Friends of Branded!
Happy Saturday and I hope you had a great week!
The image & title above, of course, are from the movie Ghostbusters, the 1984 supernatural comedy directed by Ivan Reitman and written by Dan Aykroyd and Harold Ramis.
One could logically assume that with Halloween landing next Thursday, that such was the inspiration of this week’s edition.
Solid logic, but you’d be mistaken.
Yes, the image & title are from the movie, and yes, Halloween is next week (these are indisputable facts). But it’s not the joy of the celebration observed on the eve of the Western Christian feast of All Hallows’ Day and the beginning of the observance of Allhallowtide, the time the liturgical year dedicated to remembering the dead, that inspired this week’s theme (thank you Wikipedia for the help with that definition of Halloween).
This week’s theme is inspired by what appears to be a spike in outbreaks of foodborne illnesses that are impacting the foodservice & hospitality industry.
I bet you didn’t have foodborne illnesses on your bingo when you saw the stars of Ghostbusters in the image above!
First and foremost, while not perfect, I believe the Food & Drug Administration (“FDA”) does an outstanding job overseeing our industry. I feel confident in that statement despite the eyerolls I just felt as you read that last statement b/c outbreaks of foodborne illnesses are pretty rare. And in the category of maybe randomness on my part (although a surprise to no one), I feel equally positive about the Federal Aviation Administration (“FAA”), not that they’re perfect either, but b/c planes aren’t falling out of the sky and occurrences of failures are rare!
But back to the topic of foodborne illnesses (yes, a light topic for a Saturday morning read).
The CDC estimates that around 48 million people in the US alone suffer from a foodborne illness each year. This leads to approximately 128,000 hospitalizations and 3,000 deaths. It goes without saying that these numbers are substantially higher on a global basis, especially in regions with limited access to clean water, adequate refrigeration, and safe food preparation practices.
The most common foodborne illnesses are caused by bacteria like Salmonella, Escherichia coli (E. coli), and Listeria, viruses like norovirus, and even parasites.
The good news is that most cases are preventable with proper food handling, cooking, and storage practices, but contaminated water and food production issues can make foodborne pathogens hard to avoid entirely.
As an industry, here’s why we need to care, BIG TIME!
Take for example, the recent Boar’s Head listeria outbreak, the recall of over 7-million pounds of deli meats across the United States, 59 hospitalizations and 10 confirmed deaths. Boar’s Head shares have dropped 8% over the past 3-months and 20% year-to-date.
To be clear (and as highlighted above), I believe the US food system is SAFE, but that doesn’t mean consumer confidence can’t be shaken and the sales of Boar’s Head products have dropped noticeably as consumers appear to be opting for alternative deli meats in light of the health concerns (oh…and the lawsuits are coming with 3 more wrongful death suits having already been filed: Wrongful death lawsuits filed in Boar's Head listeria outbreak).
Just this week, McDonald’s had to take (my favorite sandwich) the Quarter Pounder off the menu at 20% of its restaurants after an E. Coli outbreak.
The McDonald’s outbreak proved to have knock-on effect with our friends at YUM! Brands Inc. as they withdrew fresh onions from some Taco Bell, Pizza Hut, and KFC locations “out of an abundance of caution.” Specifically, the company said it would “continue following supplier and regulatory guidance to ensure the ongoing safety and quality of [its] food.”
Below please find some of the most high-profile food-related illnesses at restaurants over the years.
· Wendy’s: pulled lettuce from sandwiches in its restaurants in Michigan, Ohio and Pennsylvania in August 2022 after some people reported falling ill.
· Chipotle: In 2015, Chipotle was hit by an E. coli outbreak that sickened more than 50 people and it temporarily shut down dozens of restaurants on the West Coast, but that was just the beginning. A month later, 30 Boston College students, including at least eight members of the men’s basketball team, complained of gastrointestinal symptoms after eating at a Chipotle restaurant.
· Taco Bell: In December 2006, Taco Bell ordered the removal of green onions from its 5,800 restaurants nationwide after samples taken by investigators appeared to contain a harsh strain of E. coli. The outbreak sickened at least 71 people in New Jersey, New York, Pennsylvania, and Delaware, with most of them hospitalized, according to the CDC.
· Jack in the Box: Four deaths and more than 700 illnesses in Washington, Idaho, California, and Nevada between 1992 and 1993 eventually were traced to undercooked Jack in the Box restaurant hamburgers contaminated with E. coli.
And here’s where the rubber hits the road!
The Food Safety Modernization Act (“FSMA”) section 204 places a renewed emphasis on preventive controls throughout the entire food supply chain. FSMA 204 requires the FDA to designate foods for which additional recordkeeping requirements are appropriate and necessary to protect public health. While there’s an immense amount of information available on FSMA 204, this is what you need to know, the act is transforming the nation’s food safety system by shifting the focus from RESPONDING to foodborne illness to PREVENTING it.
Congress enacted FSMA in response to dramatic changes in the global food system and in our understanding of foodborne illness and its consequences, including the realization that preventable foodborne illness is both a significant public health problem and a threat to the economic well-being of the food system.
