Side Hustle: How to launch a product line

14 March, 2019 by
Annabelle Cloros

When your restaurant is fully booked, there’s not much more you can do to increase revenue. Developing a product range can bridge the gap, allowing operators to tap into a new market and expand beyond four walls.

For chef Daniel Dobra, creating a product range was always his dream. When he joined St Ali, owner Salvatore Malatesta asked him what he wanted to do with the brand, and developing a product range was top of the list. “A lot of chefs think about diversifying their skill set and I wanted to add a touch of uniqueness,” says Dobra. “It’s taken about eight years to get here.”

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Developing a product range was a natural progression for barbecue restaurant Fancy Hank’s. The Melbourne venue was already making barbecue and hot sauces in-house, and the team saw a gap in the market for sauces made with local, high-quality ingredients. Plus, customers regularly requested bottles of sauce to take home after their meals.

“A lot of sauces are full of sugar and use imported ingredients,” says chef and director Mike Patrick. “We wanted to do something local and Australian.”

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A significant amount of research and development is required to give a product line the best chance to succeed. Dobra worked on some products for years, while others came together relatively quickly.

The café launched their range in December 2018 with a total of nine options covering chip seasoning, sauces and maple syrup, to name a few. “I worked on a couple of the hot sauces for quite a few years but other things just came to me like the coffeeinfused maple syrup,” says Dobra. “The fermented orange marmalade came about after we assessed wastage in the kitchen. We were throwing out boxes of orange peels and I wanted to use perfectly good waste products and elevate them using some skill and technique.”

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Patrick tackled R&D by buying as many sauces he could get his hands on. “We tried a lot of hot sauce and decided on the styles we thought we could do better,” he says. “I’m also good friends with the guys from Lillie’s Q in Chicago and spoke to them about how they launched their hot sauce range. Retail is a whole different ballgame.” Patrick says not cutting corners on ingredients and investing in high-quality packaging were two important takeaways from Lillie’s Q’s experience.

“It’s expensive to do those things well, but it’s all about the product — we’re trying to do good-quality stuff.”

St Ali and Fancy Hank’s took two different approaches when it came to the production of their lines. St Ali made everything in-house while Fancy Hank’s worked with an external manufacturer. Dobra took a conservative approach for the first run of products which tied in with the exclusive nature of the line. “Everything was made out of our main kitchen in South Melbourne — I produced and packaged everything myself,” says Dobra. “Once everything sells, it’s gone until we decide to relaunch.” A limited run also meant Dobra didn’t have to tweak recipes to cater to large-scale production.

Patrick didn’t have to alter Fancy Hank’s recipes either, but decided to work with a manufacturer as in-house production wasn’t an option for the restaurant — a 20-litre pot of sauce would only equate to 40 bottles. “We took the recipes to some manufacturers and did some tastings,” he says. “You have to be really careful scaling it up to big quantities because the recipes can stuff up if they’re not spot on. We added a tiny bit of thickener like xanthan gum to stop them separating, but other than that, they’re exactly the same.”

The first run in August 2018 consisted of 2,500 bottles across two barbecue options (original barbecue and coffee and molasses) and three hot sauces (cayenne and watermelon, jalapeño and peach and habanero and carrot).

St Ali’s line has been well-received so far, with the products only available in-store and on the café’s website. The venue already sells a range of merchandise including cups, totes and clothing and decided to place the products with the existing display next to the POS. Dobra says the team will also start to showcase some of the hot sauces on menu items, joining the chip seasoning which has been a regular menu fixture. St Ali has used their social media platforms to advertise the products and placed a notice inside their menu listing available items.

Fancy Hank’s decided to take a multi-faceted approach to retailing their sauces, and used existing relationships to extend their reach beyond their website and restaurant. “We thought if we’re going to do it, let’s try to get them into as many stores as possible,” says Patrick. “We’ve got a bunch of connections like barbecue shops, boutique butchers and meatsmiths, so it was a given when we asked them if they’d stock the sauces. We’ve also gone in with a couple of local distributors and are approaching stores on a case-by- case basis.”

The sauces are located on a display stand at the front of the restaurant and the menu also advertises the products, which is working well. “We sell quite a lot through the restaurant — people try it with the food and take a bottle home,” says Patrick.

The sauces have been a smash hit with customers and Fancy Hank’s are up to their third production run, recently ordering 40,000 glass bottles. “Once you get into some stores and start selling, you have to be able to replenish and keep up the production,” says Patrick. “The customer reaction has been really good; I think people are enjoying the branding and the packaging which we put a lot of effort into.”

Beyond a marketing exercise, launching a product range can open up a new revenue stream with surprising results. Lillie Q’s launched their sauce range four years ago, and Patrick says it has turned into the biggest money-maker for the brand. “The sauce has eclipsed everything else they do and it’s sold in 30 countries,” he says. “The difference for me is you have a restaurant with 100 seats — once it’s full, it’s full. Barbecue sauce is limitless — you can keep producing and selling it.”

Fancy Hank’s hot and barbecue sauces are priced at $11 and $13 respectively which puts them in between low- and high-priced products. “We looked at what people are willing to spend and put ourselves right in the middle,” says Patrick. “We thought we’d go with a marketing campaign of ‘good, better, best’ and put ourselves in the middle. We’re not trying to put bottles into Woolworths or Coles for $2 — we can’t compete with that.”

Dobra treated his product range the same as any regular menu item and utilises St Ali’s kitchen accounting software. “We set out our GP and put them through the software to adjust the price,” he says. “But there’s been a lot of outlay in terms of what we’ve spent and put into them. For example, a 250ml tin of maple syrup uses triple-A grade Quebec maple syrup which is $37 a kilo and coffee which is $38 per kg. We’re not robbing people blind, but we’re making enough money to cover costs and offer something cool to customers.”

St Ali and Fancy Hank’s are both onto a good thing with their product ranges. Naturally, the next step is to diversify. Patrick is contemplating a limited-edition run of sauces created with other suppliers. “Once we get to the next level of production, I’d like to do a batch maybe twice a year,” he says. “We did a six-month-aged hot chili sauce in a Melbourne Moonshine barrel; I t would be cool to do a collab with a spirit company, brewery or even another restaurant.”

The team will also be taking their hot sauce to the Australian festival scene. “We’re doing a bunch of events around the products so we can show how versatile they can be.” Dobra is also interested in moving forward with St Ali’s product line.

“My first list had 28 items I wanted to do but we culled it back,” he says. “There’s still another 21 products I’ve got up my sleeve. We’re not trying to be like every other café or coffee roastery — St Ali is no longer just about the coffee.”

This article originally appeared in Hospitality‘s February issue. Buy the issue for $9.90 here.

Image credit: Eugene Hyland