The Light At The End Of The Tunnel Is Actually A Fire: A 2020 Recap
How our small food business barely survived 2020 - A behind the scenes look at our absolutely insane year.
The all too familiar ringtone of my phone tore my concentration away from the colorful spreadsheet I’d been building that day. Order volume inconsistencies? I blinked, hesitated, struggling to remember the meaning of the incoherent swathe of numbers before me. I thought it was right, but it--
The ringing continued. Alright, fine. With a last, sidelong glance at the rows and columns of numbers, I swiped on the dancing green symbol and held the phone up to my ear.
“Tim. There’s a problem.”
A pit immediately formed in my stomach. Rio, our production manager, was rather handy with tools, and so generally pretty good at wrangling the machines we had into working order when minor problems occurred. If he was calling...
“We have suffered a catastrophic failure with Amethyst.”
Rio, if anything, is extremely technical and precise with how he described things. This meant something bad, really bad, had happened. Amethyst was the affectionate name he had assigned to our noodle machine, as when it first arrived, it had a sign on it declaring “Amethyst” from some port or transport service or the other.
“We will not be able to operate without a major repair effort.”
“I’ll be right there.”
When I arrived, they had already cleared the machine of any remaining dough and flour, turned off the breakers, and opened up the safety panels. The oily, earthy smell of leaking lubricant mixed with the suspended flour dust, lending a strange, sour scent to the air. I approached cautiously past the row of nervous, downcast glances of the production staff, and crouched down to peek at the bent, twisted sprocket where the drive chain should’ve been.
And we were only two months into 2020.
To You, In The Future
2019 was the first year we started selling Vite Ramen, with v1.0 being available for public sale in March. In that first year, we learned a lot, did a lot, and went from small, restaurant style machines to larger, industrial machines. We upgraded to v1.1, then v1.1.1, then v1.2, and for us, 2020 was when we wanted to grow, and really start hitting our stride.
Like many businesses, our first year wasn’t profitable, with all the fixes, upgrades, and additional capital it entailed. We stuck to our beliefs, and did not seek nor take investors, which meant taking SBA(Small Business Administration) loans, as well as other capital or cash flow loans from the various lending companies that existed. With the new machinery, we were looking forward to a more stable, profitable 2020 that allowed us to pay off all our loans and do more with what we had.
Well... If you’re reading this, you can imagine how that went.
Let’s go back a bit.
Tom and I have family in China, and so, in late 2019, we already heard the rumblings of a new strain of virus that was causing significant problems there. Surely, it’d be like H1N1 or others, which would be contained and wouldn’t affect us, right? The cases grew worse, quicker than anyone ever expected, and entire cities were shut down and locked in; “unprecedented” measures began to unfold.
It was the COVID shutdown that was heard around the world, and the foreshadowing of the year to come.
We wanted to hedge against this. What if this caused problems for us, after all? Tom urged us to get preparations ready. This virus was coming during the busiest travel season for the world, with Christmas, New Years, and then Lunar New Year coming in quick succession.
Surely, this might cause some disruptions, slow some things down. We didn’t want to be caught with our proverbial pants down, so we made the decision in December of 2019 to take on some more loans, and make some larger purchase orders to secure our supplies early, things like our flour, vitamins and minerals, and dehydrated powders.
We would surely be able to clear that additional loan in 2020... Right?
Being a small, new company, we didn’t get terms from our suppliers then. Everything was paid fully up front, with average lead times, or the amount of time between the order and receiving the material, being some 8 weeks normally. So in December and January of 2019, we paid out well over $100,000 in up front costs to secure our supply chain for the beginning of 2020.
Whew, glad we saw that coming! Problem solved! Crisis averted!
8 weeks was the normal lead time we could expect. But what happens when things are the farthest thing from normal?
The Basis of Decisions
What does it mean to run a business? What does it mean to be the owner, and to be in charge of the livelihoods of many people, who depend on the income to dictate many of the choices that they make in life?
