Written by: Barry Raber
Do you know the story of the buffalo and the cows? It’s a true tale of animal behavior at its best and what entrepreneurs can learn from them. It’s so powerful that it inspired Katie Poppe, a serial restaurateur in Portland and founder of Blue Star Donuts, to make a jaw-droppingly successful pandemic pivot.
Katie is a member of the Entrepreneurs’ Organization (EO) who participates in an EO Restaurant Forum with national and international members from the industry. In early 2020, that group met on Zoom to strategize about the oncoming pandemic. Terry Pham of EO Dallas, owner of Fat Straws, shared some west Texas-style wisdom:
Leaders can learn a lot from the difference between how cows and buffalo respond to storms. In Texas, storms brew from the west, roll over the mountains, and move east. When cows sense an oncoming storm, they turn east and run away from the storm. That’s a problem, because they’re running in the same direction that the storm is traveling. In an effort to outrun it, they actually run “with” the storm, prolonging their time spent in the misery of the downpour. Though their intentions are good, the way cows go about it is kind of stupid.
Humans do the same thing. In trying to avoid difficult situations, we often prolong our misery.
However, we could learn a lot from buffalo, which exhibit a unique behavior: When they sense a storm cresting over the mountains, buffalo turn west and charge directly into the storm. By running “at” the storm, they run straight through it faster — essentially minimizing the amount of time spent in misery while enduring the storm.
When you sense an oncoming storm, make one critical decision: Are you going to be a cow — or a buffalo?
In 2020, when the global Covid storm was upon us, how and when entrepreneurs responded made all the difference in whether their companies survived or folded. Especially in the restaurant sector.
Blue Star Donuts, Pre-pandemic
Katie Poppe liquidated other business investments to go all-in when she founded Blue Star Donuts in 2012. Chef Stephanie Thornton’s creative, gourmet spin on donuts made from a signature 18-hour brioche dough inspired a loyal following in Portland, and the business expanded.
By the start of 2020, Blue Star had eight retail stores in Portland and three in Los Angeles — all 100% retail driven. After a very successful 2019, during which the company paid off debts and began offering health benefits and a 401(k), Katie felt like she had hit her groove. Blue Star’s star was rising.
In March 2020, pandemic lockdowns began. After watching the impact on China and Italy, Katie knew it was going to be really, really hard on her company, her staff, and the entire industry — an industry dependent on in-person commerce. After shutting down her newly-built, sparkling clean, now-empty, and far-too-quiet flagship store, she paused for a final look around: “I was so scared and worried about what was coming, what was going to happen to my industry and the business we worked so hard to build. I sent all of the perishable food home with employees; we had no idea when we would be allowed to reopen. I went home, ate a bunch of lemon curd with my husband, and cried.”
Channeling her Inner Buffalo
The next morning, Katie awoke with Tony Pham’s buffalo story stampeding through her head — and everything just clicked. “We can't sit around and wait to see what happens; we have to run toward the storm!” she thought. “We have to get our product to where people will be — at home, in grocery stores. We have to be like the buffalo and run head-first into the storm.”
“Chef Stephanie and I met in the kitchen to explore making shelf-stable versions of our products for grocery. She started madly experimenting and testing. Several of our donuts —with just a little tweaking — did really well with freezing and thawing and still tasted great. That opened up a world of possibility.
“I reached out to my EO network for introductions to grocery store buyers. I pitched this ‘awesome new packaged donut product’— even though we totally did not have a finished product yet. They probably saw right through me but extended a chance to us anyway.
“We hustled and got our very first packaged product on two local grocery store shelves by April 2, a little over two weeks after shutdown. It was a huge learning curve, and we faced challenge after challenge, but I am so grateful that I was able to keep my leadership team intact!
“The buffalo has become an important symbol for us. We have a video on our website that summarizes how grateful we are to our community for showing up in those difficult times.”
