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151: On the Luxury Appliance Experience with Middleby Residential

Written by Rob Stott

January 17, 2023

Scott gruel Middleby residential independent thinking podcast

As the calendar flipped to 2023, Nationwide Marketing Group formally launched a partnership with Middleby Residential. Home to some of the leading names in the luxury appliance and outdoor categories, Middleby Residential keeps a finger on the pulse of the luxury retail experience. We chat with group president Scott Grugel about the trends they’re following, how the residential and commercial side of the business learn from one another, and more.


 

Rob Stott: All right. We are back on the Independent Thinking Podcast and excited right now. I love being able to talk to any partner but new vendor partners, especially here at Nationwide Marketing Group. It’s got an extra vibe of excitement to it and today we get to do that with Scott Grugel, the president of Middleby Residential. Scott, it’s the new year as we’re sitting here talking and appreciate one, having you aboard on the Nationwide family here and second, on our Independent Thinking Podcast as this relationship is days old officially.

Scott Grugel: Thanks, Rob. Appreciate the opportunity to speak with you guys.

Rob Stott: Yeah. Not a problem at all. And we’ll start, for those that might not know, Middleby Residential, a brand that has a lot of brands underneath it. We’re talking specifically the residential side today. It’s got the likes of the Vikings and the Kamado Joe’s and Masterbuilt of the world. But tell us a little bit for those that don’t know about Middleby and about you and your background.

Scott Grugel: So Middleby’s actually a publicly held company. It trades under the ticker of MIDD. It’s a company that’s been around a long time. We have brands that are more than a hundred years old, but the residential group only really started about 10 years ago when Middleby branched out and acquired Viking, which was the first company in residential that we had. And since that time they’ve added a number of brands, great brands, people like Marvel, Aga, out of Europe, Lockhorn New, out of Paris, Links. We’ve recently acquired a company by the name of Brava and most recently acquired Kamado Joe and Masterbuilt and Char Griller.

So it’s a collection now on the residential side of about 13 brands. It’s sold through, in most cases, sold through a direct selling organization that works for Middleby Residential. And then our Uline business actually sells through independent distributors. So that’s also one of the brands today that rolls up under residential.

So that’s a great collection of brands. A few from all over the world, many of them manufactured in the United States and most are pretty well known. And I would tell you there’s probably likelihood there’ll be more added in the near future because it’s kind of a part of the strategy that the company has overall.

I actually joined the company seven years ago when we actually sold Links to Middleby. I was the president of Links Grills based in California at the time. I came over and after a few additional acquisitions a request was made to basically formulate the residential group and put it under one umbrella and move it forward with a single strategy. So we created that about five and a half years ago and that’s really when residential was born.

So, my background is not only include appliances, I didn’t grow up in this business. I actually had two careers before this. I spent 21 years in the high tech semiconductor world and I spent 12 years in new home construction and finishing work and design center for a number of builders in the western United States.

Rob Stott: No, so that’s awesome. And I love that added depth to your background because that actually makes sense. Prior to jumping on our podcast, we got excited to talking about CES together and haven’t been there so that now it makes more sense.

Scott Grugel: Absolutely.

Rob Stott: Well ,I know we won’t spend too much time on it because it doesn’t necessarily apply, but I think it’d be important to at least touch on if you can the rest of Middleby because you’re obviously president of the residential side of things, but talk about the importance and the depth of what else Middleby is involved in as a company.

Scott Grugel: So Middleby is a company that basically has over a period of time collected some of the best cooking brands in the world. The largest part of our business is on the commercial restaurant side of the business. And then we also have a large food processing and handling group as well. So within the company itself, there are three primary divisions. One is obviously the commercial side, then residential, then food processing and handling. Today the brand count is north of 100. And like I said, there are a couple brands in there that are more than 100 years old and we basically have factories and relationships and businesses all over the world and a number of countries probably would be difficult for me to name how many today, but almost anywhere in the world you would find a Middleby company or at least a selling organization selling into that market.

