As I mentioned last week, Thanksgiving really marks the end of our season. So now, in December, comes the report card. This year is different though. Why? Because we have brought in some outside eyeballs to help write the report card. We contracted a CFO, Michelle, to help examine and share her thoughts with the state of the farm.
The farm operation as a stand-alone business is in the black. It doesn’t make a ton of money, but honestly no farm does. There is a saying in the farm world, “How do you make a small fortune farming? Start with a big fortune.” So the fact that the farm makes money at all is a huge win. I doubt many growers at the farmers’ markets have quit their “day job” and we are able to employee 5 farmers on a year-round basis. Plus a dozen interns. So all that is great.
Next Michelle took the calculator and red pen to the home delivery model. Density of routes. Number of customers per driver. Cost of vehicles. Cost of fuel. Everything looked great until she circled one number—the minimum sale for free delivery, $35.
On average, it costs us $5 per delivery to drop off an order at your home. And so when you divide $5 into a $35 dollar order, the delivery cost alone is over 14% of the total sale. When you couple that with the fact that our prices are below market, you are left with an accounting conundrum of where do we make up that lost 14% in sales?? The short answer is that we do not make it up and we eat it.
And in all honesty, I have known this in the past, but I was reluctant to do anything about it because I did not feel that we had an offering that warranted folks spending more money with us. We did not have half of the amazing products that we currently offer you. With that, it was hard for me to ask you to spend more money.
But this year something incredible has begun to transpire—our food is becoming a bigger part of your kitchen. We have added so many great items this year. Local beef, more farm pork, sustainable seafood, tasty sauces, and freshly baked goods straight out of the oven. We are getting you the best of local foods and you are supporting more local businesses. This is the perfect win-win situation.
This leads us to the proverbial fork in the road. Financially we cannot stay where we are and expect good results. We have to either a) raise the price of the products so that we can make up what we lose on the delivery. Or b) increase the minimum order amount for free delivery to make that cost a smaller percentage of your order.
I do not like playing games with you on prices. We do not have any clever tricks that we use or smoke and mirrors. We work hard with our farm and suppliers to give you the best value for your buck that we can. And so I do not want and will not raise the price of our food in order to fill a gap that is caused by delivery costs. Additionally, I do not want larger orders to subsidize smaller orders. That’s not fair.
So here is what we are going to do, beginning the week of December 14th, the new minimum for Free Delivery will be $45. Any order under that will have a $4 delivery fee added to it. This will be for all delivery orders and pick-up locations. One exception will be pick ups at our warehouse.
I know this will not feel like a positive change for many. But please know that we need to do this. I am not doing this on some willy-nilly whim. The sustainability of the farm demands financial sustainability. This move will help ensure that we stay on that track.
We have succeeded in so many ways this year. Prices our members (you) pay are below grocers. Home delivery is available when no one else offers it. Employees are paid well and eat well. Open space in our community is kept green and free of chemicals. We connect more local farms to more local mouths. The list goes on and on of things we do well. We just need the financial aspect to look as good.
As always, if you have any thoughts, comments, concerns, please email me
Thanks for your understanding and support, Farmer Monte