I read about the Fruit Guys business in my Entrepreneur magazine this week and can’t get their story out of my head. The company was started in San Francisco in 1998, during the dot com boom. The owner, Chris Mittelstaedt, was working at the Fairmont hotel as a fax fetcher boy.
His boss was ten years younger, and showed up to work hung over most days, and Chris realized he could do more with his life than fetch faxes for people. He had just learned his wife was pregnant, so he decided to start his own business. What his business would be, exactly, he didn’t know.
Chris talked with a friend who was working at his desk fifteen hours a day at his dot com job, who complained he wasn’t getting any exercise and all he has time to eat all day is donuts and fast food. Chris then had a light bulb moment when he realized getting healthy foods to the office would be needed by many workers.
Chris took the couple hundred bucks he had and went to the biggest buildings in downtown San Francisco. He wrote down the business names and addresses in each building of the Embarcadero Center. He obtained 500 business names by doing this, and was able to land 4 or 5 accounts. Chris then delivered the food donned in a banana outfit. People noticed him.
Chris began working 18 hour days to get the business going. When the dot com industry tanked, Chris came into some difficulty. He lost many customers because businesses failed, and people owed him over $100,000. He had to lay off most of his staff, which he says is the lowest point of the business.
The Fruit Guys got through the hard times and now has recovered, as this year marks the company’s tenth anniversary and they have revenues of $10 million this year.
Some of the things I like about this business:
- He makes one sale to a corporation, he sells fruit to all the employees within it.
- The company sets up weekly deliveries, so he knows in advance what his sales will be and can count on repeat business.
- Low start up cost
- In San Francisco many offices are close together, so he makes one stop and can deliver to many places.
- People are willing to pay a premium for delivery, even though it can actually be cheaper for the business than leasing retail space.
- Dressing up in a banana suit makes people recognize his brand.