Paul talks to CEO Peter Van Stolk of Canadian online grocer, SPUD, about how they’re faring and how years of fine tuning their online grocery platform poised them for this moment.
Episode 6 : Peter van Stolk, SPUD
Paul: Hey there friend, I’m Paul Jarvis, and you’re listening to Call Paul, business as unusual, where we explore how business owners are working their way through their first pandemic.
Peter: You're about to see the biggest change in how people buy groceries in the last 200 years. And it's about to happen now. And we're this tiny little company sitting in the crosshairs of that transformational change
Paul: That’s Peter, the CEO of SPUD, an online grocer that focuses on ethically sourced, sustainable food delivery around the province of British Columbia, Canada. SPUD was one of the first grocers to offer internet ordering, accurate online inventories, and delivery. Their software platform is also working to streamline food resources during the pandemic for vulnerable members of the community and frontline workers, even getting a shout out about it from the Canadian Prime Minister.
SPUD is also a B-Corp, which simply means that although they’re a for-profit company, they use the power of business to solve social and environmental problems. B-Corps are a growing movement of businesses that believe we can mash up capitalism and ethics in a way that benefits both the planet and the people on it. That’s why SPUD has things like a banned ingredient list that determines what products they can sell, little-to-no packaging, and the lowest food waste of any grocery store in Canada. All of this is why I’ve been a customer of SPUD for years.
Although their corporate office is closed right now and those employees are working from home, SPUD is very much active, delivering groceries to more people than ever, and dealing with this combination of growth in customers while working through the very real issue of human resources during a global pandemic.
Peter: SPUD started as a CSA back in 1997. And CSAs were Community Supported Agriculture, meaning that they really came about because organic farmers couldn't get their produce to market. And the process back there was you get a box and people would sign up for a box of produce. And whatever the farmer grew, which was in the box, so it was predominantly kale. And then, they started to realize that the customers needed milk, organic milk. So, they started to create this online grocery from produce.
Paul: A lot of what SPUD does is low food waste, sustainability. What drove the business and the corporate decisions to move in that direction?
Peter: I think we all can agree that food and how we as individuals on this global planet consume food is the biggest impact to the future of our civilization. We have seven billion people on this planet and we have to food them, feed them, sorry, in a sustainable manner. And so, that's really what makes it incredibly important to understand food and how food is so important in our cultures. Obviously in our diet and nutrition, those obviously, but it's also important in creating friendships and having positive relationships with people. And sharing a meal and breaking bread is so important. So food is this incredibly important part of our life and I think we've always realized is that consuming food that has no nutrition and is bad for the planet is basically fast-forwarding the outcome that we all don't want. And you don't have to be a rocket scientist to look back and say, "Okay, we've had the '70s where we started to create these Cheese Whiz products and these processed foods, and all these things that happened in the late '60s and early '70s, and that stuff's not good for us." Cancer rates are going up. That's just common sense. But food waste, as you know, Paul, is a massive problem. And if it was a country, it would be the third largest country in greenhouse gas emissions behind the US and China. So if you're a capitalist and you own a grocery store, by reducing food waste, you increase your profits. That's really positive. If you're a farmer, by improving food waste, you increase your yield. If you're living without food and you need food, we're throwing away so much food that we could actually feed more people the food that we're throwing away.
Paul: Do you see that as a trend that's been growing in your time at SPUD where people maybe didn't appreciate or even maybe not appreciate but just think about things like food waste and sustainability, and relationships with farmers and that? Have you seen that increase over time?
Peter: Yes, no question. there was a trend to convenience, a trend to local and a trend to sustainability. Those were undeniable trends that were macro-trends that were globally throughout.
Local is obviously about food transparency and we're seeing that in the COVID crisis. I think there's three meat plants in Canada and two of them have COVID, and they supply just about 95% of the the beef in Canada. Well, that's a huge issue. When you have these massive facilities producing so much food that Costco now is rationing how much meat you can buy, because the source of their meat is in jeopardy due to COVID. I think what people are now starting to realize, to answer your question in a full circle, is that the food they put in their bodies will have an impact both to their bodies and to the planet. And they're willing to make better choices now, if they're given the right information.
Paul: But SPUD I think has been positioned to deal with this better or at least better than a typical Can you talk a bit about how SPUD works in how it relates to what we're going through right now with self-isolation, quarantine and the pandemic?
Peter: I think what the pandemic has done is it's shined a light on communal spaces such as grocery stores. And so, SPUD is an online grocery store, so you have your selection of food and it's made from online. And you choose your food. we have employees. We call them team members and they are. They're all actually owners of the company. So, they're shareholders of this company and they do their best to select the best food that's available at the best price to allow our customers to have the food that they want. The main difference between going online and offline is that when you shop in a grocery store and I'm sure you've had this experience as everyone does, you want to go find if they have a yogurt, your favorite yogurt. And they don't, but there's another brand of that snack. So, you take the comparable brand and you make that decision probably in less than a second, because you're making the decision. So what that means is that you're going to a grocery store and you're making decisions on the fly that you want, and there are decisions that are being made for you because of out of stocks or somebody in front of you bought all of the 12 yogurts in front of you. So what we try and do is we try and create the most amount using technology to ensure that we have the best supply for the customer at the time.And we try and manage that by having a virtual inventory.
