November 25, 2024 • 34 mins
In episode forty Accountfully's CEO and Partner, Brad Ebenhoeh, talks with Karim Khalil of Yaza Foods . Karim brings his love of authentic Labneh made by his grandmother in Lebanon to the U.S., which (up until now) has been sorely lacking in filler-free, authentic options.
Combining his years of experience running complex CPG companies and his financial expertise, he leads Yaza Foods, which is rapidly growing in the international snacking space. This episode shares insight into Karim's unique background and the interesting ways he developed his management skills. Learn the important skills and inventory management tools that go into a retail-heavy CPG brand and how they can be tackled with great consumer insights, a knowledgable team and an enthusiastic founder at the helm!
For more small business and CPG- focused resources, visit Accountfully's resources page, where you will find helpful articles, guides, eBooks and more.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Brad Ebenhoeh (00:00):
Welcome to the month end CPG community chat.
The month end will provideemerging CPG brands real life
knowledge into theaccounting,finance and
operational worlds. Our guestswill be key stakeholders from
those same brands as well asother key contributors in the
industry.
Welcome to episode 40 of TheMonth End Podcast today, we have
Karim Khalil of Yaza foods. Howyou doing today Karim?
Karim Khalil (00:22):
Great. How are you? Brad, thank you for having
me,
Brad Ebenhoeh (00:24):
for sure. Looking forward to having you. So Karim
is the founder and CEO of YazaFoods. Brand name with Yaza and
they are an emerging CPG brand,been around a couple of years,
so we're excited to learn moreabout Yaza and what you all do.
So why don't you go aheadandgive us a background of of
Yaza, as well as a background ofjust kind of where you're at
before Yaza, just before youstarted your entrepreneurial
(00:45):
journey.
Karim Khalil (00:46):
Yeah. So, so, Brad, thank you for having me. I
actually come from a backgroundof CPG. My founded. My father
founded a CPG company inNigeria, which I joined back in
2008 and not as a founder, butkind of as an employee. And
that's where I learnedeverything I know today. And
(01:06):
that was kind of my MBA. I spentseven years there. I was lucky
to be part of the the sale ofthe company. So I learned all
that process as well. And Imoved to Atlanta to found the
Yaza in 2020 the as I was foundin 2022 it took me kind of a
year and a half during COVID tokind of figure out exactly what
I wanted to do, how I wanted todo it. And, you know, we started
(01:29):
Yaza January, 1 of 2022 I tookan office. It was just me on my
own, and they start building ateam. There's there's five of us
now. We're looking to add thesixth person in the next couple
of months, and we've beengrowing really well. We we
launched in retail just over ayear ago, and we've hit over
1000 doors already so quickly.
And we think by the end of nextyear, we'll be at 2500 doors.
Brad Ebenhoeh (01:56):
Congrats on the growth so far. So Yaza, you guys
create and sell authenticLabneh, is that right?
Karim Khalil (02:06):
So we're proud. So I'm originally from Lebanon,
where Labneh is from, I had thechance to have lived all around
the world. I was born inSwitzerland, raised in France,
High School in Lebanon, I wentto college in the UK, worked in
Nigeria, as I mentioned earlier,and worked a little bit in
Lebanon as well. So I had thechance to kind of live all
(02:27):
around the world. Food for mehas always been a passion, and
Lebanon has always been part ofmy culture, always been part of
my passion. That was kind of theway for me to feel, to feel home
wherever I went. And I alwayssaw the opportunity in the US
they there's all what I callauthentic Labneh. Is the Labneh
that my Grammy used to make backin her, you know, in her
kitchen. And I wanted to launchthat authentic Labneh. So we
(02:50):
launched Yaza and not only wewanted to launch authentic
Labneh, we also wanted to launchflavored Labneh. Because Labneh
is kind of an ingredient. It's astaple in our culture, in a
cuisine, but no one eats it asis. People always add things to
it, and because the consumer isnot familiar and not used to it,
we kind of created differentflavors, different authentic
(03:11):
flavors, and we kind of focus onthat authentic flavors, because
it's very important to bring thereal food, the food the way we
eat it, back home, to theconsumer here, and that's kind
of of our success story.
Brad Ebenhoeh (03:24):
That's awesome.
So as we kind of back up, evenwhen you first dove into the CPG
kind of space, when you wereseven, I believe, or years ago,
you said, What were you doingfor your dad? I mean, all odds
and ends. Was there anythingthat like specifically that your
job or or process, or anythingin relation to that company that
you really enjoyed or became,you know, helped you become very
(03:48):
passionate about the, you know,the food and drink CPG space.
Karim Khalil (03:53):
So,excellent question. So, so that company
was not, it was a CPG, but itwas not in foods. It was, there
was hair extension. We had ourown plant. We had 6000
employees. It was a very bigoperation. When I joined and my
father was running the business,my father got sick. He had to
leave. I was 21 years old when Itook over the whole company. I
(04:14):
didn't know anything about thecompany. I didn't know anything
about CPG. Obviously, I went tovery good school. I had the
Masters in finance. I understoodnumbers, but I never I didn't
have that experience, and I wasthrown out there, and I had to
do something about it. So Ispent the first six months in
the factory working the line. Ispent time in every step of the
(04:34):
supply chain, every step of theproduction line, and I think
that was the most important partof me succeeding in running the
company, because otherwise Iwouldn't know anything. And I
think it's very important forany entrepreneur to get their
hands dirty, to understand thebusiness, to understand every
step of the way, to understandall the issues that may arise. I
(04:55):
think that was the mostimportant part of my learning
and taking over like. Company.
So my role was, as, you know,managing director, CEO of the
company. Eventually, I dideverything so we didn't the
company didn't have was verysuccessful, but I didn't have a
marketing department or salesdepartment. They had two
customer service ladies whowould take up the phone and take
pickup orders that that's it. Bythe time I left, we had 200
(05:17):
people in the sales andmarketing department I kind of
focused on, I kind of, for me,that was very important focus on
that they used, and it was backin 2008 but still, they had one
laptop for the whole company,with a Yahoo email, no
spreadsheet. Everything was penand paper. Everything. By the
time I left, we wereimplementing Microsoft SAP, you
(05:39):
know, kind of take everything tothe next level. Obviously, the
acquisition really helped melearn, because we got it
acquired by a multinationalfirm, and there was a transition
period of around two to threeyears with them, where I learned
a lot from them. And I think allof everything I learned there
helped me be who I am, andhelped me be able to run and
start Yaza. So Yaza is the firstcompany I've ever started or
(06:04):
founded. But hadn't I been inNigeria and went through that
whole tough, very toughexperience, a lot of ups and
downs, a lot of different thingsI learned on every different
aspect of the business. I wantto be able to launch Yaza the
way, the way we did. So I'm gladI went through that. And I think
it's important that anyentrepreneur goes through some
(06:24):
some kind of experience in someway.
Brad Ebenhoeh (06:30):
Yeah, definitely a very good internship there, I
would say, for you, and itsounds like you excelled at it,
but I would agree with you. Imean, just running an accounting
firm, just doing the day to dayand understanding and
empathizing over your teammembers of what they do, what
the client needs, andunderstanding that really helps
you become, I think, a betterbusiness owner, just across the
(06:50):
board, in terms of managingpeople, managing clients,
managing products, operations,once you kind of do it, you can
really see the the benefits ofcertain things you do, or even
the the downsides of yourprocesses. So fast forward now
to Yaza, I guess, as we kind ofget into that process while we
were talking about theoperations or inventory like,
(07:10):
what is your inventory andsupply chain process that you
have at Yaza?
Karim Khalil (07:15):
Yes. So so we still old school, still use
Excel, which I really likeExcel. I am really good at
Excel. I went through I used towork in in finance, and we use
Excel, the Excel tool, a lot. SoExcel is really helpful,
initially abroad. So we launchedin retail Exactly a year and a
month ago. And at the beginning,we used to produce on code date.
(07:39):
So we had a minimum orderproduction. We just produce
every time the code, the codedate is about to end. And for
packaging, we used to orderminimum quantities, so we never
had to really worry aboutinventory. Is just whatever the
minimum we have to order. Weordered, and we got to a point
where we got nationaldistribution with Whole Foods.
