Featuring Mike Schall, Managing Director of FocalPoint Partners
by Rebecca Patt, Senior Vice President of Development, Wray Executive Search
Mike Schall is a CPG food industry veteran leader who joined the F&B investment banking sector in 2020 with FocalPoint Partners. FocalPoint is an independent investment bank specializing in mergers and acquisitions, private placements, financial restructurings, and special situation transactions, with offices in Los Angeles, Chicago, New York, and Shanghai. Previously, he spent ten years with Whole Foods Market as a product development advisor and then team member, where he led the innovative plant-based Engine 2 Plant-Strong brand and then became Senior Principal of Global Growth and Business Development. Mike grew up in the restaurant business and has been a C-level leader and board member across multiple segments of the CPG food business for over than 30 years. I spoke with Mike on March 13, 2020.
Mike, this interview finds us in a global crisis. I would like to address current events and how they are impacting you, your community, and your business.
The last several weeks, and most importantly the last week, has been very tumultuous and very turbulent for life in general, and the speed at which information or misinformation is guiding consumer decisions, specifically how and where we go, what we eat and what we touch is really impacting our world like never before.
The first thing you’re noticing, unfortunately, if you’ve been to a grocery store over the last 24 hours is lots of holes on the shelves. Behaviors are changing with the way people eat and the way people prepare food, both at home and outside the home. I think that’s the biggest significant sea change. For my business practice, I’m looking at the question of how long do these behaviors last and what categories do they impact in the food and beverage sector, manufacturers, co-manufacturers and branded marketers throughout the food chain?
I think that this dynamic that we’re seeing is not only changing the way people prepare and consume food but also what foods they consume to keep themselves healthier. So, I think on a high-level basis, it’s the impact of a massive unexpected, “Black Swan” event and drilling it down through a lens of food and beverage companies, either as a merchant, marketer or as a manufacturer in my prior life, and then how it may affect us.
How is this impacting your office and work in Los Angeles?
Our offices in Los Angeles are now inaccessible for the next 30 days due to the recent State and City “Stay at Home” mandate, but our business is extremely robust and our team members continue working remotely from home. Our work for our food and beverage clients is more vital and essential than ever before.
The impact of social distancing is a huge concern for many restaurants and businesses, to say the least.
It’s not only social distancing and the laws that are being enacted to reduce crowd capacities, but beyond the distancing are questions over who may be coming in contact with the food supply, does that pose a risk, and is there any information or consistent thought as to how transmissible this virus is through the interaction of either food service workers or folks that are handling food? I think that is as grave a concern as distancing, frankly.
So, you know, personally, we cook most of our meals at home. We have gone out to restaurants over the last couple weeks, but as all the restaurants in Los Angeles have now either been closed or pivoted to take out food, we’re facing dramatic changes in behaviors. I think everybody is in uncharted waters right now.
How did you get to be Managing Director of FocalPoint Partners?
My career in the food industry spans four decades in all kinds of roles, mostly operating leadership and board roles, and it ranges everything from fresh poultry to pasta to kosher food to pressure pasteurization. I’ve pretty much done everything you can do in the food industry. I grew up in a restaurant. My father was a restauranteur. My roots are clearly from the restaurant business, but in my professional career after graduate school I’ve enjoyed a variety of assignments and leadership opportunities in the food business.
In these most recent ten years, I have had this unique opportunity of standing up a business and a brand [Engine 2 Plant-Strong] within a retailer at Whole Foods Market. When some people say they’ve worked on everything from field to fork, I really have. Transitioning from being a merchant, marketer, and a manufacturer to an investment bank really brings me back to this ultimate form of value creation. Investment banking, particularly the work at FocalPoint Partners in our food and beverage practice, is helping to strategize, develop, and consummate transactions in the food and beverage and restaurant space. So, I’ve come full circle. It’s fun.
What are you most passionate about in your business right now?
Right now, as always, I’m most passionate about applying my relationships and my experiences in the food and beverage industry to build stakeholder value. And as an operator, I know how businesses should prosper. As an investment banker, I can match businesses with sources of capital and financial wherewithal to create prosperity. The investment banking businesses, whether it’s buy side or sell side transactions, financial restructuring or access to debt capital markets , we do all of that, but my particular passion is that I am a relationship guy with a ton of operating experience in food industry.
I know how businesses should prosper, and I want to help apply to brands and businesses a source of capital to create more prosperity. And I think now as we bring it front and center to real time, how it’s more important than ever before to help people think through the unthinkable and advise owners and operators in what will be a new world order.