9 Challenges in Blue Star’s Pandemic Pivot
A total business pivot, though sometimes necessary in dire circumstances, is rarely easy. But when your back is against the wall with no other option, it’s incredible how much a team like the one at Blue Star can accomplish.
Katie had to solve a number of problems to make the pivot from 100% retail into grocery successful. Here are a few of the barriers she faced:
Creating a new set of industry contacts from scratch. Fortunately, Katie had an established network of people and the goodwill of Portland’s foodie community, but it was still an incredible amount of work.
Learning the norms, lingo, and finances of an entirely new industry. The consumer packaged goods (CPG) world is incredibly competitive. There are many gatekeepers, the systems and tech are outdated, and a ton gets done just by who you know. It was a big advantage to have a 10-year-old beloved brand with brick-and-mortar storefronts. Most CPG products at grocery stores do not have this advantage.
Extremely fast-paced product testing and buyer feedback. Two weeks from shutdown to grocery shelf is probably a world record.
Product packaging development and consumer feedback. Initially, Blue Star Donuts CPG were packaged in clear plastic clamshells, which the company had in inventory. To avoid single-use plastic, Katie’s team developed recyclable window box packaging. It presents a pain point in operational efficiency, but is more environmentally friendly.
Buyer requirements around ingredients and allergens, and revamping recipes.
How to navigate third-party distribution versus self-distribution.
How to navigate limited real-time information. Getting any information from grocers around product movement, customer feedback, and popular flavors is like pulling teeth, leaving Katie and her team to guess what's going on in-store.
How to motivate production staff and maintain morale. Retail shops provide immediate positive feedback from happy customers willing to wait in long lines. Mass food manufacturing is significantly less gratifying than the big smiles on customers’ faces.
Building out e-commerce. In 2020-21, Blue Star developed its e-commerce arm after realizing that the sub-zero freezing process would unlock shipping possibilities. Project manager Alec Addie took on navigating that world for the team. E-commerce has the additional benefit of providing much better customer data and feedback.
“And keep in mind, we were on a shoestring budget and pretty much just winging it,” Katie says. “Our Director of Wholesale, Cami Justice, was formerly Head of HR. Everyone on the team stepped up in the biggest, best possible way to make it work.”
With the pandemic fading into the past, Blue Star has re-opened six of its Portland retail locations and one in Los Angeles. Why go back into retail? “It's something we know very well how to execute, and when it's at scale is extremely cash flow positive,” Katie explains. “I see the wholesale business far outstripping retail, but retail is still the best way to make a memorable customer impression.”
The value of a pivot
Going into grocery taught Katie that her brand and product have demand outside traditional brick-and-mortar storefronts. Given the rapidly changing pandemic business environment, it made sense to develop and stabilize as many alternative revenue sources as possible so that the company would be better insulated against future unpredictable disruptions and could reach a broader audience.
Katie had only two choices in March 2020: She could have gone down with the ship or run into the storm. She had a good cry, awoke to a life-changing Aha! Moment, and performed a remarkable total business pivot within two weeks, going from retail to B2B wholesale. It’s a profound story of resilience and tenacity driven by necessity. She has since added online retail shipping and reopened the majority of Bue Star’s retail shops.
This tale of entrepreneurial resilience and stampedes in stormy weather has the best possible ending:
Before the pandemic, though very successful, Katie’s business had limited retail revenue in a regional area. After facing a life-changing global pandemic in a way that would make any buffalo proud, Blue Star Donuts has evolved from a one-legged stool into a three-legged stool with increased revenue stability and a national reach with no limits on revenue potential.
That’s why entrepreneurs must always channel their inner buffalo: Run head-first into every storm to shorten your time in the downpour. And along the way, adapt and pivot to meet market challenges — and you’ll emerge stronger for it!
Barry Raber is a serial entrepreneur, president of Carefree RV Storage, a 22-year member of the Entrepreneurs' Organization (EO), the founder of Business Property Trust, and an EO Portland Entrepreneur of the Year. He shares his successful business secrets at realsimplebusiness.org.
