Lorentz Meats

Lorentz Meats has posted positive net income in three of the past five years. Its sales growth is consistently positive and is outpacing growth in cost of goods sold. But it has taken the company more than a decade of experimentation and risk taking to find a winning formula. “Some of best lessons learned are those that cost you money,” reflects Mike.

Here are some of the ongoing challenges the company faces to achieve profitability:

• 80/20 Rule: Mike has had to embrace the “80/20 rule”—80% of his business is with a couple of large- scale customers, while 20% is with 300-400 local farmers that sell directly to consumers. The large-scale customers ensure that the plant operates near capacity, while the small-scale customers, who pay more for smaller batches, yield higher margins. With Organic Prairie and Thousand Hills Cattle, Lorentz Meats has the 80% nailed right now. But it needs to diversify its larger customer base to make sure this part of the business stays solid.
  
  
• Direct Marketing: For the small ranchers, the key has been to provide an overall marketing package that enables them to succeed and grow. As more and more small growers turn to direct marketing, Lorentz Meats will have to sharpen the tools it provides its clients.
  
  
• Good Food: Mike is amused by what is and isn’t fashionable. He’s aware that many local foodies can be skeptical about the environmental, health, and labor implications of meat production and processing. But he believes that the key to “good food” succeeding is to have a flexible definition of it. To be sure, Lorentz Meats supports alternative production methods, local food, and local economies. But Mike aims to ensure that his business—and those businesses he counsels— are profitable, leaving the ideology about how to raise animals, or whether to eat them at all, for others to decide.
  

Can Lorentz Meats be replicated elsewhere? Mike certainly believes so. The opportunities for other companies to accomplish what he has—reaching profitability by capturing 1% of the regional market—seems achievable in Virginia, New York State, and elsewhere on the East Coast. Mike argues that Lorentz Meats is a template with multiple lessons that can and should be shared with other small- and mid-scale meat processors around the country.

This isn’t just talk. The state of Minnesota has contracted with Mike to do a set of trainings based on his Branding Your Beliefs curriculum. He has shared his lessons about what works and what doesn’t in Nebraska, Iowa,

Wisconsin, Virginia, Georgia, Texas, and California. Local food groups around the country are flying him in to teach them how to do mid-scale meat processing and direct marketing. Mike emphasizes in these talks that he may seem opinionated, but he’s still learning and just mirroring back what he’s seeing in the real world.

And the message reflected back is simple. Yes, it’s getting more expensive to get into the business, because of pressures for greater food safety, labor rights, and humane treatment of animals. But all of these goals can be achieved at the middle scale, with the right approach. “There’s no reason you can’t do well while doing good.”