Chef Yourself

Introduction
Wendy Swenson was as nervous leaving the headquarters building of Chef Yourself
after her first day of work as she was when she entered that morning.

From B&Q to Chef Yourself

After spending the last 10 years working at B&Q, a large national grocery chain with
several hundred traditional large-format stores, she was excited to join Chef
Yourself, a young, growing internet-based company delivering partially prepared
meals to consumers at their homes.
B&Q had offered Wendy tremendous experience in transportation, warehousing,
demand planning, and other roles in the food supply chain. But it was exceptionally
hierarchical, and there was little coordination or collaboration between functions.
Wendy hoped that the experience and skills in traditional grocery retail she gained
in B&Q would translate well into the new home delivery model that Chef Yourself
was offering, but also feared that some of the problems she experienced in B&Q
were present in her new job as well.
Like B&Q, Chef Yourselfs supply chain was currently very silo-ed. Different teams
spread across the marketing, operations and headquarters functions handled,
separately from each other, all transportation, sourcing, warehousing, forecasting,
inventory planning, and other supply chain tasks.

Rajs Concerns
On her first day, after finishing the standard orientation meetings, Wendy had met
with her new boss, Chief Operating Officer (COO) Raj Singh. Raj had created the new
Supply Chain Director position to better look for supply chain solutions that would
cut across all of the independently managed functions.
During their meeting that morning, Raj had been very clear with Wendy: the single
major problem facing Chef Yourself are high costs, which seem to be out of control.
The total landed cost of a box (three meals) to a customer had been continuously
rising over the last several months to the point where it is today 50% higher than it
was just two years ago.
Raj confessed that he was surprised that the sales growth result of the expansion
into four new cities (Los Angeles, California; San Diego, California; Las Vegas,
Nevada; and Phoenix, Arizona) had actually led to higher costs per box! He had
been assuming that economies of scale would lead to lower costs.

This case study was prepared by Chris Caplice and the SCx teaching team for educational purposes
and not to illustrate either effective or ineffective management. Copyright MIT 2016.
 Chef Yourself

Raj also shared serious concerns about the feasibility of any future growth plans,
since the current kitchen, in Sacramento, was already at capacity. Not only were the
costs increasing, he admitted, but the level of service was starting to slip as well.

Wendys Mission
Raj made it very clear to Wendy that her job was to improve how all of these
functions work, both on their own and together. He specified, however, that these
functions would not report to her in the hierarchy at least not immediately.
Instead, her role, for at least the first several months, would be to recommend and
enact initiatives that could lead to lower total cost to serve customers, as well as
improve the level of service.
Wendys immediate goal was to find ways to decrease the total landed cost of the
meals to customers. Her longer-term goal was to build the supply chain for the
planned upcoming growth.
Unfortunately, Raj warned her, many of the managers with whom she would
interact tended to protect their own fiefdoms and, plainly speaking, did not trust
each other very much.
In the meeting, Raj tasked Wendy with coming up with a prioritized list of
recommendations within the next two weeks. This he admitted was an
exceptionally fast timeline, but it was required due to the current budgeting cycle.
Raj had set up a series of half day, one-on-one meetings for Wendy with each of the
key managers of these functions over the next two weeks.
As Wendy drove home, she started wondering how she could successfully complete
the mission Raj had given her. It was not clear to her how she would come up with
the short list of initiatives that Raj was expecting.
As she pondered whether she had made the right choice in leaving B&Q in the first
place, Wendy knew that she would face an uphill battle with the different directors
across Chef Yourself. It was her chance to demonstrate her capabilities.

A bit of history

The early days

Chef Yourself started in Sacramento, California, when entrepreneur and passionate
foodie Jon Bush started preparing ready-to-cook meals for his friends. As word
spread, Jon started getting requests from friends of friends, and soon from
strangers. After borrowing money from friends and family, Jon formed Chef Yourself
in 2008.
Instead of creating cooked meals, he created partially prepared meals. These
consisted of individually sized and packaged raw ingredients and detailed
recipes/cooking instructions that would be delivered to individuals who would then

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finish preparing the meals themselves. By doing this, Jon figured, the customer
would become more involved in the quality of the raw ingredients and the special
menus he was creating.
The concept was very popular with young urban professionals who did not have
time to shop but preferred to cook (quickly) healthy meals at home. It also was well
suited to singles or couples who found shopping for small quantities to be difficult
or to produce a lot of waste.

