Founded by John Moyles, a chef, and Pat Smyth, a butcher, the firm makes fresh ready meals and salads. It has built up a customer base of 250 outlets, ranging from convenience stores and delicatessens to garage forecourts, hospitals, schools and offices. Its products include hot chicken and beef dishes, lasagne, pies, quiches and stews, vol-au-vents, soups, a wide range of salads, sandwich fillers and cooked meats.
JM Food Services quickly left the garage behind to move into an €800,000 factory in an industrial park outside Navan. Unlike most start-ups, which decide to lease, the company opted to build the facility from scratch, using its founders’ funds, complemented by finance from a local bank and support from the Co Meath Leader programme.
“In the longer run, we are doing the right thing,” said Rosita Moyles, John’s wife and one of the founding partners, who now oversees sales and marketing. “We see it in the same way as a mortgage on a house.” Like any mortgage, however, it takes a considerable chunk out of disposable income. The business lost money in its first two years of operation, but Moyles expects to be in the black this year.
The high interest costs associated with the commercial mortgage on the premises have been a strong factor in the inability to turn increased turnover into a profitable bottom line, and with interest rates on the rise, every euro added to sales is more vital than ever.
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The business has grown since its inception and Moyles has targeted a profit of €200,000 for 2006 based on turnover of €2m, a significant jump on the €1m income achieved in 2005. She estimates turnover should grow to €2.5m by the end of 2007, based on strong sales growth from an expanding customer base. Staff numbers have climbed by a third over the past 12 months in response to the addition of a further 100 outlets.
It is still very much a family business, or more accurately a two- family business. The 19-strong enterprise counts eight members from its two founding families, the Smyths and Moyles, among its employees.
Currently, JM Foods achieves about 80% of its business from retail outlets with the rest from the catering trade. Moyles said it had no plans to move into branded consumer products because of the high costs associated with marketing. It plans to remain firmly focused on supplying high-quality, generic products to a broader customer base.
The company’s customers include members of the Londis, Spar and Mace symbol retail groups, as well as independent delicatessens and coffee shops. Extending this network has proved painstaking — not only has the company had to gain approval from the symbol groups, it then had to win acceptance from individual shops.
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“We’ve built up our customers one by one, visiting the shops and leaving samples,” Moyles said.
Gross margins on ready meals and pies typically average 30%, while salads gross about 20%.
Despite the lower returns, the company sees salads as a way of getting customers to try its other products. “The margins on salads may be lower, but they are a great way of opening doors to new customers,” Moyles said.
She insists the effort to build the customer base has been worth it, particularly in terms of enhancing cash flow and manufacturing volume, which gives it considerably more bulk purchasing power when it comes to raw ingredients. For example, the price of a 25kg bag of rice, which cost €63 a couple of years ago, is now €24 because of the volume the company now uses.
Dealing with the symbol groups also guarantees payment with minimal administration as the company is dealing with a single purchaser.
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“We are paid centrally for whatever is sold into the network of shops, which is a big help,” Moyles said. “Having a good spread in our customer base is something we are keen to maintain and build upon; it’s not good to be too dependent on a small number of large clients who can start dictating to you.”
This does not mean the company would turn away the opportunity to sell to the multiples, or any other customer if the chance arose. Exploring every avenue for increased sales is the key challenge and JM Foods is currently in discussions with Superquinn about supplying at least one of its products, an individual-sized quiche.
Moyles also considers Northern Ireland to be another untapped territory for the business, with the proximity of the premises to the border enhancing the appeal of this market. The company is in discussions with InterTrade Ireland about entering the north.
JM Foods has three vans on the road servicing its customer base, it has a distribution agreement with the Traditional Cheese Company and a further two distributors that transport its products throughout the west of Ireland.
As an indication of its readiness to capitalise on every opportunity available to it, however small, the company operates a small factory shop at the entrance to the premises. The business is located in a remote industrial estate with no shops within easy walking distance, so it has a steady lunchtime trade from workers in other units on the estate.
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With every euro critical to the success of the business, JM Foods also provides a catering service to both corporates and the public for occasions such as parties and communion banquets.
The firm operates six days a week, but Moyles said the business has significant potential to expand. With additional investment, a further 5,000 sq ft of space could be made available on the first floor of the premises, with scope to almost double capacity.
The company received a large boost recently when it won an award at the Bord Bia-sponsored Speciality Food Forum. The prize recognised the company’s excellence in producing fresh produce that approximates home-made food.
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The firm sources meat, eggs and vegetables locally. It prepares and cooks all of its ingredients on its premises, using large pots rather than industrial-sized vats to achieve a less mass-produced flavour.
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Its flexible staff have been trained to the highest food safety standards. The company is currently undertaking a programme to receive the FAS Excellence Through People accreditation as well as the quality standard ISO 9000.
Moyles admits the pressures of the business have at times been worrying during the past three years, but is confident JM Foods is on the verge of a significant breakthrough.
“We know that we’ve taken a big gamble, but we think it’s about to pay off,” she said.
JM FOODS' CHALLENGES