Latest / Choppin’ It Up by Bloomberg Intelligence / HF Foods’ Lin on Organic Growth Strategies, M&A

Transcript

HF Foods’ Lin on Organic Growth Strategies, M&A · Choppin’ It Up by Bloomberg Intelligence

• 0:13
  Speaker 1: Welcome to Chopping it Up. I'm your host, Mike Hamlon,
• 0:16
  Speaker 1: the senior restaurant and food service analysts at Bloomberg Intelligence.
• 0:20
  Speaker 1: Our Research and that a bi's five hundred analysts around
• 0:22
  Speaker 1: the globe can be found exclusively on the Bloomberg terminal.
• 0:25
  Speaker 1: If you enjoy the pod, I'd love it if you
• 0:26
  Speaker 1: could leave us a review on Apple or Spotify. Today
• 0:30
  Speaker 1: we're joined by Felix Linn, CEO and President of HF
• 0:33
  Speaker 1: Foods Group. HF Foods is a food service distributor to
• 0:37
  Speaker 1: Asian restaurants, trading on the Nasdaq with the ticker symbol HFFG.
• 0:42
  Speaker 1: Thanks for joining me.
• 0:43
  Speaker 2: Felix, Thanks for having me all right.
• 0:45
  Speaker 1: So I saw on LinkedIn that you're based in Vegas.
• 0:48
  Speaker 1: So my favorite Asian fusion restaurant, Pasta Ramen in Montclair,
• 0:52
  Speaker 1: New Jersey. It's doing a pop up this month at
• 0:55
  Speaker 1: bar Zazuu in Resorts World. So it's highly recommend I
• 1:00
  Speaker 1: think you need to check it out if you get
• 1:01
  Speaker 1: some time.
• 1:02
  Speaker 3: Yeah, that'd be great. I'd go check it out. Maybe
• 1:04
  Speaker 3: it can be a potential customer of ours.
• 1:07
  Speaker 2: Yeah.
• 1:07
  Speaker 1: Yeah, it's the only Italian Asian fusion restaurant I've ever
• 1:12
  Speaker 1: been to and they have a fantastic menu. So listen, man,
• 1:16
  Speaker 1: it seems like specializing in Asian cuisine is a good
• 1:19
  Speaker 1: place to be considering the rapid growth of that market.
• 1:23
  Speaker 2: Yeah.
• 1:24
  Speaker 3: Absolutely, Look, we've been in the business for almost three
• 1:27
  Speaker 3: decades now and we're now the leader within the Asian
• 1:31
  Speaker 3: specialty space right specifically from a food service standpoint. It's
• 1:37
  Speaker 3: actually to be projected to be the fastest growing segment
• 1:40
  Speaker 3: of the broader space. So if you look at it today,
• 1:43
  Speaker 3: it's twelve percent of the entire market, so roughly about
• 1:46
  Speaker 3: ninety four thousand restaurants. It's a fifty billion dollar Judgle
• 1:50
  Speaker 3: market and hf you know, we're at one point two
• 1:54
  Speaker 3: billion dollar today, so just a tip of the iceberg.
• 1:57
  Speaker 3: So we're very excited about where we can go within
• 1:59
  Speaker 3: the space.
• 2:00
  Speaker 1: Very cool. And your last earnings call, you mentioned that
• 2:03
  Speaker 1: sales were very strong in March and that continued into April.
• 2:07
  Speaker 1: I found this interesting because US low income consumers seem
• 2:10
  Speaker 1: to pull back in March. Does your customer's clientele skew
• 2:13
  Speaker 1: more middle and upper income?
• 2:15
  Speaker 2: I think it varies, you know.
• 2:17
  Speaker 3: So we have over fifteen thousand independent restaurant accounts throughout
• 2:21
  Speaker 3: the country, right, So a little bit over sixteen percent
• 2:24
  Speaker 3: market share within our space. So it's got a pretty
• 2:27
  Speaker 3: wide variety. So we have some higher end dining in restaurants,
• 2:31
  Speaker 3: you know, very authentic Asian cuisines. We also have the
• 2:35
  Speaker 3: lower end takeouts, you know, that's similar to the Panet
• 2:38
  Speaker 3: Express of the world.
