Interviews | June 2016 | By Sam Oches

The Hand That Feeds

How Adam Eskin is planting the seeds for a supply chain revolution.
New York City based health fast casual Dig Inn founder plans innovative supply chain.
Adam Eskin made supply chain a priority from day one at Dig Inn. Now he hopes to scale the fast casual’s model into something sustainable across the country. dig inn

Restaurant companies—the successful ones, anyway—have been known to root themselves in core values that define every decision they make as a brand. For some, it all comes down to customer service; for others, it’s product quality. Still others make their staff relations paramount to business success.

Since day one, New York City–based fast casual Dig Inn has planted its own roots in a supply chain that aims to make a difference. To be sure, the brand cares about customer service, product quality, and staff relations, too. But its innovative supply chain strategy—one in which the brand sources its fresh produce directly from farmers rather than working through third parties—is priority as the 11-unit chain looks to grow nationally and influence real change in the way restaurants source their ingredients.

Now Dig Inn is taking its supply chain mission to a new level. In March, the farm-to-counter brand announced that it planned to embody both sides of that moniker by purchasing a farm in upstate New York, from which it will not only source ingredients, but also teach chefs and customers alike about the importance of fresh food.

Dig Inn founder Adam Eskin spoke with QSR editor Sam Oches about his concept’s innovative supply chain strategy, the responsibility restaurants have to support a failing agriculture industry, and how the new farm project will help spread his fresh-food gospel far and wide.

Why is supply chain so important to Dig Inn?

In terms of supply, the vernacular or terminology we use around here these days is “mindful sourcing.” The reason we use that language is because over the years we’ve discovered there’s very little black and white and a lot of gray when it comes to navigating these waters and thinking about the myriad trade-offs one needs to make.

We think about food as an opportunity to build community and have an impact on the broader food system, as opposed to just building restaurants to cook and serve food every day. For us, from a brand perspective and a mission perspective, it was always more about how we could have a material impact on the food system at large and how we think about food as an instrument to positively impact and build community.

That concept almost forces you, by definition, to start with supply, because so much of the conversation—so much of the cost structure, so much about the quality of the produce and food you’re procuring, so much about the impact that procurement and those relationships have on the ultimate flavor of the food and the ability to serve it in a restaurant—starts with supply. From a seasonality perspective, there are only four seasons a year. Every season that passes, you have to wait until next year. So from day one, for us, we looked at it and said, “Look, there’s a long road ahead, we’re not going to be able to snap our fingers and suddenly overnight have a material impact on the system, nor can we snap our fingers and then overnight suddenly have this proprietary, unique, direct-from-the-farm supply chain.” But we said, “We have to start this process now, so that three, four, five, six, 10 years from now, we’ll have really built up a substantial system.”

The vision for us wasn’t necessarily about inventing the farm-to-table movement. Here in New York, that movement was already alive and well, at least at the fine-dining level. Our vision was to build something at a much larger scale that would have much more of a significant impact. In order to achieve that level of scale, it would have to be delivered in a format and at a price point that was much more affordable.

We started to dig through how the supply chain in the food space worked and how prices were established and how inefficient these produce markets were—and how layered the supply system was in terms of the grower, then the broker to the grower, then the marketing agent to the broker, then the distributor to the marketing agent. You’re talking about two, three, four, five levels in some instances before you ultimately move the food from seed to sprout and all the way through to the table and serving customers. When we looked at that from a business perspective, we said, “That’s not terribly efficient. There’s got to be a better way over time to pull some of that out of the middle and then some of that associated cost, such that we can deliver on the promise that we ultimately want to deliver on.”

How did you make the system work for you while keeping costs low?