What’s the most interesting thing that has happened to you since you joined FocalPoint Partners?
In the last four weeks, I have been in manufacturing facilities and or visited companies from literally at the molecular level of food technology like nanotechnology to pet food manufacturing to the flavor and ingredient business, to bakery and snacks. Having such amazing diversity in client relationships and contributing to the quality investment bankers here has been interesting to say the least.
The other most interesting thing is the world as we know it is tipped on its ear. And I think we are experiencing in real time these amazing changes in behavior that will create a lot of opportunity and short-term challenges. I think the FocalPoint Team is an ingenious and forward thinking team with an amazing culture. So, in spite of what could be very sobering and challenging information and tough—really challenging times ahead—we will, as we always have as a society composed of diversity and creativity, seek to find high ground and somehow find a way to power through this.
As you just recently left Whole Foods Market after developing the popular Engine 2 plant-based food brand, what’s your take on the Amazon acquisition of Whole Foods Market? What does it mean for the food industry going forward?
I am plant based. I’m vegan. And invariably because I have a lot of tribal knowledge about my experiences at Whole Foods Market, the three questions I’m usually asked are: 1) how do you get your protein 2) what’s it like working with Amazon, and the third is how can I get products into Whole Foods Market? It’s hilarious because these questions are so consistent.
The first answer is that there is a lot of protein in plants, whole grains and legumes, so I don’t know that anyone has ever perished from a protein deficiency. Number two, I love my former colleagues and industry friends at Amazon—they’ve been respectful and collaborative and thought-provoking. And number three, getting products into Whole Foods Market is an exciting proposition, and there are plenty of ways to do that!
As to your question: Whole Foods Market and Amazon really bring extraordinary assets to their partnership, as you can imagine. The companies are about two-and-a-half years into the merger, and I think each is learning from each other’s expertise. In the case of Whole Foods Market, they have the most stringent quality standards in the industry. Their passion for sustainable agriculture, culinary creativity, and assortment is unsurpassed. I think Amazon applies these principles more and more in the food space for the most part, but they’re online.
The other thing that’s exciting about Whole Foods Market is their penchant for supporting local merchants. And then you kind of flip that to Amazon, and Amazon brings these amazing insights and resources that elevate the shopping experience, whether it’s the online or offline grocery shopping experience, delivered, or in-store.
Amazon has these incredible insights about their shoppers, and Whole Foods Market has ethnographic and other merchant insights about their customers. When you speak to what we call the eight core values of Whole Foods Market, I think Amazon and Whole Foods both absolutely obsess over the customer. At Whole Foods Market, the job is to satisfy and delight the shopper, and the mission is to nourish people on the planet. They do that through win-win partnerships and reinvesting profits to build more sustainable food systems.
I think Amazon subscribed to most if not all those core values, and in fact the companies spent a good deal of time merging their leadership principles. So, they both obsess over the customer, which over the long term will inspire more innovation and more creativity. That’s the direction the supermarket, natural foods, and grocery business is headed.
Moving forward, the real key to success in my mind is understanding consumer behaviors, from things like transaction data, like shopping basket analysis or online transaction data which is what people buy along with that electronic shopping basket, what categories they look at, what reviews they look at. All those insights are so rich and will point toward driving more innovation in ways for companies to satisfy and delight the customer.
Now, what I can’t honestly speak to is Amazon’s future in grocery because it’s really their business. I’m sure at some level, there was some dialogue, but the Amazon Go self-checkout store, for example, and the new Amazon supermarket here in Southern California, those are Amazon’s business. I think that’s a testament to how they allow Whole Foods Market to carry forth their principles and their role as a merchant and a purveyor of natural and organic and healthful, sustainable ideas in food, and they’re doing their thing, too.
So, as far as the future goes with Amazon and Whole Foods Market, I think it’s going to elevate the entire industry, not only from a competitive standpoint but with innovation and creativity, and re-engaging local DNA, because as big as Amazon is, they love opportunities to work with local emerging food and beverage merchants.
What do you enjoy doing when you’re not working?
My wife and I are married 41 years, and we have two daughters and three granddaughters. When we can, we have fun with the kids. Also, I tend to orchids, and I’m a trail runner. I’m going to share a Fall picture of where I was running recently up in Vermont. I say there’s nothing like a good run through the woods and the hills. I love running, cooking at home, and tending to my orchids.
Rebecca Patt specializes in retained executive search with Wray Executive Search. Need to hire an ace executive for your team? Email her at email@example.com.
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