• 2:39
  Speaker 2: Right.
• 2:40
  Speaker 3: So a very region by region, market by market, so
• 2:44
  Speaker 3: we have a very wide variety of customer mix and
• 2:48
  Speaker 3: the size of businesses as well. But one thing I
• 2:51
  Speaker 3: will say is that you know, our customers are extremely
• 2:54
  Speaker 3: agile and flexible, so they changed their business models quite
• 2:57
  Speaker 3: frequently depending on what happens kind of the in the
• 3:01
  Speaker 3: macrol environment, and we saw that through the pandemic too.
• 3:05
  Speaker 2: That's great.
• 3:05
  Speaker 1: The business operates in forty six states. Which geographies are
• 3:09
  Speaker 1: you strongest?
• 3:09
  Speaker 3: Then, I think the West Coast in terms of the
• 3:11
  Speaker 3: California market in the melind region is part of our
• 3:15
  Speaker 3: most mature market at the moment. So combined, if you
• 3:19
  Speaker 3: look at the entire West Coast from Seattle, Washington all
• 3:22
  Speaker 3: the way down to SoCal and then you know eastwards
• 3:26
  Speaker 3: into the Salt Lake, Denver and Phoenix and even our
• 3:30
  Speaker 3: Las Vegas market combined it's over five hundred million dollar
• 3:34
  Speaker 3: business today, so you know, I guess close to forty
• 3:37
  Speaker 3: percent of our entire market. And then followed by Southeast
• 3:41
  Speaker 3: you know, that's where the legacy h of US actually
• 3:43
  Speaker 3: started in North Carolina, So that's a very strong business,
• 3:46
  Speaker 3: roughly about three hundred million dollars. So, and then our
• 3:50
  Speaker 3: seafood companies that we have in the Midwest kind of
• 3:52
  Speaker 3: make up you know the rest of it.
• 3:54
  Speaker 1: Okay, great, what's the sales split between chains and independent restaurants?
• 3:58
  Speaker 3: So that's an interesting you know, differentiation of ours is
• 4:01
  Speaker 3: that virtually one hundred percent of our business, our customers
• 4:06
  Speaker 3: are all independently run mom and pop businesses, so we
• 4:09
  Speaker 3: really don't do much of any chain business, which is
• 4:12
  Speaker 3: one of the advantages that we have because you don't
• 4:15
  Speaker 3: have commitments with these guys. So whenever there's things that happen,
• 4:18
  Speaker 3: you know, at the macro level that might have impacted
• 4:21
  Speaker 3: supply chain or different issues, we're able to react, you know,
• 4:26
  Speaker 3: in real time, so we make adjustments on a daily basis.
• 4:30
  Speaker 1: So you should have stronger ebadim margins too. What was
• 4:32
  Speaker 1: the ebadam margin that fair?
• 4:34
  Speaker 3: So last year it's around that three and a half
• 4:36
  Speaker 3: percent you know range. So again, we're in the middle
• 4:39
  Speaker 3: of this business transformation right now. So longer term, over
• 4:43
  Speaker 3: the next three to five years, through some of the
• 4:45
  Speaker 3: investments that we're making, you know, into the business, which
• 4:48
  Speaker 3: both in terms of growing capacity and capability, our objective
• 4:53
  Speaker 3: is to get to probably north of five percent ebit
• 4:55
  Speaker 3: the margin here over time.
• 4:57
  Speaker 1: Okay, great, what's the split between Chin, Japanese and other
• 5:01
  Speaker 1: Asian cuisines.