We look at it as a very incremental process. Up front, it is absolutely true that you need to devote considerable resources, and by resources, frankly, I mean time. You have to build some physical infrastructure; we have a 12,000-square-foot supply center up in the Bronx that serves our restaurants and serves as a cross-docking and processing facility. We started with a 2,500-square-foot space. So we sort of built up to it. You have to also have people who are here who are passionate about this mission, who are out there building these relationships, who are visiting these farms, who are taking our farmers out to dinner or picking up a hoops game on a Saturday afternoon, which are, frankly, the types of things that happen here with our internal sourcing team and partners. You have to be able to make that commitment.

It wasn’t really a tradeoff; we didn’t really look at it as, “Oh boy, we’re going to have to spend this much additional money relative to our peers.” It’s sort of the whole reason why we’re here. I suspect—and I can’t speak for our peers—that this particular facet of our business is much higher on the priority list given what we want to accomplish over the next five, 10, 15, 20 years than maybe some of the other brands. And, as a result, we didn’t look at those costs as additional costs, but as fundamental to who we are and what we want to be.

How much have you learned and evolved over the years?

We’ve learned a lot and it’s changed considerably. There’s a lot more openness in the market and in the farming and agriculture community to the idea of building long-term relationships—that we can all work together. I think there was a period of time when it wasn’t really a symbiotic relationship. You had the demand side—restaurants, grocery stores, etc.—trying to beat the farmers up as best as they could to get the best possible price. That created a relationship where no one was really working with one another and no one was trying to understand how to get creative about these types of relationships, what each side and each party needed, and what the challenges were associated with one another’s business.

It’s taken quite a bit of time to build trust. Are we being a good partner? Are we being respectful? Are we paying our bills on time? Are we sending our people out to the farm to meet the folks growing the food to actually learn about their process and learn about what they’re doing? Are we doing things like sending some of our smaller-scale farmers to a weekend boot camp at Cornell? Are we willing to subsidize the cost for an additional refrigerated truck that maybe one farmer couldn’t afford one year? These are the things we’ve wanted to do along the way.

I think those types of actions and that perspective in taking a long-term view has really started to build trust and buy-in from the community at large. Then, as you get more partners and you develop more relationships, it starts to build on itself. Word starts to spread that Dig Inn is actually a really good partner. It’s very fruitful for us, and we’ve grown our business alongside of them as opposed to in spite of them.

What do you think is wrong with the national supply chain?

A couple of things. No. 1 is that the current infrastructure is simply not built for fresh. When you think about the types of food in the grocery aisles and in the coolers and freezers of restaurants over the last 30 years, fresh wasn’t nearly as big back then as it is now. There’s a material difference for a logistics provider to be handling fresh food— and particularly produce—that has varying degrees of shelf life and can spoil. When you talk to broadliners, they all know, from the Syscos all the way down the line, that this is the way the industry is moving, and they are taking steps to rectify that and to build programming around fresh. But it’s a little bit lagging.

No. 2 is really a market-driven issue: Produce markets are not transparent like a lot of other markets. We can trade in beef contracts, we can trade in coffee, we can trade in soybeans, we can trade in corn. For many of these products, there are exchanges or there are nationally and globally mandated pricing. There are standards. But when it comes to produce, you don’t have that. Weather patterns impact produce markets so quickly and so vastly that markets can move really quickly and nobody really has insight into why or how, and the produce market in itself is not as homogenous as you need it to be to be somewhat transparent or an exchange-driven market. There are so many different nuances around these particular items of produce that you lack that homogenous nature, which makes it very hard to have that transparent and exchange-driven market.

The third thing is it takes a lot of effort. What we’ve found is, we as human beings seek the path of least resistance. As we build companies and build brands, we focus on the things that are most important to us as individuals and as businesses. For us, this has been what’s most important.

A lot has been said about how much the agriculture industry is suffering as younger generations leave family farms. Do you think the restaurant industry has a responsibility to support agriculture?

