As a beginner, when you’re trying to stay as lean as possible, pulling out is the name of the game. If you can get someone else to do it for you (and manage the team, deal with hiring and HR, etc.), that’s a win. A core specialty is the core intellectual property and technology that creates and is critical to the business’s ultimate mission. For ButcherBox, a company that ships hundreds of thousands of boxes of meat, dry ice is one of those things.
“During Covid, we opened a dry ice factory, and now we’ve opened a second one,” ButcherBox CEO Mike Salguero said in a speech at the Boston Innovation Technologists Conference.
There were a few macro-economic reasons why it suddenly started to make sense. The first In 2020, the administration enacted legislation that would make it useful to finance certain types of equipment.
“We bought these machines for $2 million each with a five-year note at 0% interest and were able to pay it all off in one year,” Salguero said, shaking his head. In a world where ButcherBox is making huge profits (the company is expected to generate more than $440 million in revenue by 2021), the tax and financial benefits directly related to Covid have been huge. “It was basically free. It’s like Trump paid us to buy these machines.
Mike Salguero at ButcherBox Dry Ice Factory. Image Credits: ButcherBox
The acquisition made financial sense, but it put a very important part of the business at risk.
“We do frozen meat by mail, which means we need dry ice. If we don’t have dry ice, we can’t ship,” said Salguero, noting that dry ice is the only truly mission-critical item in the supply chain. We may need a thigh or turkey substitute.If we run out of dry ice, we can’t ship it and we’re dead.
Especially in the year As the pandemic gathers steam in 2020, this looks like a bigger and bigger risk. There was a vaccine that wanted to ship a lot of dry ice on the way, and many other businesses also started sending it.
“We thought it was going to get worse, and these machines were as cheap as they could be for dry ice production. Now we are on our own when it comes to dry ice. The plant is just coming online, but we’re definitely going to be a dry ice seller,” says Salguero. “The real dream is to run these plants and sell our own dry ice.”
Opening in the summer of 2021, the first plant in Oklahoma City will be able to make an average of 111,000 pounds of dry ice per day. A second plant in Muscatine, Iowa is being maintained as we speak.
