Behind the Plate - Episode 4 - Patrick Ernst - Silver State Foods

Patrick explains that his family-owned business, which started as a manufacturer of Italian goods, has expanded to include hot sauces and barbecue. They supply both retail and food service, with a 50/50 split between the two. The pandemic shifted their focus to retail, but they recovered as restaurants reopened. They source ingredients locally when possible but sometimes need to go further afield due to seasonal availability. Patrick discusses the challenges of maintaining consistent pricing amid rising costs and the importance of adapting to market trends, such as the rise of hot sauces.

Transcript

Antonio Howell  0:06  
Hey everyone, welcome to Behind the Plate. I'm your host, Antonio Howell, and this is the podcast where we go behind the scenes of the restaurant world from day to day operations through challenges of running a business. We'll hear first hand stories from the people who bring you your favorite meals, whether you're dreaming of opening up your own spot or just curious about what it takes you're in the right place. Let's get started.

Patrick Ernst  0:41  
Cool. Nice to meet you, 

Antonio Howell  0:42  
Yeah, nice to meet you too.

Patrick Ernst  0:44  
We're here. It's just me. I'm Patrick, the one of the kids. I know you were working on some school stuff, right? Is that what this is? 

Antonio Howell  0:53  
Yeah, school project there. 

Patrick Ernst  0:55  
Okay, nice. You're in high school, then?

Antonio Howell  0:57  
yeah. So it's just like a passion project, pretty much. This is my last year of high school, just getting it done.

Patrick Ernst  1:04  
Okay, very nice. Yeah, happy to help you and see what we can chat about.

Antonio Howell  1:09  
Yeah, absolutely.

Patrick Ernst  1:10  
 Alright, cool, yeah, we can go, go for it. Alright.

Antonio Howell  1:15  
So, Patrick, what's your story like with silver states foods and all that. 

Patrick Ernst  1:22  
Yeah, so you might be familiar with this on from the family situation, but I work here Silver State foods. We're manufacturer of all kinds of Italian goods, spaghetti sauces, and then we've dabbled now into hot sauces, spaghetti sauce, you know, barbecue, all kinds of different sauces. And I actually am working here for my dad, who owns the company now. And we, you know, got into it from a family type of thing. We bought it from, I believe, Pat Aiello And then some of the Aiello family started this many years ago. My dad was looking to get involved, and kind of took that over from that family, and now our family's taking over, I'm the second generation here helping. My brother helps as well. And so, you know, just kind of by luck, I guess, through family years of different passing it down. But I went to Colorado School of Mines, actually, and got a mechanical engineering degree, and then worked for Frito lay for a bunch of years, and then as small family businesses, kind of, you know, grow and change, they're looking for some help. And just to be able to go to the next level, we needed to, you know, take on some help and so I was willing to do that. Came over, and we've grown it to now. What I like to think of is Denver and Colorado's kind of middle sized co-packer, we call it, where we manufacture other people's products. So most of the stuff in the grocery stores, if they're made locally, we are involved in it somehow. So it's kind of, kind of how we got here, kind of by luck, I guess, and enjoying it every day.

Antonio Howell  3:04  
That's really interesting. I didn't know all that. 

Patrick Ernst  3:06  
Yeah, my dad took it over. I think I guess that would be your grandpa. Is that?

Antonio Howell  3:11  
 Yeah, 

Patrick Ernst  3:12  
Okay, yeah,

Antonio Howell  3:15  
Okay. And then, um, I was reading on the website, just getting some basic information. I also use the little bit of chat GBT to get some information. I said you like, besides grocery stores, you also sell to restaurants and some schools.