For many, it seems the answer is to maximize their personal profit at any and all costs. Labor is looked at as nothing but a detestable number that cuts deeply into the hallowed net balance sheet at the end. “Ballooning labor costs,” is looked on as a negative outcome and a sign of bad management practices in the corporate world.
After all, higher labor costs means less money going into the pockets of shareholders, and shareholders always come first, right?
An important lesson I learned from my mentor when I cooked in professional kitchens was that the most important person in the kitchen was not the chef-- It was the dishwasher. Without the dishwasher, the kitchen doesn’t have clean pots, pans, or plates to send out to the customer, and the entire system fails. Similarly, at Vite Kitchens, we have our production line members-- If they are not making noodles, then the rest of us can make all the spreadsheets we want, crunch all the data, make all the marketing materials, but without the noodles, then what are we doing?
If businesses are constructed where there are the fewest people at the top and the most at the bottom of the standard pyramid, then why do we treat those people as bottom feeders instead of who they really are-- The essential foundation of the business? Therefore, the rest of us are there to not lord over them, but to be their support, to not rest our weight atop them but to give them everything we can to help, as they are the foundation.
Here, I cannot continue without giving great thanks and gratitude to our two production managers, Rio and Ana, who have stepped up, doing their best to keep production running despite all the adverse circumstances.
To this, running a business means to be grateful that these people are spending their time and effort to help you, and that they are trusting you with their livelihood. That becomes your responsibility, and your burden to bear. The foundation needs not, and should not show loyalty to those above them, but those above them should show gratitude, respect, and loyalty to those who spend their energy to support the business owner’s dream.
We do not take this lightly and understand the gravity of needing to provide for many, many others besides yourself.
This formed the bedrock of our decisions in 2020.
Problems Begin (and don’t end)
Some of you who have ordered in 2020 have seen the hardships we’ve encountered, and have found yourselves waiting for longer than expected. Starting even early in Q1 of 2020, we began to suffer problems with the supply chain. This wasn’t entirely unexpected, and ironically enough, the causes of these delays weren’t related to COVID, as this was still in January. This put us into a state where there were many days where we’d be sitting there with no supplies, waiting for a truck that was supposed to have arrived two days ago to get there just so we could make and package noodles.
As soon as we started to regain our footing, the disastrous, catastrophic failure happened on Amethyst, with a primary sprocket being completely bent out of shape, due to what we later summarized as improper heat treating, making the metal incredibly soft and pliable compared to the stress it had to undergo. This took us out of commission for almost two weeks as we got special custom parts cut and made for us to repair the machine. In that February, we also suffered a failure of the noodle cutter from secondary stress on the drive shaft from the aforementioned sprocket breaking.
Given all that went wrong, we were still trying our best to keep everything going. Eris, our COO, normally would run data, projections, schedules, financials, and all sorts of other things, but was invaluable in keeping our machines running. Not only was she able to plan and provide insight to operational efficiencies and projections, she was the one who would come in when the machines broke, roll up her sleeves and tie up her hair to get elbow deep in grease and electronics to bring the machines back to working order.
On these kinds of days, or even weeks, even though there was no work for the production crew to do, we were adamant on paying them their full wage. These failures were no fault of theirs, after all, and why should they be punished for it? Our responsibility was to them and their quality of life.
March came in like a lion. Everything we had, all of our plans set to recover from the expensive machine repairs, the downtime, and the additional loans we had to take out for all of it was torn to pieces as the economy began to shut down, and the USA started to be swept by the pandemic in full force. We were optimistic to begin with. With the shutdown, sales spiked in the first two weeks as people bought at home foods, but that could never last.
By late March, sales were down by 73%, and every new week was the new worst week yet. But surely with the shutdown, the government would come with new regulations, safety measures, and support for the people, right? March comes in like a lion, and goes out like a lamb, as the saying goes.