Exponential growth
Over the next few years, Jon grew Chef Yourself from putting meals together in his
own kitchen, then in rented kitchens, and finally in a specially designed kitchen. He
ran the business essentially by word of mouth with next to no marketing or
advertising. He would source the ingredients, prepare and package them in his
kitchen and his oldest childhood friend, Dougie Walsh, would deliver them locally
across the greater Sacramento area.
In 2012, he met David Durham, a computer programmer and also a big food
connoisseur. He discussed with Jon how the Internet could potentially help him
grow his company. With a web presence, they soon expanded into delivering meals
to San Francisco and San Jose, but still prepared everything in the single kitchen in
Sacramento.
Based on the strong interest shown for his Chef Yourself products in other cities, Jon
decided to seek outside funding to accelerate the companys growth in 2014. With
the new capital, they first renovated and expanded their kitchen in Sacramento and
expanded their offerings to four new cities targeting Los Angeles CA, San Diego CA,
Las Vegas Nevada, and Phoenix Arizona.
As of the spring of 2016, Chef Yourself was serving these six metropolitan areas
with specially packaged food services. Jons focus on adding more customers had
paid off: the company had grown by a lot, very fast. But now it was time to face the
rising costs and eroding customer service levels.

Current operations
The way in which Chef Yourselfs meals are selected, prepared, and delivered has
evolved over the last several years. Below is a description of how it works today.

Ordering the meals

Customers sign up for the Chef Yourself service via their website. The website
displays the six available menus for each week from which the customers can select
three. These menus are published to customers one month in advance on the
website and customers may order at any time up to two weeks prior to delivery. So,
for example, the meals delivered the week of Monday 15 August must have been
ordered no later than Monday 1 August and they were published on the website on

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15 July. While most customers place their orders at the very last moment (two
weeks out), about 20% order much earlier (4 weeks out).
There are no substitutions of ingredients allowed but customers may choose to not
receive any meals for a specific week. So, customers will receive either three meals
or none they cannot request a reduction in the number of meals delivered nor may
they order multiples of the same meal.

Designing the meals

Chef Yourselfs in-house nutritionist, Lisa Cross, plans the menus for all meals. She
designs these menus mainly to promote a healthy lifestyle and to provide customers
an attractive range of options to choose from.
Lisa takes a lot of pride in her work, and considers it something of an art form:
selecting fresh and healthy ingredients, that can be cooked relatively quickly,
resulting in a meal with attractive flavors, colors and textures, is not an easy feat.
Doing this week after week, bringing diversity to the table of loyal consumers, is
even more difficult.
Each Chef Yourself meal consists of a main entre (beef, pork, chicken, fish, or some
vegetarian options) and two side dishes (vegetables, rice, pasta, etc.). The average
number of ingredients required for each of the meals ranged between six to a dozen.
Most of the ingredients are sourced locally from family farms around the
Sacramento area. Most of the meals have ingredients that require refrigeration.

Forecasting demand
When Lisa publishes the menus for a week she makes a guess regarding how many
customers will order each of the meals being offered. Chef Yourselfs sourcing team,
led by Eddie White, then translates Lisas meal forecasts into quantities of the
required ingredients based on the menus that Lisa has provided them. The sourcing
team will make some advanced orders to their vendors based on these initial (one
month out) projections from Lisa.
The ordering deadline for a specific week is one week prior to the production date.
So, for example, the meals delivered the week of Monday 15 August were ordered
no later than 1 August and production occurred the week of 8 August. Once the
order deadline is reached, the meal orders are frozen and the procurement team
finalizes their orders with their vendors and coordinates delivery to the Sacramento
kitchen. Lisas forecasts are generally reasonable on an aggregate level as to the
total number of meals that are ordered. However, the accuracy for the estimates she
provides for the individual meals can vary widely.

