An indepth case study on Amy’s Kitchen

The first recipe, hand-made pot pies Dec’87²
PHOTO: Courtesy of Amy’s Kitchen

Amy’s Kitchen is a ‘home kitchen’ start up based in Santa Rosa, California – that has grown into an established food brand. Amy’s now serves millions of global customers with organic, ready-made frozen meals.

In this article you will learn:

• How Amy’s started
• How they funded the business
• How it grew, evolved and matured and where it is today
• You will also find great inspirational lessons hidden throughout the storyline that you can start applying today.

Everyone’s journey in business is different but there are certain universal principles that you and I can apply to current and future projects. You will find plenty of inspiration as you read through Andy and Rachel’s story.

Absorb the lessons that you can, begin implementing them and you will start to see results. Make sure you read till the end and enjoy the full story.

The idea

In September 1987, Andy Berliner stumbled over an opportunity that would change their lives. Andy’s wife Rachel was pregnant with their first child Amy. Rachel was bed ridden so they decided to look for some healthy ready-made vegetarian meals in their local organic store.

Andy struggled to find a nice meal and suddenly saw that as an opportunity, they saw a gap and they have been filling that gap ever since. From their first home made pot pies, Amy’s Kitchen now generates over $500million in annual revenue with over 2,400 employees. And it is still family owned. Oh, and Amy – she is all grown now!

Amy’s Kitchen as we know it today

From that first pot pie to over one million meals a day, Amy’s Kitchen, a family-owned and privately held. The company specialises in the manufacture of organic and non-GMO convenience and frozen foods. Reported annual revenue of $500million and 2,400 employees.

Today, the company produces more than 250 foods of its own recipes, completely made from scratch in its own kitchens using specially sourced organic ingredients. Products range from burritos, soups and sauces, to pizzas and whole meals.

Amy’s bold differentiation is that it’s a like a home kitchen, just bigger. Its underlying motto is that while other companies manufacture food, Amy’s cook it.

How it all started – the founders of Amy’s Kitchen

It was founded in 1987 by Andy Berliner and Rachel Berliner, formally incorporated in 1988. It took its catchy name Amy’s Kitchen from their newborn girl, Amy – she is now a mother herself!

The company is headquartered in Santa Rosa, California, USA. It is reported to have revenues exceeding US$500million as it now expands into the fast-food ‘drive-through’ retail model which will complement its ever-growing international footprint.

Andy has a science background with degrees in biology and psychology. Rachel studied art and worked as a physician’s assistant. They were strict vegetarians who believed in growing their own food.

Andy and Rachel Berliner, Amy’s Kitchen founders
PHOTO: Only Organic

Eating habbits had to change as Rachel got further advanced into her pregnancy. But the clear lack of ready-made vegetarian meals that were natural and organic ended up being a huge blessing in disguise for the Berlingers. They had a hunch that if they were struggling, there were probably other families who were also struggling with wanting to eat healthy but lacked the time to prepare healthy meals every day.

That’s how it all started. They decided to work on a vegetarian pot pie which became their much loved signature product.

The back story before the brand

Rachel comes from a vegetarian background. Both her parents were keen vegetarians who grew a lot of the produce they ate in her childhood. It was all organic, years before organic food was even a thing. Although she personally didn’t take up the vegetarian lifestyle until much later in life.

Andy was also a vegetarian. They both loved to grow their own organically produced food and eat fresh right from their garden. But Andy was not much of a cook. So when Rachel got too heavy with the pregnancy around that 7 month mark, Andy started looking for a way for them to keep eating healthy. But all the frozen meals he found at the local supermarket and local organic shops didn’t taste that great. The couple says it all tasted a bit like eating cardboard!

The couple already knew it was a huge struggle to eat out at restaurants because not many eating places had vegetarian meals on their menus. They figured there would be other people facing the same dilemma and they began looking at the idea as a possible business opportunity.

With a baby coming, the Berliners needed a way to earn some good income. Making organic vegetarian frozen food looked like a good way to earn a decent living while raising a family.

So, it was off to mums.

Developing and launching the first Amy’s Kitchen product

Rachel’s mum Eleanor helped work on their first vegetarian pot pie. It took hours and hours of testing and tasting until they finally got it right, it was a yummy ‘veggies and tofu’ recipe.

Rachel’s mum Eleanor, with baby Amy Berliner, Feb’88²
PHOTO: Courtesy of Amy’s Kitchen

There was a health food show taking place in March 1988 over in San Francisco, so they targeted this as their testing launch pad. They made a batch of 100 pot pies by hand and on the first day of the show they received orders for their pies from natural food stores.