• 5:03
  Speaker 3: So, you know, restaurant that's kind of owned by first
• 5:07
  Speaker 3: generation immigrants that's ethnically Chinese probably make up a vast
• 5:11
  Speaker 3: majority of our customers today. Another interesting you know, statistic
• 5:17
  Speaker 3: within our space is that if you look at the
• 5:20
  Speaker 3: ninety four thousand restaurant dimension that's the addressable market fifty
• 5:24
  Speaker 3: billion dollars, roughly two thirds of those restaurants it's dominated
• 5:29
  Speaker 3: by again first generation or second generation Chinese immigrants, and
• 5:34
  Speaker 3: then the rest that probably make up you look at
• 5:36
  Speaker 3: the popular Vimanese fa noodle house, right, the Rama house,
• 5:40
  Speaker 3: Korean barbecue, sushi, steakhouse, so forth, and so forth. But
• 5:44
  Speaker 3: even within those categories, a good bit of them it's
• 5:47
  Speaker 3: actually only and operate again by you know, ethnically Chinese
• 5:51
  Speaker 3: immigrants because there's so much similarity that crosses over from
• 5:55
  Speaker 3: a product standpoint. That's why we see a very strong
• 5:58
  Speaker 3: opportunity even from a adjacency standpoint, to expand beyond what
• 6:02
  Speaker 3: a core business model is today.
• 6:05
  Speaker 1: Okay, cool, So do you have that sounds like a
• 6:08
  Speaker 1: good plan for organic growth. Do you have any other
• 6:10
  Speaker 1: plans you'd like to share?
• 6:12
  Speaker 3: Yeah, So organically the biggest opportunity for me, you know,
• 6:16
  Speaker 3: at least in the short term, it's just to growth
• 6:18
  Speaker 3: my shirt walle with my existing accounts. Right, there's a
• 6:22
  Speaker 3: couple of territories that I mentioned, whether it's in the
• 6:24
  Speaker 3: Southeast or in the Midwest. You know, today we're somewhat
• 6:27
  Speaker 3: constrained by our capacity, so we're actively making investment into
• 6:31
  Speaker 3: growing those facilities. So in the next three five years,
• 6:34
  Speaker 3: there's probably two or three hundred million dollars worth of
• 6:37
  Speaker 3: organic growth opportunity just my existing accounts. Then beyond that,
• 6:42
  Speaker 3: as I mentioned adjacency, you know, there's so much product similarities.
• 6:47
  Speaker 3: You look at sauce of sauce, right, you know, whether
• 6:50
  Speaker 3: it's soy sauce or other commodities that rise and noodles
• 6:53
  Speaker 3: and specialty fresh produce it doesn't matter if it's a
• 6:57
  Speaker 3: Chinese restaurant, Korean restaurant, or Japanese and they use very
• 7:00
  Speaker 3: similar not exactly the same product. So that's how we
• 7:04
  Speaker 3: plan to get into it. But I think M and
• 7:07
  Speaker 3: A it's another great opportunity for us because this space
• 7:11
  Speaker 3: it's largely makeup of a lot of smaller players. You know,
• 7:16
  Speaker 3: there's literally dozens and dozens of these smaller businesses that
• 7:19
  Speaker 3: range from thirty million dollars to fifty sixty million top
• 7:22
  Speaker 3: line business. So there's not a close second, you know
• 7:26
  Speaker 3: that can compete with HF on a national level, where
• 7:29
  Speaker 3: by far the largest player within our space. So it
• 7:32
  Speaker 3: really creates an opportunity where HF could be and is
• 7:36
  Speaker 3: the strategic acquired within our space. So I think that's
• 7:40
  Speaker 3: you know, from a strategy standpoint, it's really a dual approach.
• 7:44
  Speaker 3: Organically it's cross selling in the short term expand into adjacency,
• 7:49
  Speaker 3: and organically it's to consolidate via acquisition of a lot
• 7:54
  Speaker 3: of these smaller players.
• 7:55
  Speaker 1: Okay, it sounds like there's a lot of available attractive
• 7:58
  Speaker 1: targets as yet that environment, that M and A environment
• 8:02
  Speaker 1: become more competitive.
• 8:04
  Speaker 3: No, it's you know, that's the advantage that we have. Right,
• 8:08
  Speaker 3: It's a lot of these businesses they're either too small,
• 8:12
  Speaker 3: too complicated for a much larger broadliner. So you mentioned,
• 8:15
  Speaker 3: you know, whether Cisco US Food, they don't understand the business.
