How this company went from a few farms to filling up frozen food aisles

Chuck Casano’s business started with an unfulfilled appetite creating an unexpected benefit.

More than a decade ago, Casano worked for a nonprofit in Nicaragua, and while there he developed a taste for the dragon fruit grown in the country. When he returned to New York City, he couldn’t find the odd fruit with white flesh anywhere he looked. Casano decided to build a business importing dragon fruit after he “discovered an enormous opportunity for organic raw material.”

“Nicaragua is the second poorest country in the Western Hemisphere,” he tells Inverse. “Most farmers cannot afford pesticides, so the majority of these farms were ‘default’ organic. Until I launched Pitaya Foods, all of the dragon fruit had been consumed locally. I thought if I could open the U.S. market to these farmers, it could increase their income and improve their lives.”

THIS IS NIMBLE, A SERIES WHERE BUSINESS OWNERS OPEN UP THEIR BOOKS AND LIVES TO INVERSE, WITH HELPFUL TIPS ON HOW TO KEEP GOING.

The first step in launching Pitaya Foods? Helping the farmers gain USDA organic certification, which would help the farmers financially while making his company’s products more appealing to an increasingly discerning customer base with the help of chief marketing officer and co-founder Ben Hiddlestone.

Dragon fruit has seen increasing popularity in the United States among the health-conscious crowd, as its high in fiber, nutrients, and antioxidants. Typically, people eat it raw, in salads, or in smoothies.

Since its founding, the company has grown from sourcing produce from 10 growers in Nicaragua to 800 family-owned, organic-certified farms in Brazil, Peru, Mexico, and Vietnam. Pitaya Foods (pitaya is another name for dragon fruit), a certified B Corporation, now sells frozen fruits, smoothie packs, and powders in more than 16,000 retailers nationwide, including Costco, Kroger, Publix, Target, and Whole Foods, and juice bars such as Jamba Juice, Playa Bowls, and Nekter. It processed a whopping 10 million pounds of dragon fruit last year. And it’s also incorporated other fruits like jackfruit and acai into its product line.

In the Q&A below, which has been edited for length and clarity, the CEO and co-founder talks about how the company spends its money and its biggest expense that pays the most dividends.

Can you give us a rough overview of your revenues versus typical business operating expenses?

Corporate expenses are about 40 percent of gross revenue. Our travel and supply costs are high due to our business, the standards we have for our products, and relationships with our suppliers.

How do you track your money?

We use QuickBooks online. It is the simplest and easiest program for us to use.

What numbers do you look at to determine whether your business is doing well (for example, revenues, returning customers, inbound inquiries)?

We are constantly looking at sales growth over the previous year, sales velocity (units per store per week), promotional lift, and more. This shows us how retailer sales are doing and consumer buying trends across the different varieties. It can also track how well a certain launch is doing.

In what situations do you dial back spending or increase it?

We usually dial up marketing and run promotions whenever we launch a new item, as well as when we have a positive ROI in digital, retail, and foodservice. We definitely dialed up our marketing and trade spends last year when we expanded our portfolio and wanted to build more awareness for new varieties. We also strive to support new retailer relationships and availability, so we will target spends for that as well.

In tough times, what’s the first expense you reduce or eliminate?

The nature of our business forces us to be really conservative with our capital, so we don’t have big expenses we can cut that would make a big impact. Most of the fruit we purchase is only in-season four months out of the year and we need to purchase 12 months of inventory. Therefore, most of our cash is tied up in inventory. It is the toughest part of our business, but it keeps us honest and we think about every expense.

What’s an expense you can’t spare?

Gotta pay your people. This is a non-negotiable for us; our team is imperative to our brand and growth. Payroll is the first thing we take care of when it comes to expenses. Obviously, another expense we can’t spare is our ingredients — without them, we can’t create our products.

Where do you draw the line between business expenses and investing in your business?

We believe every dollar or any time spent to further build upon our initial brand mission of sustainability, quality, and overall health is an investment in our brand. Our assistance in getting organic certifications for the small family farms in Nicaragua, our B Corp certification, and our Foreign Supplier Verification Programs are investments and we don’t see them as business expenses.

Since we launched the brand, we have helped more than 600 small family farms in Nicaragua get their organic certification. In 2019 we created 1,079 smallholder farmer jobs, 229 female organic farmer jobs, and 174 factory operator jobs (46 percent of operators are female).

What’s an unusual expense that you believe adds value to your company?

Happy Hour! It is important for us to have a good company culture, so we always have to spend money on that. It creates a solid company culture and friendly work environment.

What was the biggest expense that ended up paying the biggest dividends?

We source our fruits from all over the world, so it is always great to bring employees to the source so they understand who our company supports and why we invest so much in a quality supply chain. The team is always re-energized after a trip like that and it helps them further believe in our mission.

What's a line item on your budget that makes your business uniquely your business?

A lot of travel expenses to a lot of exotic countries to meet with suppliers. Our farmers and producers are a crucial part of our project. We work with them directly and meet with every one of them face to face to ensure that the farms we source our fruit from are kept clean, that the fruit is of the best quality possible, and working conditions are good for everyone involved.

What personal sacrifices have you made on behalf of your business?

I love my job and team so much that I feel like I really haven’t sacrificed too much. My wife and I started the business together so we got to spend a lot of time together. This business has given me more on a personal and professional level than I have had to sacrifice. My work friends are also my weekend friends.

Inverse Analysis — If your company is steeped in good values, it’s worth investing in them. Not only should these dictate your brand’s culture, but they can also determine the products you sell and how you market them to consumers. Being authentic in values will most likely help differentiate your brand.