Professor Stan Mandel Applauds Local Business Owner's Expansion Plans

A Rising Business
Reposted from Winston-Salem Journal | by Richard Craver

At an age when most business officials are thinking more about retirement than innovation, Cathy Dunn has cooked up a bit of a culinary miracle.

Dunn, 62, the high-energy queen of Cathy’s Homemade Biscuits and Biscuit King in Lexington, has developed a fluffy Southern-style biscuit with all-natural ingredients, low sodium and zero trans fats – a healthier alternative to the usual biscuit.

Cathy’s Homemade Biscuits are fully baked at Dunn’s production facility and then frozen. They can be reheated in an oven or microwave.

“I got the idea about 18 months ago for a premade biscuit from some customers wanting to have something healthy they could heat up at home,” Dunn said.

Although Dunn has been selling the biscuits at her four Triad restaurants and at (www.cathyshomemadebiscuits.com) since then, sales have soared in the past two months since the biscuits gained shelf space at several Whole Foods stores in North Carolina, including the one at 41 Miller St. in Winston-Salem.

The biscuits also are sold through Healthy Food Market, a five-store chain in the Charlotte area, and Service Foods.

Since beginning an advertising campaign for the frozen biscuits, Dunn said she’s gotten “a lot of calls from seniors because they can eat these biscuits.” Many seniors are on low-sodium diets.

“There’s interest from nursing homes for the same reasons, as well as people with children who need a quick breakfast before school. We’re hopeful they will prove worthwhile for hospitals as well.”

At a recent four-hour sampling of the biscuits at the Winston-Salem Whole Foods, Dunn barely had time to catch her breath while talking with current and potential customers.

One new customer was Katherine Duncan, who bought a 12-pack after tasting a sample. “It’s a challenge for someone like me, on a fixed income, to eat healthier because healthier food tends to be more expensive,” Duncan said.

Ashley Haynes, a demonstration team member for the local Whole Foods, said, “We’re probably getting new customers because of the biscuits and Cathy’s enthusiasm.

“When you have the owner of the company doing the demonstrating and talking with customers, it can make for a real connection.”

Being considered a 25-year overnight success tickles Dunn, a workaholic who spends between 10 to 12 hours a day on the new business. Her three Biscuit King restaurants in Lexington and one in High Point have a total of nearly 100 employees. Dunn said she spent about $180,000 on the new business from savings she’d built up over the years, including $100,000 on the production facility and $40,000 on a flash freezer. A flash freezer is used to quickly freeze food at extremely cold temperatures so that as many nutrients as possible are retained. She has hired several full-time biscuit makers to help with producing about 10,000 biscuits a day for the premade-biscuit business.

Dunn said her biggest challenge in getting local and regional Whole Foods managers on board was adapting the recipe to meet the store’s all-natural food strategy and adhering to the specifications of its 32-page application.

“It took me about a week to make the adjustments, mostly substituting in natural ingredients, and about four months for Whole Foods to accept the biscuits,” Dunn said.

Johnny Smrdel, a team leader of the local Whole Foods store, says the store has been ordering between six and eight cases a week.

“The sales that she’s done have been pretty crazy,” Smrdel said. “She has a convenience product that comes out just stellar out of the oven and microwave.

“We’re working to get her into all the North Carolina stores and then the Southeast.”

Smrdel said Whole Foods stores, with its strict all-natural ingredient standards, typically average 10 North Carolina product introductions a year.

Other Triad small businesses that recently have worked out shelf arrangements with Whole Foods are the Pasta Wench in Boone, Miss Jenny’s Pickles in Kernersville and MyThreeSons Gourmet of Greensboro, which makes two flavors of all-natural pimento cheese.

MyThreeSons will also be in 207 Harris Teeter stores by the end of February. Its pimento cheese is also in Fresh Market and Lowes Foods stores.

“There’s been a different supply or ingredient challenge for each chain,” said Cheryl Barnet, a former dentist who retired because of back problems then turned the pimento-cheese recipe of her best friend’s mother into a business.

“With some, it was a matter of adjusting the recipe,” she said. “For Harris Teeter, it took a local store manager going to bat for me with corporate to get started. Some may want to add preservatives because of the demands of their supply chain.”

Dunn said she knew she had a hit with her biscuits when she sold out quickly not only at her first Whole Foods demonstration, but also at the recent Metropolitan Cooking and Food Show in Washington. Dunn said she hopes to become a regional supplier to Whole Foods this year, which requires creating enough volume to carve out space in the store’s tight distribution channels.

Although Dunn has national distribution in her vision, she says her accountants and financial team are keeping her grounded.

“We’re making the big decisions together, which is good because there are times I feel like the pony trying to get out of the corral,” Dunn said. “We will do our best to grow in a measured, practical manner.”

Stan Mandel, director of the Center for Entrepreneurship at Wake Forest University, said the fact Dunn got her products into Whole Foods is a plus for the reputation of her biscuits.

But he said that Dunn, considering her age, also needs to establish an end game for her involvement with the business.

“Does she just love this business and will work there forever, or perhaps would she like to set the venture up to sell?” Mandel asked. “If it is the latter, then she seems to be doing the right things, building to sufficient volume with appropriate profits, to make it interesting for someone to offer a lot of money.

“If it is for the joy of the business she has spent most of her life in, that’s good also,” he said.

Dunn said her children are not interested in taking over the restaurants or the pre-made business. She projects some internal managers could buy stock in the business over time to help her figure out the next owner.

“I would like to get the business big enough over the next 18 months to be able to bring people in place so I don’t have to spend 12 hours a day at it.

“Then again, there’s not much else I’d rather be going, so I don’t expect to stop making biscuits anytime soon.”