Obviously, that really helpeddistribution a lot and get the
(08:00):
product out there. But wejumped. So some January till
July of this year, we sold inAugust, three times that number.
And we sold in September, twiceAugust, and we were selling in
October. You know, October isnot done yet, but we're we're on
track to two, one and a half totwo times September. So the
(08:22):
growth has been incredible. It'sreally hard to predict the
future. So what we do is we nowhave all our inventory in one
place. We track that on monthlybasis, and I like to have twice
the amount and lead time that'sneeded for our projection. So we
have projections going forward,and because lead times and
(08:43):
things, you know, sometimes getdelayed and very conservative
when it comes to to inventory.
So I always like to have extra,you know, three months, six
months, depending on what kindof item we're buying,
Brad Ebenhoeh (08:57):
yeah, and I think that makes sense clearly, you
know, a big what I take fromthat is essentially keep your
process and workflow like mirroror reconcile to kind of the
needs and complexity of yourbusiness, right? So through the
last three or four months thatyou're mentioning, you've had to
ramp it up, change your processproactively, source and then buy
(09:18):
inventory. Now that you havekind of a curve go bell curve
going up prior when you didn'thave that, you know, just in
time, when the codes were kindof expiring, things like that. I
do see various, you know, brandowners or clients with inventory
that may over complicate it tobegin with, and then all it does
is creates a drain of resources,time, energy, money, complexity
(09:42):
and it doesn't allow you to makethe best decisions. Where
sometimes an Excel sheet thatyou've created that can do it
can last you a long, long time,as long as you understand the
inputs, how it works, and have agood kind of consistent process
with that.
Karim Khalil (09:54):
Let me just clarify, clarify something, Brad
here, so I want to separate twothings, the raw materials,
inventory. Versus the finishedgoods. So the finished goods
inventory, we still produce toorder. We produce a weekly
basis. We get orders the weekbefore whatever order we get, we
produce it the following week,because it takes, you know, we
need a week ahead of time tokind of buy the milk we have. We
(10:15):
use a co Packer. We're lucky tohave one of, you know, really,
the relationship, relationshiphas been really, really good.
And when we produce once a week,they buy the milk for us. So
that's that's been really goodwhen it comes to packaging and
other raw materials, you know,different flavors, different
spices that we use. That's wherewe didn't know how to buy. We
used to buy the minimum orderquantities, but that's where now
(10:38):
we kind of have a better ideagoing forward, and now we're
starting to buy and buildinginventory. Yes, it's a little
bit costly, but what's more,more costly is, you know, if I'm
out of the foil seal, whatevercovers my my the cup, I can't
produce anything, and I closeshop and I lose sales, and that
has a 12 weeks lead time,because it's coming from far
(10:58):
away. I may have to print it,etc. So I'd rather we have a bit
more and tie in some cash. We'relucky to have that opportunity,
and we make sure that we neverrun out of the market. We try
and meet our demand as much aswe can.
Brad Ebenhoeh (11:14):
And you're selling into retail. Are you?
Have you ever sold direct toconsumer? Are you ever going to
I mean, I know you're probably,like, a refrigerator product, so
like, shipping or freight, youknow, pretty expensive, but
like, is that kind of the reasonwhy you're that's
Karim Khalil (11:30):
talking about sales channels. We are in
retail. We we would love to bedirect to consumer. It's really
expensive and really hard to beso that's not the channel that's
that works for for Yaza, fornow, we are going into club very
soon next year. So we gotpackaging arrived last week, and
we're launching club instead,and we are looking at food
(11:52):
service and C stores. We justrecently launched our product
called Yaza on the go, which isa snack packed version of Yaza.
So Yaza on the bottom, pitachips on the top. And we're very
excited about that. We've hadsome interest from universities,
different schools, differenthospitals. Just try to get
things working for that. That'sgoing to be a bit tough. And
(12:14):
then on talking about foodservice. The only issue we have
with food services, Yaza is apremium product. We don't use
any thickeners, anypreservatives, any powders. And
the issue we have food servicewhen it comes to retail,
consumers, look, read theingredients, have the
opportunity to know the brandand get become loyal to the
brand. When it gets to arestaurant. The restaurants you
(12:35):
know, you don't really know whatkind of brand they're using,
what kind of product they'reusing. So that's where it's more
complicated to to convince aconsumer that you have to pay,
pay more for a plate of Lebanona restaurant, because it's a
premium product. We've we havesome restaurants, premium
restaurants, who are veryinterested in Yaza, and we're
just trying to get distributionsorted for that. That's kind of
(12:56):
where the the bottleneck and thechallenges we have when it comes
to food service. But Brad, youtouch a very important point.
Retail is a very good saleschannel, but one anyone has to
diversify those sales channels.
And retail is very expensivechannel, so you have to pay to
play, whether it is slottingfees when you get in, or that
it's free sales, all the promosyou have to do, all the certain
(13:19):
deductions that the bigdistributors take on you. It's a
very expensive place to be at,and it's not sustainable to only
be selling through retail in thelong term.
Brad Ebenhoeh (13:32):
Yeah, it's, it's tough being a small guy in the
space that you're in, and soit's, it takes a lot of cash. It
takes a lot of, you know,management of the business in
general to kind of execute, whenHow do you manage, you know,
speaking of cash, like, how doyou manage cash on your end? You
know, what is your kind ofaccounting finance like,
(13:53):
workflow for for Yaza,
Karim Khalil (13:55):
so, so we have an accounting firm. We use third
party and they, they could, theydo our books every month, and
that's really helpful. But whatwe like to do, what we started
doing, so I have a person namedGrant. He just joined the
company in July. What we starteddoing is bi weekly cash flow,
because that's kind of whereit's important, kind of deciding
who to pay, when to pay, how tomake sure we don't run out of
(14:18):
cash. Because when things aretight, the value of cash is also
very expensive. So you want tomake sure that to make sure that
you make the best of it. So wedo bi weekly cash flows. We're
planning to do next year, a fullyear of cash flow. It's it's
going to be hard, but that'skind of where we plan to be on
when it comes to Financials. Andwhen I did the business plan, it
was more, I would call it a roadmap, versus a business plan
(14:40):
where a lot of people say, oh,let's do five year financials.
There's so many numbers unknownsyou don't know. You know, if you
ask me three months ago whereI'm going to be today, I really
don't know. So the thing thatwas, that's a waste of time, in
my opinion. So what they focusedon is rather a budget. So what
are the things we want to do?
How much will it? Would thatcost us? And kind of a budget?
For every step to make sure thatwe try and not go over budget.
(15:01):
And you know, a lot of times wehave we had to go over budget
because there's so many thingswe don't know and so many things
that happen, so many challengechallenges we went through. But
now I think we're at the pointwhere we're working we have 2025
26, 27 financials, three-yearprojection, we can do it, and
all we have to change is a fewassumptions along the way. You
(15:24):
know, let's say we get a bigretailer, we get into big
distribution, then we can justadd one or two numbers and we're
covered there. But I think it'simportant at the beginning to
focus more on budget and howmuch money is going to take you
to kind of sustain the business.
And then next step is kind of doprojections, and we're kind of
(15:45):
looking at when is the breakeven point? How many years will
that take us kind of make surewe get to a point where we stop
bleeding, because this is whenthings get interesting and fun.
Brad Ebenhoeh (15:57):
Yeah, so many different, you know, terms that
you use there. I think, numberone, you're 100% right. When
people start with a brand newbusiness and doing three year
five year forecast, it's like,it's just like a waste of time,
energy. I mean, it's nice tokind of see how, where to go, or
possibility, but don't waste aton of time, energy on it. Focus
(16:20):
on, you know, the next 90 daysand the next 12 months. That's
kind of what I'm always like,rolling 90, rolling 20, you
know, 12, right? So you can kindof manage cash on the short term
and then continually change youryour assumptions on the 12
month, but also to your point,like, reconcile that to a budget
and expected outflows of money.
You know, it's hard when you'replaying in the the distribution
space and paying to play andthings like that. Sometimes it's
(16:42):
hard to have exact timeliness ofunderstanding, number one, when
you're going to get paid fromthe big big guys, especially as
you start the relationship, andnumber two, how much you're
actually going to get paid fromthe big guys once you start the
relationship, after you'reinvolved with them. Over time,
it kind of becomes more likerefined and defined. But
initially it's really, it's kindof unfair, as we've discussed
(17:02):
that, but I mean, it sounds likeyou're in a good working
relationship with them at thatpoint, and you understand the
cash and the deductions and allthat type of stuff.
