BC Business
Luvo founders | BCBusinessStephen Sidwell hopes Christine Day can do for frozen food what she did for yogawear.
Christine Day and Stephen Sidwell are trying to find a quiet corner of the Anaheim Convention Center to talk to a reporter. This is the big Natural Products Expo West trade show, but (sadly perhaps) the two Vancouverites will not be presiding at a booth, buttonholing passersby or showing off previously undetected expertise at slicing and dicing. Instead, Day has just come out of a press briefing where she and other star panellists spoke to topics such as “Food tribes: How are the growing gluten-free, vegan, paleo and other special diet communities fuelling the healthy-eating movement and changing the way people view food and community.”
Parsing notions such as these is hardly a stretch for Day, who during her six years as CEO of Lululemon Athletica Inc. tread a lot of similar ground and sounded very happy doing so. At Lululemon she pulled off some neat tricks. Founder Chip Wilson had the brilliant idea of making clean-lined, body-flattering clothing rooted in the yoga ethos, and he and the CEO who briefly replaced him, Robert Meers, got the company up and running, but it was Day who turned it into a perpetual profit machine while simultaneously creating an aura of mindfulness and community.
When she announced her imminent departure in June 2013, shares in the company were hit hard, and they failed to scramble back during the months before she left for good in January. Day helped turn Lululemon into one of the sexiest companies in existence (though the story got a little too sexy for the markets when a line of yoga pants proved overly transparent).
Nor was this Day’s first shot at helping to run an “of the moment” company. She did much the same thing at her previous posting, as the third employee and ultimately second in command at Starbucks. Now, Sidwell—who may just turn out to be Vancouver’s next Chip Wilson—has hired the 51-year-old to perform a similar magic act at his own startup, which happens to have the decidedly Lulu name of Luvo. In just two years, the Atlanta-headquartered but Richmond, B.C.-run Luvo Inc. has already come a long way, even if most British Columbians have never tasted its wares, and aren’t likely to until some-time late this year. Put simply, the new company is trying to do the same thing for frozen and prepared food that Lululemon did for yogawear and Starbucks for coffee: transform flatbreads and freezer packs from prosaic commodities into holistic lifestyle choices and symbols of enlightened aspiration.
So Luvo will be Day’s third stint at a just-out-of-the-gate company with designs on changing the commercial world. Each of the other two not only succeeded but did so at a blinding rate of speed. Does she think that Luvo has similar potential?
In a word, yes. “There’s an opportunity to transform an industry,” she says. “Not only how people eat, but how things are grown. My concern is not moving fast enough. I think this is an industry where the consumer is actually ahead, particularly of the big legacy players. So what you’re seeing is a bunch of small startups.”
Already Luvo products are available at 7,000 U.S. retailers, while an institutional arm has put Luvo entrees onto Delta Airline jets, with schools and hospitals to follow. The privately held company has a lineup of celebrity endorsers that includes actress Jennifer Garner, Pittsburgh Steelers star Troy Polamalu, wellness author Dr. Mark Hyman and New York Yankees shortstop Derek Jeter, who is in his last season as perhaps the greatest baseball player of the past two decades and says he wants to help the company develop a line of active nutrition products (he’s described by the company as a “brand development officer”). Canadians will get their own chance to buy Luvo steel-cut oatmeal, quinoa wraps and veggie burritos by the end of the year, says Day, just as soon as local suppliers can be lined up. [pagebreak]
Suffice to say that things are moving quickly—and with considerable narrative flair. Almost every firm likes to talk about its story these days, but Luvo is the kind of company where the word gets used a lot. Fortunately, it’s an interesting story.
