2006-04-12 / Features

Fresh Direct CEO Explains Operation To LICBDC

BY THOMAS COGAN

"Are you sure you want to work at Fresh Direct?" is a question Dean Furbush asks his new workers, both as inspiration and warning. He means to tell them that a job at Fresh Direct can be a fine opportunity, but it requires hard work-occurring, as he says, "at night, in the cold and on weekends."

Furbush is chief executive officer at Fresh Direct, which has delivered groceries all around the city since its founding in 1999. He is an economist and former NASDAQ official who joined the company in 2003 and became CEO in 2004. He spoke before the Long Island City Business Development Corporation April breakfast meeting, at DeVry Institute on Thomson Avenue, at times telling those in the audience about Fresh Direct as if they were a group of new workers. He began by describing a woman typing a food order into her computer at 10:30 in the evening. The order is sent to Fresh Direct, specifying delivery at a certain hour, perhaps next day at 7:30 in the morning or 2 p.m., in the afternoon. On the working end of this operation, that delivery time is crucial. The order must be sent in a timely fashion, but until delivered to the customer it must remain in storage. All items for delivery are food items, and for them, storage means cold storage. "It's called Fresh Direct," Furbush said. "How do we keep it fresh? By keeping it cold-38 degrees." He said that at handsome markets such as Whole Foods, a cluster of broccoli may look good, but it isn't, as he said, "happy", since broccoli is happy only at 38 degrees, not at 72. But happy food can mean sad, or chilled, workers, who must transfer food items from refrigerated rooms to refrigerated trucks. Fresh Direct delivers fresh food at the discomfort of its workers. That's the news he delivers to those responding to the company's employment ads.

His workers are unskilled and mainly Spanish-speaking. He has between 1,400 and 1,500 of them, and the turnover rate compels the company to hire between 50 and 60 per week. That means Furbush does a lot of talking, and learns Spanish as he goes. (He rattled off a few phrases to demonstrate how fluent he must be.) He said he worries about psychological relations with them, and confessed that remembering their names is not one of his strengths. He has read angry social observers such as Barbara Ehrenreich and realizes that life is tough for the poor; and realizes also that the jobs he offers are difficult and workers hired only after tests of acceptability, such as drug testing, are passed. Those hired must then endure the rigors of the job, already mentioned.

There's no let-up, he said. Those not able to make it to work are required to call in and say why, because the company cannot function well while wondering about a number of no-shows. "No call, no show-no job," Furbush said. For those able to meet the stern requirements on a consistent basis there is advancement and benefits that include free health service. Fresh Direct's best business comes when it's cold outside, too, and in the warm months, seasonal slack occurs-but not seasonal layoffs, not strictly anyway. "Don't work for me and I'll pay you $50 a week just to go away," was his way of describing how he cuts the work force in the summer months

Regarding Fresh Direct's main mission Furbush said, "What we do is sort of impossible." It was founded in the midst of the dotcom boom and now remains standing where many, including food delivery services, have fallen. But there's no rest for the successful. Some problems or obligations will never go away-customer dissatisfaction will always pop up and sanitation at the workplace and in delivery must never be neglected, for instance. He and the other executives see that the company must grow between 20 and 30 percent each year, but busy and slack times occur and are hard to forecast. He said he often asks himself what he has done for tomorrow. "And then," he said to the audience, "I say to myself: 'Oh good, let's add a layer of complexity to everything!'" He worries a lot, he said, but feels Fresh Direct is starting to build to last. He was asked if Fresh Direct makes deliveries to Harlem and said it has delivered there for about a year and a half; he called the venture "a bit early" but believes it is working. But that is only an expansion with its current urban design, and Furbush said he asks himself, "Is this urban or is it global?" He may start answering that question by expanding Fresh Direct to the suburbs.

Answering another question from the audience, Furbush said Fresh Direct has 119 trucks and an on-time delivery rate of 98.2 percent. He was asked if there's a high cost of doing business, i.e., a heavy load of parking tickets. He said parking tickets added up to $600,000 worth annually, and though the company managed to lower the number in a succeeding year, it has returned to the former level. He said truck drivers attempting to make time-driven deliveries cannot be likened to persons parking automobiles- sometimes it seems they must park just anywhere, and the police and parking violations people aren't sympathetic. Regarding the food on hand, he said that Fresh Direct keeps 11 or 12 days of inventory (a food market keeps its inventory between 30 and 40 days, he added), and of course maintains a hierarchy of freshness, potatoes being considered more durable than strawberries and fish. He described his business model as better financials, better inventory and more satisfied customers. The company takes a monthly survey of customer satisfaction, and in March came up with a rating of 4.77 out of a possible 5.

"Nobody's doing what we do," he said, but he is aware of what others might regard as his competition and realizes at the same time that his customers also use those other enterprises, such as Whole Foods, Trader Joe's and Peapod. It's Fresh Direct's mission to remain unique, and to expand.

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