Business: Detroit Popcorn Co.
Sales popping at new store
Detroit Popcorn’s move brings foot traffic, more profit
In January, David Farber, president of Detroit Popcorn Co., thought he would have to shut down the now 85-year-old business and re-retire at 47.
During his first shot at retirement, he sold his 10 Vitamin Outlet stores, sat in his basement and drove his wife nuts before a friend told him Detroit Popcorn was up for sale.
Farber purchased the dying business three years ago in an attempt to revitalize it.
But marketing the company — which sells concession supplies such as popcorn and cotton candy as well as provides wholesale products to local companies — proved difficult in its location. Its Detroit facility on Greenfield Road near I-96 was oversized and didn’t generate much foot traffic. Expensive city taxes also strained the company.
“We were going to close on Jan. 1, but when this building popped up, there was real hope, real life. We were blessed,” Farber said. “It was the perfect building.”
Instead of closing, Farber spent more than $2 million to move to Telegraph Road in Redford Township. The 32,000-square-foot facility, while smaller than the previous location, offers a larger showroom. The
Telegraph location also made it easier for Detroit Popcorn to market its products because of its better visibility and proximity to freeways.
Due to its relocation, Farber said Detroit Popcorn is expected to save $30,000 to $35,000 annually due to a lower tax bill. Its online business is booming, generating $200,000 annually.
“The first half of the year has been phenomenal. We have about $500,000 growth for the year, but it’s too soon to tell,” Farber said. “This is the first year we’re making money since we bought it, which feels good.”
He projects sales will reach $3 million this year — a huge turnaround from the $1.4 million in sales it generated when he purchased the business three years ago.
Farber has added six fulltime employees, bringing his total full- and part-time staff to 28. The company also partners with the JVS program in Southfield in providing special- needs workers with jobs making cotton candy. The number of walk-in customers has surged since the move, going from 50 per day to 200 daily.
“Because of the stigma on Detroit, women don’t want to go to the inner city,” Farber said. “And where 70% of our walk-in clientele are women, we had to go where our customers go. It’s all about marketing and location, location, location.”
And with a changing market, it’s all about retail, too, Farber said. Given that there are fewer independent grocers — which used to be major customers for Detroit Popcorn — the company needed to expand its base.
“Growing retail is easier than being a wholesale player, so we did that. We found our niche, and we’re doing a good job in it,” Farber said.
While Detroit Popcorn Co. is still in the wholesale segment, Farber isn’t chasing that one big customer.
“It’s like putting all of your eggs in one basket. It’s great when you have it, but it’s terrible when you lose it,” he said. “Honestly, if I get a million-dollar deal from a big company like Wal-Mart today, I probably wouldn’t take it.”
Michael Bernacchi, professor of marketing at the University of Detroit Mercy, agrees that retail is the way to go for the company.
“Going from wholesale to retail is a smart move. With economic grief and difficulties, the consumer has held up remarkably well. By going closer to the consumer, they’re controlling their own destiny, which is an invaluable resource,” Bernacchi said.
Detroit Popcorn Co. is working to do just that. In its objective to become a one-stop shop, the firm offers a variety of concession supplies ranging from hot dogs, nachos and ice cream to eating utensils. It also rents and services equipment.
“We also have a list up front for customers to request items that we don’t have,” Farber said. “About 100 new items were added since we moved here.”
Detroit Popcorn also has stepped up its visibility in the community.
The company is a product supplier to 500 public schools in southeast Michigan and gives tips on how to fund-raise effectively, from the best kettles to pop with to the type of oil that should be used to keep them working.
“There’s a science to the business,” Farber said. “It’s not just throwing seeds on a kettle.”
Detroit Popcorn Co. even packages flour, salt and kernels separately to preserve them longer for schools.
“I like to take care of customers. I see it as a long-term relationship. I don’t look at one sale as a good sale,” Farber said. “If they keep coming back, it’s a good sale.”