Way Better Snacks Is Way Happier In MN

Way Better Snacks Is Way Happier In MN

The early-stage snack company came looking for an experienced talent pool. They found it.

Long Island is known for a lot of things: the Hamptons, its beaches, the iced tea. But not food manufacturing. Jim Breen, CEO of Way Better Snacks, knows this all too well. His company, which makes organic, sprouted chips, was based there for a while, and he found the talent pool as thin as the people buying his healthy snacks.

“You would think that, geez, there’s tons of commerce there and millions of people, you would think it would be super-easy to find those same types of individuals, but it’s not,” he says.

And so about a year ago, Breen, a Minnesota native who launched Way Better Snacks in September 2011 with personal savings and investments from family and friends, started looking homeward. In June his company moved into its new headquarters in the Tractor Works Building in Minneapolis’ North Loop. Upon arrival Breen focused on staffing up.

He found a bounty of industry experience. “We’re in a little bit of a specialized industry and we had a number of positions that you benefit from having people work with you that have some experience. Things like deduction resolutions, promotional planning and whatnot. We found plenty of good people, and hired five full-time people in the first five weeks,” he says, noting that the company is up to 15 employees today.

Finding employees may have been a snap; finding its new headquarters was a little trickier. Way Better Snacks has been performing way impressively—it did $7 million its first year, $15 million in 2013 and is expecting to double again in 2014, and its products are on shelves at major retailers such as Whole Foods and Cub throughout the United States and in Canada. It’s breaking even, but it’s still a ways away from sustained profitability. This posed a challenge in lease negotiations.

“We were running around looking for someone who not only had a space but was comfortable with the fact that we were not that old and don’t have profits yet. That was painful. It was just not easy to explain to landlords that, while our financials are pretty good, they may not be what the guy next door has. So we ended up losing an opportunity to move into a building that we had our sights on because we just could not come to a lease agreement beyond personal guarantees. The landlord needed bank support. I had not experienced that before and was not educated on how to navigate through that,” he says.

But things worked out at the Tractor Building, where the company has 4,500 square feet—plenty for its needs for the time being, since it’s strictly for office space, no manufacturing. (Its products are co-manufactured; the company doesn’t own plants.)

The other location Breen strongly considered was Boulder, Colo., where he had contacts from his stint there at Celestial Seasonings. It had its strengths as well, namely a forward-looking consumer base that understands what the company is trying to do in the healthy snack category. Ultimately Minnesota won out for both personal and professional reasons.

“I grew up here in the Midwest, I was a Chicago guy before we moved to Minnesota. My wife is from Indiana. There was a Midwestern draw that came into our minds when it came to raising our kids. But above everything else it was a combination of it being the right market for us business-wise, which mostly had to do with sourcing of employees,” he says.

Year three is a biggie for the company. That’s when things get serious, as Breen puts it. The company is likely to be adding another 15 or 20 employees in the next 12 months, mostly professionals on the sales and marketing side of the business. The company has succeeded so far in building a well-known brand in the Twin Cities, with excellent notices in the trades and writeups in such influential retail pubs as Whole Foods Magazine, which touted the company’s use of sprouted seeds, grains and beans.

If the coming year goes extremely well, the company might need to reassess its space requirements sooner rather than later, especially if it takes over manufacturing. If the time comes, Breen now feels better equipped to handle space negotiations.

“If we were self-manufacturing, we clearly would have a different set of requirements, but we’re not quite there yet. But it will be something we have to think through in the next few years. If we potentially build some of these facilities, who knows if we will choose Minnesota. I would hope so.”