants. It arrived overnight, perfectly packed and protected. Because we cut out middle distribution, there’s no extra markup beyond the fisherman and us. I’m sold on it and plan to start ordering more.

26/03/2025 Do you offer direct-to-consumer sales?

We’re currently testing a consumer-facing site called Harvest Chef’s Market. It’s in early stages and offers products in large quantities, so customers need to be ready for that. It’s something we’re exploring to give consumers access to our specialty products. Managing risk as a leader means building this kind of strong, aligned team and culture.

26/03/2025 Can you share some unique ingredients you enjoy and their stories?

I’m into honey as well. I order special honey from Tasmania, which involves a complex journey, flying to mainland Australia, then a small plane or boat to Tasmania, and another special plane to the mountains of Tasmania to get it. It’s been used by Gordon Ramsay in some dishes and tastes unlike anything I’ve ever had. A small jar costs about $20, but it’s incredible. I also learned about bitter honey from Italy, which was traditionally used to coat lamb. When cooked, a chemical reaction occurs that helps tenderize the meat. I love discovering and using unique ingredients like these.

Sources

Innovative Food Holdings Talks on Recent Acquisitions in Food Distribution Space & 2025 Focus

Innovative Food Holdings Presents at MicroCap Leadership Summit 2024

From Kroger and Wal-Mart to Running a MicroCap Company with Bill Bennett, Innovative Food Holdings

Bill Bennett: $IVFH, Growth Stage, Expansion Plans, Acquisitions, Mistakes | ValueHunt #46

DO NOT FLUSH LEADERSHIP: AI, Risk, and the Future of CEOs

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