Karim Khalil (17:12):
Yeah, so I've, I've heard a lot of bad stuff,
and obviously I've watched a lotof your podcasts, and different
podcasts, spoken to many peoplein the industry. Yes, I've heard
a lot of bad stuff. We've nothad, we've not have been hit bad
yet. And I hope that that, youknow, touch what that will stay.
We have a good relationship withboth UNFI and KeHe. Obviously,
(17:34):
UNFI, we have distributionalmost everywhere with with
Whole Foods and KeHe, we havedistribution in half of their
warehouses. The relationship hasbeen good. And what I think is
important, Brad, so thesedeductions will happen, that's
that's part. That's how theymake money, right? And one of
the things that's very importantfor everyone, for every
entrepreneur, every CPG founder,to do is to get a financial
(17:55):
expert, or whether it is, youknow, an accounting expert who's
familiar with CPG, or maybesomeone industry who understands
those deductions, and you takethose into account, and you can
never, let me just be clear, youcan never take into account
because they are very creativeat deduction. But at least if
you have some kind of budget forthat, you know where you're
going, then that really helps.
Whereas you have a lot of peoplewho like, okay, cost me $2 to
(18:18):
produce. Let me set it at three,and then they forget that
distributors need to take theirmargins, their cost, plus the
freights, and then all thedeductions, all the promos, but
then the retailers needs to getmargins, etc, etc. So one of the
most important things to do isto understand your fob cost, the
cost that the product will costyou at the warehouse before it
(18:39):
gets shipped out, and what doesthat translate into retail
price? That's the most importantpart, I think, to start any
business to see if it'sfeasible. A lot of people will
be like, Oh, that seems very youknow, people are selling
whatever the Labneh at $7 aWhole Foods. Oh, it cost me two
or three, or whatever, dollarsto make it, that's how much
(19:01):
profit the company is making.
That's not the case, and that'svery important to understand,
especially when it's rated,especially when it's a
competitive asset. When retailmargins go up to 60% they expect
you to do at least fourpromotions a year. They charge
(19:23):
you for promotions, other thanto start all the free fields and
the slotting fees that you haveto incur, all the promo fees,
all the different deductions,and then unifying ke will deduct
here and there, all the tradeshows you have to attend, etc,
etc, etc. The list goes on.
Brad Ebenhoeh (19:40):
Yeah, no, I You're 100% right. I think
number two things I take awayfrom that, number one is
understand what's going on at ahigh level, right? Like hire
people that can help you talk topeople in the space. There's so
many different CPG communitiesthat exist out here that
somebody will help you to walkthrough and understand at a high
level what it means and and justmake sure that you're going into
the situation. Your as bestknowledge as possible. And then,
(20:02):
number two, it's justconsistently tracking and
monitoring it and adjustingthings as needed, and following
up and understanding it, right?
It's just not like I said it,and forget it. It's a consistent
situation with your business andanybody's business as we kind of
move forward to kind of people,right? So how many people do you
have on the team that you'rekind of in house, plus, like,
what is your day to day like,and how did you did you decide
(20:24):
to which people to hire for yourdifferent roles?
Karim Khalil (20:29):
I think that's a very nice question. I can. I
want to kind of walk back how Istarted. So in January 1, 2020 I
took an office, had my laptop,and started researching. I
didn't know anything aboutLabneh as a consumer. I knew
everything about it. I visitedsome factories back in Lebanon
before I moved in, but I didn'tknow anything about how to make
Labbeh here in the US, etc. So Iwas looking for a, you know,
(20:51):
Labneh is made out of at home,you can make it out of Greek
yogurt. So I was looking for aGreek yogurt factory in Atlanta.
I wanted to buy one, becauseinitially, from in my head,
someone coming from productionbackground, let's buy a factory,
and then we'll figure it out howto do it. So I wanted to buy
one. There's a factory that hadsome issues. I contacted the
person planning to buy it, andthe guy's like, you know, I
(21:13):
already sold it. I closed down.
And I, you know, I don't thinkLabneh is a good idea. I don't
think you should get into it.
Forget about it. And I'm like,What are you doing these days?
And he's like, I'm just aconsultant. And I'm like, why
don't you come? Let's kind of doLabneh together. And he's like,
I don't think it's a good idea.
You're crazy. I'm like, let's doit. So I employ Ron as a
consultant initially, April of2022, and he remained a
(21:36):
consultant for a year, kind ofpaid by the hour to help me
develop the product. He wentthrough it. So he used to sell
his own yogurts, Whole Foods indifferent stores. So he had some
connections, some network, he'sdone it, and he went through a
lot of different challenges. Soit was really good to get all
the experience from him. So Ronjoined a year later, full time,
(21:58):
and now he's, he's the guybehind our production. He's our
chef, he's our productdevelopment. He's actually
working on new new products aswe go forward now. And he's
always been at the productionfacility in upstate New York
every time we produce. So hejoined full time April 2023 and
until then, I was doingeverything myself, right? I was
doing every single role, whetherit is even HR, and kind of
(22:20):
understanding how that works,and payroll, etc, in June of
2023, and he's still on parttime basis. We employed a guy
called Steven. He used to be thehead of Whole Foods in the
southeast. So he's very wellknowledgeable on how Whole
Foods, for me, was always mytarget, my dream. He's always
he's very knowledgeable on that.
(22:43):
He has a lot of connections inthe industry, because he worked
in different with differentretailers. He knows a lot of
people, but he knows also howthings work, and he's the guy
behind this is how much you'regoing to pay at every step of
the way, kind of understandingthe numbers. And he helped us.
He helped us there. And I alsoemployed the same time political
Kelsey, straight out of collegefor marketing, and for me, I
(23:04):
wanted someone young whounderstands social media,
understands consumers, doesn'tneed to have the experience with
someone who has the energy forthat. So she joined at similar
time, in June, July, just aftershe finished school, and she
joined as a full time, fulltime, and she's still with us
now. She does marketing, but shealso does sales. She does HR,
(23:25):
and she does all of that, andshe takes care of all our
events, etc. She has a lot onher plate, and it's this year,
in July, we Grant joined us,also straight out of college
financial background. I wantedsomeone that can help us with
all tracking, like you said,deductions. But also from step
one, from the POS all the way,but also on the purchasing and
(23:45):
the inventory side, all of that,and kind of the relationship
with the accountants, because Ihave less time on my plate. So
initially I had, I would get oneemail every three, four days,
and I kind of celebrate gettingan email. Now I get an email.
Maybe every minute was reallyfun. I enjoy every part of the
job. I work seven days a week,but I love it, and that's why I
(24:08):
think I'm able to enjoy it,because every minute and
everything I do, I enjoy
Brad Ebenhoeh (24:14):
love it. So sales, marketing, operations,
sales, finance, logistics. Yougot kind of demos?
Karim Khalil (24:20):
Demos I do trade shows. That was last week I was
at trade show. I try and do asmany demos as possible, because
that's where you get thefeedback directly from the
consumer. That's the guy that'sconsumers paying for it. The
easiest way is to give someonesomething for free to someone,
and he's going to say, it'sreally good. No one's going to
say anything else. He's notgoing to give you feedback,
because it's free the secondthey have to pay for it. Even at
(24:42):
the demo, he would try it, hesays it's good. If he doesn't
buy it, then you know he didn'tlike it. Or you have an idea, if
he doesn't take a coupon thatyou're trying to offer him that
gets a discount, you know, he'snever going to buy it, or he's
not interested. And you kind oftry to understand why. I also
like to hang out so. Initially,I used to hang do that a lot. I
have less time. Now, I used togo to grocery stores, especially
(25:04):
the whole food aisle, and stoppeople and kind of understand
the purchasing habits and kindof ask them questions. I've had
weird people giving me weirdfaces, and I've had people kind
of interacting, kind of explainto them why I'm doing it.