Patrick Ernst  3:30  
Yeah, so I'm not sure I know you said you've been working on a different a lot of different people doing these interviews and stuff. Some of them are more restaurant focused, but yeah, we are a little bit different, where we do a lot of retail stuff, so things end up in the grocery stores, but also food service side of things. So some of the same sauces we make that you buy in the grocery store, we make in larger quantities for like restaurants, if they're making like, you know, spaghetti or marinara, like meatball subs or something like that. They can use our spaghetti sauce and use it in the back of the house. We'll make it in larger packaging, whether that's like, you know, five gallon buckets or something, or if it's a custom sauce, like a hot sauce, you know, as hot ones, has kind of blown up over the past handful years, like on YouTube and different restaurants in town are trying to get their own kind of custom sauces. We'll help them with that. So five ounce jars doesn't necessarily have to be big ones. We do the five ounce jars for, like, their tables, if you go to like, you know, the Illegal Pete;s or something like that, they have their own custom sauces. So we'll help them with that. So it's a little bit, I'd say 50 50, retail jars versus food service industry as well, we also make spaghetti noodles which go to the restaurant. So they'll, they'll have like, pre made spaghetti noodles for their restaurants. So

Antonio Howell  3:42  
I was wondering, can you give me, like, some restaurants? That you sell to Is there, like?

Patrick Ernst  5:01  
Yeah it's kind of difficult in the in the world of we sell through a distributor. So a lot of times, actually, we don't even know where this stuff goes. I mean, most of the small Italian restaurants around town are using our noodles or sauce, and the way it gets sold would go through like Sysco or Shamrock, some places like that, and then they buy it from the distributor. So we don't actually know exactly where they all end up. It's kind of interesting. We do contract for a couple different people, some barbecues like Smoke barbecue in Denver has blown up quite a bit recently, and we, we make their barbecue sauce for them to some stuff like that too, but not, not entirely sure where it all goes even..

Antonio Howell  5:49  
Yeah Okay, well, I wanted to get to, kind of going to change this question up a little bit. Not too much, though. So like when purchasing ingredients, do you would you purchase from, like, local farms and stuff? 

Patrick Ernst  6:05  
Yeah, so we try to buy as local as we can. Denver and Colorado in general has limited agriculture, a lot of wheat and stuff like that, but we don't, you know, buy anything like that. So a lot of fresh veggies. We try to get as locally as we can from different farms, but a lot of it's seasonal, right? And so if you're looking at the grocery store, you want your salsa or spaghetti sauce year round, you want it to be the same price in the same place. So we try to source as locally as we can, but through the different seasons, you end up having to buy kind of from wherever it's available. In California, some of those places grow the tomatoes, you know, and package them, and then they're available year round. So a lot of times it ends up being from wherever you can get it, especially these days with the different, you know, difficulties of agriculture and things like that, fires in California, floods in this area, you just kind of get it from where you can. But we try to source as locally as we can. It's kind of the short story.

Antonio Howell  7:05  
Okay, okay, so the pandemic, how did that affect your business? Like, was that big change?

Patrick Ernst  7:14  
Yeah, I think it's, it's, it always feels like it was just yesterday. But, you know, it's been five, five years or so now, but it does affect it a lot. We obviously service a lot of restaurants, and when they shut down, right, they're not buying the stuff to serve the customers, because nobody's going out to eat. So it kind of transitioned from 50 50 where we make, like, half grocery store and half restaurant, to pretty much 100% grocery store there for maybe six months till the restaurants open back up. But we were lucky enough to keep working through it, and we just had to transition and hold on to some of the grocery store spots, you know, keep people as full as we could. But I think the grocery stores were struggling to keep things stocked, which we have no control over, but in the end, it did pan out that we were able to survive. And then when the restaurants opened back up, we were able to kind of pick that back up. So mostly just with with the demand for it, it didn't affect so much on our end, with the labor, we have a pretty small, small team here. And then obviously with the supplies, like everybody we were buying from was having the same problems, right? Getting employees in, getting transportation. So it's just kind of the same effects as the rest of the world, but mostly for us, it'd be transition more to retail than food service.

Antonio Howell  8:34  
Oh yeah, yeah. No, absolutely. Um. So like with with the cost of your items, how do you break that down, just like pricing everything? 

