Little Sesame opened in 2018 with a goal to serve Washington D.C.’s downtown office crowd. The fast-casual offers lunch five days a week, serving a menu of sandwiches and bowls built around its signature item, freshly spun hummus. But in recent years, the restaurant has expanded well beyond its brick and mortar.
Today, you can find Little Sesame hummus on grocery shelves from D.C. to Los Angeles, thanks to a consumer packaged goods (CPG) line launched amid the pandemic.
“It was pretty clear, even before the pandemic, that beyond-four-wall revenue was going to be important for restaurants, and our restaurant, in the future,” says co-founder Nick Wiseman. “But the pandemic basically forced us to shift our distribution model overnight, so we started hand-packing pints of hummus. That got early traction, and we leaned in to grow [the line] to where it is now.”
Little Sesame packages four flavors of hummus, currently available in select Whole Foods, Foxtrot convenience stores, and a couple hundred independent and secondary stores. Little Sesame also has distribution partnerships with Sweetgreen restaurants and Baldor Specialty Foods, and plans to announce a larger national grocery partnership this year.
By 2022, the ratio of CPG sales to restaurant sales had reached 50/50. In 2023, Wiseman expects that to shift to a ratio of ¼ restaurant sales to ¾ CPG sales.
We chatted with Wiseman about the decision to focus on a product line versus opening more physical restaurants. Plus, he shares his advice for other operators on how to get started in the CPG world.
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Over the past couple of years, since Little Sesame expanded to include a full-fledged CPG line, what are some of the primary benefits you’re seeing as a result?
Meeting customers where they are is critical. With a restaurant, you sign a lease, and you’re subject to the movement of a city. In this case, we’ve seen a shift in where people work. Having a multi-channel model has insulated us from the unpredictability of the last few years.
Plus, centralizing the supply chain and starting to manufacture at scale is just more efficient, especially in this inflationary environment. We have a bit of buying power now – buying a 50 pound bag of an ingredient for a restaurant is very different from buying 50,000 pounds for manufacturing. As we scaled, there was a trickle down impact on the restaurant. We’re now self-distributing a lot of the raw materials [we use for the CPG line] to the restaurant.
I want to walk back to when you first started the hummus line. How did you go about transforming your hummus from restaurant ingredient to a more shelf-stable grocery item?
We basically outfitted ourselves with a 1.0 lab inside the restaurant. We bought pH and viscosity meters and just slowly figured out how to prepare the product for grocery store shelves.
The first year, we produced nights and weekends out of our shop. In early 2022, we grew out of that capacity and turned on a 10,000-square-foot facility just outside of D.C. So yes, we manufacture all of the hummus [in-house]. In the early days, we were making a couple 1,000 pounds a week. In early 2023, we’ll be making upwards of 20,000 pounds a week.
Can you tell me more about the learning process you went through to make the product more shelf stable, and what went into the decision not to work with a co-packer?
We’ve been in restaurants our whole lives. We weren’t business school kids trying to solve a problem. We were chefs who love making food. Holding onto that was important. We’re also able to maintain our supply chain and process, and we believe that’s why we’re making a better product. By delegating away the making of your food, there’s going to be some qualitative loss.
The same principles of cooking still apply. We’re still making food. But we definitely sought out support. We worked with Cornell Food [Processing and Development] Lab and Berkley’s Mezzoni Foods lab. The puzzle was figuring out the tools to extend shelf life while keeping the recipe as close to what we were making in the restaurant. You can throw a bunch of preservatives into hummus to extend shelf life, but we wanted to use just fresh lemon juice, and that was the hardest part.
Hummus feels like a no-brainer for retail. But I’m wondering if you have any advice on what operators should consider when deciding which products to turn into a CPG.
You can go two paths. One path is to innovate and create a category – a product that doesn’t exist on the shelf, and so you become a pioneer. But obviously being a pioneer comes with some risk. If the market isn’t proven, you have to go out there and prove it.
The second path is to go to an established category, like hummus, which is already in a lot of people’s homes, and has high velocity and visibility in the store. You build trust in the category, and then once you earn that trust and you’re in people’s fridges, you’ve got a starting point.
Hummus is our starting point. Our hope is that we can start adding to our lineup and build new and exciting products to elevate the shelves more broadly.
How about the actual packaging of your hummus – who did you work with on that?
Some of our processes set the parameters for the packaging, and I can’t go deep into that because it’s proprietary. But an advisor once told me, “Look at what toilet Home Depot uses in their bathroom. It’s going to be the best toilet that’s out there.”