Listen, I'm here. I want tounderstand what why you're
looking at the aisle what you'relooking for? And I care more
about people who take their timelooking, versus people who know
(25:25):
exactly what they want. Theytake it and they leave, because
those people are harder toconvince. But the people who
take their time are those who Ikind of care to understand how
they think. What are theylooking for? Is it the
ingredient panel? Is it theNutritionals? Is it the item
that they're looking for,something new or, you know,
because there's so many optionswe are, yes, I sold in the same
category as hummus. And there is12 different flavors. There's
(25:48):
seven eight different companiesin every retail store. So it's
really hard buying hummus thesedays. So it's kind of good to
understand, why is this personchoosing that brand over that
brand, or that flavor, or thatflavor? Is it the box size, or
is it ingredients, or is itwhatever criteria they're using?
Brad Ebenhoeh (26:05):
Need to go where the customers are. I like it.
Final couple questions here, aswe kind of move forward. Number
one is like, what are your kindof your KPIs, or key performance
indicators that you kind of lookat consistently, whether it's on
the financial side, sales side,marketing side, operation side,
just kind of, what's a couple ofthem that that you like to look
at.
Karim Khalil (26:22):
So the most important one I've learned from
the industry here is velocity.
So it's, it's, in a way, I'm notgoing to say easy. It's hard to
get into retail, but it's easy,and if you can pay for it, and
if you have the right product,etc, as easy as you get into
retail, they're going to giveyou a chance. The hard part is
to stay on shelf, and velocityis the key word, is the speed of
(26:43):
which the product stays onshelf. Because at the end of the
day, these retail stores arereal estate for them, that's
that they're renting you outreal estate, and need to make
money. The more they turn themore they sell per SKU or per
shelf space, the more money theymake. So velocity is a number we
track, and we have access todata either something that we
purchase, but we also haveaccess to data from different
(27:05):
grocery stores and differentdistributors share with that
with us, and that's something wetrack very religiously, to make
sure that the velocity keepsgoing up in every store, and we
make sure that we've said no toretailers where we feel the area
is saturated for Labneh yet,kind of make sure that. So we
launched on the west coast withErewhon and Pavilions, kind of
the premium banners. We did thatsame thing in the East Coast.
(27:27):
Same thing in Texas CentralMarket and HEB. Kind of Whole
Foods everywhere it's morenatural space, premium stores,
and now we're starting to getinto conventional as Labneh
becomes more trendy at WholeFoods chose our flavor as a top
10 trend for 2025 so that showsyou how, how much levy has gone
through in the last year. Sovelocity is the key. That's the
(27:51):
number one. The other one welook at is a promo uplift. So we
kind of compare. So we do apromotion. Let's say we give,
you know, buy one, get one free,or we do a 25% discount. We want
to kind of see the velocity orthe promo uplift during the
promotion, but also after, do wegain customers? Do we not gain
new customers? It's veryimportant to do that, and that's
(28:11):
also applicable when we dodemos. So we've, we've just
done, we've been doing demos forthe last two months in Atlanta,
where where our headquarterslocated, and that's the
strongest city. Now, by far, itkind of beats every everyone
else. When we bought data, andinitially on Labneh, it was the
worst region. It was the lowestregion. Now, yes, has stopped
(28:32):
performing cities Atlanta justbecause of the number of demos
we've been doing. It's kind of,you know, following that up as
well. And obviously when itcomes to financials, not the
financial statements themselves,but more of the cash flow. So we
predicted that the next twoweeks we need X dollars.
Obviously, some checks beendelayed the mail, and all the
hurricanes and different thingsthat affected that kind of did
(28:53):
we plan correctly or not? Andhow can we adjust going forward
to make sure that, because themore you grow, the more cash
flow you need, or the moreworking capital you need to to
finance the business. So we needto make sure that we don't run
out of working capital goingforward. And as we're adding
more doors and more sales, weneed to have more cash. And any
mistake can affect that.
Brad Ebenhoeh (29:17):
Love it. So cash flow velocity and then promo
uplift, great kind of KPIs andgreat definitions and
backgrounds of those. I love it,alright. So as we kind of head
into wrapping this up, we alwayslike, as a experienced
entrepreneur on the CPG spacethat we can kind of share some
insights to the to the audience,which you've already done, but
(29:40):
just from a kind of a CPG retailbusiness owner, can you provide
one do and one don't to fellowCPG brand owners?
Karim Khalil (29:49):
So yes, so that, that obviously will depend on
the category, the kind of item,etc. So it's I'm going to talk
about Yaza, my experience, whatI've seen, I talked about the
Co-Packer. Please go. Co-Packerdon't produce on your own, at
least at the beginning, becausethat's an extra layer that you
don't want to get into. That'san extra stress you don't want
to get into it. I think I kindof touched and explained why do
(30:11):
get someone an expert. Do getexpertise, especially when it
comes to understanding pricingand costing, whether it's it's
an accountant that's experiencedin CPG, or someone in the
industry, and do marketresearch. So we, one of the
things we did early, very earlyon, we did the focus groups
where we kind of understood theconsumer, how they see Labneh,
(30:32):
what's it? What it is for them.
Make sure that you understandwho your consumer is. You buy
data if you have to tounderstand the space, to make
sure that you're launching.
You're adding value to thecategory. If you're not adding
value. There's so many brands,so many smart people with so
many good ideas. You know youneed to to be different. And to
be different, you need tounderstand who you're selling
(30:52):
to. Those are the big do's. Forme, the big don'ts. It's don't
launch until you're ready. AndI've met a lot of different CPGs
firms that are very excited andin the rush to launch, and we
delayed our launch by three,four months because we had
production issues. It was justno, you know, when you scale up,
it was just not working out. Andwe kind of debated and
(31:15):
internally, do we just launchit? Because it's not that bad,
and I'm like, No, until it's100% perfect. We made huge
losses on production. We justhad to throw it away until it's
100% there's no rush. It's not,you know, it's a marathon. It's
not a race. Take your time andmake sure that you have the what
you think is the best product,the product you're comfortable
with, that you think is going todo really well, because it's
(31:37):
more costly and it's harder tofix the problem later on. So
that's, that's that's kind of a,don't, um, understand the
financial so don't launch if youdon't have the finance to
sustain the business. And I'veseen, and I've read a lot of
case studies where so many greatideas, and they get to a point
where they just can't affordyou, they have to close shop.
And that's kind of, really, youknow, it's heartbreaking,
(31:57):
because either they have to goto VCs are early on investors
and and sell their company forso cheap, and nothing remains
for them. It's not even worththe work, or they just close
shop. And I think that's that'sanother thing that's important.
Maybe the last don't is, don'tbe a, you know, don't shy away
from your mission, whatevermission you have in mind. And
(32:18):
you know, for us, is bringingauthentic Lebanese Labneh
finding product, findingflavors. Our all our competitors
use, use powders or thickeners.
It's cheaper they make they havemore margins and make more
money. We don't. Don't shy awayfrom your mission. Our mission
is to have the authentic way wemake it, the way my grandma
makes it. Think that's the bestway, even on flavors. So we
launched the tar and olive oil.
(32:40):
People don't know what the taris. We're kind of worried about,
do we call it the tar? What dowe do with that? And one, it's
our best selling item flavor.
It's it got the Nexty award atExpo West. I don't know if
you're familiar with Expo West.
I got next year award forPeople's Choice Awards The
people voted for it. And three,it got the top 10 trends for
Whole Foods Market for 2025 as aflavor itself, as a Yaza Labneh
(33:02):
Zatar and olive oil flavor. Soit tells you that, you know,
when you stick to your mission,that's that's the unique
proposition we offer to themarket, authentic Labneh,
authentic flavors, and that'swhat that's the recipe behind
our success.
Brad Ebenhoeh (33:17):
Awesome, great info, several do's and several
don'ts. Do you think would thinkone question popped up? Do you
think you'd be here today if youdidn't take over, you know, your
father's business, or wereinvolved in kind of the space
several I don't
Karim Khalil (33:30):
think so. Brad, and I think I learned a lot from
him, from the team he had, andfrom the experience I went
through. And I think that it'svery, very important to go
through ups and downs, becauseyou're going to have ups and
downs, and you're going to haveto deal with things, and just
learning how to deal withthings. It's not a particular
experience of just copy pastingwhat you what you did. It's just
(33:50):
learning how to think and how toreact and what to do when and
CPG world is full of challenges,and it's a lot of work. You have
to understand. Anyone who wantsto launch a company needs to
understand that from thebeginning, it's a life
commitment versus a typical nineto five job or typical career.
