Optimize Your Food Costs with Hava Volterra

Coffee, Engineering, and Building Parsley Software

Will Schreiber: Let's get started. I imagine more people will trickle in, but happy March Bottle coffee club day. I hope everyone got their gift card. Today we're really excited to have Hava from Parsley software join us. Parsley, if you aren't aware of it, is a really great tool for managing your ingredients and back-of-house operations as they relate to producing food, managing your menu and ingredients, and even ordering from suppliers. So I'd love to kick things off with a question about your morning ritual. I know it's about noon where you are on the West Coast, and I'm in New York trying not to drink coffee in the afternoon, but here I am. Hava Volterra: Oh, I love caffeine. Coffee is very important to me. My father was Italian, and if there is one thing that was important to him when I was young, it was the idea of drinking coffee with his daughter. Since a young age, he was getting me used to the idea of coffee. He got me chicory so I would get used to the flavor. His idea was that I couldn't really have real coffee until age 12, but I love coffee and I love it the Italian way with a stovetop moka. Will Schreiber: Oh nice, do you make it every morning? Hava Volterra: Yeah, I do it every morning. But the truth is, coffee is brought to me in bed every morning, and I'm so attached to it that if I travel for more than a couple of days, I often take a burner and my stovetop with me to make sure I have the coffee I want in the morning. Will Schreiber: That's not messing around. That's really cool. We had a big espresso talk on our all-hands today, so that takes the cake. I think traveling with your own moka pot beats everything. Tell us a little bit about how you got to starting Parsley and what you guys do to help meal delivery companies. Hava Volterra: Absolutely. My background is engineering. I'm a hardcore electrical engineer. I worked in communications equipment, image processing, and ultimately very high-speed components for communications. But as a teenager, I always wanted to be a chef. At some point, we had sold a company and I decided to pursue that dream and start a prepared meal company. Being an engineer, the first thing I thought I needed was software, which I was sure would be easy. So I hired someone to do it. I had developed software in the past, but anyway, the point is I hired someone and it didn't work. I tried someone else, went through a few people, and finally hired a student in his last year of computer science. It took a year. We realized it was quite complicated, but he developed software for me, and that's where the idea for Parsley came from.

From Meal Delivery to Building Parsley

To explain this business, because I think it's relevant to a lot of your customers: my idea at that time was to learn how to serve food. So everything was going to happen on Sunday, which would leave me the rest of the week more or less free. We would go online with our menu for the week. In the middle of the week, people would place their orders by Saturday afternoon. We would do all our shopping Sunday morning, prep, cook, chill, and package. Everything would be delivered Sunday night, and people would find it in the cooler by their doorstep Monday morning. That was the idea, and that's what we did. What that really meant was we were a very big operation on Sundays, especially as we got up to speed. But in order to do that, I needed software that would manage recipes, tell me what everything would cost, and also tell me what to buy. It would create all the prep lists and scaled recipes, because every week we were cooking different things. Anyway, that business worked. It's not terribly scalable with just a one-day-a-week business—it's not scalable to multiple locations—but it worked well and I learned how to serve. We had been talking about doing Parsley since that original development. A few years later, after the student who developed the software went off to another company and did their own thing, we started Parsley together. Parsley was developed from scratch, but using everything we learned from that experience. We had a much broader idea: we were going to serve restaurants, basically any food production. Our focus was to make it easy, user-friendly, and accessible for any mom-and-pop operation. As we launched, we realized there were more and more features that people wanted, and we also realized that larger customers wanted it as well. So we basically moved up while still servicing single-location and very small operations. Parsley today has an entry-level product and expands to much larger volumes and multiple locations. We support all of that. Will Schreiber: How have you seen Parsley evolve over the years with the evolving meal delivery market? Hava Volterra: We've basically learned that customers need more than we thought originally. At its launch, Parsley was ideally suited to prepared meal companies. That wasn't even the intended focus—it was because that's what we knew and how we designed it. We started from recipes and scaling recipes. From the beginning, we added nutrition facts so you could automatically get calories and full nutrition information: protein, carbs, and so forth. With a recipe, it tells you that automatically. Of course, you immediately know what your recipe costs, and as you're developing it, you can see those numbers change. We found there are plenty of other features people need: prep lists, production planning, the ability to import orders and connect with ordering systems, and label printing capabilities. You can set up your own template with your logo and the information you want, and it all draws from your recipes. That was something we originally tried to connect with other companies for, and then one of our customers asked, "Why don't you just do it?" I suddenly realized we should. Will Schreiber: We relate to that all the time. It's funny how that works.