Instead, this metaphorical lion decided it’d like to stay and make itself quite at home.
Our loans continued to nip at our heels, and the supply chain began to stagnate and suffer. The flour, vegetables, dehydrated powders, vitamins and minerals all began to delay longer, and longer, and longer. Trucking became inconsistent, with transit times more than doubling whenever we tried to send ramen to the east coast fulfillment center, with tens of thousands of noodles sometimes being in transit for a full month, with nothing that we could do to expedite it. We’d get refunded our shipping guarantee fee, and that’d be it.
We had, at this point, completed our Sichuan Chili Edition kickstarter as well, with quite possibly the worst timing that could happen. Our original assumption was that, towards the end of March, we could place our order, and with 8 weeks of lead time, begin production and send out that ramen in June.
Our 8 week lead times had stretched on to 12 weeks, then 16, and longer. We still had not received these materials by June, and this held true for the materials we needed for our normal line of Vite Ramen as well. Things were not looking good, to say the least.
Oh, to be Self-Fulfilled
Production was run as often as we could, but a secondary problem occurred. With tens of thousands of noodles being stuck in trucks, and trucking becoming extraordinarily inconsistent, we would often have weeks where not a single noodle was sent out. All of them were made, but stuck in transport to the third party fulfillment we used on the East Coast. This was a constant, omnipresent problem, creating significant gaps in our ability to send out orders in a timely manner.
Fulfillment is the process of looking up an order, grabbing the right size box, stuffing everything that order has into it, taping it up, and slapping a label on to it to give to whichever delivery service is picking it up.
Of course, whenever we could, we’d also be sending them to a west coast fulfillment facility. However, if we were backlogged on orders, the fulfillment company wouldn’t be able to catch up very quickly, keeping orders hanging much longer than we would like. This, coupled with the inconsistent supply chains of 2020, created compounding problems where we’d be waiting for materials that we ordered forever ago to arrive on trucks that were promised days, if not weeks ago, to send to fulfillment centers that would take even longer to arrive, before the fulfillment center could slowly try to catch up.
During these periods of time, I’m sure some of you are asking-- Why not just shut down advertising, and stop sales until you could catch up?
Well, we did. There would be days and weeks where we would run no advertising, no marketing, and do next to no sales, but this is something that is inherently unsustainable. Not only did we have loans piling up that needed paying, but more importantly, we were committed to keeping people paid, so that no one would have to lose their job.
We committed to firing no one, and reducing no wages. Tom and I would be the ones to skip our pay to get this or that paid for, and try to keep everything afloat. But in the end, as payday rolled around, we would need to sell some ramen, regardless of where those materials we paid for months ago were, or how long the trucks were being lost for.
There were many, many angry people who, used to Amazon’s two day shipping, threw quite a few mean words at us. Jade, our customer service specialist, took the brunt of it, though the rest of us would often switch out to alleviate the massive toll this would take on her mental health. She deals with thousands upon thousands of emails a month, and we could not have managed through all of this without her fortitude and ability.
Still, we could not continue to lag behind like this. Each and every week, we fell behind more, and we knew that if things progressed, we would not be able to sustain.
That’s when we made the decision to do our own fulfillment. Sounds easy, right? Just print out orders, addresses, stuff things in a box, send it out. Of course, everything is easy until you scale it up to the magnitude we were dealing with-- This gets very different when you start to do thousands of orders, filling up entire truckloads with small 10x8x6 boxes, trying to manage so many that the awesome Dave the USPS guy has to make a couple trips with boxes hanging out his blue and white truck to get them all.
We also had to make sure our system was compatible with our fulfillment partner’s system, ensuring that we weren’t double fulfilling orders or skipping over orders altogether. We sure didn’t want to input thousands of addresses, names, and orders by hand, so we’d also need to link our Shopify orders somehow to automatically purchase, format, mark orders as fulfilled, and match the customer’s tracking number to their email.
