In 2010, Shannon and Erik Duffy, two unemployed brothers from Iowa, decided to take a bacon recipe and make it work. Erik Duffy, a trained chef started making the bacon at his home and letting some of his local chef friends try it. That bacon grew into what would become Tender Belly, a company selling gourmet bacon, ham, sausage, pulled pork and jerky.
“About a month later we were having it made at a local plant in Arizona,” said Shannon Duffy, chief executive officer of Tender Belly, now headquartered in Denver.
Tender Belly sold bacon to mostly Arizona-based high-end restaurants and a few very small retailers before moving to Colorado. The brand is fun, Duffy said, and about four years ago he noticed enough restaurants were putting the name on menus that Tender Belly began to get noticed by consumers.
“So, three years ago we took on investment to really go after retail,” Duffy said. “It was slow going at first, we were 70% to 90% foodservice depending on the time of the year and 10% to 30% retail. The pandemic hit and everybody knows what happened and we went all-in on retail. So, now we’re probably 70/30 retail/foodservice, and we’ve got the biggest of the big. We’re mostly on the West Coast, but we just started our East Coast push this year and things are going well.”
Tender Belly bacon is now available in five regions of Whole Foods, three regions of Costco, multiple Safeway divisions, a division of Kroger and a multitude of mom-and-pop type retailers.
Tender Belly devised a clear and strategic plan to move into retail before the coronavirus (COVID-19) pandemic hit. Duffy uses a famous quote from Mike Tyson to describe the pandemic hitting.
“‘You know, everybody has a plan until they get punched in the face,’ but the pandemic and our ability to shift as a small company moved the progression a ton quicker,” Duffy said.
Changes and challenges
Once Duffy and his executive team understood how COVID-19 would impact the foodservice business for the remainder of 2020, they made the decision on Friday, March 13, to budget for zero foodservice sales until Oct. 1. The following Monday, the leadership team and board cut the staff by approximately 35%.
Tender Belly realized around April 1 that retail was set to really take off. The company went to Costco, went to Whole Foods and all the other retailers it sold to and told them it had the raw material necessary and it had the line capacity necessary to deliver product. Tender Belly’s small SKU count and nimbleness made it able to ensure the delivery of product
to its customers.
“Then we locked up our supply and made commitments to our copackers,” Duffy said. “And we made some bets with Costco for what they were going to need, and the bets paid off. We put more down and started making more product than we had orders for, based on what we thought was going to happen at retail.”
Trusted partnerships with raw material suppliers and co-manufacturers gave Tender Belly the credibility needed to complete the significant shift from foodservice to retail production. Retailers wanted more product from processors and processors needed more raw material to produce.
“It was a big web of talking to everybody and getting on the same page,” Duffy said.
With retail packaging running slower than foodservice packaging, the amount of production and the time necessary to produce changed. With all the players in the same predicament and co-manufacturers only able to do so much in a day, “…there was the jockeying for position and planning so we could get the line time,” Duffy said.
He added, “It’s pretty obvious that we’re not the only one that did well at retail during this time. It’s just that the size of us, the scrappiness of us and how our total business mix shifted so much. The big thing is how we did it, how fast we did it and how well it worked out for us and that we got it done.”
There was no real change in cost to make bacon once the pandemic hit. As pork prices went down, it got harder to process because of plant shutdowns and dwindling labor. Tender Belly ended up paying a little extra to get line time, thus negating the raw material price decrease.
“I would say it was basically steady with normal times, it just took a lot more work to get it done,” he said.
Overall, Tender Belly has seen a 30% increase in revenue and pounds produced over pre-COVID-19 numbers.
Tender Belly operates in the natural/specialty niche, a place where uncured stands front and center as the norm. The company has offered uncured bacon long enough that it’s the norm for Tender Belly as well. It’s part of the differentiation of the brand and what facilitated the shift into retail so quickly, but it’s not the only thing that makes Tender Belly different.
“I would say it had something to do with it, but the differentiation on our product is how it’s made, and how the ingredients are claimed on our package and claimed on our bacon,” Duffy said. “That is what differentiates us and drove it.”
Tender Belly adds another significant differentiation by endorsing “extreme” and “adventure” athletes. The company’s roster includes professional big wave surfer Paige Alms; professional skateboarders Greg Lutzka and Dave Bachinsky; professional kart racer Nolan Payne; professional skiers Todd Ligare, Dash Longe and Julian Carr; professional snowboarder and cattle rancher Mark Carter; mounted archer Erin Troyk; professional long drive golfer John Cassaday; and professional triathlete Ben Hoffman.
The Duffy brothers are extreme athletes at heart, and while they still get out for the occasional snowboarding session, they miss the days of living that lifestyle. At the same time, they understand a high-quality protein snack with good taste can provide an athlete with much more than a typical sugar- and caffeine-packed energy drink.
“I think it was a little bit of my brother and I wanting to associate with and give our product to guys that are doing stuff on a daily basis that I guess we probably wish we were out doing instead of in an office,” Duffy said. “So, that’s how that came about.”
The athletes Tender Belly sponsors aren’t the biggest money makers in sport, but they are champions and the best in their fields. They live a lifestyle the company wants to associate itself with and they “…are out there crushing it at life,” Duffy said. The athletes find pride in the fact they are sponsored by a pork and bacon company owned and run by people who also live that life, and they tell Duffy as much.
“Flat out, we like those people,” Duffy said. “They’re extremely good people. They do exactly what they want and that’s the mentality that we want around Tender Belly.”