Learning From Running a Meal Prep Business

Will Schreiber: You got into this by actually launching a meal prep and meal delivery business. When you look back on that business now with all the extra knowledge from Parsley, what would you have done differently? Hava Volterra: That's an interesting question. If Parsley had been around, I would have used Parsley. But that wasn't really possible. I learned a lot about production best practices and manufacturing. I understood this somewhat from the beginning, but it became clear that whenever possible, you work by weight—by portion by weight—as opposed to by volume or anything else. I also learned things running the business that don't necessarily relate to Parsley, but really to scalability and finding the right kitchen. Something that I do see a lot through Parsley is how customer needs and interests change over time in terms of what's important for their food. We had a very specific focus on French, Italian, and Mediterranean home cuisine. We did those dishes because those are cuisines I know very well. Although even then, we expanded to other parts of the world because you need to have variety. Will Schreiber: What are you seeing now in terms of consumer preferences? Hava Volterra: I would say that when we started, the main theme in meal delivery services was diet—calorie-based diet. You get 1200 calories a day, maybe 1000, more often maybe 1500. That was what people were looking for. Now people are looking for much more. Today it may be keto. It may often be all organic. It may be specific dietary styles that are more health-focused as opposed to weight-loss focused. Even if that ultimately results in weight loss, people are very interested in health and in managing their performance through the food that they eat. Will Schreiber: Much more macro-oriented than just calorie and weight loss. That's interesting.

Managing Food Costs Effectively

Will Schreiber: Let's talk about some of the more specific things all business owners can do better. What are the biggest ways business owners can effectively manage their food costs? Beyond just tracking it with a system like Parsley, let's assume someone's set up and able to see what's going on. Do you have a framework or recommendations on how business owners can work through and actually manage their food costs? Hava Volterra: There are specific characteristics of prepared meal companies that are different from, let's say, a restaurant. Usually, a prepared meal company needs to have a lot of different recipes because you don't want to offer the same thing every week. People need variety to stick with you. If it's a restaurant, you might go once every two weeks or once a month, and you're okay if you always get the same thing because that's what you feel like eating that day. But if it's a prepared meal company and you want to provide maybe half the meals the customer eats during the week, you need to do that week after week with many different dishes on offer. Generally, our prepared meal company customers have a very large selection of recipes. When you do that, because you have to develop a lot of recipes, you need an easy way to know what the cost of each recipe is going to be. You want to know when you create the recipe how much it's going to cost. It has to be easy to know that because you're making a lot of recipes. Of course, that's something Parsley offers, but any way you do it, you have to know up front what the cost should be. You need the cost of your ingredients and something that will calculate the cost per portion, per recipe, including your packaging and all the elements that go into it. If that recipe doesn't fall into a reasonable framework and you don't have a reasonable margin on it, don't do it. Maybe you need to try different variations. Maybe you need to change ingredients or raise the price. I don't know, but you need to make sure you maintain a certain margin. Traditionally, we talk about 25 to 33 percent food cost. Thirty-three percent is fine dining. I always stuck with 25 percent, including packaging. That should be 25 percent food cost, but you might do it a little bit higher. You need to know what your number is, and obviously, some dishes will be more expensive than others, but it needs to average out correctly. The other thing, and this is again related to prepared meals, is that because you're changing your recipes, you're likely to have variations from week to week. What Parsley will give you—and you need to have this no matter what you're using—is a list of what you need to buy with the correct quantities. A restaurant can just repeat their purchases from the previous week, but it doesn't work for prepared meal companies. If you're changing your offering every week, you need to purchase accurately. That can make a huge difference. It's a combination of purchasing the right amounts and not forgetting anything. If you forget something, you may need to rush out and buy it, which might be more expensive. You've lost time and so forth. Accuracy in ordering, in pricing your recipes, and in ordering—that's really important. What comes out of that is that you actually don't need to keep much inventory. Parsley has full inventory capabilities. Because we have different types of customers, not only prepared meals need to take inventory. Some things you don't care about—you're going to keep your spices. You don't buy them every week; you just buy them as you run out. But most things, ideally, you're running on a very low inventory level. You buy what you need, how much beef, how much chicken, or if it's vegetarian, the produce, and you buy the correct amounts. You use them, and at the end of the day, there's nothing left. That's the ideal situation, and that's the way we were running. With prepared meal companies, you can more or less do that. Why do I say more or less? Because we definitely have customers who have an estimate up front of how many orders they'll get for every dish, but they allow changes. They do their purchasing a bit in advance, so they have to make some estimate and then converge on what they really need. When you do that, you may have some leftovers and some last-minute purchases, but you want to be as accurate as possible. The last thing, of course, is to figure out who the right suppliers are for the different items that you're buying.