Paul: I've placed orders with a few other grocery stores and I've got probably 20% of what I ordered when I actually get the thing. Whereas with SPUD, maybe once every couple weeks, there's an item that I ordered that your supplier shorted you or something. But for the most part, everything that I put into my cart that I check out with, I receive.
Peter: And I think what you asked me about the question about what COVID has created, it put a stress test on us, both physically and I think people have to understand that. It's been really interesting, because working in the pandemic is my first. This is my first pandemic and hopefully my last. What it means, it means you have all your workforce that are your accounting and your marketing. All these people are not in the building. They're working at home, so that's a real shocker. All of a sudden, boom, one day no one's there. The second thing is if you're trying to coordinate accounting with purchasing, it becomes more challenging. It just is, and it's not right or wrong. It just is. And then, you have a workforce that you really want to protect in the warehouse. So how do you do that? So then, the first and foremost thing is that if they're feeling any sort of threat to their health, meaning they feel cold, they feel sick, they can go into self-quarantine which is super important for them. So, they feel like, "Hey, I'm not feeling great right now." I don't know if it's COVID. I don't know if it's a cold. I don't know if it's, "I jammed my toe." I don't care. It's not for me to judge, right? It's like you're rollerblading on ice with rollerblades. So what that means is you have a very unstable workforce in a time when everybody wants you. So everybody wants your service, because they don't want to go to a grocery store. All of a sudden, you have 1,000 orders and you get 20 people versus 50. And you can't complain about it, because it's a pandemic. And you shouldn't complain about it, because you're assuming that these people are making the decision that's best for everyone else and they are. But you have that multiplied, because that same activity of people not showing up at SPUD is also happening, people not showing up to vendors. So what you thought you would get delivered on Tuesday and the truck driver didn't feel like driving on Tuesday for whatever reason or they were short, it comes Wednesday. So, you have this cascading effect of different things that you have no visibility on. And it's not a blame or a whine or a complain. It's part of a pandemic. And then, what happens is customers may not be able to get their banana bread when they want it. And then, they're like, "Well, I want my banana bread." And I'm like, "Yeah, I want to give you your freaking banana bread, too. I really want to give you your banana bread. There's nothing more I want to do than give you the banana bread. So, we've been working really hard on changing those things that are different and communicating better to our customers. And that's what it's been like. So if someone asked me, "What is it like to work in a pandemic?", my response is, "Rollerblading on ice." You just don't know what's going to happen every minute.
You've been very good at SPUD at illustrating that please have safe distancing with our drivers and all of that, but how are the drivers handling it or dealing with it?
Peter: Now, they've all got into a zone of it. At the start, they were very concerned. We have 60 drivers in Vancouver and 20 wouldn't show up, and that was hard. You're dealing with people's fears, right? And that's the hardest thing that this thing is doing for everyone.
Paul: You've had to hire more people as well to deal with the influx of orders?
Peter: So, you had this perfect storm, a positive which is from a business standpoint, you have positive demand. But on a negative is you want to maintain the consistency to your current customers and your core workforce is shifting due to fear. In any way, shape or form am I complaining, because I'm so fortunate. Every day, I wake up and say, "I know of so many people who are having challenges." All I'm saying is that I'm very fortunate that I have a group of people who work extremely hard. And this has now been five weeks where the core people have not had a day off and working 12 to 14 hours a day-
... just to maintain it and that's really what I'm grateful for. So when I get feeling depressed or down because my service levels are not right, or you may have not got the item that you want, because we're all striving to provide this amazing experience. But I sit there and sometimes I'll just say, "I'm so grateful that, yeah, this may not be perfect, but I know 10 people who are in the event business and there's not a chance. 50% of Vancouver's businesses are tourism-based.
Yeah, regardless of if business is up or down, there is still... Like you said, this is all of our first pandemics and there are challenges associated with from one day to another everything changing.
Peter: Everything changes.
Paul: Yeah, there's no way around there's going to be challenges there.
Peter: Yeah, everything. We were very fortunate. Another part of our business is Food-X Technologies, And our vision there is to create a platform that enables groceries to go online profitably and sustainably. So, we focused on sustainability, traceability, and circular v economy. And we were called out by Trudeau in his daily briefing for the cool work that we're doing for frontline workers and how we're trying to create a very traceable food system for our community with respect to how we can create a platform for frontline workers and at-risk community members to get food very quickly.
Paul: So, it seems that the pandemic has affected both food production and distribution. And I think a lot of people are worried about that, because they don't know what's going on. So, I'm wondering if you can speak to those points.