Brad Ebenhoeh (34:15):
Yup, yeah. It seems like, just from our chat
here, you've definitely taken avery kind of wise and mature and
proactive approach to the to thebusiness. And it seems like you
know the growth and the successkind of to date, and especially.
Welcome to the month end CPG community chat.
The month end will provideemerging CPG brands real life
knowledge into theaccounting,finance and
operational worlds. Our guestswill be key stakeholders from
those same brands as well asother key contributors in the
industry.
Welcome to episode 40 of TheMonth End Podcast today, we have
Karim Khalil of Yaza foods. Howyou doing today Karim?
Karim Khalil (00:22):
Great. How are you? Brad, thank you for having
me,
Brad Ebenhoeh (00:24):
for sure. Looking forward to having you. So Karim
is the founder and CEO of YazaFoods. Brand name with Yaza and
they are an emerging CPG brand,been around a couple of years,
so we're excited to learn moreabout Yaza and what you all do.
So why don't you go aheadandgive us a background of of
Yaza, as well as a background ofjust kind of where you're at
before Yaza, just before youstarted your entrepreneurial
(00:45):
journey.
Karim Khalil (00:46):
Yeah. So, so, Brad, thank you for having me. I
actually come from a backgroundof CPG. My founded. My father
founded a CPG company inNigeria, which I joined back in
2008 and not as a founder, butkind of as an employee. And
that's where I learnedeverything I know today. And
(01:06):
that was kind of my MBA. I spentseven years there. I was lucky
to be part of the the sale ofthe company. So I learned all
that process as well. And Imoved to Atlanta to found the
Yaza in 2020 the as I was foundin 2022 it took me kind of a
year and a half during COVID tokind of figure out exactly what
I wanted to do, how I wanted todo it. And, you know, we started
(01:29):
Yaza January, 1 of 2022 I tookan office. It was just me on my
own, and they start building ateam. There's there's five of us
now. We're looking to add thesixth person in the next couple
of months, and we've beengrowing really well. We we
launched in retail just over ayear ago, and we've hit over
1000 doors already so quickly.
And we think by the end of nextyear, we'll be at 2500 doors.
Brad Ebenhoeh (01:56):
Congrats on the growth so far. So Yaza, you guys
create and sell authenticLabneh, is that right?
Karim Khalil (02:06):
So we're proud. So I'm originally from Lebanon,
where Labneh is from, I had thechance to have lived all around
the world. I was born inSwitzerland, raised in France,
High School in Lebanon, I wentto college in the UK, worked in
Nigeria, as I mentioned earlier,and worked a little bit in
Lebanon as well. So I had thechance to kind of live all
(02:27):
around the world. Food for mehas always been a passion, and
Lebanon has always been part ofmy culture, always been part of
my passion. That was kind of theway for me to feel, to feel home
wherever I went. And I alwayssaw the opportunity in the US
they there's all what I callauthentic Labneh. Is the Labneh
that my Grammy used to make backin her, you know, in her
kitchen. And I wanted to launchthat authentic Labneh. So we
(02:50):
launched Yaza and not only wewanted to launch authentic
Labneh, we also wanted to launchflavored Labneh. Because Labneh
is kind of an ingredient. It's astaple in our culture, in a
cuisine, but no one eats it asis. People always add things to
it, and because the consumer isnot familiar and not used to it,
we kind of created differentflavors, different authentic
(03:11):
flavors, and we kind of focus onthat authentic flavors, because
it's very important to bring thereal food, the food the way we
eat it, back home, to theconsumer here, and that's kind
of of our success story.
Brad Ebenhoeh (03:24):
That's awesome.
So as we kind of back up, evenwhen you first dove into the CPG
kind of space, when you wereseven, I believe, or years ago,
you said, What were you doingfor your dad? I mean, all odds
and ends. Was there anythingthat like specifically that your
job or or process, or anythingin relation to that company that
you really enjoyed or became,you know, helped you become very
(03:48):
passionate about the, you know,the food and drink CPG space.
Karim Khalil (03:53):
So,excellent question. So, so that company
was not, it was a CPG, but itwas not in foods. It was, there
was hair extension. We had ourown plant. We had 6000
employees. It was a very bigoperation. When I joined and my
father was running the business,my father got sick. He had to
leave. I was 21 years old when Itook over the whole company. I
(04:14):
didn't know anything about thecompany. I didn't know anything
about CPG. Obviously, I went tovery good school. I had the
Masters in finance. I understoodnumbers, but I never I didn't
have that experience, and I wasthrown out there, and I had to
do something about it. So Ispent the first six months in
the factory working the line. Ispent time in every step of the
(04:34):
supply chain, every step of theproduction line, and I think
that was the most important partof me succeeding in running the
company, because otherwise Iwouldn't know anything. And I
think it's very important forany entrepreneur to get their
hands dirty, to understand thebusiness, to understand every
step of the way, to understandall the issues that may arise. I
(04:55):
think that was the mostimportant part of my learning
and taking over like. Company.
So my role was, as, you know,managing director, CEO of the
company. Eventually, I dideverything so we didn't the
company didn't have was verysuccessful, but I didn't have a
marketing department or salesdepartment. They had two
customer service ladies whowould take up the phone and take
pickup orders that that's it. Bythe time I left, we had 200
(05:17):
people in the sales andmarketing department I kind of
focused on, I kind of, for me,that was very important focus on
that they used, and it was backin 2008 but still, they had one
laptop for the whole company,with a Yahoo email, no
spreadsheet. Everything was penand paper. Everything. By the
time I left, we wereimplementing Microsoft SAP, you
(05:39):
know, kind of take everything tothe next level. Obviously, the
acquisition really helped melearn, because we got it
acquired by a multinationalfirm, and there was a transition
period of around two to threeyears with them, where I learned
a lot from them. And I think allof everything I learned there
helped me be who I am, andhelped me be able to run and
start Yaza. So Yaza is the firstcompany I've ever started or
(06:04):
founded. But hadn't I been inNigeria and went through that
whole tough, very toughexperience, a lot of ups and
downs, a lot of different thingsI learned on every different
aspect of the business. I wantto be able to launch Yaza the
way, the way we did. So I'm gladI went through that. And I think
it's important that anyentrepreneur goes through some
(06:24):
some kind of experience in someway.
Brad Ebenhoeh (06:30):
Yeah, definitely a very good internship there, I
would say, for you, and itsounds like you excelled at it,
but I would agree with you. Imean, just running an accounting
firm, just doing the day to dayand understanding and
empathizing over your teammembers of what they do, what
the client needs, andunderstanding that really helps
you become, I think, a betterbusiness owner, just across the
(06:50):
board, in terms of managingpeople, managing clients,
managing products, operations,once you kind of do it, you can
really see the the benefits ofcertain things you do, or even
the the downsides of yourprocesses. So fast forward now
to Yaza, I guess, as we kind ofget into that process while we
were talking about theoperations or inventory like,
(07:10):
what is your inventory andsupply chain process that you
have at Yaza?
Karim Khalil (07:15):
Yes. So so we still old school, still use
Excel, which I really likeExcel. I am really good at
Excel. I went through I used towork in in finance, and we use
Excel, the Excel tool, a lot. SoExcel is really helpful,
initially abroad. So we launchedin retail Exactly a year and a
month ago. And at the beginning,we used to produce on code date.
(07:39):
So we had a minimum orderproduction. We just produce
every time the code, the codedate is about to end. And for
packaging, we used to orderminimum quantities, so we never
had to really worry aboutinventory. Is just whatever the
minimum we have to order. Weordered, and we got to a point
where we got nationaldistribution with Whole Foods.
Obviously, that really helpeddistribution a lot and get the
(08:00):
product out there. But wejumped. So some January till
July of this year, we sold inAugust, three times that number.
And we sold in September, twiceAugust, and we were selling in
October. You know, October isnot done yet, but we're we're on
track to two, one and a half totwo times September. So the
(08:22):
growth has been incredible. It'sreally hard to predict the
future. So what we do is we nowhave all our inventory in one
place. We track that on monthlybasis, and I like to have twice
the amount and lead time that'sneeded for our projection. So we
have projections going forward,and because lead times and
(08:43):
things, you know, sometimes getdelayed and very conservative
when it comes to to inventory.