• 8:19
  Speaker 3: They don't have the culture connection, the customer stickiness that
• 8:24
  Speaker 3: we enjoy. And then if you look at the other
• 8:27
  Speaker 3: outlets in the in the capital market, private equity or
• 8:30
  Speaker 3: anything like that, again similar issue that they deal with.
• 8:33
  Speaker 3: So we're in a very unique position that we're really
• 8:36
  Speaker 3: the only ones that understand the business. You know, I
• 8:39
  Speaker 3: can go into any one of these shop and look
• 8:41
  Speaker 3: at how many trucks they have, and look at their
• 8:43
  Speaker 3: warehouse and space and probably come within one of two
• 8:46
  Speaker 3: percent margin error and say this is probably how much
• 8:49
  Speaker 3: book business that you're doing and what your margin profile is.
• 8:53
  Speaker 3: So that's a great advantage that we have, and we
• 8:56
  Speaker 3: accumulate this obviously over three years of reation that we
• 9:01
  Speaker 3: would build.
• 9:01
  Speaker 1: Interesting. Yes, you mentioned Cisco. They're focusing on growth in
• 9:05
  Speaker 1: Asian cuisines. They were in five Midwest states as of
• 9:09
  Speaker 1: a year ago looking to expand. Are you feeling any
• 9:12
  Speaker 1: pressure on your business?
• 9:14
  Speaker 2: Not at all, not at all.
• 9:17
  Speaker 3: And look, I mean they just don't have the same
• 9:20
  Speaker 3: level of product skills that we offer.
• 9:22
  Speaker 2: Right.
• 9:22
  Speaker 3: If you look at our business, we have over twenty
• 9:25
  Speaker 3: thousand schemes and fifty percent of them a little bit
• 9:29
  Speaker 3: over ten thousands, specifically in the Asian specialty. So you
• 9:34
  Speaker 3: think about you know, it isn't the model. Isn't just
• 9:37
  Speaker 3: hiring a bunch of salespeople that perhaps speak the language, right,
• 9:42
  Speaker 3: you know, one of the things that some of the
• 9:43
  Speaker 3: other food service companies might kind of talk about, it's
• 9:47
  Speaker 3: understanding what the customers want. It's understanding the cuisine. So
• 9:51
  Speaker 3: the cultural aspect of it, you just cannot replace. So again,
• 9:54
  Speaker 3: I came from one of these HIF customers myself, you know,
• 9:58
  Speaker 3: twenty five years ago. My parents were HF customer and
• 10:01
  Speaker 3: they sold the business about twelve years ago, and the
• 10:05
  Speaker 3: successor is still an HEF customer.
• 10:07
  Speaker 2: Right.
• 10:08
  Speaker 3: So having been through the type of restaurants and growing
• 10:11
  Speaker 3: up in one, that connection is just again evenreplaceable good stuff.
• 10:18
  Speaker 1: Can you speak to the new e commerce platform that
• 10:20
  Speaker 1: was launched in Utah, North Carolina and Florida.
• 10:23
  Speaker 3: Yeah, e commerce for me, it's a huge opportunity, you know,
• 10:27
  Speaker 3: one from a digital transformation standpoint over time. Right, it's
• 10:32
  Speaker 3: going to add a lot of value for us, but
• 10:33
  Speaker 3: it's a proven platform in terms of you know, retail
• 10:39
  Speaker 3: or distribution business in general. Right, things are so events
• 10:44
  Speaker 3: now in terms of you know, algorithm that's being built
• 10:48
  Speaker 3: into the platform. It will remind people potentially what they
• 10:51
  Speaker 3: haven't ordered that they should be ordering, bundling things together.
• 10:54
  Speaker 3: So eventually it's going to be a volume kind of
• 10:57
  Speaker 3: an organic volume increase plate for us. But in the
• 11:01
  Speaker 3: short term, I also find a great alternative, call it
• 11:06
  Speaker 3: a sell channel for us. As I mentioned in fifteen
• 11:10
  Speaker 3: thousand individual accounts today, that's fifteen thousand families and their employees. Right,
• 11:16
  Speaker 3: a lot of these guys are located in areas that
• 11:19
  Speaker 3: they don't have access to specialty grocery or specialty snacks.
