Tips to secure deals in writing: ‘A verbal commitment means almost nothing’

In this episode of FoodNavigator-USA’s Startup Spotlight, Theo’s Founder and CEO Theo Mourad also advises startups not to sell themselves short when negotiating commitments and to only agree to arrangements that they can afford – that means building in the cost of discounts, slotting fees and other activations when determining  price points, packaging and promotions with potential retail partners.

“A verbal commitment means almost nothing,” Mourad told FoodNavigator-USA. “You need something on paper for it to be solidified.”

He explained that at trade shows and networking events there is an “unconditional positive regard” for entrepreneurships that can lead founders to believe they made a key deal. And while that may be true, Mourad says they need to ink it – otherwise “it is really not real.”

So, what is the secret from going from the show floor to store shelves? According to Mourad: Persistence without being bothersome is essential.

“At the same time of being persistent, also recognizing that buyers and manufacturers are super busy people, and being respectful and being kind and” being yourself, he added. “What has been most advantageous for myself is to try to be myself – people remember you more that way.”

Theo’s stands out as upcycled, whole food, vegetable-based snack​

Theo’s positioning as a shelf-stable, veggie snack in a competitive set dominated by dried fruit, potato- and corn-based puffs or meat snacks also makes the brand’s beet and sweet potato jerky memorable.

“We make veggies-on-the-go. So products that are at the intersection of convenience, taste and nutrition – made with vegetables. Right now, we have a vegetable jerky in the market … made with either sweet potatoes or made with beets,” Mourad explained.

The snack was created to help consumers eat more vegetables by offering them a version that is convenient and flavorful, he added.

He explained, “We have the maple Dijon, which is sweet with a little mustardy kick, and then our Korean barbecue, which has some toasted sesame oil, some garlic, and ginger, you know? So fun flavors, things that people want to grab.”

Leverage promos to drive velocities without undercutting margins, value ​

A year-and-a-half after launching, Theo’s is in about 600 stores and eager to expand distribution, but it also carefully considers what it takes to drive velocities when partnering with retailers.

Theo’s leverages tried-and-true strategies to drive velocities, including demos and promos, the latter of which does not need to be steep to be successful.

“Offering discounts on the retail shelf, sticking out at Whole Foods, getting that yellow tag, it does not even really matter what discount you give – it just makes you stick out,” Mourad explained.

But, he added, discounts cannot be so steep and frequent that they compromise profitability or discourage purchase at full price.

“We have worked relentlessly to get our [cost of goods] down to be at a price where we have a margin that we can afford to do some promotions with. That being said, you do need to find ways to gain repeat customers at your normal price point,” he said.

He added, “My advice would be that you only do promotions you can afford and have a clear path to profitability, because it is too easy to get in a cycle where you are just burning money to increase velocities and have no positive upside.”