So I always like to have extra,you know, three months, six
months, depending on what kindof item we're buying,
Brad Ebenhoeh (08:57):
yeah, and I think that makes sense clearly, you
know, a big what I take fromthat is essentially keep your
process and workflow like mirroror reconcile to kind of the
needs and complexity of yourbusiness, right? So through the
last three or four months thatyou're mentioning, you've had to
ramp it up, change your processproactively, source and then buy
(09:18):
inventory. Now that you havekind of a curve go bell curve
going up prior when you didn'thave that, you know, just in
time, when the codes were kindof expiring, things like that. I
do see various, you know, brandowners or clients with inventory
that may over complicate it tobegin with, and then all it does
is creates a drain of resources,time, energy, money, complexity
(09:42):
and it doesn't allow you to makethe best decisions. Where
sometimes an Excel sheet thatyou've created that can do it
can last you a long, long time,as long as you understand the
inputs, how it works, and have agood kind of consistent process
with that.
Karim Khalil (09:54):
Let me just clarify, clarify something, Brad
here, so I want to separate twothings, the raw materials,
inventory. Versus the finishedgoods. So the finished goods
inventory, we still produce toorder. We produce a weekly
basis. We get orders the weekbefore whatever order we get, we
produce it the following week,because it takes, you know, we
need a week ahead of time tokind of buy the milk we have. We
(10:15):
use a co Packer. We're lucky tohave one of, you know, really,
the relationship, relationshiphas been really, really good.
And when we produce once a week,they buy the milk for us. So
that's that's been really goodwhen it comes to packaging and
other raw materials, you know,different flavors, different
spices that we use. That's wherewe didn't know how to buy. We
used to buy the minimum orderquantities, but that's where now
(10:38):
we kind of have a better ideagoing forward, and now we're
starting to buy and buildinginventory. Yes, it's a little
bit costly, but what's more,more costly is, you know, if I'm
out of the foil seal, whatevercovers my my the cup, I can't
produce anything, and I closeshop and I lose sales, and that
has a 12 weeks lead time,because it's coming from far
(10:58):
away. I may have to print it,etc. So I'd rather we have a bit
more and tie in some cash. We'relucky to have that opportunity,
and we make sure that we neverrun out of the market. We try
and meet our demand as much aswe can.
Brad Ebenhoeh (11:14):
And you're selling into retail. Are you?
Have you ever sold direct toconsumer? Are you ever going to
I mean, I know you're probably,like, a refrigerator product, so
like, shipping or freight, youknow, pretty expensive, but
like, is that kind of the reasonwhy you're that's
Karim Khalil (11:30):
talking about sales channels. We are in
retail. We we would love to bedirect to consumer. It's really
expensive and really hard to beso that's not the channel that's
that works for for Yaza, fornow, we are going into club very
soon next year. So we gotpackaging arrived last week, and
we're launching club instead,and we are looking at food
(11:52):
service and C stores. We justrecently launched our product
called Yaza on the go, which isa snack packed version of Yaza.
So Yaza on the bottom, pitachips on the top. And we're very
excited about that. We've hadsome interest from universities,
different schools, differenthospitals. Just try to get
things working for that. That'sgoing to be a bit tough. And
(12:14):
then on talking about foodservice. The only issue we have
with food services, Yaza is apremium product. We don't use
any thickeners, anypreservatives, any powders. And
the issue we have food servicewhen it comes to retail,
consumers, look, read theingredients, have the
opportunity to know the brandand get become loyal to the
brand. When it gets to arestaurant. The restaurants you
(12:35):
know, you don't really know whatkind of brand they're using,
what kind of product they'reusing. So that's where it's more
complicated to to convince aconsumer that you have to pay,
pay more for a plate of Lebanona restaurant, because it's a
premium product. We've we havesome restaurants, premium
restaurants, who are veryinterested in Yaza, and we're
just trying to get distributionsorted for that. That's kind of
(12:56):
where the the bottleneck and thechallenges we have when it comes
to food service. But Brad, youtouch a very important point.
Retail is a very good saleschannel, but one anyone has to
diversify those sales channels.
And retail is very expensivechannel, so you have to pay to
play, whether it is slottingfees when you get in, or that
it's free sales, all the promosyou have to do, all the certain
(13:19):
deductions that the bigdistributors take on you. It's a
very expensive place to be at,and it's not sustainable to only
be selling through retail in thelong term.
Brad Ebenhoeh (13:32):
Yeah, it's, it's tough being a small guy in the
space that you're in, and soit's, it takes a lot of cash. It
takes a lot of, you know,management of the business in
general to kind of execute, whenHow do you manage, you know,
speaking of cash, like, how doyou manage cash on your end? You
know, what is your kind ofaccounting finance like,
(13:53):
workflow for for Yaza,
Karim Khalil (13:55):
so, so we have an accounting firm. We use third
party and they, they could, theydo our books every month, and
that's really helpful. But whatwe like to do, what we started
doing, so I have a person namedGrant. He just joined the
company in July. What we starteddoing is bi weekly cash flow,
because that's kind of whereit's important, kind of deciding
who to pay, when to pay, how tomake sure we don't run out of
(14:18):
cash. Because when things aretight, the value of cash is also
very expensive. So you want tomake sure that to make sure that
you make the best of it. So wedo bi weekly cash flows. We're
planning to do next year, a fullyear of cash flow. It's it's
going to be hard, but that'skind of where we plan to be on
when it comes to Financials. Andwhen I did the business plan, it
was more, I would call it a roadmap, versus a business plan
(14:40):
where a lot of people say, oh,let's do five year financials.
There's so many numbers unknownsyou don't know. You know, if you
ask me three months ago whereI'm going to be today, I really
don't know. So the thing thatwas, that's a waste of time, in
my opinion. So what they focusedon is rather a budget. So what
are the things we want to do?
How much will it? Would thatcost us? And kind of a budget?
For every step to make sure thatwe try and not go over budget.
(15:01):
And you know, a lot of times wehave we had to go over budget
because there's so many thingswe don't know and so many things
that happen, so many challengechallenges we went through. But
now I think we're at the pointwhere we're working we have 2025
26, 27 financials, three-yearprojection, we can do it, and
all we have to change is a fewassumptions along the way. You
(15:24):
know, let's say we get a bigretailer, we get into big
distribution, then we can justadd one or two numbers and we're
covered there. But I think it'simportant at the beginning to
focus more on budget and howmuch money is going to take you
to kind of sustain the business.
And then next step is kind of doprojections, and we're kind of
(15:45):
looking at when is the breakeven point? How many years will
that take us kind of make surewe get to a point where we stop
bleeding, because this is whenthings get interesting and fun.
Brad Ebenhoeh (15:57):
Yeah, so many different, you know, terms that
you use there. I think, numberone, you're 100% right. When
people start with a brand newbusiness and doing three year
five year forecast, it's like,it's just like a waste of time,
energy. I mean, it's nice tokind of see how, where to go, or
possibility, but don't waste aton of time, energy on it. Focus
(16:20):
on, you know, the next 90 daysand the next 12 months. That's
kind of what I'm always like,rolling 90, rolling 20, you
know, 12, right? So you can kindof manage cash on the short term
and then continually change youryour assumptions on the 12
month, but also to your point,like, reconcile that to a budget
and expected outflows of money.
You know, it's hard when you'replaying in the the distribution
space and paying to play andthings like that. Sometimes it's
(16:42):
hard to have exact timeliness ofunderstanding, number one, when
you're going to get paid fromthe big big guys, especially as
you start the relationship, andnumber two, how much you're
actually going to get paid fromthe big guys once you start the
relationship, after you'reinvolved with them. Over time,
it kind of becomes more likerefined and defined. But
initially it's really, it's kindof unfair, as we've discussed
(17:02):
that, but I mean, it sounds likeyou're in a good working
relationship with them at thatpoint, and you understand the
cash and the deductions and allthat type of stuff.