And that was all just on the digital end.
Luckily, Spencer, our logistics wizard, was able to cobble together a script within some spreadsheet programs linking to a bunch of additional third party programs that fit our needs to create a strange, frankenstein’d, but very functional system. He’d work late nights, long days, spending hours and hours not just behind the computer writing the code, but moving his hands blazing fast on the fulfillment line we’d set up, setting a breakneck pace as he put ramen left and right into boxes to get us caught up as fast as possible, and always with a good natured smile on his face.
Nothing can be perfect on the first, second, or even third run. Problems still happened, of course, with double fulfillment, phantom fulfillment, and all sorts of other bugs that we quashed one by one as we ran the system. The more we did, the more problems we sorted out, and the better we got at it, allowing us to start catching up on the delayed orders, and the light at the end of the tunnel started to blink into the corners of our vision.
The Light At The End Of The Tunnel Is Actually A Fire
Our supply chain had grown thin again, where ingredients promised weeks upon weeks ago delayed again and again. We had started to sell out of some of our flavors-- Vegan White Miso went first, with Roasted Soy Sauce Chicken falling soon afterwards. With the lag time between receiving ingredients, producing them, then packing them and sending them to the fulfillment facility, and then waiting for them to be fulfilled, we began to feel the pressure squeeze around us.
Our powdered ingredients were conspicuously missing. Even the slow-arrival bank of supplies we had ordered in January were running dry quicker than the yellowed grass lining the Vacaville hills. Our relief order had been placed shortly afterward the first order, and yet, were nowhere to be seen, devoured by the same all consuming pandemic that plagued the world.
We waited, day after day, flurry after flurry of email sent inquiring about the status of our ingredients. Day after day, we’d receive apologetic responses, with hollow promises that they’d try their hardest to get it to us. We watched in apprehension as every number of our resources, from our bank account to our inventory counted down, ticking ever faster towards zero.
Like hell we were going down like this. We got to work, and pivoted.
No flavor ingredients? Okay. Deep breath. What did we have? Nothing much. Remove the flavor packets then, Tom said. Cut down to what we have. He glanced at our ingredient stock, and asked, “Can we make noodles?”
White wheat flour we’d be able to get. We had a surplus of corn fiber from a larger order we made a while ago. Vital Wheat? A bit of searching, and there were a few suppliers at a higher price. That wasn’t too rare or hard to find. Quinoa flour?
Our entire team began to search, contacting all and any suppliers for quinoa that we’d be able to get at a moment’s notice. Phones rang constantly and emails sent in droves to find this essential material. Even if as we found it though, another question loomed over our heads-- Would a truck that was sent to pick it up be able to deliver it in time?
We decided to take no chances. I began to rent Uhauls, driving hundreds of miles to pick up quinoa flour anywhere we found it, hand loading thousands of pounds of flour bags into the back to haul off to our facility to ensure, at the very least, that we could make noodles.
Those noodles Tom came up with are what became Naked Noods. Behind the scenes, we rushed to make this with whatever we could, buying off-the-shelf packaging meant for cookies to seal the noodles in, spending late nights designing and re-designing a sticker to FDA standards to stick onto that packaging, doing box drop tests, shipping tests to see how much bubble wrap we’d need, ran the numbers on pricing, production, marketing, and everything else that comes with creating a new product at breakneck speed.
One of our team members is called James, a great guy I had met during college, who ran the gaming club, and the guy who recruited me to be the Team Captain of our collegiate Overwatch team. He was, and still is, a pivotal member of the Vite Kitchens team, as the person who handles our sponsorships, PR, and outreach. But his secret weapon, and his greatest strength is his flexibility and ability to learn, and learn fast.
Because in these times of crisis, it was James that filled in all the gaps that needed to be filled, being the stalwart bridge that connected everyone’s projects and picked up where anyone struggled. Anytime we needed logistics data, he had it in a flash. Anywhere we needed marketing written, he’d have it done before you needed it. Anyplace we needed a new skill picked up, he would have a working knowledge of it in days.
