Chapter Three: Coming Up With A Name – And A Business
At the imam’s suggestion I formed a small advisory council of Islamic religious leaders and other community leaders to advise me on various aspects of the project. One of the things that they gave me advice about was the name. They felt that the name “Canada’s Finest Halal” did not have a familiar ring to it. I asked them if they had any alternate suggestions. One of them said, How about “Al Safa?” I said “Great! What’s Al Safa?” He told me the story of Al Safa mountain in Saudi Arabia. Muslims believe that Ibrahim (Abraham) brought his wife Hajar (Hagar) and son Ismail (Ishmael) to Arabia, between the two mountains Al Safa and Al Marwa. G-d commanded him to leave them there, and he obeyed. When Hajar began to run out of food, she went to search for more, leaving her child so that she could move more quickly. She could see her son from each of the two mountains, so she ran from one to the other, always seeking to keep her son in sight. Today at Mecca, the city every Muslim is required to visit at least once in a lifetime, there are two hills that Muslims travel between when they circle the holy Kaaba that is the center of Mecca. In memory of Hajar, the two hills are called Al Safa and Marwa.
The members of the advisory council agreed that all Muslims throughout North America, regardless of their native language, know about the mountain Al Safa. I put together a focus group of Muslim consumers and asked them what comes to mind when they hear the words “Al Safa.” Although they were from many different countries and backgrounds, they all said that the name Al Safa evokes a very warm feeling.
And so it came to be that the name was changed from Canada’s Finest Halal to Al Safa Halal.
I put an e-mail address and 800 number on the box, and we received many calls and e-mails, mostly with the same theme. “Alhamdulillah [Arabic for ‘Thanks be to G-d’], thank you so much for making these halal burgers. My children love them. Please provide us with more halal items!” One theme which was especially prevalent was that their children did not attend Islamic schools; rather, they went to public schools. And after school their friends would all go to McDonald’s and have chicken nuggets. The Muslim children would come home and exclaim, ‘Why am I punished for being Muslim so that I cannot have McDonald’s chicken nuggets?’ So please make chicken nuggets that are halal and that taste just like McNuggets!”
With roughly the same population of Muslims as Jews in North America, and with no other halal branded product in North America, I was quickly coming to the realization at that point that Al Safa Halal could be a major brand, equivalent to Manischewitz and Empire all rolled up into one.
I also quickly came to the realization that it is very difficult to make chicken nuggets in a beef slaughterhouse. I had no experience with poultry at all and certainly no idea how to make chicken nuggets. I canvassed my colleagues in the beef industry and was fortunate to be introduced to a man named Steve Hahn, who worked at Cuddy Foods, the company that made the chicken nuggets in Canada for McDonald’s. Steve managed the McDonald’s account there, and it is fair to say that there was no man in Canada who knew as much about making chicken nuggets and other further-processed poultry items as Steve did.
I also realized that it takes millions of dollars to build a branded food line in North America. Seeing this as a once-in-a-lifetime business opportunity, I put together a proposed business plan and presented it to my family. The
slaughterhouse/deboning business was not doing well, and I saw no prospects for its improvement. My proposal was to sell that business, including the assets, for whatever we could get for it, and take those proceeds and invest them into this new brand, Al Safa Halal.
The amount that we could get for the slaughterhouse business was less than we had in it, and as a result, my family was not interested in pursuing that plan. Furthermore, the slaughterhouse business had gotten no better, and whatever cash there was there was needed for capital improvements. Thus, they had no interest in investing in a fledgling consumer brand.
Realizing that there was no point of me staying with Muller’s Meats, I decided to go out on my own to embark on this new venture. Because Steve Hahn had been hired by Muller’s Meats specifically to create a consumer brand there, and since that that was no longer happening, I took Steve with me to help create Al Safa Halal.
I needed funding to get the project off the ground, and I believed that the best place to get investors would be in the Gulf countries. I was fortunate to be introduced to many of the largest investment groups from Saudi Arabia, UAE, and Dubai, and I made presentations to them, but alas not a single one was interested in investing in Al Safa. They pointed out that the level of projected profitability was not attractive enough for them. This was at the time when dot-coms were booming, and these investors were not interested in making a reasonable percentage return on their money – they wanted five times their money in the “next eBay.”
One day I was visiting my friend Warren Cole in New York and he asked me what I was up to. I told him about Al Safa and about the fact that I was not having luck getting seed money from Middle East venture funds. He was intrigued and mentioned that he and the brothers he worked for could potentially be interested in funding such a venture. Warren set up a meeting for me with his bosses Daniel and Moshael Straus. These two brothers had inherited a huge nursing home conglomerate and were looking to make outside investments. They also brought to the meeting a friend of theirs, Jonathan Kolatch. They were intrigued by my presentation, and along with Warren, invested the seed money we required to get off the ground. They also introduced me to Irwin Schlass and Abraham Goldstein of Interequity Capital Corporation, an SBA funded investment fund, which took a share.
Between Warren and his group, and the SBA fund, we raised half of the money that we were looking to raise. It was enough to get us started, and in September 1999 we incorporated Al Safa Halal and set up offices in Cambridge, Ontario.