Rob Stott: No, that’s awesome. And the reason I bring it up is I think, you talk about that number of brands and I can imagine having them all under one roof kind of learn something from one of those. It’s a lot of potential brands to be learning from, but I’m sure as things develop, technologies develop and ways products are built, a lot of that can, I’m sure, and I’m sure you’ve seen in just a few years there how things can leak from one side to the other and you learn from brands and things like that.

Scott Grugel: Yeah, it’s actually one of the strengths of the company that you probably can’t find in most places. So first thing I’ll answer on your question or your comment was that we have a facility in Dallas that’s known as the Middleby Innovation Kitchen. It’s actually both a residential design and gallery showcase and then next door is the only facility of its type in the United States and it’s got all of our commercial cooking brands under the same roof. So the real nice thing about Dallas is there are hundreds of pieces of equipment that are actually live and in use on a daily basis, but it actually gets to show the breadth of what the company’s about.

And when you start to realize that we have baking and grilling and pizza and innovations across all of the commercial side of the business, but you also see technologies that have transferred from the innovations that existed in the restaurant world and in the highly competitive commercial world to where burner technology, which many of our companies are known for and famous for, have transitioned over to our residential brands like Viking.

And then you look at some of the products like Turbochef, a speed oven and some of those speed efficiency type things that exist on the commercial side have transferred over to some of our brands on the residential side. And then you look at food preservation with a partnership and a company called Blue Zone, which basically extends the life of food that basically started on as a commercial relationship is transitioned over as inside our seven series Viking refrigerators.

And so basically what you have is you have a really unique organization, a collection of a lot of brands with a tremendous engineering staff that on a regular basis or designing and innovating on one side or the other and then they have a tendency to transition over to basically the commercial and vice versa or to the residential and vice versa.

Rob Stott: So yeah, I mean you get a lot of smart people in the room and smart things happen and what’s the best way to be able to share those smart things but then to bring it to other brands and it’s translatable. So it’s cool to see. And spoiler alert for anyone listening that might be in Dallas with us, I think that there’s something happening down there potentially at that Dallas showroom we think.

Scott Grugel: Yeah, the event in March.

Rob Stott: Something, I don’t know what, but Primetime might be going on or something like that.

Scott Grugel: Yeah, Primetime is scheduled in March and there’s a strategy at this place or a conversation taking place to try to get a number of the people that are coming to Primetime over to our MIC facility, which will be from one of the evenings as well. So.

Rob Stott: Be cool to see and if you can’t, I know, yeah, just like we did at Primetime in Orlando, I’m elbowing my way into that event so that I can get online and get us on Facebook so that even if you can’t be there with us, you’ll at least be able to get a virtual guided tour of what’s going on. Because as you said, it is a great facility with so much innovation happening. It’ll be cool to see up close and personal and dive into some of those things. So. No, that’s awesome.

Scott Grugel: Yeah, we’re very proud of it. It’s a nice place to visit. You go away with a much different understanding of who we really are.

Rob Stott: Well, another thing too that’s cool is you mentioned a lot of those things are live and the product can be not only seen but tested. And I think that translates too to a cool conversation that we could have around the luxury experience from a client’s perspective and what a retailer can do and maybe in visiting a facility like that, how they can take some of the things that you guys are doing there and apply it to their own showrooms and stores. Is that something that you guys in developing a place like that have in mind when a retailer comes through?

Scott Grugel: Yeah, actually it is. It’s all about the experience and everybody’s looking for something different. I mean some people that walk in the door don’t have any idea on what they’re looking for and some are maybe so brand specific and product specific that it’s really been narrowed down to what they want to see. But at the end of the day with the collection of brands and the collection of technology that we have, you basically can provide the experience and the opportunity for the people to customize their kitchen, to narrow down the style of cooking that they’re interested in and also the look and style of the equipment that they’re interested in as well. We have a full-time culinary staff on the residential side and we have a full-time culinary staff that actually includes two of the certified master chefs of which I believe there’s only 85 in the world. Two of them are on our staff in Dallas.