In a blisteringly short amount of time, we wiped the sweat from our brows, and hit the button, launching Naked Noods to the world. It wouldn’t be an exaggeration to say that the only reason Vite Kitchens is still around today is because of this crucial time period, and Tom’s decision to push us into creating a brand new product in the blink of an eye. Naked Noods provided the desperate gasp of air we needed, the breather to stumble, beaten and bruised, back onto our feet, flashing a defiant and bloodied smile at the catastrophic mess of 2020.
That Fire, As It Turns Out, Is Very Much Literal And Not Metaphorical
The hot, dry summers of Vacaville reached 110F in 2020. The wind whistled through the corridor at high speeds, often beating a cacophony against our warehouse doors as the PVC door strips were ripped upwards and slammed down against the sheet metal of the roll up door. These months were by far the most brutal and difficult, with even a five ton air conditioning unit being unable to keep up in a space five times smaller than it was rated for.
We weren’t strangers to this heat. Back when we first started, Eris, James, Tom and I would be working the production line without any kind of air conditioning, but with each subsequent year, higher average temperatures made conditions progressively worse. One of the very first things we saved up for after our 2017 Kickstarter was an air conditioning unit, and even now, the unit was struggling to keep up. Our building had some severe power limitations as well, which meant that the unit we had was just about as big as we could support.
In late August, smoke began to billow through the fields. Within five minutes, the sky went from a brilliant clear blue to a hazy, burnished orange color. We immediately shut down production and sent everyone home for the day for safety as flakes of grey ash drifted down like summer snow. We learned later that, luckily, the fires weren’t anywhere near us, but we were catching the residual smoke and ash from a wildfire raging a hundred miles away.
This sigh of relief didn’t last.
Next week, the smoke returned in force, and we once again shut down for worker safety. The fire, seemingly so far away, had begun to creep closer towards our production facility. There was a large swathe of land and giant hills to block the approach, as well as a highway that acted as a natural fire break, after all. The fire would have to become one of the largest fires in California history to even get close to reaching us-- There’s no way that’d happen, right?
At 3AM, 8/19, we were alerted to an evacuation order in Vacaville. The LNU Lightning Complex fires, as they were known, had grown to one of the largest fires ever recorded in California, with the scattered borders of the inferno spitting sparks across the dry grasslands of Vacaville. Small brush fires raged across the thirsty hills, catching the perfect tinder of the brittle remains of the plant life.
We could only watch as roads closed, evacuation centers were set up, and the news crews showed the hellish landscapes of roads and buildings we’ve driven through repeatedly to work. Every new update, the fire crept closer and closer, and remained at 0% containment, even managing to jump the highway as it burned its way towards Vacaville and Fairfield. The fire crews at this point could do nothing to contain it, focusing instead on evacuation efforts. We were fully and completely at the mercy of the fire.
Funnily enough, it was during this time that some of our materials that we’d been waiting on for a while wanted to show up, and we had to frantically call to reschedule the trucks.
The fire burned fast and hard, but in two days, it had slowed, unable to sustain itself with only grass to burn. Evacuations were tentatively and slowly lifted, and the roads opened once more. According to the fire tracker, the edges of the fire had been only a mile away from our facility before its dying gasp.
I donned a sealed P100 ventilator, and drove towards the facility with a heavy pit in my stomach. The roads were scattered with ash that was constantly swept, dancing, into the air by the passing of oncoming cars, leaving a fine layer of ethereal grey particulate falling onto my car’s windshield.
I pulled into the parking lot, layered with a uniform ashen blanket that concealed all the parking lines, glancing up towards our facility with trepidation...
And a deep, cathartic sigh of relief.