We’ve tried to bring that lesson into everything we’ve done – look at the big players that have a budget and a team to extensively study these things. So for us, it was about looking at the CPG companies we respect and what containers they’re using. We also built a team of product advisors who could guide us in the right direction. The combination of those two things has led us to make our decisions around packaging, processing, and distribution.
What resources did you turn to in order to find the right advisors?
Again, we looked at brands that we admire. The CPG world, especially across categories, is super friendly, and with up-and-coming brands, there’s a lot of camaraderie and openness about processes.
We networked through our existing network, but there are certainly trade shows and tools for digging in and building community. Gary Hirshberg, the co-founder of Stonyfield, has his entrepreneurship institute, and twice a year he does a deep dive on CPG. There are accelerator models, like SKU out of Texas, and they have a network of advisors. And there are just a lot of resources out there for people who want to learn CPG.
What role would you say marketing plays in the success of a product line, and how did Little Sesame introduce its new line of business?
How you market the product versus how you market the restaurant is very different. The top of the funnel, brand-building stuff is the same as a restaurant, like press, and events, and partnerships. But for CPG, promotion on the shelf, merchandising, and couponing all play a very big role.
The biggest thing that drives trial in a grocery store is promotion and discounts, which was very antithetical to how we felt about the restaurant. We thought the restaurant was special, and we never really discounted product. We’d incentivize people through new menu roll-outs or partnerships and collaborations. But the grocery store model is pretty specific. You need to support the product on the shelf to get velocity, and that costs money and resources.
I imagine the hardest part of launching a CPG line is building the partnerships with distributors to expand product reach outside of the restaurant. Can you talk about what that process looked like for you?
It is the hardest part. We built a brand in our home region via the restaurant, and that was our path into the door. But as you expand, you need to make a clear case of how you’re going to drive more sales to the category as opposed to just taking away sales from someone else. Your value proposition could come from your story, your flavors, your supply chain – there could be a lot of factors, but it’s really important to be able to articulate that.
We got good advice at the beginning – focus on a narrow door count, and focus on selling a lot in the stores that you’re in. That was our mantra, and we were obsessive about it. We were in the stores all the time talking to the buyers. Our velocity story was great, and that’s the story you want to present to other buyers. When you present, “Hey, these are the numbers we’re doing in other stores.”, that’s what opens more doors.
Do you think it’s essential for operators to take their CPG line beyond their own restaurant to make it worth the effort?
No, because with direct-to-consumer, you get freedom with the margin. If you just want to have an incremental line of revenue, selling your product directly to consumers online, through farmers’ markets – that’s really valuable. It’s also a great way to prove traction of a product. If there’s direct-to-consumer velocity, that’s a pretty good indicator if people will want to buy it in the grocery store.
Once you start distributing through retailers, that business is built on scale. You have distributors who take a margin, retailers who take a margin, and it’s a fundamentally different business. Once you take that leap, you have to be committed to building a new business. While you can leverage the brand you built, thinking about it as an entirely new business is helpful to do it right.
Obviously there’s an upfront cost to starting a CPG line. Do you have any advice on how to weigh the risks with the payoffs?
Most restaurants have limited resources, so it's hard to test. We certainly bootstrapped our way through it. We didn’t buy state-of-the-art manufacturing equipment from day one. We slowly built piece by piece as we grew.
That gave us time to learn the business, too. We knew the product was good, but was there actual traction? Did it make sense to shepherd more resources in that direction? We started by hand-filling pints at the shop that only had a few-day shelf life. But people wanted it. We sold a lot. So from there, we figured how to commercialize it, and said, “Let’s just test in 20 Whole Foods.” We bought a limited amount of manufacturing equipment, and when it did well in Whole Foods, we tested in Foxtrot and started to build the proof of concept.
We took over a year in what I’d call beta mode, and then from there, we had the confidence to start investing more.
Any other advice from your experience of launching a CPG line?
At the end of the day, it’s the same as a restaurant – quality is everything. How do you honor the quality of your product? How do you maintain quality as you grow? For us, it’s been intentionality around the process, and that’s something we learned from our fine dining days.
It’s definitely harder for the little guy to succeed, but we’ve found when people try our product, they come back. The hard part is getting the product into as many people’s hands as possible. So we go out and make sure people try the product, know our story, like that we buy regenerative chickpeas. That has driven our early success.
Grace Dickinson is a reporter at Back of House. Send tips or inquiries to grace@backofhouse.io.