Founder Stephen Sidwell has dual U.S./Canadian citizenship and grew up commuting between B.C. and Idaho. On the U.S. side his family had the very Idahoan profile of being the owners of a large potato operation. Up here, their identity was similarly iconic, as partners in the Gang Ranch, near Clinton—for a time the largest ranch in North America. In 2001 he founded Devante Capital, where he remains CEO, even if Luvo is currently monopolizing 100 per cent (“150 per cent,” says Day) of his time. Devante is a boutique investment bank based in Vancouver that helps companies secure funding and manage transactions in addition to providing general financial guidance. As investment bankers go, Sidwell is very much your hands-on variation. When Yves Veggie Cuisine undertook its successful expansion into the U.S. under the brand name Gardein, he was involved on numerous levels. “My role was as managing director,” Sidwell says. “I helped Yves raise the capital, recruit the management team and expand distribution in the U.S.”
Luvo began to take shape in 2011, but there would have to be darkness before there could be light. Sidwell today looks svelte and healthy, but flashback a year or two earlier and the investment banker was flying too much, exercising too little and eating too poorly. He’d put on some pounds, about 45 of them, and that was affecting his health and well-being. Concerned, he enlisted his wife to cook an enhanced diet, but that exercise proved to be an immense amount of work that satisfied neither of them. Finally he decided to engage a private chef, and put an ad on Craigslist looking for an appropriate candidate.
The annals of Craigslist hookups are extensive, but there have been few more portentous than the one that transpired between Sidwell and Stephen Ford. Ford was a recent UBC graduate in nutritional sciences then working with Langley-based HLS Foods, where he was helping to develop cured salmon variations. He was as interested in food sustainability as he was in cooking delicious, nutritious meals.
Sidwell hired Ford to cook three meals and three snacks every day for three months. He requested 1,600 to 1,800 calories a day and a full nutritional complement. On the other hand, he was willing to suffer a little if the food didn’t completely measure up in the taste department, as he expected would be the case. But in fact, the food proved to be delicious, and a happier and much more svelte Sidwell found himself wondering why everyone couldn’t eat that well, including people without a personal chef. “I don’t know very much about food,” he says today about his thought process back then. “But I know how to start a company, I have some capital, I know how to raise capital—I’m going to do this.”
The light bulb had been switched on, and it wasn’t about to go off. So Sidwell went ahead and launched his new food company—only in 2011, the company wasn’t called Luvo. Instead, he got to work starting a restaurant chain intended to deliver on Ford’s promise of nutrition combined with flavour, calling it Lyfe Kitchen. He quickly enlisted a couple of former McDonald’s executives: Mike Roberts, who’d been global president and COO, and Mike Donahue, McDonald’s U.S.A.’s chief of corporate communications. Then came Art Smith, Oprah’s former chef, and Tal Ronnen, a talented vegan chef. Ford too joined the team.
The first Lyfe Kitchen opened in 2011 in Palo Alto, California, since followed by seven more in Colorado, Texas and Illinois—some owned by the company, some of them franchise operations. Mark Bittman, the prominent New York Times columnist and proponent of healthier eating, visited and went away impressed by both the food and the operation, wondering if it was destined to become “the Whole Foods of Fast Food.” Within months of that first restaurant, Lyfe announced the launch of a frozen and packaged food line, Lyfe Kitchen Retail, to be sold initially at Bay Area Costcos. [pagebreak] The goal with the new at-home line was to deliver the kind of nutrient-dense, fat- and sodium-reduced dishes that Ford had provided for Sidwell, while keeping calories below 500 per serving. To enhance and differentiate the cooked product, the restaurant team had already developed a technique in which entrees were cooked inside a paper pouch modelled on the French en papillote technique. Steamed in their own juices, dishes retained more of their nutrients, colours and flavours. As a side benefit, the method reduced packaging, eliminating things like foil and plastic, and made for a product that could be slid out of its pouch and onto a plate, ready to serve.