What this pandemic has done is it shined light on certain types of food that we took for granted. And I think the brightest light has been on proteins without question. If you want to look at Maple Leaf Cargo, if you want to look at poultry farms, those big facilities unfortunately are massive, massive facilities where people work very close together. Historically, they're challenging from an E. coli perspective. They're very challenging to keep clean. It's one thing to keep it clean from a food safety perspective. It's another issue to keep it safe from an E. coli perspective or from a COVID-19 perspective. I think that you're seeing that in Beyond Meat burger shares jumping up 1,000% or whatever they did, and all these plant-based meat products are now the hot new tech stocks of the world.. This is really positive, positive that we are now looking at a plant as a substitute for proteins. People now not going to restaurants, so what do you see happening? They're baking. So there's this huge push to learn how to cook. People learning to cook is good for society, because it will prevent us from eating crappy food that we were buying before. And then, it will lower the, in my humble opinion, disease and all the costs associated with disease. So the fact that more people are baking, the fact that more people are cooking and recipes, and the fact that people are spending some time in the kitchen and enjoying it is truly something that is important, because once you do that, then you start to appreciate the ingredients that you're purchasing. Then they're starting to realize that there is a difference between an organic tomato. There is a difference and there is a reason why that product is slightly more expensive, but it also employs people, your neighbors and it employs people who really care about what they're doing. And that's in this good economy.
Paul: One of the things that I think is really interesting about SPUD is when you do an order, it shows how far every item in your basket has traveled versus the average for food products purchased traveled, which I think is a lens through which I think more and more people are thinking about .
Peter: Food transparency is so important and what we're talking about is do we know where our food comes from. Knowing that and that confidence and feeling safe, and I think that's what this pandemic has really shook the core of people in understanding that. The fear of this pandemic makes a little less or more vulnerable. And that vulnerability needs to transcend into the vulnerability of this planet and how can we take care of this planet, because if we just get through this COVID-19, and then we're left with a world that's warming at two or three celsius. You're going to be here in five years, and we're going to deal with this again and again and again. My vision of this crisis is a wake-up call that allows us to all know that we can get through these things and we can work together.
Paul: What changes do you think that you've implemented in SPUD that you think are good ideas that have come from this and come from these rapid changes, that you see lasting into the future once this is all over?
Well, I would first of all start with our platform to get at-risk community food quickly. That's really smart. That's something that we hope to share with everybody. It's really smart and it's an amazing piece of work that the team did, and I'm super proud of it. So when you have a pandemic like this, you are going to have community members who need food that cannot afford food or at risk in the Vancouver side where there are people who just need help.
Peter: And there needs to be a way that does it effectively and at a lower cost from a logistic side. And we were just talking about doing it efficiently, effectively, quickly and doing it with passion. We set it up so no one's judgmental about... If you need food, we're not judging. Get your food, enjoy it and be safe, and be happy and wash your hands kind of thing. So, we really like that and we think that's a really positive thing that we can take going forward.
Paul: What else do you see going forward ?
Peter: And you're about to see the biggest change in how people buy groceries in the last 200 years. And it's about to happen now. And we're this tiny little company sitting in the crosshairs of that transformational change. And not only do we distribute groceries in the market that we do, we also create software that allows retailers to go online. And these retailers are massive and they're talking to us about how we can do it and help them. So this pandemic has created some very clear trends that are not going to go away. The first trend is that people want to feel safe on their food supply. So there's the safety on their food supply is not only where they buy it but what they buy. Those are very important. So where you buy your food, is it safe to go to a grocery store? And what are you buying from that store? Is it safe? And so, food transparency, convenience are now in part the same. What's going to happen is it's going to be an opportunity for people to create amazing products in a safe local environment. And there will be a huge reception for those products. We've gone through this five or six weeks of crisis and I want to say to the people that, yes, there's jobs that are going to be lost and there's no question about it.
Peter: But there's going to be jobs that are created and there's going to be time for us to look at how we can create new and positive things for both the community and the planet. And so, we have choices and this is what I would want to share.
Paul: Food has become one of the most pressing issues for all of us, and dealing with grocery shopping is now the stuff of anxiety-nightmares.
I’ve been worried about how this pandemic will affect food production and supply chains, especially for those on the margins. Will food prices increase to a point where they’re too much for some? Will our options for what we can eat be dramatically decreased? How will we adapt, and how will we keep everyone well nourished and well fed?
Peter doesn’t have all the answers, of course, but he’s been thinking about more sustainable and resilient food system, since before the virus struck.
It was good to hear that sustainability in business can, be… sustainable. There’s a real opportunity here for entrepreneurs to create amazing products and processes in safe, local and sustainable ways to keep us all fed. We can use this visceral feeling of a lack of safety to develop food systems that are positive for both people and the planet. And in a world filled with uncertainty about nearly everything from global warming to how, when and where we get our food, SPUD's contribution to the community's peace of mind is no small thing.
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