Packaging the meals

The kitchen team has approximately 72 hours to receive, prepare, and package the
ingredients and assemble them into the meals. The ingredients for each meal are
individually packaged and labeled. All of the ingredients for the meals for a
customer are then placed, along with detailed cooking instructions, into a larger

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non-returnable, shipping box. This box also contains pre-chilled thermal packs to
keep the ingredients cool.
The boxes are of a standard size (12 x 12 x 18) and weigh about 15 lbs. when fully
loaded. They are labeled and delivered within 12 hours of being prepared. The
meals are prepared on certain days for each city served. Chef Yourself has
sequenced and synchronized the days of delivery so that, for example, the company
delivers to San Francisco on Mondays and Thursday, and to San Jose on Tuesdays
and Fridays. This sequencing was established to better manage the kitchen
operations.
Customers receive their meals at their homes and are expected to dispose of the
packaging and the shipping boxes. None of the packing elements, neither the boxes
nor the thermal packs, are returnable. Before joining Chef Yourself, Wendy tried the
companys products as a customer, and she still remembers that she was surprised
that she was expected to throw away the whole packaging, including the thermal
packs. Im not so worried about the box, she had mentioned to a friend, but I think
at least the thermal packs should be reused.
Now that she had joined Chef Yourselfs supply chain, Wendy understood that the
company had bigger issues to address. But she knows that it was not a problem the
company could postpone forever. Given that the Chef Yourselfs market is located in
California, a state with abundant environmental regulations, home of many
customers with a sustainability mindset, Wendy considered that in the not so
distant future she should think about a solution to reduce the environmental
footprint of Chef Yourselfs distribution operations, which she could present to Raj.

Wendys notes
Over the next several days, Wendy met individually with the key personnel and
managers that Raj had suggested on the first day. During each one of these
meetings, Wendy made a conscious effort to keep the conversation as friendly and
informal as possible. Because of this, instead of taking detailed notes during the
discussions, she waited until the meeting was over and only then sat down in her
office to summarize the key points of the conversation, as she remembered them.
As part of her interview, she asked each of the directors what the first initiative
should be.
What follows are the notes that Wendy took from each one of her meetings.

CEO Jon Bush

Jon seems totally focused on Growth (with a capital G)! High costs do not
worry me, he said, poor service does! Hes the brains behind the company.
Jon could not say enough about Linda Chin she is single-handedly growing
this companys new markets!

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In his mind, growth is not limited to quantity of meals sold, but also includes
the diversity of our offerings. For example, Jon mentioned he wants to
expand the meals to include other items, such as paired wine, ice cream, etc.
Jon thinks that expansion of Chef Yourself, to be successful, needs to happen
across the country at the same time! He has in mind cities like New York,
Boston, Chicago, Seattle, and others.
Jon also expressed interest in Chef Yourself expanding to more rural or
suburban areas rather than focusing solely on urban delivery areas. These
are where our next generation of customers are coming from!

Transportation Director - Dougie Walsh

Dougie was the original driver who distributed the meals around
Sacramento in his mini-van. Employee #2 and a very interesting guy!
He is now in charge of all distribution of the boxes to customers, and knows
Chef Yourselfs transportation from the inside out. Could be very useful.
He explained that delivery to each of the cities differs somewhat. He sent
some details about this in an email after the meeting:
o Delivery within the Sacramento area is done by an outsourced local
courier service, TruckieCo. TruckieCo uses their own employees to
load directly at the kitchen and deliver to each of the customer
locations. The charge to Chef Yourself is $5.50 per box, all included.
o Delivery to San Francisco and San Jose is done by a contracted
trucking firm, KC Fish, that drives a full truck to designated pool
points in each of the cities. Once at the pool point, the boxes are
divided into local delivery vans for final delivery to homes.
A full truckload (53) can hold up to 28 pallets and 32 of the boxes
can be placed on a single pallet (4 layers of 8 boxes per layer) for a
total capacity of ~900 boxes per truck.
The cost for linehaul moves under 1000 miles by KL Fish in this
part of the country has been negotiated at $150 per load with a $1.75
per-mile fee. The linehaul cost is independent of the number of boxes
in the truck as long as it does not exceed truck capacity. Dougies
employees load the trucks in Sacramento and he estimates this to
cost about $0.75 a box.
In each of these cities, local van delivery service delivers from the
pool points to the individual customers homes at an average all-in
cost of $6 per box.
o Ace Trucking handles all delivery to the four new cities: Los
Angeles, California (or LA); San Diego, California (or SD); Las Vegas,
Nevada (or LV); and Phoenix, Arizona (or PH). They are a full-service
company and have their own employees working at the Sacramento
kitchen facility who load the trailers for distribution. For this service,
they charge a flat fee per each box delivered based on the destination
city: $16 for LA, $18 for SD, $21 for LV, and $22 for PH.

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Ace does not have any capacity constraints, as far as Dougie can
identify. He seemed pretty confident about this fact.
Doug shared that average transportation cost (linehaul and local) for a
delivered box was less than $7.00 prior to the opening of the four new cities.
Transportation is the lifeblood of Chef Yourself, Dougie said. The fact that
transportation cost on a per box level has doubled in the last year is proof of
this!

