Ready to franchise? How do you know? Dana Knowles of Taste of America shares her experience with different distribution channels and the decision to franchise.
18 years ago, Arkansas native Dana Knowles and her partner Alicia Vañó, decided to open an American supermarket in Madrid, Spain. What began as an alternative to carrying over groceries in her suitcase (namely cheerios and tortillas) has evolved into a powerful brand that is continually reinventing itself. Taste of America is now not only the place US Expats go to for Halloween candy and Peanut Butter, it has become a lifestyle shop and an ambassador for yummy things from the USA.
Womenalia visited the place where it all began and chatted with Dana about the decision to franchise, unearthing great advice for those who are looking to expand their business.
The Taste of America Customer
Surprisingly, 60% of Taste of America Customer's are well-travelled young Spaniards who like to spend time in the kitchen experimenting. The curiosity and interest generated for American products as seen in films and during trips to the States have proven to be the main generator of traffic in the shops. When they opened their first shop in Madrid's exclusive Salamanca neighborhood, many had never heard of many of the products.
60% of Taste of America Customer's are well-travelled young Spaniards interested in American products seen in films and during trips to the States.These clients are willing to spend a bit extra for authentic Americana. They want things that appear in the movies; items unique to the Spanish palate. In fact, Taste of America was the first to foresee the cupcake and baking craze that hit Spain two years ago, by offering an extensive range of cake decorating and baking items as people began spending more time in the kitchen.
Ultimately, for Knowles and her partner, the customer is what drives their business. As educated consumers, they are very demanding, and this sets the pace and determines the selection. Knowles advises multi-brand shop owners to listen closely to their customers – it's important to visit the shops; stay connected those at the frontline as well as to the client. Being physically present in your venue gives you real time insight into what's working and what's not.
What does the Taste of America customer look for?
In the stores, novelty items such as marshmallows, peanut butter and Halloween candy sit on shelves alongside organic, sugar-free, gluten-free products. Taste of America only carries products that are "difficult or impossible to find," thereby consolidating their position as a niche supermarket.
When evaluating products for their shops, Knowles' #1 rule is to have "really good products that we believe in," balancing the craving for seasonal products with a broader assortment of foods that reflect "all the flavors and traditions of American culture." For her and her partner, this conviction has been their mantra. It has also made it easier for them to work with their providers.
They are sure to stock special candies that are hard to find outside the states, but also have healthy foods that are naturally made. Recently Taste of America hired Chef Carla, a Cordon Bleu trained chef, who teaches people how to use their products in a healthy way. At regular cooking classes held in shops, clients learn about the diversity reflected in American cooking beyond pancakes. "We try to combat the stereotype that all American food is junk food," says Knowles.
"We try to combat the stereotype that all American food is junk food," says Knowles.Dana has a particular penchant for Tex-Mex and Cajun food and so their first Taste of America branded product were hand-made Mexican-style Tortillas and tortilla chips, which she personally bagged in the early years. Star products include Pepperidge Farms cookies, pancake mix, syrups, peanut butters, Betty Crocker cake mixes, and now authenticTaste of America Bagels – hand made in New Jersey!
Redefining Niche: Breaking out of the boutique mold and into store-in-store corners.
Stocking classics such as Pepperidge Farms, Betty Crocker and Old El Paso has led to numerous exclusive distribution rights for Taste of America. It's comforting to know that every time you buy Mint Milano Cookies in Spain, it's gone through Knowles and her partner, who quickly saw the opportunity to expand on their business model by gaining exclusive distribution rights to these popular items. They gained the trust of their vendors with their rigorous internal processes.
As a specialty supermarket, Taste of America is subject to some stringent Health Regulation Rules. It's no secret that European gastronomy is remarkably different. Customs probably has a field day over all the confiscated cheese and cured meats European expats try to bring over in their suitcases, their offices overflow with the smells items such as camembert to prosciutto. So it's only logical that the laws be equally stringent in the opposite direction.
Plus, while coveted European food such as Jamón Serrano from Spain is banned for the old fashioned farming techniques used to produce it, American food is considered unhealthy and impure. Foods with added coloring and which go over established percentages of preservatives are not allowed into Europe. Knowles and her team aim to change this perception.
When importing food items, having a Biologist on your staff will make sure your products meet the required norms quickly and easily. It's important to avoid surprises when you have multiple shops waiting for their deliveries.
The legislation has meant that Knowles and her partner had to learn not only about the law but also gain an in depth knowledge about their products – which is not necessarily a bad thing. Being knowledgeable on a detailed level with their products meant that they developed very close relationships with their producers.
While Knowles got offers to franchise from the beginning due to their well-designed logo and highly organized structure, it took 15 years to decide to go ahead with franchising. The decision came with a fundamental shift in their philosophy: "In order to get out structure up to speed to be able to franchise, we had to make a lot of changes," says Knowles. This meant elevating their logistical offering and services to be able to ensure a continual flow of products to more than their 3 proprietary stores.
Challenges to franchising:
1. Marketing Beyond Word Of Mouth –
Prior to franchising, Taste of America's clients were won almost exclusively through the word of mouth buzz. The decision to Franchise meant that they had to make sure the client base was extensive enough to support all the shops. They launched a huge marketing campaign to coincide with the openings.
"There must be harmony at the corporate level in order for them to transmit that to all employees."
2. Communicating Corporate Identity –
It was very important that Taste of America retain the essence of who they were. It was a project begun by two friends who found a niche, and now it was going to evolve to something bigger than their initial dream. But they wanted each shop to have the same feel as their original shop. They are very choosy when it comes to accepting a Franchisee, it has to be someone who shares their vision and who will accept them being very involved. Most importantly, Knowles cites "There must be harmony at the corporate level in order for them to transmit that to all employees." Knowles and her partner frequently visit the franchisees and make sure to generate an inclusive culture so that they feel that they are an extension.
3. Establishing A Sustainable Business Model –
In order to support the needs of their franchises and to make sure they were being served with undisrupted service, they had to make sure that they had all their technical certifications, health regulations up to date, control their costs and have the logistical infrastructure to support that. They had already established exclusive distribution rights for many of their star products, so they were able to take advantage of those relationships and work with them to create private labels and centralize product offering.
Knowles has also found that Franchising has some very clear benefits for her structure:
1. Local Perspective –
The Franchises not only offer a unique perspective, they provide valuable local insight into other markets. And they are the eyes and ears on the ground in other markets.
2. Infrastructure & Financing –
Franchising is a good alternative for those who want to grow but are unable to invest all that is needed to open a new venue.
3. Continual Feedback –
Having another perspective from other managers invested in the company, helps Knowles stay at the cutting edge. This input informs her decisions and allows her to be closer to a broader range of clients.
For Dana and Alicia, Franchising was the natural next step in the evolution of their company. They had already grown through expanding their distribution channels and with the store-in-store concept at local gourmet supermarkets, and now they were able to have more store fronts to build their brand upon. And now 17 more Taste of America shops have popped up across Spain in less than 3 years.
The Road Ahead
Franchising has led Knowles' team to learn about new marketing tools and to rethink their strategy. They are committed to becoming a lifestyle brand, to educating people about American culture, (in particular to help people the healthy side of American food), and to building a community of people who are interested in good and original food.
For the video interivew, click here.