Karim Khalil (17:12):
Yeah, so I've, I've heard a lot of bad stuff,
and obviously I've watched a lotof your podcasts, and different
podcasts, spoken to many peoplein the industry. Yes, I've heard
a lot of bad stuff. We've nothad, we've not have been hit bad
yet. And I hope that that, youknow, touch what that will stay.
We have a good relationship withboth UNFI and KeHe. Obviously,
(17:34):
UNFI, we have distributionalmost everywhere with with
Whole Foods and KeHe, we havedistribution in half of their
warehouses. The relationship hasbeen good. And what I think is
important, Brad, so thesedeductions will happen, that's
that's part. That's how theymake money, right? And one of
the things that's very importantfor everyone, for every
entrepreneur, every CPG founder,to do is to get a financial
(17:55):
expert, or whether it is, youknow, an accounting expert who's
familiar with CPG, or maybesomeone industry who understands
those deductions, and you takethose into account, and you can
never, let me just be clear, youcan never take into account
because they are very creativeat deduction. But at least if
you have some kind of budget forthat, you know where you're
going, then that really helps.
Whereas you have a lot of peoplewho like, okay, cost me $2 to
(18:18):
produce. Let me set it at three,and then they forget that
distributors need to take theirmargins, their cost, plus the
freights, and then all thedeductions, all the promos, but
then the retailers needs to getmargins, etc, etc. So one of the
most important things to do isto understand your fob cost, the
cost that the product will costyou at the warehouse before it
(18:39):
gets shipped out, and what doesthat translate into retail
price? That's the most importantpart, I think, to start any
business to see if it'sfeasible. A lot of people will
be like, Oh, that seems very youknow, people are selling
whatever the Labneh at $7 aWhole Foods. Oh, it cost me two
or three, or whatever, dollarsto make it, that's how much
(19:01):
profit the company is making.
That's not the case, and that'svery important to understand,
especially when it's rated,especially when it's a
competitive asset. When retailmargins go up to 60% they expect
you to do at least fourpromotions a year. They charge
(19:23):
you for promotions, other thanto start all the free fields and
the slotting fees that you haveto incur, all the promo fees,
all the different deductions,and then unifying ke will deduct
here and there, all the tradeshows you have to attend, etc,
etc, etc. The list goes on.
Brad Ebenhoeh (19:40):
Yeah, no, I You're 100% right. I think
number two things I take awayfrom that, number one is
understand what's going on at ahigh level, right? Like hire
people that can help you talk topeople in the space. There's so
many different CPG communitiesthat exist out here that
somebody will help you to walkthrough and understand at a high
level what it means and and justmake sure that you're going into
the situation. Your as bestknowledge as possible. And then,
(20:02):
number two, it's justconsistently tracking and
monitoring it and adjustingthings as needed, and following
up and understanding it, right?
It's just not like I said it,and forget it. It's a consistent
situation with your business andanybody's business as we kind of
move forward to kind of people,right? So how many people do you
have on the team that you'rekind of in house, plus, like,
what is your day to day like,and how did you did you decide
(20:24):
to which people to hire for yourdifferent roles?
Karim Khalil (20:29):
I think that's a very nice question. I can. I
want to kind of walk back how Istarted. So in January 1, 2020 I
took an office, had my laptop,and started researching. I
didn't know anything aboutLabneh as a consumer. I knew
everything about it. I visitedsome factories back in Lebanon
before I moved in, but I didn'tknow anything about how to make
Labbeh here in the US, etc. So Iwas looking for a, you know,
(20:51):
Labneh is made out of at home,you can make it out of Greek
yogurt. So I was looking for aGreek yogurt factory in Atlanta.
I wanted to buy one, becauseinitially, from in my head,
someone coming from productionbackground, let's buy a factory,
and then we'll figure it out howto do it. So I wanted to buy
one. There's a factory that hadsome issues. I contacted the
person planning to buy it, andthe guy's like, you know, I
(21:13):
already sold it. I closed down.
And I, you know, I don't thinkLabneh is a good idea. I don't
think you should get into it.
Forget about it. And I'm like,What are you doing these days?
And he's like, I'm just aconsultant. And I'm like, why
don't you come? Let's kind of doLabneh together. And he's like,
I don't think it's a good idea.
You're crazy. I'm like, let's doit. So I employ Ron as a
consultant initially, April of2022, and he remained a
(21:36):
consultant for a year, kind ofpaid by the hour to help me
develop the product. He wentthrough it. So he used to sell
his own yogurts, Whole Foods indifferent stores. So he had some
connections, some network, he'sdone it, and he went through a
lot of different challenges. Soit was really good to get all
the experience from him. So Ronjoined a year later, full time,
(21:58):
and now he's, he's the guybehind our production. He's our
chef, he's our productdevelopment. He's actually
working on new new products aswe go forward now. And he's
always been at the productionfacility in upstate New York
every time we produce. So hejoined full time April 2023 and
until then, I was doingeverything myself, right? I was
doing every single role, whetherit is even HR, and kind of
(22:20):
understanding how that works,and payroll, etc, in June of
2023, and he's still on parttime basis. We employed a guy
called Steven. He used to be thehead of Whole Foods in the
southeast. So he's very wellknowledgeable on how Whole
Foods, for me, was always mytarget, my dream. He's always
he's very knowledgeable on that.
(22:43):
He has a lot of connections inthe industry, because he worked
in different with differentretailers. He knows a lot of
people, but he knows also howthings work, and he's the guy
behind this is how much you'regoing to pay at every step of
the way, kind of understandingthe numbers. And he helped us.
He helped us there. And I alsoemployed the same time political
Kelsey, straight out of collegefor marketing, and for me, I
(23:04):
wanted someone young whounderstands social media,
understands consumers, doesn'tneed to have the experience with
someone who has the energy forthat. So she joined at similar
time, in June, July, just aftershe finished school, and she
joined as a full time, fulltime, and she's still with us
now. She does marketing, but shealso does sales. She does HR,
(23:25):
and she does all of that, andshe takes care of all our
events, etc. She has a lot onher plate, and it's this year,
in July, we Grant joined us,also straight out of college
financial background. I wantedsomeone that can help us with
all tracking, like you said,deductions. But also from step
one, from the POS all the way,but also on the purchasing and
(23:45):
the inventory side, all of that,and kind of the relationship
with the accountants, because Ihave less time on my plate. So
initially I had, I would get oneemail every three, four days,
and I kind of celebrate gettingan email. Now I get an email.
Maybe every minute was reallyfun. I enjoy every part of the
job. I work seven days a week,but I love it, and that's why I
(24:08):
think I'm able to enjoy it,because every minute and
everything I do, I enjoy
Brad Ebenhoeh (24:14):
love it. So sales, marketing, operations,
sales, finance, logistics. Yougot kind of demos?
Karim Khalil (24:20):
Demos I do trade shows. That was last week I was
at trade show. I try and do asmany demos as possible, because
that's where you get thefeedback directly from the
consumer. That's the guy that'sconsumers paying for it. The
easiest way is to give someonesomething for free to someone,
and he's going to say, it'sreally good. No one's going to
say anything else. He's notgoing to give you feedback,
because it's free the secondthey have to pay for it. Even at
(24:42):
the demo, he would try it, hesays it's good. If he doesn't
buy it, then you know he didn'tlike it. Or you have an idea, if
he doesn't take a coupon thatyou're trying to offer him that
gets a discount, you know, he'snever going to buy it, or he's
not interested. And you kind oftry to understand why. I also
like to hang out so. Initially,I used to hang do that a lot. I
have less time. Now, I used togo to grocery stores, especially
(25:04):
the whole food aisle, and stoppeople and kind of understand
the purchasing habits and kindof ask them questions. I've had
weird people giving me weirdfaces, and I've had people kind
of interacting, kind of explainto them why I'm doing it.
Listen, I'm here. I want tounderstand what why you're
looking at the aisle what you'relooking for? And I care more
about people who take their timelooking, versus people who know
(25:25):
exactly what they want. Theytake it and they leave, because
those people are harder toconvince. But the people who
take their time are those who Ikind of care to understand how
they think. What are theylooking for? Is it the
ingredient panel? Is it theNutritionals? Is it the item
that they're looking for,something new or, you know,
because there's so many optionswe are, yes, I sold in the same
category as hummus. And there is12 different flavors. There's
(25:48):
seven eight different companiesin every retail store. So it's
really hard buying hummus thesedays. So it's kind of good to
understand, why is this personchoosing that brand over that
brand, or that flavor, or thatflavor? Is it the box size, or
is it ingredients, or is itwhatever criteria they're using?