Steve worked on the supply chain and I worked on the customer base. Our business model was to have all our manufacturing outsourced so that we would not have to spend money on bricks and mortar. We got our halal beef from MGI Packers. For the chicken, Steve approached Port Colborne Poultry and made arrangements with them for us to take over their plant for one day to do halal slaughter that whole day. We brought in our own Muslim slaughtermen to slaughter the chickens halal. Then the Port Colborne Poultry employees deboned the halal-slaughtered chickens and we bought all the boneless poultry produced in the plant that day. Because we paid Port Colborne a premium for the boneless poultry, it was a win for them as well. At first we only went in about one day a month, because that supplied us with enough chicken meat to keep us going for a month. After sales started to increase, we went in more often. By the time we were several years in, we were doing the halal slaughter there on a full-time basis every day.
With the raw beef from MGI and the raw chicken from Port Colborne Poultry, Steve set up a group of manufacturers to make the finished products for us. For each manufacturer, we would set up a given day that they would run Al Safa Halal product. We would supervise the cleanup the night before, making absolutely certain that no non-halal product remained in the machines or anywhere near where our product would be made. Then we brought in the halal beef or chicken and supervised the manufacture of our product, making sure that there could be no possibility of any commingling with non-halal product.
To ensure the complete confidence of the halal consumer, we also contracted with a group called the Islamic Food and Nutrition Council of America (IFANCA). We had them send an independent inspector into the plant while we were making our products so that they could verify independently that the products were 100% halal. We also worked with them to design a logo, a Crescent M, for them to put onto our packaging to inform the consumer that the products were independently verified as halal. We contracted the services of Grand River Foods in Cambridge, Ontario, to make our chicken nuggets, strips, and patties. Cardinal Meats in Mississauga made our beef burgers and Macgregor’s Meats in Woodbridge made our cooked meatballs.
Windsor Marketing in London, Ontario, made our pizzas. We began our sales of the products in the Toronto area at supermarkets Food Basics and No Frills. We also sold products to independent halal shops and to a couple of food distributors who serviced independent food stores. Sales began climbing.
The largest concentration of Muslim consumers at that time was, and probably still is, in the New York City boroughs of Queens and Brooklyn. At that time the dominant supermarket chain there was called Pathmark. I arranged to see the Pathmark meat buyer, and as we did with our Food Basics meeting in Toronto, I made a map of the major mosques in their area, and superimposed on the map the locations of the nearest Pathmark. Pathmark agreed to a trial of the product, and it would be delivered to them via one of their frozen food distributors, Nebraskaland, whose warehouse and distribution center was located at the Hunts Point Cooperative Market in the South Bronx.
At that time our family went to Los Angeles to visit my wife Joyce’s sister, and while there I met up with my friend from business school, Paul Vogel. We were catching up and I was telling Paul about Al Safa Halal and about the fact that we had raised half of the money we needed. Paul suggested that he would be interested in investing, and also mentioned to me that I should set up a meeting with another of our classmates, John Pasquesi. Paul contacted John and set up the meeting for me. I met with John, and between him and Paul and several other people that John brought in – including Arthur Rock and Warren Hellman – and classmates Bob Horne and Dan Baldini – we were able to get the other half of the funds we needed. That really propelled us into being able to grow out our sales team, and by 2004 Al Safa Halal products were sold in all fifty states and all ten provinces.
One day I was able to secure an appointment with the ethnic frozen food buyer at WalMart in Bentonville, Arkansas. It is not easy to get there: one has to change planes in Chicago and then take a second flight to NWA Airport at Bentonville. I flew into NWA, where most of the people flying in were salespeople calling on WalMart.
Every twenty minutes or so a WalMart shuttle bus takes everyone from the airport to WalMart’s headquarters and then returns to the airport with the salespeople who have finished their meetings and are ready to catch their flights home.
I got on to the shuttle bus, took an available seat, and began a conversation with the man on the bus next to me. He asked me what business I was in and I explained Al Safa Halal to him. I asked him what he did, and he told
me that he was a salesperson for Marvel Comics. We disembarked at WalMart headquarters, and I had my meeting with the WalMart buyer. I had extra time before my return flight, so I went to visit the WalMart Museum,
located in Sam Walton’s first store.
I then got back on the bus to return to the airport, and upon embarking, saw the same person I had sat next to on the way to the headquarters. I took the seat next to him. He asked me how things went, and I told him they went well and I had gotten a trial order for twenty stores. I asked him how things went for him, and he told me they went amazing: in fact, he had gotten a seventy-million- dollar order.
We reached the airport, I got on my flight, had to overnight in Chicago, and then flew back home the next morning.
When I got back to my desk the day after that, I opened the newspaper and read the following headline: Marvel Stock Up 14% on News of Huge WalMart Order!
Now, I had known that news before anyone else did by virtue of my conversation on the bus. Had I thought of buying out-of-the-money Marvel call options at that moment, I could have made a fortune! (Whether or not I would have been convicted of insider trading is another interesting question!)
In addition to WalMart and Pathmark, our products were sold in Kroger, ShopRite, Winn-Dixie, Wegman’s, Tops, Price Chopper, and many other supermarket chains throughout North America. It was a great run.
