The rich black soil and relatively mild climate of the Lake Erie shore historically supported many family farms until giant agribusinesses with fleets of refrigerated trucks undersold them into extinction. A cabbage is a cabbage, and if that cabbage is grown so cheaply in California that it can be trucked to Cleveland and sold there for less than a farmer in Huron is asking, the Huron farmer finds himself in trouble. By offering a range of products not available elsewhere, the Joneses freed themselves from the tyranny of the commodity market. They then realized that the efficient transportation system that had threatened their old livelihood could enable their new business to take off.
One of their best customers in Cleveland was the chef at the restaurant in the Ritz-Carlton Hotel. When he moved after five years to another Ritz-Carlton, in Phoenix, the Joneses didn't expect to hear from him again. But they did. "He called and said, 'You got us spoiled--we thought we could get what we wanted because California is so nearby," Lee recounts. So the Ohio farm took an order, packed it up, and sent it to Phoenix by Greyhound bus. As Lee continues the tale, "He called and said, 'Farmer, it's dripping out the bottom. You've got to do it FedEx (NYSE:FDX), like we do with fish." The Joneses learned quickly. Today 92 percent of their business is shipped by air. Of those deliveries, 87 percent is sent by FedEx, the rest by UPS (NYSE:UPS) or DHL. "We don't want to be 100 percent dependent on anyone," Bob explains. "A few years ago UPS had a strike, and their competitors would only take 20 percent above their normal volume with any customer." The Chef's Garden ships as far away as Denmark, Singapore, Hong Kong, and Tokyo. "Chefs are so mobile," Bob says. "The chef in Hong Kong was one of our good customers in New York." While still only 8 percent of the total business, the overseas segment is growing at double the rate of the domestic. Chefs who can afford to buy the best products often find them far from home. "A lot of buzzwords in cooking are 'local' and 'seasonal,' but swordfish from New Zealand that is FedExed sometimes is fresher than what I can buy at the Fulton Street market," says New York chef Andrew Carmellini, a longtime Chef's Garden customer.
Lee believes there is long-term potential in collaborating with a big company such as Birds Eye. "I do a presentation with microbasil," he says. "It costs $140 a pound, but two or three pieces enhance the value of the product for pennies."
Since the Joneses started the Chef's Garden, the opportunities for small farmers to grow high-priced specialty vegetables have been widely recognized. ("One university person in Ohio said you could gross $250,000 an acre in pear tomatoes," Bob grumbles. "What she didn't say was that an eighth of an acre would supply the whole Midwest.") The result is that the cycle from rarity to commodity is a mere three or four years. That is how long it takes for larger farmers to procure seed and determine the most efficient growing method. "Mesclun is a perfect example," Lee says. "You can buy a good three-pound case for six bucks from Costco (NASDAQ:COST). We do a version that's $30 a pound. Or radicchio--that was $35 or $40 a case 20 years ago; now it's six bucks. We don't want to compete on that level. We have a version with little individual heads. It's about product differentiation." The Joneses believe that their quality is unmistakably superior, but to retain a marketing edge, they must also continue to offer vegetables that are not available elsewhere. Every year, the Chef's Garden cultivates about 300 new items (many of them old varieties that years ago fell out of favor), of which some 10 percent will be judged worthy to go into production. Often the trials are of vegetables suggested by chefs, either varieties they have tasted in their travels or things they have dreamed up. Cooking at Café Boulud in New York, chef Carmellini asked for a haricot vert, or French green bean, to be picked at an earlier stage than usual. "You could almost eat them raw, they're so tender," Carmellini says approvingly. They became a very popular product, which the Joneses named after the chef who inspired them. "The first time I saw a salad with 'Carmellini beans' on an Alain Ducasse menu, it was very flattering," Carmellini says. Ironically, the beans are so expensive--it takes three men an hour and a half to pick a pound, for which the Joneses charge $70--that in his highly regarded but less pricey new Manhattan restaurant, A Voce, Carmellini can't afford to offer them.
The niches can be even smaller than that. To grow a supersweet melon that a chef had seen in Japan, the farmers had to remove all but one blossom on each plant, so that all the nutrients went into one fruit. The Chef's Garden charged $65 a melon.
The Chef's Garden sends out a monthly newsletter and biweekly e-mails to its 1,200 customers. Lee, the head marketer, is a ubiquitous presence at restaurant conventions and food-related charity events, instantly recognizable in his trademark blue overalls, crisp white shirt, and bright red bow tie. The Joneses won't talk about revenue, but they allow that they've had to keep growth down to its current level of slightly more than 20 percent a year. At one point, the business was growing at 40 percent annually and they couldn't handle it. As it is, the Chef's Garden dispatches 600 to 1,000 orders a week from its 225-acre farm. "You could pick up the phone and talk to a farmer, ask him to grow something, he would say yes, and boom, you had the product," says Lawrence McFadden, director of food and beverages at the Ritz-Carlton in Naples, Florida, explaining why he had become a loyal customer. "You were artisan to artisan. You say to Lee, 'I need some celery microgreens'--they're not really in existence, and he grows them. He customizes from your imagination."