According to the FDA, it finalized several rules to implement FSMA, recognizing that ensuring the safety of the food supply is a shared responsibility among many different points in the global supply chain for both human and animal food. The FSMA rules are designed to make clear specific actions that must be taken at each of these points to prevent contamination.
The combination of regulatory requirements and the demand by consumers for transparency has led to the dramatic expansion in the food traceability sector. There are now several hundred companies that provide digital solutions to ensure food traceability and compliance with the FDA’s Food Traceability Rule which again, has mandated advanced recordkeeping for high-risk foods.
Numerous companies are innovating in this space, including firms like Wholechain, which utilizes blockchain with Mastercard to provide end-to-end tracking, and OpsSmart, which integrates traceability data directly through QR codes. Other examples are Rfider and Mojix, both of which use IoT and data-sharing tools to track product locations, temperatures, and other critical information in real-time, creating a comprehensive view from production to consumer.
While I fully recognize that this is the Top of the Fold section and NOT the Shoutout section of the H^2, Branded is super proud to share our own portfolio company in the food traceability sector with our investment into Starfish Technologies.
Starfish is the “PLAID” of product traceability, which is to say it offers a connectivity layer providing trusted data sharing and interoperability across the industry.
For those not as familiar with PLAID, it’s a FinTech company that provides infrastructure to connect various financial applications with consumers’ bank accounts, enabling secure and streamlined access to financial data. PLAID was founded in 2013 and acts as a bridge between consumers’ bank accounts and the apps they use to manage their finances (such as Venmo, Robinhood, Coinbase, and Acorns). It allows users to link their bank accounts with these apps by using PLAID’s API, which enables sharing bank transaction data, balances, and other financial information in a secure and standardized way.
That’s what Starfish is doing, allowing food companies to continue using their existing technology solutions while enabling them to share traceability data with trading partners through their solutions. With Starfish, companies can share data with partners regardless of what technology they use, and the platform facilitates automated and secure data sharing.
For Branded, our focus continues to be on the breadth & depth of the foodservice & hospitality industry. Admittedly, much of what we’ve done to date has been in the restaurant and specifically ResTech space.
With this investment and partnership with Starfish, while restaurants are of course part of the federal mandate, we see the heaviest weight of the mandate first falling on the shoulders of the manufacturers, then the distributors and farmers. We believe the largest restaurant companies will take a leadership role (as they usually do) while the SMBs will be among the slowest adopters. The grocery industry is absolutely part of this mandate as well and similar to the restaurant segment, we expect the largest players in the grocery space will lead and the smaller ones will follow in due time.
As you can tell, there’s a great deal of interest by Branded in food traceability b/c it essentially represents food safety and security. No one should underestimate the trust our guests put on the food industry that we’re taking the necessary steps to ensure that supply chain is secure and that the food we consume is in fact safe. This trust can be eviscerated in a second and the cost to recover can be enormous.
I grew up on Boar’s Head deli meats and my young daughter now does as well. It’s heartbreaking to see the damage done to this company from the outbreak, but unsanitary conditions and the health & safety violations issues persisted over multiple inspections, indicating systemic problems with the plant’s sanitation practices.
At this time of great political divide and polarization, here’s something that’s not controversial; the expectation that our food supply system will do everything possible to protect the health of the public. While this is universally important, it’s essential for protecting groups that are vulnerable such as young children, the elderly, pregnant women, and those with weakened immune systems. It’s in these more vulnerable groups where even mild contamination can lead to serious complications.
As Branded’s “Finance Guy,” I want to hammer home that food safety supports economic stability as recalls and outbreaks have significant financial consequences for companies and industries.
I’m excited to be on this journey with our new partners at Starfish. I believe this company can do important things for the foodservice & hospitality industry and Branded, along with the other stakeholders at Starfish, can also do well by bringing a "layer-zero" solution to a most important issue that represents a most meaningful challenge to our industry.
It takes a village.
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Last week I was proud to give a shoutout to our friends at EMERGING, one of Branded’s favorite strategic & value-added investors in connection with its partnership with one of our portfolio companies, Leasecake.
This week I want to give a shoutout to another strategic most and value-added investment platform, our friends at Savory Fund and its sale of Mo’ Bettahs.
When we think about value-added investors focused on driving emerging brands, Savory is among our favorites. This Savory crew helped take Mo’ Bettahs from 6 units in 2017 to 56 units at the time of the sale.
Mo’ Bettahs was acquired by private equity firms Blue Marlin and Trive Capital.
When I write about the hospitality industry being among the most democratic industries, I believe the story of Mo’ Bettahs founders is an ideal example.
The company was founded in 2008 by Hawaii-born brothers Kimo and Kalani Mack. These gentlemen never expected to own a restaurant. They were two city bus drivers from Hawaii who knew how to cook, how to eat and how to work.
As a testament to selecting the right partners, in connection with the sale of Mo’ Bettahs, Kimo and Kalani Mack said of Savory, “we wouldn’t be here without our Savory partners, Andrew and Shauna Smith. They have been by our side at every step of growth, all while respecting and honoring our experience and heritage. We are honored to continue the journey with them as we welcome Blue Marlin and Trive to the Mo’ Bettahs’ fold. Their partnership will enable us to share good food and ‘spread da aloha’ across the mainland for years to come.”