And so at any point in time you’ll see whether it’s a handful of people to a couple hundred people in that building depending on what’s going on a single day and most everything during the day is live and inaction and somebody’s demonstrating something or can demonstrate if that’s the interest. So we do hands-on cooking type items, but we also do presentations to where we’re actually showing off what the equipment can do and explaining on the benefits, the features, the benefits and the technology that may be embedded in it, and then also some of the things on what’s coming in the future and things like that as well. So it’s absolutely the reason we have the facilities is to provide that type of an experience that people can’t get in most places.

Rob Stott: I got to tell you, hearing that you got a couple master chefs on staff there, I’d be so disappointed if I saw them walking into work with a lunchbox and not like raw meats that they could cook on the live equipment. That would make me so sad. They have a ham sandwich or something when you could really use those machines and go cook.

Scott Grugel: Well, I will tell you that the people that work there, the people that visit generally don’t go away with any hunger pains. That’s for sure. That’s not really good for your waistline if you’re there frequently, but that’s kind of the way it works.

Rob Stott: I can only imagine. Well, to that point though, a retailer might not have a master chef or even a chef on staff. But what are some of the things that you think they could take away from a visit or just advice to elevate their game in the luxury space?

Scott Grugel: I think there’s a couple things here. Many of the retailers because of cost and also because of investments they have to make, they have limited square footage. So not every store, not every partner has the same size footprint that they can show product. So one of the benefits of the showroom itself is that we can display quite a bit more equipment than most of our partners can. And depending on the region or the geography that they exist in, they may not be able to display some of the product in a live format because of local rules. So New York’s a really good example. In the city of New York, we have a beautiful showroom in the A & D building, but within the city of New York you cannot have gas within the facility. In our building we cannot live demonstrate anything that’s gas driven. So we rely heavily on the electrical side of the business, the induction, the electric range, the electric cooktops and things like that.

But sometimes people need to see, want to see and want to be able to touch and feel the actual gas burner, whether they’re sealed or open or whatever the case may be. So taking them to a location like Dallas where they can see all of the product in action and then compare them side by side is what really presents an opportunity that we don’t always have everywhere.

And we’re also a safe harbor. We don’t sell from the showroom. We are an additional tool for the dealer partners that we have together and the referrals come directly back to the marketplace through our local salespeople within every region. So if somebody from Nashville comes to Dallas showroom and they have a dealer partner that they’ve originally started with, that lead is going to go directly back to that dealer partner. And if they don’t have a dealer partner that started up front, we’re obviously going to introduce that lead back to the people that service the best in the local marketplace.

So we’ve had people fly in for a one brand only cooking demonstration. We’ve also had people of course do it virtually. But at the end of the day if a builder, a designer or a dealer has a live client that wants additional information, we’re happy to engage and help them. And we can technically do that virtually or in person in any of our showrooms. But if you really want to understand at this point in time the full Middleby experience, the Dallas location’s the proper place to go.

Rob Stott: Yeah. And I can envision some retailers maybe listening to this and shaking their head, like fly to Dallas to see a… But you got to understand the type of client that this is typically going for these products and that’s nothing. And I’m sure a retailer going with them, walking them through or if they can’t, you got the staff there to be able to offer up that sort of hands-on white glove type of experience for them so that they get exactly what they’re expecting or looking for in a visit like that.

Scott Grugel: You bet. Yeah, absolutely.

Rob Stott: No. That’s awesome. Well, talk about some of the things that excite you about getting to work with this NMG dealer, the luxury dealers here at Nationwide and this new partnership and going into ’23, the things you’re looking forward to.

Scott Grugel: I think at the end of the day it comes down to the opportunity to interface with up to 600 luxury partners. And some of them already sell a couple of our brands and some of them don’t sell any. But at the end of the day, they really don’t sell all. And part of that of course is the exciting part about it. There’s ability to bring an expanded relationship, there’s ability to bring a one stop opportunity to them in some cases, but it’s also the ability to engage and become more important on both sides. So there’s benefits that Nationwide provides to their partners and there’s benefits that the brand can also provide together with the Nationwide team.

I think what’s exciting about that is that we may not be a fit and don’t expect to be a fit with every brand we have, right, and every dealer, but we probably have a solution within the seven brands we’re starting with and the 13 brands we have in total. We have a solution that probably can answer almost any question, whether it be indoors or outdoors or a combination thereof.