• 11:24
  Speaker 3: So I see a business opportunity where I have an
• 11:26
  Speaker 3: established supply chain network where I can source these products
• 11:30
  Speaker 3: and service them for their own consumption rather than for
• 11:34
  Speaker 3: their inventory purposes. It goes out on the same delivery
• 11:37
  Speaker 3: trucks that I have to the restaurants, so I'm not
• 11:41
  Speaker 3: giving margin away to last a mile delivery trucks. So
• 11:45
  Speaker 3: that it's one thing that I'm very, very excited about
• 11:48
  Speaker 3: and it will give the customers an opportunity to learn
• 11:50
  Speaker 3: a new platform, so over time kind of a transition
• 11:54
  Speaker 3: to that more more holistically. But again, it's just an
• 11:58
  Speaker 3: option for these guys.
• 12:01
  Speaker 1: Okay, good stuff. I'd imagine too, you know, it would
• 12:06
  Speaker 1: it would kind of help maybe the language barrier at
• 12:10
  Speaker 1: some point, right if people can just order online and
• 12:13
  Speaker 1: you know, maybe some of your sales reps don't have
• 12:15
  Speaker 1: to speak uh, their their native tongue stuff like that.
• 12:19
  Speaker 3: Yeah, that's a very good point, right, It's all about
• 12:22
  Speaker 3: you know. You know, for me, I'm always going to
• 12:26
  Speaker 3: be in the position of taking a much longer term view, right,
• 12:29
  Speaker 3: and all these different strategies kind of tie into each other.
• 12:32
  Speaker 3: So we talk about getting into adjagencies, right, if I
• 12:35
  Speaker 3: want to do other ethnic cuisines, you know, again, getting
• 12:38
  Speaker 3: more into the Japanese, I think the Japanese space, Korean space,
• 12:42
  Speaker 3: tie Vivanese. You know again, I think language and culture
• 12:47
  Speaker 3: is still important. You know, there's enough similarities. But having
• 12:51
  Speaker 3: e commerce, you know, it's an option on the table
• 12:54
  Speaker 3: where language is not the only option, you know itself,
• 12:58
  Speaker 3: and it certainly if I want to ban into you know,
• 13:01
  Speaker 3: Hispanic business, which we have been doing that a little.
• 13:03
  Speaker 2: Bit on the pro seafood side of it.
• 13:05
  Speaker 3: So one of the advantages and the opportunity I've seen
• 13:09
  Speaker 3: across the board is, you know, ethnic cuisines and ethnic restaurants. Historically,
• 13:16
  Speaker 3: it's just been very much underserved by people.
• 13:20
  Speaker 2: So there's a.
• 13:21
  Speaker 3: Huge opportunity there in terms of understanding why is it
• 13:24
  Speaker 3: that they've been underserved and making sure you have products
• 13:28
  Speaker 3: and services that align with how they do business. That's
• 13:32
  Speaker 3: what's going to keep us ahead of some of these
• 13:34
  Speaker 3: bigger guys. From a commercial opportunity standpoint.
• 13:39
  Speaker 1: It's a perfect time to be attacking that business because
• 13:41
  Speaker 1: the younger generations are much more exploratory, exploratory with the
• 13:46
  Speaker 1: cuisines that you know, they're trying.