Mo Bettah’s is a leader in the Hawaiian category and is a truly exciting fast casual brand. Schatz and I had the privilege of dining at Mo Bettah’s on a visit to Utah to see our friends at Savory and I can only hope that this concept makes it way to NYC someday!
Ohana!
Today’s second Shoutout goes to our friends at Restaurant365 (“R365”), a leading back-of-house accounting, inventory, workforce management and payroll solution developed specifically for the restaurant industry.
R365 was honored by Goldman Sachs as the Most Exceptional Entrepreneurs of 2024 at its Builders and Innovators Summit.
2024 marks the 13th year of Goldman's Builders & Innovators Summit and is recognized as the can't miss gathering for Founders and CEOs of high growth companies. Previous honorees have gone on to lead multi-billion-dollar companies, both in the private and public markets. In addition to honoring the most exceptional entrepreneurs each year, the Summit consists of general sessions and clinics led by seasoned entrepreneurs, academics, and business leaders as well as resident scholars.
But this amazing recognition and award by Goldman Sachs is nice but is NOT the reason for the Shoutout to R365.
The Shoutout to R365 is b/c this tremendous ally to restaurants just became the most recent crew to join us at our hospitality innovation hub, B Works!
The Branded team is thrilled to welcome R365 to B Works, and we look forward to increasing our collaboration with them and the other folks at B Works (tenants or visitors) that will also now be able to dive deeper and explore areas of cooperation with R365.
Receiving awards from Goldman Sachs is NICE, but becoming a member of B Works, now that’s THRILLING! 😊
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Branded invites readers of the H^2 that are interested in learning more about our portfolio companies, and investment strategies to become part of our Access Hospitality Network.
This was an exciting week at Branded as we're now able to announce our newest portfolio company, Starfish Technologies, to join our Branded Bunch!
As we enter the final two months of the year, it will be a big sprint to finish and we're thrilled to be supporting a diverse group of hospitality companies, including, but not limited to Big Chicken; LDV Hospitality; Craveworthy Brands; and Fishbowl.
New to the list this week, we're proud to include Mr. Bing, a company that is all about East Asian Street Sauces and bold flavors. That’s right, Branded is getting a little saucy and we couldn’t be more excited about our spicing things up!
We love sharing our insights on our portfolio companies with interested parties.
Please reach out to me directly if you'd like to discuss.
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Featured Episode: Bad Ass Coffee CEO Tells the Brand's Badass Story
Join Michael Schatzberg, “The Restaurant Guy,” and Jimmy Frischling, “The Finance Guy,” In our latest Hospitality Hangout episode, we dive into the remarkable journey of Scott Snyder, CEO of Bad Ass Coffee of Hawaii. Scott shares how he transformed the brand from its quiet beginnings into a powerhouse in the coffee industry, merging authentic Hawaiian culture with a modern approach. From his unconventional relaunch on Friday the 13th in 2020 to scaling up stores across the U.S., Scott explains how Bad Ass Coffee is carving out a unique space in the competitive coffee scene.
Don’t miss Scott’s exciting news: Bad Ass Coffee is opening its first New Jersey store next month in Hackensack, with their inaugural franchisee convention in Denver on the way too! As always, we close out with a lighthearted round of “Branded Quick-Fire,” where Scott tackles trends like TikTok drinks and plant-based milk. Tune in to catch the full story and more!
Tune into the episode and subscribe to our channel here: Hospitality Hangout With Scott Snyder
Re-Run of the Week:
With the recent acquisition of a majority stake in Mo’ Bettahs Hawaiian Style Food by Blue Marlin Partners and Trive Capital from Savory Fund, now’s the perfect time to revisit our conversation with Mo’ Bettahs CEO, Rob Ertmann, on Hospitality Hangout.
Hosts Michael Schatzberg, "The Restaurant Guy," and Jimmy Frischling, "The Finance Guy," sit down with Ertmann to uncover the story behind this vibrant brand, from its modest beginnings to its impressive nationwide growth. Rob shares a behind-the-scenes look at Mo’ Bettahs’ journey, discussing how Savory Fund helped them evolve from a six-unit concept into a powerhouse with over 40 locations.
From partnerships with tech giants like Olo and Ovation to an expanding presence in cities like Las Vegas, Houston, and Phoenix, Mo' Bettahs' journey is a case study in smart growth. Tune in to hear how Mo’ Bettahs has crafted its unique recipe for success.
Tune into the episode and subscribe to our channel here: Hospitality Hangout With Rob Ertmann
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That’s it for today!
See you next week, same bat-time, same bat-channel.
It takes a village!
Jimmy Frischling
Branded Hospitality Ventures
jimmy@brandedstrategic.com
235 Park Ave South, 4th Fl | New York, NY 10003
Branded Hospitality Ventures ("Branded") is an investment and solutions platform at the intersection of foodservice, technology, innovation and capital. As experienced hospitality owners and operators, Branded brings value to its partners through investment, strategic counsel, and its deep industry expertise and connections.
Learn more about Branded here: Branded At-A-Glance