They had no bakery to bake from so they found a local bakery who agreed to bake the pies for them. It also had an old kitchen that Andy and Rachel used as their temporary office.

Sourcing natural organic produce was not easy at the time. The Berliners eventually found a combination of local and interstate independent producers who supplied them with fresh and frozen organic vegetables in bulk.

As systems fell into place Amy’s began expanding and selling their pot pies around the country.

Amy’s vegetable pot pie⁷
PHOTO: Courtesy of Amy’s Kitchen 

How they raised capital and funding for their start up

The couple didn’t have much money to get started with. They borrowed some funds against Rachel’s car, sold a few of their prized valuables, and that helped them come up with $20,000 to get their food business started.

But once that initial capital run out, the Berliners needed more funds to keep going. However, almost every bank they approached denied them credit, until their local bank eventually accepted their loan application for $20,000 which helped the couple continue on.

Facing eviction, and building production capacity in the early days

As word got out, the company orders started to outgrow the production capacity of the bakery they were using. So they were asked to move out of the bakery due to lack of capcity, this was just a few months after their launch. After failing to find an alternate bakery space they renegotiated with their tenancy with the bakery by agreeing to convert the kitchen space they had previously used as an office into their own dedicated space inside the bakery. As well as hiring their own team of five bakers plus the two of them and Rachel’s mum – business was cooking again.

Rachel Berliner with the daughter⁷
PHOTO: Courtesy of Amy’s Kitchen    

Figuring out how to automate and improve production

While the team was great, it was a big effort producing everything by hand, only managing a few hundred pies a day and on the flip side, achieving consistency in the ingredient mix for all the pies was a huge challenge without automation.

Andy had the guts to call up a long-established manufacturer of frozen meals (Swanson), spoke to one of their engineers and they helped him understand how their machines and processes worked to achieve the consistency they were after.

This information helped the Berliners figure out how they could improve their manual system, so they improvised using two additional employees for their assembly line. But production really got going once they got their hands on a second-hand pie making machine which improved their capacity to around 2,400 pies a day.

The evolution of the brand

The couple talk about how at the beginning they just thought it would be a small company that just made pot pies, they did not set out to create the large company that Amy’s is today.

From the company’s inception the Berliners determined that they would only use organically grown fresh produce, using real food and real ingredients, not manufactured derivatives. And the founders believe that is why their food tastes good, and customers appreciate that.

This philosophy was challenging because it was not easy to source organic ingredients especially back when organic certification was not really a thing. But still Rachel and Andy built a model of working with their local farmers to get them to grow the organic produce that they needed, a model that was not common back then but is still alive and well today. In fact, some of those early farmers are still producing ingredients for Amy’s.

Amy’s is an award-winning pioneer of today’s organic food culture and the global movement towards an organic planet.

Dealing with crisis – their first real kitchen disaster

In their second year of business, the company was happily selling pot pies around the country which was a great achievement over a short time. Disaster visited the Berliners during this expansion period, their freezer died. They had thousands of pies in the freezer, they all started to thaw at the top, but they didn’t look like they had been damaged, so they went ahead and shipped them.

But distributors were calling soon afterwards, complaining about mouldy pies that had turned black on top. It was crisis mode. The whole batch had to be thrown out and replaced – very costly for a young company. The good news is that the company’s reputation survived.

Exponential expansion

Expansion in Amy’s Kitchen
PHOTO: JAMIE LUSCH/ASSOCIATED PRESS
Wall Street Journal

While the brand had gained a lot of traction, they were still waiting to expand into the supermarket arena and it was not until the late 1990’s that things changed. When Kroger, the United States’ largest supermarket by revenue introduced frozen health foods, the whole landscape changed and Amy’s saw their sales grow by over 70% to over US$30million in 1998 as a number of large supermarkets started ordering Amy’s frozen food products.

Amy’s Kitchen in Pocatello
PHOTO: IDAHO STATE BUSINESS JOURNAL

US$30million in revenue within 10 years from a standing start was a great run, but that was only the beginning. Fast forward to 2017 and revenues were around US$500million.

Yes 30 years is a long time, but half a billion dollars in that space of time is an incredible feat and a great encouragement to every founder today that you can start with whatever you have, wherever you are today and just put your head down, keep facing your giants, keep moving ahead and only time will tell how far you can really take that idea.

Marketing

According to the Berliners, the company has grown without having to invest heavily into traditional advertising. Apparently, this has even impacted relationships with big box stores whose terms generally require a decent advertising budget for them to carry a manufacturer’s product.