So I think most of the dealers will know us for one brand or the other, but many dealers that haven’t done a lot with us the past few years don’t recognize how different the company is today since we formed the residential group. Prior to that, we were individual brands with individual selling strategies and basically well known and extremely influential in the business, I guess is the best way to put it. When you start to bring them together and you bring a common strategy and you build a relationship and you build trust, I think it changes things a lot. And so at the end of the day, I think it’s getting an opportunity to expose us to all of them and have them present to us what they’re all about today as well. Just open some different doors than what we’ve all seen in the past.

Rob Stott: Yeah. A lot of learning on both sides I think. You mentioned some of these brands and it’s cool to, like you said, see them all under one roof and knowing what they all represent individually, but then the collective and just the opportunity that presents to our dealers obviously is exciting I think for us for sure and something we’re looking forward to and watching grow throughout this year and beyond.

And beyond the membership. I want to ask you too about just the luxury appliance space in general, things that you were watching, whether that’s trends or opportunities or I don’t know. We’re both coming off of CES, so new technologies that are coming out in this space and with your product that are exciting you about the year ahead and maybe something that a retailer might not be, a luxury retailer, might not be thinking about right now, but they should keep an eye on.

Scott Grugel: Well, yeah, I think there’s obviously a couple that come out of CES, of course. I think we see the expansion of the internet of things and connectivity. There’s a lot of apps that are being created or implemented and included in equipment today. And I think this is probably just my opinion on things, I think there’s a fine line between adding value and being invasive in somebody’s home. And I think we’ve taken a little bit of a cautious step on how quickly to introduce that to a great degree. We have a number of great products that do have some advancements that some people haven’t seen so far. But I think as this moves forward in ’23 and ’24, I think you’re going to see the adoption of and commonality with the connectivity aspect and apps that truly create value.

I also think you’re going to see some apps that have the ability to control multiple brand appliances versus if you have a kitchen and it has four or five brands in it today and everybody has their own app, it becomes a little bit invasive and a little bit complex for most people to do that. So I think as people become more or people develop and implement products that can create value across all products and make it simple, I do believe that you’ll see a much quicker adoption as far as that goes.

I think you’ll see different types of cooking. We talked earlier about a product that we have that we’ve not brought to this relationship yet, but it probably could come. But we have a product that cooks with high intensity light and it’s a speed oven, but it actually can cook and sere a steak and it can cook very delicate things like an egg or toast and all the variations in between with thousands of recipes embedded in it. And it’s a technology that over time is going to be probably more and more important to the consumer’s kitchen as well.

And I think the other thing that we probably are all experiencing depending on where we’re based at is there’s a tremendous effort currently in the industry today to convert people from gas driven cooking to electric and induction cooking. Some of the states, obviously portions of California, Colorado, New York, Washington DC and additional others, especially county by county, have started to implement laws that restrict any new gas appliances and things like that in new home construction and in some cases, remodels. And so I think you’re going to see force by legislation, an additional shift to the electrical side of cooking for the various benefits, that are perceived benefits or real benefits, that you’re going to see come over the next couple years as well. So I think those are the things that we need to all pay attention to and that’ll be where the investments are primarily made for the most part by us as well.

Rob Stott: Yeah, and great to point out some opportunities ahead too for retailers out there who may be thinking about where they need to look for assortment and things like that and some trends to keep an eye on. So we appreciate that and some great insight and exciting times ahead, Scott. This is a cool partnership and I can’t say it enough. We’re excited about it. It’s clear that you guys are as well, and looking forward to diving into it and learning more about you guys and seeing some of these brands and getting to Dallas, man. That’s really what it is. My calendar is circled. So we’re ready to be there and looking forward to it and getting down there with you. So this has been fun.

Scott Grugel: Yeah. Look forward to meeting the membership, look forward to seeing people in Dallas. Obviously there’ll be more conversations and participation in some additional calls. But if I can help in any way, I’m happy to do it and the team’s ready to engage and move forward from here. So thank you.

Rob Stott: Yeah, you bet. Great talking.

Scott Grugel: Thanks.

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