Managing Yields and Nutrition Labels in Parsley

Will Schreiber: I'd love to dig into supplier selection, but first we have a relevant question about how you deal with yields for certain recipes. How does Parsley handle yields, and how does that impact the nutrition label based on how you cook it? Hava Volterra: Okay, sure. First, there's the yield of how much you get when you prep an item. There are different yields along the way. For example, if you have onions in Parsley, you probably will, then you have chopped onions, peeled onions, sliced onions. For each one of those, you can enter a yield. We start with a nominal yield, but you can enter it. For sliced onions, it's mostly 80 percent, but some people get 85 percent. First, if you need a certain amount of chopped onions, and we'll give you the prep list showing how many chopped onions you need, if you need 10 pounds, it may tell you that you need to buy 12 or 12.5 pounds. So it'll tell you how much you need, taking the yield into account. Now you have what we call a sub-recipe, which is the components of a recipe or a dish. Let's say you're making hummus, and this is the elements that go into it. You tell Parsley how much hummus that's going to make. That is the yield that recipe gives you. So if you need four ounces of it, Parsley knows how much you need in turn. Obviously you're dealing with larger quantities, but how much chickpeas, how much lemons, and so forth you're going to need. So that yield is taken care of to make sure you make enough of it. And then ultimately you have your dish that you're packaging. You know that you need four ounces of this, two ounces of that, three ounces of that, but that's already been yielded for you so you make the correct amount. Will Schreiber: So the yielded ingredients become the nutrition label, right? It's not the inputs, it's whatever coefficient off the yield is. Hava Volterra: Yes, so the yielded raw ingredients—meaning if you use a pound of chopped onions but you have to start from 1.2 pounds, the calories we're going to use are for the pound because that's what remains. Now, if you cook it down—let's say you sauté it down so it only weighs a quarter pound—it still has all the calories that a pound had. It just lost water. So those things are managed in Parsley. We give you a fat loss percentage. Let's say you take a burger and sauté or grill it. You're going to lose some fat. Let's say you lose half the fat. So actually, calories went down because that fat dripped away and you're not serving it. So we give a fat loss percentage that you can use as a parameter, and that will correct for that fat you lost. The other thing that we have, which is actually unique to Parsley, is an uptake percentage. Let's say you use a marinade or you cook your pasta in salt water. Not all the salt or all the elements of the marinade go into the finished dish. A lot of it is drained away. So for that, you use an uptake percentage. Those things are significant. Will Schreiber: I love that you're an engineer. This is the classic case of something that seems simple until you reveal it a little bit, and then it's way more complicated. I'm on calls all the time where someone says "This can't be that hard," and then you actually go to do it and realize it gets complicated quickly. That's really interesting.