Patrick Ernst  8:44  
Yeah, that's one of the more difficult things to keep up with these days, especially glasses going up. Tomatoes, you know, we're just talking about eggs. Is a tough one right now, with the bird flus and things like that that are having, the noodles that we make have eggs in them, the egg noodle, obviously Italian noodles. So we try to keep the prices as low as we can and hold on to it to help the consumer and the in the restaurants keep it as consistent as possible. But a lot of times, when we get price increases from the supplier, we have to pass that along. We kind of set the baseline price of what it costs, you know, with labor, ingredients, and then a little bit of profit for the company, and then from there, we try to keep it as, you know, tight as we can, because we know I do grocery shopping every week too, right? We're trying to keep things low as we can. But when we get, yeah, when we get price increases, we have to pass that along, right? You can't, can't eat it all. So yeah, just try to fight for the lowest prices from the suppliers as we can get as well.

Antonio Howell  9:51  
Okay, I got a quick question about, like, just, like, community stuff. So like, how do you do? Get your company out into the world, like, 

Patrick Ernst  10:03  
Yeah, we have a pretty good reputation, from what I what I like to think, maybe it's not true, but we like to think we have a good reputation for Co-packing. So if somebody in Denver is looking to make a sauce or some product that we would handle, you usually gotta buy glass to put it in, or some sort of packaging. And most of the people start there, and then the suppliers of that glass or packaging would recommend us to try to, you know, say, hey, these guys are good to work with. We have a few different events where we supply churches and like fire department for their like, 911 fundraiser and stuff like that. They do every year. We we supply some stuff like that, and get our name out and try to support the community as best we can, donations and things like that. But in general, in our business, at least, I'm thankful we stay busy enough that we don't have to do a ton of advertisement or anything like that out there to gain more customers on that, and then just try to do as much engagement as we can with churches and, yeah, different stuff like that. 

We were asking kind of what we decide to sell, and how we decide new products and get them to stand out and stuff. It's a It's definitely you gotta go with the flow a little bit on the market like especially in today's world, there's a lot of changes with people's preference and diet and things like that. So you try to follow the trends as best you can and keep up. But it is challenging, right? Hot ones is a big good example. We'll use that if you are a lot around here, but it's blown up a lot. I mean, people your age or my interview watch YouTube almost as much as anything else, right? That's kind of the entertainment. So they're doing these interviews with hot sauces, and that's really changed the market. That's something that, like my dad or your grandpa would have never imagined. When Pat comes in, we talk about it, he's like, I have no idea what you guys got going on with all these hot sauces, but, you know, people seem to like it and it's it's true, right? They might not understand it, or even myself in the future, might not understand what the market's driving, but if that's what people are interested in, people are eating, that's what we got to make. So, kind of whatever the market demands.

Antonio Howell  12:13  
And have you like, changed through different foods over time? Like, is there other foods that are in the past now,

Patrick Ernst  12:20  
Yeah, yeah. I think a lot, a lot of it, too, is the eggs in flour and the noodles are challenged right now, because a lot of people are going gluten free or vegan, and so our noodles are the opposite of both of those things, right? They have full gluten and have the eggs in them, so you can't be either one of those things. So it has seen little bit of change there. We've experimented with gluten free noodles and things like that, but it doesn't exactly, it's not the same, right? So different market, we've explored some of that. And then as far as sauces go, yeah, there's restaurants, because we do do for a lot of restaurants, so it's kind of whatever they see. So we're seeing a lot of like chili crunch type things come through, and it's just kind of mostly spicy right now. Everybody's trying to get everything as spicy as possible. It's kind of the newest one. 

Antonio Howell  13:13  
Yeah, I've noticed that too.  Are you the current owner right now, or is

Patrick Ernst  13:22  
One of them, yeah, me, my brother, partaking and buying out my parents, or, you know, my mom and my dad, who took it over from your family, so, you know this next generation. But yeah, we're owners right now. 

Antonio Howell  13:35  
And are you guys planning to, like, move on with the business? Or maybe, yeah, yeah,

Speaker 1  13:39  
we it's a long term plan for my brother and I to keep it up and Keep keep going as long as we can

Antonio Howell  13:47  
Absolutely!