The Lyfe Kitchen line had all the makings of a nice little off-Broadway hit, but Sidwell harboured bigger aspirations, and late last year a reorganization was announced. Sidwell retained his interest in Lyfe Kitchen, along with CEO Mike Roberts, but the retail arm was split into a separate company in which Roberts had no financial interest (Sidwell remains majority owner). “It became very evident that the retail products were in high demand,” says Sidwell. “And because of our unique patented technology, it would allow for very fast expansion in multiple channels at the same time. And we didn’t want to create confusion with our franchisees or with the consumer.”
The new retail name was Luvo—which, according to the Urban Dictionary, describes people who take good care of themselves and others, though also those slightly less wonderful people who love themselves just a little too much. Nothing about that bothered buyers at major supermarket chains such as Kroger’s and Target, however. In January 2014, when Luvo announced the arrival of Christine Day as CEO, the company was already selling in stores across the U.S., with growth plans that include a network of Luvo bistros—small free-standing outlets that will sell the rapidly growing Luvo line already heated and ready to eat.
Day, who will receive a 15 per cent stake in Luvo, joined the company on a part-time basis in April and takes the reins full-time this fall. She has three children, the youngest a 14-year-old, and had promised her husband she’d take a year off, which is why her full-time arrival at Luvo is being delayed. Sidwell—who started courting Day for the job shortly after her departure from Lululemon was announced—has always had British Columbian connections, but Day, who will be based in Richmond, also brings deep ties to the province, ones that aren’t widely known.
When she was two, her family relocated to Vancouver from Northern Ireland, where her engineer father had been a teammate of footballer Georgie Best before blowing out his knee. That stint lasted only three years, but several members of the extended family live here, and Day’s own family later landed in Seattle, where she attended high school and then college, graduating with a degree in accounting. While still in her twenties she helped Howard Shultz raise the money that would ultimately lead to the founding of the Starbucks chain, where she spent almost two decades and occupied various senior positions. The move to Lululemon was just a short jaunt up a freeway that she’d driven dozens of times before.
The challenge at Luvo may be less about creating a category and stoking a market, as Starbucks did to an extent and Lululemon absolutely did, than about being the company that emerges from among many to own it. For that challenge Day sees Luvo as being extremely well positioned. “Even though it’s early stage, the management team is very talented and very industry savvy,” she says. Sidwell has said that while the company is currently well capitalized, it would consider a public offering if conditions warrant, eliminating another barrier to growth.
And of course there are Day and Sidwell, who have the track records but also the passion and purpose, words that they are not shy about using. Day talks about visiting her mother-in-law in the hospital, seeing what she was being given to eat, and vowing that things there were going to change, and soon. Getting Luvo food into hospitals is now a personal priority for her.
Meanwhile, Sidwell swears that eating better has done nothing less than transform his life. Now, when travelling, he has Luvo products shipped ahead to the hotels he’s staying at. He isn’t going back to the old diet, and he doesn’t think we should either: “We are trying to change the perception of food in North America.”
SIDEBAR
Rating Luvo’s Potential
Delicious, nutritious dishes that anyone can heat and serve, conceived in the French tradition by celebrity chefs and endorsed by the stars—is Luvo the Lululemon of the food world, a B.C.-bred and -based monster hit in the making? To find out, we quizzed Darren Tristano, an executive vice-president at Chicago-based Technomic, a leading food- industry consulting firm.
How big is the market for this type of product?
The health and wellness market remains a bit of a niche, but there is definitely a critical need and an opportunity. Right now there are two main targets: the affluent consumer who can afford the higher prices, and those that actually need something like this due to dietary restrictions.
Who are the main competitors?
There are some smaller brands, but the big companies are way behind. Most frozen food is very unhealthy, and most of the competition is not direct. For example, a product like Lean Cuisine competes on nutrition but not on taste.
What about Christine Day as the new CEO?
Great hire. Lululemon and Starbucks have the same demographic as Luvo, based on lifestyle and affluence. Generally, retailers don’t understand food service and vice-versa. Combining the two should be a real advantage.
Your summation?
They’ve done a really nice job. But as the company becomes more and more successful, competitors will come into this space. •