Food Sourcing and Supplier Selection

Will Schreiber: On the food purchasing piece, I'm curious what efficiency or price gains you see by working with certain distributors or aggregators. Do you see that it's worth going straight to suppliers, or what setups do you see work best for businesses trying to scale and get more efficient? Hava Volterra: We deal with businesses from really small ones—mine was small—to huge ones, more than a million meals a week. The parameters are totally different when you're smaller versus when you're larger, and you need to optimize for what you're doing at each level. At the smaller level, you might find that you can get your best prices at Trader Joe's, at certain stores, at the farmer's market. The thing you need to make sure of is that you always have the quantity that you need available to you. You might have to do your own shopping. As you get larger, you may order from a broadliner like Cisco or from a specialty produce provider. There's the question of delivery fees and minimum orders. These are all things you need to look into. If you put it into Parsley, you can put multiple supply options and immediately see the cost per pound so you can compare whether the bigger provider is better or not. When you get to really large quantities, we have capabilities like split orders, because then you can have an issue where even a large provider won't have enough for you and you need to be able to split it. It's a different issue. But generally, when I look at prices, I don't see a huge difference between what large customers get from wholesalers and what we get at stores with reasonable pricing. So it has a lot to do with your operations and what works for you. Will Schreiber: At what scale—in terms of meals per week—do you recommend switching to a supplier versus just shopping in-store? Hava Volterra: That's a good question. You know what? I don't really have a specific number there. It depends what you're able to work out. I would off the top of my head say 500 to 1000, but I could be wrong with that. Will Schreiber: And as a practical note, just ask the supplier how to get set up. If you're not sure how to get a wholesale license, the supplier would know. They want you as a customer, and they can walk you through it.

Comparable Solutions and Parsley's Differentiators

Will Schreiber: Before we move on, if you could take a minute: who are the top comparable companies to what Parsley offers, and why is Parsley better in your mind? Hava Volterra: This is something customers ask, and I'm in a situation where I haven't actually used any of these other pieces of software. So everything I know is a little bit of here and a little bit of there. But traditionally, there was a company called Chef Tech. They're quite widely distributed, although at this point they're very long in the tooth and not properly supported. People continue using them, but I don't think a new customer would use them. We do some work with colleges and universities. There's a company called Seaboard. They're very large and you'd want to go to them if you're very large. I don't think they're terribly relevant otherwise. There's another company that escapes me at the moment, but also for colleges and universities. Not terribly relevant. We do work with Sodexo and they use something called FMS. I'm not sure that's relevant either. The company I would say is more in our space today is called Galley. I don't honestly know much about them. I do know they're much more expensive. As far as I know, they do less than us, but you probably want to check. There's also a company called Reciprocal, a much older company now acquired by a company called CRS that makes point-of-sale systems for grocery stores. Grocery stores are actually a big market for us. They support prepared meals, catering, and other areas.

Habits of Successful Meal Delivery Operators

Will Schreiber: What are traits or habits that you've observed that set the best meal delivery owners apart? What are businesses doing really well, and what mistakes do struggling businesses make? Hava Volterra: I divide this into at least two or three different areas. One is the type of food that you make. Is it tasty? How many people like it? Does it fit a market need? When I say fit a market need, we've seen clients do very well that are much more keto-focused or muscle-building focused. That is a certain market need, a certain niche. If you do well there, it's a large niche. But there's also just good food, right? There's customer service. There's marketing. Those are all things that aren't about Parsley or any type of software. Those are other issues. Now, as far as operations, ultimately you need to be profitable in a competitive business. To be profitable, you need to price things well. To price things well, you need all the controls I was talking about before. You need to know how much each recipe is going to cost you per portion. You want to know that up front, not after you've run it a few times. You want to purchase correctly. You don't want inventory that goes bad. Ideally, it's all fresh. You also don't want to spend too much time on things like calculating how many chopped onions you need. Those are hours you're paying people for. That gets into operational efficiencies, and we focus on operational efficiencies. Will Schreiber: Do you have any tips or advice for choosing the right kitchen and choosing the right partners and suppliers? Hava Volterra: A lot of this depends so much on where you are in development. For us, it was important, and this is generally true: you need space when you're doing prepared meals. The reason is that you're actually making large quantities that need to be chilled and packaged. With a restaurant, you may be pushing it out the door, but you can't really do that with prepared meals. In fact, many prepared meal companies will have a multi-day process. They may do certain prep on day one, certain on day two, and certain on day three. If you're going to do that, you need a lot of cooling and walking space. You definitely want to go bigger as far as that goes. We always used what are called bun racks—the stacked trays that bakers use. You can put everything on a bun rack and push it into the walk-in. If you're making soups, there are these wands with ice inside that you put inside to chill them because you're making large quantities. You want to make sure it chills fast enough, both for efficiency and for health reasons.

