The cookie crumbled towards Lauren Brill as the world froze in the spring of 2020.
Hundreds of millions of Americans suddenly found themselves at home all day as the country and much of the world contained the spread of the COVID-19 virus. Consequently, two trends converged to push biscuit dough specialist Brill’s into even faster growth: supply chain shortages that limited the availability of big brand dough in grocery stores, and stoking consumer appetite for experimentation in the kitchen.
“Because the kids were stuck at home, it entailed a lot of new product testing,” says Brill. Curious consumers found her Sweet Lauren branded cookie dough, clicked “add to cart” as they walked down the virtual aisles, and kept coming back for more.
Lauren is one of several entrepreneurs who first spoke to Growth of the middle market at the beginning of 2020. At the time, they noted that their experience of launching during the Great Recession instilled in them resilience and faith in the long game — qualities that proved important as the COVID-19 shock swept through the economy.
Currently, MMG caught up with Brill and other packaged food professionals to find out how they’ve tested their navigational resilience over the past two and a half years.
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Skating in the test
Unexpected opportunities emerged as the impact of the pandemic on the economy was unlike a typical recession and was accompanied by an atypical wave of aid from the federal government. Broadly speaking, as of mid-2020, food and catering services almost equally divided food consumption. analysis from McKinsey. There have been near-universal restaurant closures, drastic cuts in catering to the non-residential population, and a shift to alternative ways to shop for groceries. McKinsey estimates that in just one year, a quarter of national food spending has shifted from catering to the food sector.
U.S. restaurant industry still reeling from pandemic quake, February report says National Restaurant Association. Nearly all NRA survey respondents said they expect supply chain kinks to continue this year; 80% of full-service restaurants and two-thirds of limited-service operators have changed their menus to sidestep supply chain issues.
A headache for one company is a unique opportunity for another. Some private companies have taken advantage of this seismic redeployment, including Sweet Loren’s.
Back in late 2020, Brill was ready to get into private equity financing. But in 2020, the flow of cookie dough expanded so consistently, and she was so busy managing new distribution relationships, that “I even forgot it happened,” she recalls.
I have worked hard to get us to where we are and I think I could raise the money if I could find a partner who would be a minority investor.
The dough is gluten-free, nut-free and dairy-free, and its specialty ingredients became a real asset when the staple food supply chain faltered: Brill never had a just-in-time logistics philosophy, so her products were available thanks to ample inventory. just when consumers needed to be pampered. “When stores were mostly empty, we had 99% occupancy,” she says of her company’s ability to continue sourcing and delivering through its narrow niche.
As the catering business declined, Brill rushed to forge relationships with institutions that were looking for new co-branding operations. Now Sweet Loren dough is baked fresh on site at college catering establishments and is offered as a signature product alongside big names like Starbucks.
The new products are on track to fill out the expanded range of less sweet dough and no dough products, aiming to break into new categories and expand beyond the company’s current 15,000 supermarkets.
“Potential investors were eyeing us,” she says. “I have worked hard to get us to where we are and I think I could raise the money if I could find a partner who would be a minority investor.”
Meanwhile, CREO Capital Partnersanother company represented MMG at the beginning of 2020, she turned off the purchase of tortilla. Founding partner and executive chairman Rob Holland says the company’s grocery business, much of it in the Mexican food category, has grown 50% over the past three years (since the original story came out in January 2020). In September 2021 BlackRock led a nine-figure investment in Flagship Food Group through its parent company CREO. “We survived the pandemic doing what we promised to grow, acquire and raise capital,” Holland says.
But the post-pandemic landscape presents another hurdle, he adds. Consumer confidence, bolstered by the pandemic stimulus, is currently declining due to inflation. The appetite for exotic dishes, cooked at home or brought with you, is fading. Household routines continue to be disrupted as businesses waver between a return to the traditional office routine and full support for hybrid work.
We survived the pandemic by doing what we promised to grow, acquire and raise capital.
CREO Capital Partners
According to Holland, the only constant is the supply chain. “Warehousing has become a huge part of our business as people stockpile,” he says. “We invest in assets for special situations, so we are comfortable with a business in transition. We think the next couple of years will provide an opportunity to identify winning companies in the food and non-food industries.
But these opportunities will come in the form of consistently profitable companies, not those that are ruined by circumstances or mismanagement.
“EBITDA is back,” Holland says. “Companies that operate on minimal margins are in a difficult position. The labor force has grown, but gas has doubled. Wheat has risen in price by 60%. If you have low margins, you are losing money.”
Opportunities, he says, will lie less in individual companies than in coincidences that add up to more than the sum of the parts. The duplication might have seemed redundant a few years ago, but now factories that can support each other ensure that products continue to be delivered and profits come in return. “We bought two tortilla businesses that would have had a tough time on their own, but now we can make tortillas in California and Kansas and get them from the right factory to the right customer,” he says. “It’s about sustainability – and being on the shelf when someone else isn’t.”
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