I do, and we do. You can’t cut off the hand that feeds you, as the old adage goes. We should acknowledge them for the fact that the job is really hard, not just from a physically demanding perspective, but from a profitability perspective and from a volatility perspective. They’re in the weather business, so they’re getting caught on both sides. It’s unbelievably challenging to manage supply and production given weather and all of the other inputs that go on when you’re thinking about growing crops. And then you have the demand side: Unless you have long-term, fixed relationships with partners like us, oftentimes a lot of these folks don’t know how much they’re selling any given day of the week, which is also challenging. We don’t as an industry recognize that and think about ways we can step in and support and lend a helping hand.

There are a lot of young people who are incredibly passionate about the food system at large and about sustainable agriculture, and they do want to get in, but one of the biggest issues around that is capital. You need land and you need infrastructure; you need tractors; you need all these different types of tools and machinery and equipment, and that takes money. Oftentimes, folks who want to get into agriculture at an early age don’t have access to that type of capital.

What we’re starting to see, which we think is really interesting, is this idea of almost community-driven farming, where younger folks are starting to band together and they’re saying, “We need refrigeration; we need a tractor; we may or may not need a refrigerated truck. Whatever those big capital-intensive investments are, we’re all going to need them, and yet we all don’t need to use them at the same hour on the same day. Why don’t we talk about leveraging the collective requirements so that we can all share in that?” It’s a very community-driven approach.

How did Dig Inn’s farm project come about? What do you hope to accomplish?

Our brand and our business are built on these fundamental pillars. One is the product chain and how the food is grown sustainably and how it gets to our restaurants. And two is this concept of culinary excellence in building the next generation of folks who really develop culinary skills and learn how to cook the right way.

When we think about the farm as a physical place and as an asset, we really think about it more as a living lab for growing and preparing food. It’s a place to train our folks on how food is farmed and grown. It’s a place, in all likelihood, to work with and collaborate and innovate and train other farmers. It’s a place to bring our chefs to really give them a connection to the seasons—to touch and feel the soil, learn how the carrots, the sweet potatoes, the broccoli is actually being produced and grown—then, on that same day or same week, to take that food from the field, harvest it, wash it, chop it, prep it, cook the food on site in our R&D lab, and sit down as a group and enjoy that meal together.

Ultimately, it’s about cultivating community, people, schools, family, farmers, and chefs around a physical space that can inspire, excite people, and really enable us to have a larger role in the broader conversation around the future of food.

What kind of a role does the farm play as you scale Dig Inn?

We have 11 restaurants going on 16 or 17 this year. Given our larger mission-driven goals about changing the food system, being a 15- or 20-unit restaurant chain based in one city is not going to move the needle on a national level. For us, what’s scalable about this idea is the education we’re providing to those that come visit both internally—the chefs that start the training program there—as well as, ultimately, the public, who can come and visit the land and have an amazing meal at the full-service restaurant that will be on site down the road. If we bring one of our chefs up to the property and then four to six weeks later we send them out to Chicago to open our first or second or fifth restaurant in Chicago, that knowledge and experience they’ve gained at this location, they’re going to bring that to their restaurant and to their sous chef and their customers.

The more we can inspire and spark the conversation around what’s good and right about food and what’s wrong and broken, I think that ultimately is what scales. The rising tide lifts all boats—that’s what will move the entire industry forward.

What kind of influence do you hope to have over the industry and supply chain? What advice would you give other operators?

The message that I hope people gather from this farm project is just to think big. We started kicking the idea around here a year ago. I actually got a lot of sideways glances. But we did the work and we did the research, and this is not an insurmountable project. In fact, in our opinion, the dividends are so vast that it does make sense to make this commitment. It’s no different than four or five years ago when we started out on this journey. Be able to step out of your comfort zone and be willing to think bigger about how to solve the problems we’re facing as it relates to food in this country.

Second is just to be patient. There are only a handful of seasons every year, and once it’s gone, you have to wait until next year. Know that, long term, if you stick with it, it’s going to pay off as it has for us. If you’re a part of the conversation and a part of the movement, then you’re contributing to what’s ultimately going to be an unbelievably tectonic shift in our domestic food system over the next couple of decades.

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