The Supply Side: Family chili operation eyes national retail distribution

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.
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There’s not a Walmart Store within an hour’s drive of Webster Springs, W.V., a one stoplight town nestled in the Appalachian Mountains. But that hasn’t stopped Angie and Dee Cowger from seeking national distribution with the retailer for their Custard Stand hot dog chili which is made there.

“We’ve been selling our family recipe hot dog chili to Walmart on a regional basis since 2004 and we’re in Sam’s Club, but we have not yet been able to crack the national distribution,” Angie Cowger said in a recent interview with Talk Business & Politics.

The couple recently appeared on Shark Tank seeking $400,000 and expertise to help expand their chili distribution outside the 15 states it now has distribution with in Walmart, Sam’s Club, Kroger and other grocery retailers. While the Cowgers didn’t attract a shark, nor any additional investment, Cowger said the company’s online chili sales have exploded 5,000% since the program aired on Feb. 21. The company is working with E Gourmet Solutions to handle its online fulfillment which is done solely from the Custard Stand’s website.

“We’d like to pursue business with Walmart.com but we’re not sure exactly where to begin. Now that we are finished with Shark Tank we will pursue those options,” she said.

FAMILY BUSINESS
Custard Stand hot dog chili is a family business that consists of a flagship restaurant and five franchise locations, a fully accredited manufacturing facility and a small logistics arm that delivers product when necessary.

The family opened its first opened Custard Stand eatery in March 1991 selling hot dogs and dairy treats in its hometown of Webster Springs (pop. 702). Angie is a classroom teacher and has been for the past 30 years. Now teaching part-time Angie and Dee have their hands full with the growing family enterprise.

“My mother-in-law and all three of our kids also work in the business. It’s always been a family venture,” she said. “We have a small production team to help.”

Over the years Cowger said folks in the community began to ask if they could buy a quart or pint of the hot dog sauce they ate in the restaurant. The demand for take out chili kept growing until finally the couple had to expand into a manufacturer.

“In 2003, we converted a three-bay car wash behind our restaurant into a USDA-approved production facility and opened a second business, Custard Stand Food Products,” she said. “We have since invested in additional cooking kettles, more freezers and cold storage room to be able to expand our distribution.”

Last year the food products company had roughly $1.6 million in sales. Angie said about 60% of the business is at retail, while 40% of sales come from their wholesale distributors for food service vendors.

SELLING TO WALMART
Angie said after their production facility was USDA certified, she began taking the product to food shows and she drove it one hour up the road to the nearest Walmart Store and had the store manager give a try.

“He told us about Walmart’s efforts to buy more local products and said that our timing couldn’t have been better. We filled out a two-page application and found 15 stores in our region that wanted to sell the product. Then a little while later we got into Sam’s Club because the Club manager was working the door one day when we came through,” she said.

Angie said they were buying their chili ingredients from Sam’s Club and the club manager who checked the receipt one day asked them what they were going to do with all that chili powder.

“We told her about our retail chili business and she agreed to try it. She got our product into Sam’s Club in our region several years ago,” she said.

Custard Stand now sells 1-pound containers of frozen hot dog chile to Walmart Stores and 3-pound containers at Sam’s Clubs. She said the stores often merchandise the products in the meat cases next to the hot dogs. The product has a 30-day lifecycle in the cooler or two years if it stays frozen.

“In the coming months we plan to self market our hot dog chili and a newer chili soup product that includes beans to Walmart.com and other retailers in hopes of getting a broader distribution network, now that we have the added production capacity,” Angie said.

OVERCOMING REGIONAL TASTES
One of the big reasons the couple didn’t get a bite from their Shark Tank proposal was because the venture capitalists said chili is a regional food preference that can vary across the country. Angie said their hot dog chili has a slightly sweeter taste than other brands. She said the bean and beef soup product which is not yet sold at Walmart has a spicier taste. She also said based on growing Internet sales from around the country she hopes to break down the regional barricades that some may erected in the past.

“One of my goals is to get my products back in front of the chili buyers at Wal-Mart and let them taste for themselves. Our product is made in the U.S., free of trans-fats, it’s gluten-free with no fillers or added preservatives. You’ll recognize, and be able to pronounce every single ingredient on the label,” Angie said.

While the couple said they were disappointed they didn’t attract a shark they took some solace from the kind words they received from billionaire venture capitalist Mark Cuban.

“You are everything that everyone watching this show (Shark Tank) wants to see. … Someone grinding it out and claiming their share of the American Dream,” Cuban told the couple.

Angie said the overall Shark Tank experience was exhilarating but the couple has already laid the groundwork on which to build.

“We are strong together and that strength will make us bigger and better,” she said.