How We Simplified Our Offer And Had Our Most Profitable Year Yet
This is a follow up story for Wander New Mexico Food Tours. If you're interested in reading how they got started, published almost 5 years ago, check it out here.
Hello again! Remind us who you are and what business you started.
Hi! I’m the founder and owner of Wander New Mexico, a food tour company based in Santa Fe, NM. Our product is walking culinary tasting tours of downtown Santa Fe. Our primary focus is on tourists visiting the area.
COVID was very tough for our business - after being closed for almost two years we returned last year, albeit in a much different format than before. We’ve increased our prices and re-positioned ourselves as focused on the upper-end / luxury end of the segment.
We’ve also streamlined operations, going from six different tour types across two cities to two tour types in our core city. This focus on simplicity has been great for bottom line profitability - last year was by far the most profitable in the business’ history despite the fact that top line revenue was less than half of 2019 levels.
Read on for more!
Tell us about what you’ve been up to. Has the business been growing?
Last time we chatted Wander was in explosive growth mode. It was January 2020, mere weeks before Tom Hanks tested positive for COVID and the NBA canceled their season. Wow - who knew what a curveball life was about to throw at everyone?
COVID was hard for all businesses. For us, being in tourism with pre-paid bookings, meant a huge volume of refunds. Since people pay for their tour at the time of sale, we had tens of thousands of dollars of refunds to process in a short period of time. So many tour companies were refunding customers so much in such a short period of time that our booking platform suddenly started requiring us to front the cash for refunds.
Thankfully we had enough cash on hand to remain solvent, but I know many food tour businesses weren’t able to issue full refunds or had to fold - including one of our competitors here in Santa Fe.
Many other food tour businesses quickly pivoted to offer online experiences. We intentionally decided not to pursue any virtual products and instead put the business into hibernation mode. This had obvious and very real cash flow implications - all of the guides were effectively laid off, and I no longer count on any financial proceeds from the business. Thankfully everyone was able to find alternate income sources.
The decision to not launch a virtual product proved to be a wise one. Remember those early days of everything moving to Zoom? I took a few virtual beer classes, and even attended a few Zoom “concerts”. Until Zoom fatigue set in and suddenly people were looking for ways to de-zoomify their lives. While virtual was a short-lived source of much needed revenue for many food tour businesses, the juice wasn’t worth the squeeze for us.
About a year into COVID (March 2021) we started to think about how and when to reopen. This went in fits and starts - and was complicated by local regulations around whether indoor dining was open, how many could eat in a group, and where / when masks were required. Just as soon as we started to sell tour tickets another surge of cases would come, which meant another surge of refunds. 2021 was hard.
Summer of 2022 is when things began to return to normal. 2023 is shaping up to look even better - and this month (February 2023) was an all-time sales record for the month.
What have been your biggest challenges in the last year?
- Restaurant partners: one thing that’s always a struggle for food tour businesses is maintaining a roster of high-quality, affordable restaurant partners. As we all know the last few years were tough for restaurants, with staffing shortages being an ongoing challenge. The busier restaurants are the less time they have to accommodate our groups.
- Marketing: this is always a challenge, especially as we have to fight against big players like Viator for keyword traffic.
- Disruptions to the historical seasonality trends: as a tourism business we historically were able to look at past year visitation trends to know when there will be a lot of tourists in town, and when, as a result, we will be busy. Since COVID it seems like many of these historical patterns no longer hold. We’re operationally nimble enough that this isn’t too disruptive, but it does make planning more of a challenge than it was previously.
What have been your biggest lessons learned in the last year?
The biggest thing we’ve learned is that sometimes less is more. What I mean by that is we have fewer tours, fewer guides, and lower revenues - but the business is much more profitable and sustainable.
Another lesson I often think about (and encourage others to be realistic about) is it's never too early to think about your exit plan. Before COVID, the original plan was to grow the business to a size where it could be sold to someone else. But, several months into COVID I was able to connect with one of the food tour entrepreneurs I look up to - an established operation in Northern California.
We had a very nice conversation where she told me that the conclusion she had come to, after many years in the business, is that the only way to make a long-term living in food tourism is to be an “owner operator” - meaning the best way to make a reasonable living is to be the person out giving the tours.
While I loved starting the business and the first few years of building it, I didn’t see myself leading food tours every week for the rest of my life. So I approached one of the tour guides and we explored handing more of the reigns of the business to her, where I could still keep a role in the business but she could partake in a larger piece of the operational upside. We’ve been working in this way for almost a year now and so far it seems to be working well for both of us.
I still wonder if there’s a scale advantage in this business - i.e. if there’s a path for someone to consolidate several local players under a single umbrella. Eating Europe is an example that comes to mind. But it’s such an inherently local business, with 1:1 relationships with each restaurant being the core of what makes our business shine, that I can’t see a path to how that would work without compromising the quality of our product and the experience that our guests enjoy.
So scale advantages, growth, and exit plan is something that I’ve been thinking about a lot since COVID.
What’s in the plans for the upcoming year, and the next 5 years?
For this year our goal is double last year’s revenue while maintaining profit margins. This will be done by simply doing more of the same - same product, same guide, with a mix of higher utilization (i.e. guests per tour) and more tours per week.
We’re also focused on expanding our private and corporate events business. The margins on these tours are often higher, and because of the group sizes (20, sometimes even 30 guests vs. our usual public tour size of 6-10), we can generate much higher revenue per hour.
The next five years will probably be more of the same. Given the aforementioned challenges around the lack of buyers for food tour businesses, the focus will be on running a lean, sustainable business that provides quality living (and quality income) for our tour guides while also positively contributing to the local area restaurant community.
There is one wildcard - how to monetize some of our website traffic that isn’t interested in taking a food tour. We’re lucky in that our blog has become one of the most popular New Mexico tourism blogs (almost by accident) - and 99% of our website visitors never book a tour. Certainly, there’s something we could sell them though - even if they never set foot in Santa Fe. Perhaps this will be the topic of the 2026 Starter Story update…
What’s the best thing you read in the last year?
As it relates to the food tours, a steady stream of the business section of NYT/WSJ. The economy around us has changed so much during the last several years, it’s been helpful to keep an eye on the macroeconomic picture particularly as it relates to consumer spending on travel. So far we’ve been lucky and have been able to maintain our higher prices without seeing any dropoff in demand.
The “How I Built This” podcast is fun.
Advice for other entrepreneurs who might be struggling to grow their business?
If you’re still in the planning stages, be realistic about the numbers behind your business. How big is the market? How much are people willing to pay? How many widgets do you need to sell in a year to generate the income you need?
This all sounds obvious, but I’m often surprised by how many people don’t run the numbers. And by running the numbers I mean creating a simple Excel sheet. And if you don’t know how to use Excel, a few days of YouTube videos or even a quick introductory course online is probably one of the single best things any aspiring entrepreneur can spend time on in the early days.
If you’ve already started your business but aren’t seeing growth, don’t be afraid to change your approach. But first, you should also have a good sense of why the business is struggling. Find a mentor or advisor and ask yourself the five whys - an iterative “but why” process to get to the root cause of why you’re struggling. You will often find that the true root cause of a problem is different than what one might initially think or expect.
Are you looking to hire for certain positions right now?
We’re always looking for fantastic tour guides. But you have to live in Santa Fe, NM.
Or, if anyone has any bright ideas for how to monetize our site traffic I’m all ears! Preferably products not ads.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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