• 13:49
  Speaker 3: To absolutely you know, you think about ten to fifteen
• 13:53
  Speaker 3: years ago, right, the only thing that you know the
• 13:56
  Speaker 3: general public might be familiar with is your classic you know,
• 14:01
  Speaker 3: Asian takeout. In terms of the childmain is the sesame
• 14:04
  Speaker 3: chicken swings, our chicken of the world. But now with
• 14:08
  Speaker 3: you know, social media, how popular things are. You know,
• 14:10
  Speaker 3: people are traveling, people are experiencing new things. There's a
• 14:14
  Speaker 3: there's more of an appetite for new things, right, so
• 14:18
  Speaker 3: you see so much of these new or fusion cuisines
• 14:20
  Speaker 3: that start popping out. You know what, this looks really interesting,
• 14:25
  Speaker 3: whether it's hot, hot restaurants or these very authentic, you
• 14:29
  Speaker 3: know restaurants you mentioned in Vegas for example, you know,
• 14:32
  Speaker 3: one of the most popular spots that that I go
• 14:34
  Speaker 3: to all the time, it's an authentic Asian restaurant here
• 14:38
  Speaker 3: called Tastes. You know, when I go to the restaurant,
• 14:42
  Speaker 3: seventy eighty percent of the customers is actually non Asians,
• 14:45
  Speaker 3: you know, but the food that is serviced is very
• 14:48
  Speaker 3: very traditional, you know, it's not the takeouts that that
• 14:50
  Speaker 3: were historically used to. But just seeing people come to
• 14:54
  Speaker 3: you know, age with with new cuisines, it's amazing for
• 14:59
  Speaker 3: us and also just offers a lot of positive positivity
• 15:03
  Speaker 3: for me in terms of where the industry is going itself.
• 15:07
  Speaker 1: Yeah, it's exciting. My quick shout out to lotus as
• 15:10
  Speaker 1: I am whenever I'm in Vegas, Man, I love hitting
• 15:13
  Speaker 1: that place up. We touched on it a little bit earlier,
• 15:16
  Speaker 1: but maybe if you could expand a little bit on
• 15:19
  Speaker 1: your margin expansion strategies, including your plans to streamline operations.
• 15:24
  Speaker 3: Look, I mean scale is what matters within our business,
• 15:27
  Speaker 3: right you know, So even though we're one point two billion,
• 15:31
  Speaker 3: you know, we're still there's still plenty of room for
• 15:33
  Speaker 3: us ago. You know, like I said, it's a fifty
• 15:35
  Speaker 3: billion dollar market that we're in. You know, historically, you know,
• 15:39
  Speaker 3: one thing I would admit is that we have not
• 15:41
  Speaker 3: done a good job in terms of fully integrated businesses.
• 15:44
  Speaker 2: Right, It's okay.
• 15:45
  Speaker 3: You know, we're on a very aggressive path here now
• 15:48
  Speaker 3: to modernize and to get up to speed. So bringing
• 15:51
  Speaker 3: this brand new ERP system fully online here as a
• 15:54
  Speaker 3: May one, twenty twenty five, it's a huge milestone for
• 15:56
  Speaker 3: us as a business. So over time, these tools, it's
• 16:00
  Speaker 3: going to enable us to have better data, better analytical power,
• 16:04
  Speaker 3: you know, because again you know, common business SE's right,
• 16:07
  Speaker 3: it's always better to buy as a bill and dog
• 16:10
  Speaker 3: business than buying as you know, ten or fourteen fifty
• 16:13
  Speaker 3: seventy million dollar businesses. You know, so intuitively, I know
• 16:17
  Speaker 3: there's a lot of opportunity in that in terms of
• 16:20
  Speaker 3: just you know, acting as a bill and dog business,
• 16:22
  Speaker 3: you know, ourselves. So as we continue to grow organically
• 16:27
  Speaker 3: and inorganically the size gets bigger, it's just.
• 16:30
  Speaker 2: Going to add more and more value.
• 16:32
  Speaker 3: But in the last twelve months, we've done a lot
• 16:34
  Speaker 3: of very good pilots internally, specifically with our frozen seafood programs.
• 16:38
  Speaker 3: We're seeing a tremendous amount of improvement in our frozen
• 16:41
  Speaker 3: seafood margin in the last twelve months or so. And
• 16:45
  Speaker 3: that's despite the fact that we didn't have a you know,
• 16:48
  Speaker 3: an update system in place. So again, you know, credit
• 16:52
  Speaker 3: to the team in terms of what they've done so far.
• 16:56
  Speaker 1: And you mentioned that you're expanding your network. You know,
• 16:59
  Speaker 1: how much you spending a year in cappex expand your capacity.