Nutrition Director Lisa Cross

Lisa was Jons third hire and has been integral in the success of the quality of
the meals. She is highly valued, and she knows it!
Lisa designs the meals specifically to appeal to her customers. Besides being
a trained nutritionist, she was also a chef herself a few years ago. Apparently
even back then she had a reputation as a creator of simple, yet tasty meals.
Makes forecasts for each meal. I asked her about how she came up with the
forecast, but she gave me a look and I didnt pursue the question any further.
She turns these estimates over to sourcing at the start of a planning cycle.
Lisa is passionate about fresh ingredients. She picks meals based on her own
thoughts and on what is currently in season: she likes using what is fresh.
Lisa does not seem to consider the use of similar (modular) ingredients
across the meals. The uniqueness of the flavor is more important to her than
modularity, I guess.
She noted as a point of pride that in a typical week there would be no overlap
of ingredients between the offered meals!
Lisa complained that the sourcing guys take forever to procure the
requested ingredients and that it severely limits the types of meals she can
create.
Lisa strongly prefers to procure from family farms that are committed to the
limited use of chemicals.

Sourcing Director Eddie White

Eddie does not think that Chef Yourself does a good job forecasting at all! I
didnt even have to prompt him about this: he just volunteered the opinion.
He thinks that Lisa Cross does not know how to forecast and, in his view,
this is the cause of most of Chef Yourselfs problems.
The number of total boxes expected each week is pretty stable, he said, but
the estimates for each of the individual meals are bad. He showed me some
graphs about this. Note to self: See if I can get a copy of those graphs later!
He noted that the amount of waste has increased by 30% over the last year,
by his estimate. The waste is occurs when the sourcing team contracts a
certain quantity of an ingredient based on Lisa Crosss forecast (Eddie
actually used air-quotes when saying this) and then having demand for the
meal come in at half of what is expected! Because the policy is that

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everything is fresh, excess supply means that whatever is not used has to be
destroyed!
The menus that Lisa develops, he says, will suddenly need some strange
ingredient that we have never sourced before. So, we find it, set contracts
only to find it is never used again! He was very frustrated about this.
Eddie also complained about Linda Chin (I will interview her soon), saying
that she just decides to run a promotion in San Francisco one day and
expects us to suddenly ramp up our sourcing! Apparently this kind of thing
has happened several times especially in the four new cities.
Eddie gets little to no advance warning of spikes in materials from marketing
or sales. I wonder if these guys even talk to each other at all!?
The majority of the vendors and farms were located south of Sacramento
closer to Bakersfield and Fresno. Chef Yourself picks up the products at each
vendors location and uses the trucking spot market. He knows he is paying
too much, but he does not have time to focus on this it is a small portion of
his total buy.
Eddie also complained that he inherited payment terms where Chef Yourself
pays the local farmers and other vendors upon receipt of the goods a
practice the Jon Bush started when he began the firm.
Eddie said that the average cost of the meals (the raw materials) averaged
out to about $35 per box but has increased to about $42 per box due to
greater waste and spoilage over the last year.

Kitchen Operations Becky Schick

Becky was very angry. She says the kitchen is way understaffed and does not
have sufficient capacity. She seems to be at her wits end.
She told me that she keeps hearing talk of growth. She complained that, given
that the current kitchen is not sufficiently big for the current volume, it is
much less so for any new business!
They either need to expand the current kitchen or build a new one or
multiple ones! This is the first time I heard a suggestion of more than one
kitchen.
She blames Linda Chin for running promotions out of the blue. (This is
something Eddie mentioned, too.) All of a sudden we need to double our
staff for extra hours. With a day or so advance notice, I could have adjusted
schedules instead I have to pay overtime!
This staffing uncertainty has led to both excessive overtime and idle hours
for her staff. The average cost for kitchen labor staff to prepare and package
a box of meals was $5 but has increased to $6.25 over the last year. She also
attributed this to operating in very cramped conditions in the Sacramento
kitchen.
She suggested two locations as candidates for new kitchens: Fresno and
Bakersfield.