Managing Inventory and Reducing Waste

Will Schreiber: How do you manage inventory for perishable items and reduce waste if you do have leftovers? Hava Volterra: First, specifically for prepared meals, if you know in advance how many you need to make, there should be very little waste. Any waste that does occur can go into a family meal. You can cook something with it. There should be very little waste. However, if you do need to keep inventory, there are standard best practices: first in, first out. If you have some broccoli leftover from a few days ago and you're cooking broccoli today, use the broccoli from a few days ago first. If it's no longer good, obviously toss it. But it's always first in, first out—the broccoli that was purchased first, you use it first. Those are standard practices. No software is really going to solve that for you. It has to do with the way you place things in the walk-in and make sure that anything that's oldest is in the front, so it's the first thing people grab. That's just standard good practice. If you buy so much that it's going to go bad before you use it, maybe cook something with it. See if you can sell it in some way. Make a soup. But I generally don't love that method because it's less methodical. And how are you going to sell it? It's much better not to buy too much from the outset. Will Schreiber: I think it's interesting how many challenges you're highlighting that are specific to meal delivery. One advantage is the ability to take pre-orders and know exactly how much you need to cook. If you're using recipe management and getting really particular on how much of each ingredient you need to buy, trying to minimize waste at the outset is probably the best answer because you have a chance to get ahead of it with this business model.

The Evolution of the Meal Delivery Industry

Will Schreiber: I'm curious about your thoughts on the industry at large. You have a unique angle into so much of food. How have you seen the meal delivery industry change from a business model or operations perspective? Hava Volterra: I think the business has gotten a lot more professional. There are bigger players today, and it's gotten a lot more refined and segmented. You want to be clear on what it is that you're offering. If you're offering vegan food service, some people will specifically want that, and some people specifically won't want that. But by being specific, you might actually get more customers because you offer specifically what they want. For smaller companies, if you want to be covering the whole US, that's a different story. But starting out or medium-sized, being specific is very helpful. Will Schreiber: I couldn't agree more. Having a reason to order brings you loyalty. Speaking to a particular diet or niche is always really effective. Do you see that as well beyond meal delivery, like with restaurants? Hava Volterra: I think in any context—definitely in restaurants and food trucks, even more so. You go to a food truck and you order, and you want to know specifically what they make. There's also the Cheesecake Factory model, where you want to have something for everyone because a family comes in with kids and adults. I can't really say if that applies to meal delivery services. Maybe that model works as well. But you have to be quite big to do that because you need a really big menu offering every week. You can't be small if you're doing that. When you ask me that question, I personalize it. What do I like to go to? And yeah, sometimes I'm specifically interested in a certain type of cuisine, but I gravitate towards quality. That was what I was pushing in our own business. We didn't do a certain type of diet, but we focused on certain types of cuisines and the best of those.

Parting Advice on Kitchen Operations

Will Schreiber: As we wrap up, is there any parting wisdom or advice on improving kitchen operations? Hava Volterra: All I would say is that no matter how you run it on the marketing side or what type of cuisine you do, having tight operations and doing things cleanly is very important. It can make or break you because this market is competitive. Even if you have wonderful dishes, if you can't be consistent, if you're spending too much, it's not going to work. If you can't deliver what was ordered, all those things can spell bad things for your business. So operations are super important, no matter what. Will Schreiber: I think that's such a good point. I'd draw a corollary to software. Our biggest competitor isn't another software platform as much as it's the status quo—Excel and spreadsheets and manually texting customers. I think that's a really important thing for everyone to remember. We're all battling the status quo. You're fighting people getting takeout from a restaurant or cooking food themselves or doing things they're currently doing more than fighting them to switch from a different meal delivery company. To beat the status quo, you need to be excellent at operations and be there for people when they're ready to give you a shot. Hava Volterra: Most of the businesses I see out there are using spreadsheets, and I always wonder how they manage to get along with that. It's clear to me that they're definitely losing a lot of time and probably losing money doing that. But you are battling the status quo. There's no question about it. Will Schreiber: Thanks so much to everybody who joined live. We'll be posting the recording. We'll post a link to Parsley. If there's anything else anyone needs, please get in touch. We'd love to invite guests who present topics and insight the way Hava has that are relevant to you and help you run a better business. So thanks so much for joining. This was really helpful. Hava Volterra: Thank you. Thanks for inviting me. Will Schreiber: Absolutely. Have a great day. Hava Volterra: You too. Bye.