How the food company Two Chefs on a Roll grew up, and really started growing.
Two Chefs on a Roll has two things in common with Willy Wonka's candy company: a business model that depends on secrecy and one hell of an impressive plant tour. Over the past few years, representatives from some of the country's largest food companies have submitted to the twin indignities of hairnets and nondisclosure agreements in order to explore the company's Carson, California, factory, which is a showplace of agile manufacturing. Rich green cilantro hummus is churned in liquefier as tall as a man, and vivid red tomato sauce burbles in great vats suspended from a deck that looks like something an oil company might erect in the North Sea. Employees at satellite quality assurance stations measure salt levels and viscosity against metrics produced by a half-million-dollar computer system. Each room in the factory announces its purpose with a different powerful aroma--garlic, cumin, chocolate--and the scents change almost daily as new items are introduced and lines swapped around.
In other rooms, the company's human taste buds--chemists, food scientists, and chefs--labor amid a motley assortment of ovens, giant mixers, and other equipment meant to replicate the contents of clients' kitchens. The goal: to devise gold-standard products that send eyeballs rolling rapturously, and keep them rolling even when recipes are multiplied a thousandfold. On one recent afternoon, R&D manager Dan Fleischman is patiently testing the 66th iteration of creme brulee for a restaurant chain that demands both convenience and a luxurious "mouth feel." "Instead of making it fresh and baking it, we've given them this concept of having it frozen--all you have to do is heat it in a pot, pour it into a ramekin, put it into the refrigerator," says Fleischman. "So I'm working with different thickening systems, trying to get the texture I want." (Iteration 68 eventually won approval from both Fleischman and his client's executive chef.)
Such chefly creativity hasn't stopped Two Chefs from becoming a high-performance operation. The company manufactures a million pounds of products a month, in as many as 120 distinct SKUs. In one week it produces more than 100,000 pounds of dips and sauces for a major national food retailer and 50,000 pounds of customized sauces for two casual-dining chains, each with more than 250 restaurants worldwide. (Two Chefs is a private-label manufacturer and so does not name its clients. The customers approached for this story would not discuss the relationship.)
Almost everything the company makes it also develops--quickly. Operating in a notoriously trend-driven industry, Two Chefs has occasionally taken a product from concept to commercialization in as little as four weeks, although three to nine months is more usual. And its success rate for new products (success being defined as achieving a significant life in the marketplace) is 70 to 80 percent. In five years, the company's revenue has tripled to roughly $40 million, while head count has remained stable at about 200. Production has doubled, and the executive team has grown fat with pedigreed talent.
Some days, Two Chefs' founders find it hard to believe that this exceedingly capable grownup is their baby. The business looked very different back in 2000, the year Lori Daniel and Eliot Swartz--the eponymous two chefs--came to grips with the need to become two chefs and a CEO. With only some trepidation about yielding absolute control of their business and their destinies, they hired Jeffrey Goh, who as chief executive has transformed the company. He has recruited people with blue-chip resumes, mandated more selectivity in projects, and implemented the kinds of systems and processes he learned while introducing products such as Head and Shoulders and Cheetos to China. "Systems and processes," of course, is code among entrepreneurs for "the hard, boring stuff I have to do to grow."
Under Goh's leadership, Two Chefs has become adept at execution on a large scale. Meanwhile, Daniel and Swartz have been freed up to do the thing they love--which by the way is also the thing they do that most benefits the business: think and act like chefs. Founders often worry that hiring professional CEOs will leach the souls from their enterprises. But Daniel and Swartz found that ceding control of day-to-day leadership left them better able to protect the culinary creativity that was pretty much all they had going for them when they started.
And Two Chefs has no choice but to continue to be creative--its customers are also getting bigger and so require from their supplier infusions of innovation as well as efficiency. That is just the balance that is implicit in the company's name, which nods to both the founders' native artistry and the company's growth. (It is expanding 20 to 25 percent a year, on track with its five-year plan.) A largely right-brain business--creative, conceptual, opportunistic--has grafted on a process-oriented left lobe with minimal sacrifice of its goals and identity. How it did so--and how its founders found their place in the new order--is instructive to any company hungrily eyeing the next level.
First, the chefs. Lori Daniel and Eliot Swartz are foodies by nature (his parents owned delicatessens near Boston; her grandparents founded a series of candy stores in New Jersey) and by nurture (both trained at the prestigious Culinary Institute of America in Hyde Park, New York). In the early 1980s the pair, then recently married, fetched up in Redondo Beach, California, where they cooked at a California-style restaurant and debated starting a business selling wholesale desserts to hotels, caterers, and other chefs. In 1985 they took $13,000 of their $20,000 in savings and did what so many entrepreneurs had done before them: They traveled to Europe and spent four months eating cake.
"Guests at the restaurant were saying, 'Have you ever had patisserie in France? Have you ever had strudel in Germany?" says Daniel. "I needed to know what we were missing." The continental offerings did not prove intimidating. "The Europeans didn't have anything on us," says Daniel. "We realized we should be proud of our cupcakes and layer cakes and puddings. We decided to go for it."
Home from Europe, Swartz went back to sous-chefing to provide an income, while Daniel baked from 2 p.m. to 10 a.m. in the kitchen of an Italian restaurant that was open only for lunch. Her customers included restaurants that wanted to enliven their dessert menus and caterers serving Hollywood clientele. Daniel gave everyone something different, from a pecan pie as tall as a four-layer cake to miniature truffle cakes baked in geometric shapes. Photographs of those early concoctions adorn the hallway of their current factory, each framed in a gleaming cake pan or pie plate.