Our facility, built over the years, upgraded piece by piece and bit by bit with our own hands, still stood. Its white walls were scattered with soot, and yet no worse for the wear. I entered, and everything stood, pristine, clean, and waiting just as ready as it was the days before the fires.
We were safe.
Well The Years Start Coming and They Don't Stop Coming
The California fires would continue to burn out of control for months, and our air would be filled with a smoky haze. Pandemic aside, it was unsafe to be outdoors without having an N95 mask on, or some kind of smoke filtering ventilator. Our facility itself was well sealed against this, and all of our staff were wearing masks designed to filter fine flour particulates long before all of it, which ironically made our facility a safe haven against the pervasive and ever-present smoke.
We had not managed to completely escape the Vacaville fires without a scratch. With the fires so close and the air thick with burning matter, our air conditioning unit’s filters had been completely blocked up, meaning its filtration and dehumidifying properties had been compromised. In our rush to evacuate, the finished goods portion of the facility had not been quite locked and sealed in the manner it normally was.
We came to learn that an entire month’s worth of noodle production had been potentially compromised because of this. The ash from the smoke, after all, was not just wood, but burning plastics, cars, homes, and all manner of other materials that had been released into the atmosphere. We could not, with good conscience, allow these boxes to go out and be consumed, and made the tough, heart wrenching call to dispose of tens of thousands of potentially compromised noodles.
A massive salvage effort was conducted after this, where the remainder of our supplies and ingredients were inspected, which luckily turned up nothing. The only compromised section was the finished goods storage, while the remainder of the suites were ash-less.
Still, this meant that we were instantly set behind another month of production. Many of the operations and administration staff would come to pull full packaging and fulfillment shifts to help us catch back up before returning to their other duties. Strangely, we had started to become accustomed to this-- Crisis after crisis, problem after problem, we had learned to roll with the punches, and these sort of things no longer fazed us. (By the way, if you got this far, thank you so much for reading. Get 10% off with LIGHTATTHEENDOFTHETUNNEL - Valid until Feb 1st 2021, non-subscription purchases.) When catastrophe struck, we would shrug our shoulders, roll our sleeves, and get to work solving it as if it were no big deal.
This resilience can be described as a good thing, and likely is looked upon fondly by many, and I couldn’t lie and say it wasn’t. And yet, there is also perhaps something to say about the long term mental strain of constant and repeated high stress events. It is not, no matter what anyone likes to claim, healthy or good for someone. Burnout is a very real, overlooked, and often ignored problem. The fires that burn the brightest, loudest, and fastest are often the ones that burn for the shortest amount of time, after all.
As of the time of this writing, it is almost the New Year. 2021 comes, and we have, at long last, come to the end of a tumultuous and nerve wracking chapter in Vite Kitchen’s story. Or, so we hope. We have smoothed out our supply chain, increased our inventory backup supply, hired more labor, have machine parts on backup, are able to self-fulfill at a moment’s notice, and have made many, many other changes to increase both the flexibility and resilience of our operations.
Through 2020, we had something that became a joke among ourselves. Whenever we would talk about the future, we would append to the end: “...when we’ve stabilized.” It was something that we said in late 2019, and then continued onwards as problems kept arising. It quickly, and rather depressingly, became a morbid joke that we’d repeat as things constantly and continued to go wrong throughout the year.
And yet, that is the goal we are looking towards for 2021, and striving for. In 2020, the objective was to survive. More small businesses than ever are closing, with some news outlets reporting as many as one in six having closed or at risk for closing with how 2020 has gone.
We are extraordinarily fortunate to be one of the ones who have pulled through despite everything. Our story of 2020 is but one among millions of stories of hardship that small businesses have faced this year, and will continue to face going into 2021. But nevertheless, we have survived, and everything we wanted to do originally in 2020, we will try for in 2021.
In 2021, we’re going to strive for stability. After all, it can’t be worse than 2020.
-Tim Zheng, CEO and Co-Founder of Vite Kitchens