Brad Ebenhoeh (26:05):
Need to go where the customers are. I like it.
Final couple questions here, aswe kind of move forward. Number
one is like, what are your kindof your KPIs, or key performance
indicators that you kind of lookat consistently, whether it's on
the financial side, sales side,marketing side, operation side,
just kind of, what's a couple ofthem that that you like to look
at.
Karim Khalil (26:22):
So the most important one I've learned from
the industry here is velocity.
So it's, it's, in a way, I'm notgoing to say easy. It's hard to
get into retail, but it's easy,and if you can pay for it, and
if you have the right product,etc, as easy as you get into
retail, they're going to giveyou a chance. The hard part is
to stay on shelf, and velocityis the key word, is the speed of
(26:43):
which the product stays onshelf. Because at the end of the
day, these retail stores arereal estate for them, that's
that they're renting you outreal estate, and need to make
money. The more they turn themore they sell per SKU or per
shelf space, the more money theymake. So velocity is a number we
track, and we have access todata either something that we
purchase, but we also haveaccess to data from different
(27:05):
grocery stores and differentdistributors share with that
with us, and that's something wetrack very religiously, to make
sure that the velocity keepsgoing up in every store, and we
make sure that we've said no toretailers where we feel the area
is saturated for Labneh yet,kind of make sure that. So we
launched on the west coast withErewhon and Pavilions, kind of
the premium banners. We did thatsame thing in the East Coast.
(27:27):
Same thing in Texas CentralMarket and HEB. Kind of Whole
Foods everywhere it's morenatural space, premium stores,
and now we're starting to getinto conventional as Labneh
becomes more trendy at WholeFoods chose our flavor as a top
10 trend for 2025 so that showsyou how, how much levy has gone
through in the last year. Sovelocity is the key. That's the
(27:51):
number one. The other one welook at is a promo uplift. So we
kind of compare. So we do apromotion. Let's say we give,
you know, buy one, get one free,or we do a 25% discount. We want
to kind of see the velocity orthe promo uplift during the
promotion, but also after, do wegain customers? Do we not gain
new customers? It's veryimportant to do that, and that's
(28:11):
also applicable when we dodemos. So we've, we've just
done, we've been doing demos forthe last two months in Atlanta,
where where our headquarterslocated, and that's the
strongest city. Now, by far, itkind of beats every everyone
else. When we bought data, andinitially on Labneh, it was the
worst region. It was the lowestregion. Now, yes, has stopped
(28:32):
performing cities Atlanta justbecause of the number of demos
we've been doing. It's kind of,you know, following that up as
well. And obviously when itcomes to financials, not the
financial statements themselves,but more of the cash flow. So we
predicted that the next twoweeks we need X dollars.
Obviously, some checks beendelayed the mail, and all the
hurricanes and different thingsthat affected that kind of did
(28:53):
we plan correctly or not? Andhow can we adjust going forward
to make sure that, because themore you grow, the more cash
flow you need, or the moreworking capital you need to to
finance the business. So we needto make sure that we don't run
out of working capital goingforward. And as we're adding
more doors and more sales, weneed to have more cash. And any
mistake can affect that.
Brad Ebenhoeh (29:17):
Love it. So cash flow velocity and then promo
uplift, great kind of KPIs andgreat definitions and
backgrounds of those. I love it,alright. So as we kind of head
into wrapping this up, we alwayslike, as a experienced
entrepreneur on the CPG spacethat we can kind of share some
insights to the to the audience,which you've already done, but
(29:40):
just from a kind of a CPG retailbusiness owner, can you provide
one do and one don't to fellowCPG brand owners?
Karim Khalil (29:49):
So yes, so that, that obviously will depend on
the category, the kind of item,etc. So it's I'm going to talk
about Yaza, my experience, whatI've seen, I talked about the
Co-Packer. Please go. Co-Packerdon't produce on your own, at
least at the beginning, becausethat's an extra layer that you
don't want to get into. That'san extra stress you don't want
to get into it. I think I kindof touched and explained why do
(30:11):
get someone an expert. Do getexpertise, especially when it
comes to understanding pricingand costing, whether it's it's
an accountant that's experiencedin CPG, or someone in the
industry, and do marketresearch. So we, one of the
things we did early, very earlyon, we did the focus groups
where we kind of understood theconsumer, how they see Labneh,
(30:32):
what's it? What it is for them.
Make sure that you understandwho your consumer is. You buy
data if you have to tounderstand the space, to make
sure that you're launching.
You're adding value to thecategory. If you're not adding
value. There's so many brands,so many smart people with so
many good ideas. You know youneed to to be different. And to
be different, you need tounderstand who you're selling
(30:52):
to. Those are the big do's. Forme, the big don'ts. It's don't
launch until you're ready. AndI've met a lot of different CPGs
firms that are very excited andin the rush to launch, and we
delayed our launch by three,four months because we had
production issues. It was justno, you know, when you scale up,
it was just not working out. Andwe kind of debated and
(31:15):
internally, do we just launchit? Because it's not that bad,
and I'm like, No, until it's100% perfect. We made huge
losses on production. We justhad to throw it away until it's
100% there's no rush. It's not,you know, it's a marathon. It's
not a race. Take your time andmake sure that you have the what
you think is the best product,the product you're comfortable
with, that you think is going todo really well, because it's
(31:37):
more costly and it's harder tofix the problem later on. So
that's, that's that's kind of a,don't, um, understand the
financial so don't launch if youdon't have the finance to
sustain the business. And I'veseen, and I've read a lot of
case studies where so many greatideas, and they get to a point
where they just can't affordyou, they have to close shop.
And that's kind of, really, youknow, it's heartbreaking,
(31:57):
because either they have to goto VCs are early on investors
and and sell their company forso cheap, and nothing remains
for them. It's not even worththe work, or they just close
shop. And I think that's that'sanother thing that's important.
Maybe the last don't is, don'tbe a, you know, don't shy away
from your mission, whatevermission you have in mind. And
(32:18):
you know, for us, is bringingauthentic Lebanese Labneh
finding product, findingflavors. Our all our competitors
use, use powders or thickeners.
It's cheaper they make they havemore margins and make more
money. We don't. Don't shy awayfrom your mission. Our mission
is to have the authentic way wemake it, the way my grandma
makes it. Think that's the bestway, even on flavors. So we
launched the tar and olive oil.
(32:40):
People don't know what the taris. We're kind of worried about,
do we call it the tar? What dowe do with that? And one, it's
our best selling item flavor.
It's it got the Nexty award atExpo West. I don't know if
you're familiar with Expo West.
I got next year award forPeople's Choice Awards The
people voted for it. And three,it got the top 10 trends for
Whole Foods Market for 2025 as aflavor itself, as a Yaza Labneh
(33:02):
Zatar and olive oil flavor. Soit tells you that, you know,
when you stick to your mission,that's that's the unique
proposition we offer to themarket, authentic Labneh,
authentic flavors, and that'swhat that's the recipe behind
our success.
Brad Ebenhoeh (33:17):
Awesome, great info, several do's and several
don'ts. Do you think would thinkone question popped up? Do you
think you'd be here today if youdidn't take over, you know, your
father's business, or wereinvolved in kind of the space
several I don't
Karim Khalil (33:30):
think so. Brad, and I think I learned a lot from
him, from the team he had, andfrom the experience I went
through. And I think that it'svery, very important to go
through ups and downs, becauseyou're going to have ups and
downs, and you're going to haveto deal with things, and just
learning how to deal withthings. It's not a particular
experience of just copy pastingwhat you what you did. It's just
(33:50):
learning how to think and how toreact and what to do when and
CPG world is full of challenges,and it's a lot of work. You have
to understand. Anyone who wantsto launch a company needs to
understand that from thebeginning, it's a life
commitment versus a typical nineto five job or typical career.
Brad Ebenhoeh (34:15):
Yup, yeah. It seems like, just from our chat
here, you've definitely taken avery kind of wise and mature and
proactive approach to the to thebusiness. And it seems like you
know the growth and the successkind of to date, and especially.
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