Amy’s has managed to reach the market by being attentive to what the customers want and innovating new recipes and products around those customer desires. While not all product launches are profitable, Amy’s believes in prioritising customer demands first and letting profitability follow on.

 
Frozen burritos – Amy’s Kitchen Santa Rosa, California
PHOTO: Jeff Chiu/AP Photo

Rachel’s advice to fellow business founders is that if you’re going to do something you must find a niche and you focus on what’s not there. She says Amy’s success has been about looking around and seeing what people need.

Making organic soups

When Amy’s went into the making of organic soups, it was an idea that came about because Rachel realised that they were eating in-organic soup because the organic ones tasted horrible. And so they thought that maybe there were other people that believed in an organic diet but were eating in-organic food because it tastes better than the organic alternatives.

So, they made Amy’s organic soups!

And within a year they were the best-selling soups, because they paid attention to the market and using their great chefs and product development team, they created a product that customers love and enjoy.

Amy’s Kitchen, Santa Rosa, California
PHOTO: Glassdoor.com

Success philosophy

Listening to your customers, Amy’s Kitchen style

Amy’s success is predicated on their undivided focus and attention they have given to the voice of the customer. It’s a responsibility that Rachel advises founders not to delegate to other team members in the organisation. She says, if you are a business owner, you must be the one who reads the letters, emails, messages and feedback from your customers. She says it’s a role that she takes seriously as it connects her to the pulse of the business, the stories customers share continue to drive the future of Amy’s.

Customers have informed the company’s product development

Rachel talks about how certain mums would write to her asking whether the company could develop a macaroni and cheese meal because their kids loved mac and cheese, and so they did. The idea of creating new products like their rice-flour-based meals has also resonated with customers who are intolerant to wheat.

The Berliners put this all to listening to customers and not putting profit first.

Rachel shares how customers that might have severe medical conditions or on treatment find it easier to eat Amy’s food because somehow it agrees with them. Every age group seems to have their favourite at Amy’s Kitchen be they young, old or even little kids, Amy’s makes sure they are listening to each customer demographic.

This is the type of thinking and the philosophy that underpins success at Amy’s and it can work in any business, listen to the needs of your customers and find a way to meet that need, do it well and profits will follow.

Where to now for Amy’s Kitchen

In July 2015, the company launched the first Amy’s Drive Thru restaurant in Rohnet, California, serving vegetarian fast food with vegan and gluten free menu varieties. An additional two locations followed, and the company is reportedly continually evaluating expansion options as interest in the brand remains strong both locally and internationally.

Amy’s Drive Thru opened on Monday, July 20, 2015, in Rohnert Park.
PHOTO: Courtesy of Amy’s Kitchen

Business as a family legacy

Rachel and Andy have laid a strong foundation for this large family business. They are keen to pass it onto the next generation led of course by their daughter Amy who is now a Stamford graduate. And maybe later their grand-child Malachi may also have a say in the family business – at least that seems to be their plan.

The Berliners have consistently refused offers to sell the business, they believe selling the business and cashing up would be more of a burden, not knowing what to do with all the cash. Their daughter Amy is also committed to maintaining the business as a family-owned enterprise.

Learnings…

• Keep an open mind and be on the look-out for opportunities.
• Don’t look outside, you have everything it takes to achieve your big dreams and goals.
• Find a temporary solution to an obstacle while carving out a permanent answer, the key is to keep moving.
• Listen to your customers, create products that solve their needs and sales will follow.
• Stay true to who you are, put people before profits.
• You can make mistakes as you grow, time will compound your positive efforts, don’t give up.

‘Till next time.
@davismutabwa

———-

Sources:

1. https://www.onlyorganic.org/pioneers/andy-and-rachel-berliner/
2. https://www.amys.com/our-story/our-history
3. https://www.encyclopedia.com/journals/culture-magazines/berliner-andy-and-rachel
4. https://www.inc.com/magazine/201707/stacy-perman/how-i-did-it-rachel-andy-berliner-amys-kitchen.html
5. https://en.wikipedia.org/wiki/Amy’s_Kitchen
6. https://www.youtube.com/watch?v=5zvA56_o2ec&ab_channel=TurningGreen
7. https://money.cnn.com/2009/02/18/smallbusiness/amys_kitchen_startup_story.fsb/
8. https://en.wikipedia.org/wiki/File:Amy%27s_vegetable_pot_pie.jpg
9. https://www.wsj.com/articles/balance-of-power-shifts-in-groceries-1427414817
10. Idaho State Business Journal – Amy’s Kitchen in Pocatello
11. https://www.theepochtimes.com/amys-kitchen-hopes-to-start-construction-in-2016_1992033.html