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Marketing Director Linda Chin

Linda has been with Chef Yourself for 6 months, having come from running
marketing for a niche luxury handbag company out of Los Angeles.
In the first few months, Linda pushed promotions that doubled the sales in
the four new cities!
Having a single kitchen is stupid. Linda prefers to have a kitchen set up in
each city for faster, fresher, more customized meals and delivery.
Wants to expand the offerings from six options to twelve each week for the
customers to select from. People like variety. We have to give them variety.
Wants to start targeted marketing to 5 new cities within the next month
possibly in Northern California, Oregon, and Washington.
Linda wants to expand Chef Yourselfs operations from just urban areas to
any area in the Southwest states of the US.
Promotions are the key to growth We need to run them more frequently
and offer steeper discounts like half off for the first month or free first
week
Linda clearly had a bone to pick with the transportation, sourcing, and
operations teams. She thinks they are being old fashioned and not able to
adapt to the changing environment.
For a relatively new start up, Chef Yourself is not very flexible! Linda noted!
Her focus on growth reminds me a bit of that of Jons.
Linda has developed forecasts for demand in the established and new
markets for 6 months from now.

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Potential Initiatives
At the end of the week, late in the Friday afternoon, Wendy sat at her desk. In front
of her was a yellow legal pad, with page after page of notes from her meetings. She
was impressed by the candor that everyone displayed, but a little depressed at the
level of distrust between the directors. As she flipped through her notes, she
opened her laptop and started typing, in no special order, a preliminary list of
potential initiatives that were suggested by the different director.
CEO Jon Bush
o Expand the offerings to include other items, such as paired wine, ice
cream, etc.
o Expand Chef Yourself to serve New York, Boston, Chicago, and Seattle
o Expand Chef Yourself to more rural and suburban areas rather than
focusing solely on urban delivery areas.
Dougie Walsh (Transportation Director)
o Redesign the delivery pool points in SF and SJ to be better located to
reflect the change in customer locations.
o Re-negotiate the transportation with Ace Trucking to the newly
opened cities
Lisa Cross (Nutrition Director)
o Improve sourcing from local farms
o Speed up the ability of procurement to acquire needed ingredients
Eddie White (Sourcing Director)
o Consolidate the supply base try to use fewer bigger farms and
providers
o Shift payment terms for their suppliers to at least net 30 days
o Start running more competitive auctions for suppliers
o Stabilize the menu selections and number of raw ingredients.
Becky Schick (Kitchen Operations Director)
o Either expand the current Sacramento kitchen or open a second
kitchen
o Get marketing to limit the number of promotions or provide more
advance notice (1 month or more)
Linda Chin (Marketing Director)
o Open new kitchens in each new city local ingredients, local chefs!
o Expand the offerings from six to twelve or more
o Allow for product substitutions within the meals people love to
customize!
o Instead of weekly delivery to homes make it daily! People love
freshness
o Improve how the kitchen operations work increase their flex
capacity to be able to handle 50% swings in volume

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It was a rather overwhelming feeling, Wendy thought, to be thrown without much

ceremony into the heat of what seemed at first sight an all-out battle between the
functions. Maybe I should have stayed at B&Q, she joked to herself. But she didnt
mean it. By now, she had started to understand that, despite their conflicts and
tensions, all these different players were good people, who had sacrificed a lot with
the same objective at heart: to make Chef Yourself successful. They believed in what
they did. Now they just had to figure out how to do it! And thats why they had hired
her. This is truly a supply chain management problem, she thought.
Wendy needed to come up with a recommendation to Raj on where she should dive
in first. She understood that more due diligence would be needed but where
should she focus first?

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Exhibits

Exhibit 1. Map of current Chef Yourself network. Established markets (green squares) in San Francisco
(SF), San Jose (SJ), Sacramento (SA) and four new markets (yellow squares) in Los Angeles (LA), San
Diego (SD), Las Vegas (LV), and Phoenix (PH). The existing kitchen is in Sacramento (red square) with
candidate locations for new or additional kitchens in Fresno and Bakersfield.

SA SF SJ LA SD LV PH
Current Average Weekly 2800 4000 3500 2200 1800 900 2400
Demand (boxes)
Forecasted Demand in 6 3000 4500 4000 3800 3600 4000 3600
Months
Exhibit 2. Current average weekly demand of boxes (each containing 3 meals) for established and new
markets. Forecasted demand (from Linda Chin) for 6 months out.

SA SF SJ LA SD LV PH
Distance (miles) 0 90 120 384 500 564 755
Exhibit 3. Linehaul distance from the Sacramento kitchen to each of the city markets.

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