• 17:03
  Speaker 2: You know, we're being very methodical right now.
• 17:07
  Speaker 3: So in terms of capex, whether there's twenty four to
• 17:09
  Speaker 3: twenty five in the next couple of years, right you know,
• 17:12
  Speaker 3: we're trying to make sure we can handle it internally
• 17:16
  Speaker 3: with our own cash flow, So probably ranges from that
• 17:20
  Speaker 3: fifteen to twenty million dollar range on the annual basis. And
• 17:23
  Speaker 3: again a lot of the focus will be on the
• 17:25
  Speaker 3: facility and the fleet side of it, you know, as
• 17:28
  Speaker 3: the system now is kind of a wrap. But you know,
• 17:31
  Speaker 3: we're always welcome to to have some conversations in terms
• 17:34
  Speaker 3: of you know, additional capital because It's one of those
• 17:36
  Speaker 3: things you can do it much on the much larger
• 17:39
  Speaker 3: and faster pace if you have unlimited capital. So that's
• 17:44
  Speaker 3: always a conversation that we're willing to kind of entertain
• 17:46
  Speaker 3: and explore a little bit.
• 17:49
  Speaker 1: Great and meat poultry produce their source domestically, but frozen seafood,
• 17:55
  Speaker 1: Asian specialty items, packaging are imported. What percentage of your
• 17:59
  Speaker 1: basket from overseas and more specifically from China.
• 18:03
  Speaker 3: Yeah, so roughly seventy percent of my by it's all
• 18:06
  Speaker 3: domestic to your point, right, exactly the categories that you
• 18:11
  Speaker 3: kind of mentioned, So thirty percent of it comes from overseas,
• 18:15
  Speaker 3: and a significant portion of it it's in the seafood category.
• 18:18
  Speaker 2: So seafood we mainly get.
• 18:20
  Speaker 3: From, whether it's India, Southeast Asia, or South America, you know,
• 18:25
  Speaker 3: specifically like Egador for example, from China. Historically it's been
• 18:31
  Speaker 3: in that fifteen eighteen percent range, you know, but again,
• 18:35
  Speaker 3: you know, we've learned a lot of lessons here from
• 18:37
  Speaker 3: the pandemic, you know, even during the pandemic when we
• 18:40
  Speaker 3: saw a significant amount of supply chain disruption. Right, So
• 18:44
  Speaker 3: we've been working with our partners here for the last
• 18:46
  Speaker 3: four vive years, really diversifying where things are getting manufactured.
• 18:50
  Speaker 3: So a lot of our Chinese suppliers in the last
• 18:53
  Speaker 3: few years have been actively setting up manufacturing shops elsewhere,
• 18:57
  Speaker 3: you know, for various reasons. That's why I think, you
• 19:00
  Speaker 3: know our ability one of the things that you might
• 19:02
  Speaker 3: touch on here a little bit is actually terrorst right,
• 19:05
  Speaker 3: you know, our ability to deal with the terror is actually.
• 19:09
  Speaker 2: We're in a lot.
• 19:10
  Speaker 3: Better position than some of the folks because we've been
• 19:12
  Speaker 3: having so much of these conversations for a very long time.
• 19:15
  Speaker 1: For folks ahead of the game, I love hearing it. Well, listen,
• 19:18
  Speaker 1: Thanks again, Phelix. This is an interesting business and you
• 19:21
  Speaker 1: don't have to comment on this, but I could see
• 19:23
  Speaker 1: this as potentially even a target for some of the
• 19:26
  Speaker 1: very large national players in this country. So, you know,
• 19:30
  Speaker 1: thanks for your time. I look forward to continuing to
• 19:33
  Speaker 1: follow this interesting story.
• 19:35
  Speaker 2: Yeah, I appreciate it. Mike, thanks for having me again today.
• 19:37
  Speaker 1: Sure thing, and thanks to the audience for tuning in.
• 19:39
  Speaker 1: If you liked our discussion, please share with your friends
• 19:41
  Speaker 1: and colleagues. Check back soon for another episode of Chopping
• 19:45
  Speaker 1: It Up.