Scrappy Entrepreneurship At Its Best: Fresh Diet CEO Zalmi Duchman (Part 8)

Sramana: What is that deal going to look like from a business structure point of view?

Zalmi Duchman: It is a straight up revenue deal. The menu is ours and we are running the operations. They will receive a commission for every client that signs up with the program. We have high expectations because at the end of the day, even if we get only 100 people added a day, that is still $100,000 a month. In terms of economies of scale, that adds a lot of value to us because we are paying rents and salaries. That is not a lot of people for us to handle spread over six kitchens. Even if the number of new clients added is low, it is still a good deal for us.

Sramana: How many customers do you have across all your different kitchens right now?

Zalmi Duchman: We have over 3,000 active clients. We do about 2,000 bags a night because clients can turn any day on or off. About 70% of our clients use the service Monday through Thursday.

Sramana: Have you raised any money at this point of your business?

Zalmi Duchman: We raised $2 million from a private investor who is based out of Canada. He is very hands-off and loves our company. He came after me and pursued me to make the investment. I told him what I was I was able to come up with based on a friends and family round and expressed my desire that he either cover it all or let me do the friends and family round. That was it for him, so he covered the $2 million round.

Sramana: Where are you at now in terms of revenue and profit margins?

Zalmi Duchman: This year we will do about $16 million in revenue. We should be at a net of 5% to 10%, but next year we should be at net 20% with economies of scale. We plan on growing by 100% this year. Anything less would be unacceptable.

We do a Black Friday special every year as well. We offer the service for $29.99 a day and let our clients buy as many days as they like. We guarantee that our Black Friday price is the lowest we will offer and have some clients buy an entire year worth of food. Last year we did over $300,000 on Black Friday and Cyber Monday. This year I had to rework our software to handle the load. We had four times the amount of sales and revenues this year compared to last year.

Sramana: That is great. I really enjoy stories like this.

Zalmi Duchman: Thank you. I never could have imagined that it would have gone this well. I am just an entrepreneur and this is what I love to do. The funny thing is that I did not know it. When I meet other entrepreneurs, I find out they are just like me. It has to be part of your blood to make something like this happen.

Sramana: Thank you very much. Good luck!

This segment is part 8 in the series : Scrappy Entrepreneurship At Its Best: Fresh Diet CEO Zalmi Duchman
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