ChipMonk Baking Update: How We Reached $80K MRR By Expanding Into Wholesale

David Downing
Founder, ChipMonk Baking
$80K
revenue/mo
2
Founders
10
Employees
ChipMonk Baking
from Houston, TX, USA
started February 2019
$80,000
revenue/mo
2
Founders
10
Employees
777K
alexa rank
16.3K
followers
259
followers
538
subs
market size
$5.6B
avg revenue (monthly)
$80K
starting costs
$53.3K
gross margin
56%
time to build
180 days
average product price
$2
growth channels
Email marketing
business model
Software
best tools
Google Drive, Google Hangout, HotJar
time investment
Full time
pros & cons
33 Pros & Cons
tips
5 Tips
Discover what tools David reccommends to grow your business!
Discover what books David reccommends to grow your business!
Want more updates on ChipMonk Baking? Check out these stories:
Start A Gluten Free Bakery

Hello again! Remind us who you are and what business you started.

My name is David Downing, and in early 2019 I teamed up with Jose Hernandez to start ChipMonk Baking, a Houston-based specialty bakery that produces healthy, low-glycemic cookies and other dessert products sweetened with monk fruit and allulose (two naturally occurring sweeteners that don’t impact blood sugar).

Jose created these recipes after being diagnosed with type-2 diabetes and subsequently controlling the disease through diet and exercise. Perfect for keto diets and people following gluten-free lifestyles, ChipMonk’s desserts are low-carb, delicious treats with all of the taste and none of the sugar.

As of November 2021, our business sells around $80,000 per month via a mix of online (website, Amazon, Walmart.com) and wholesale business.

chipmonk-baking

Tell us about what you’ve been up to! Has the business been growing?

Since our last Starter Story Interview, our business has more than doubled in size mainly due to our expansion into retail wholesale channels as well as strong growth in our e-commerce business driven by Amazon and the implementation of a robust SMS and email marketing strategy.

In just about a year, the company has gone from 2-3 employees to over 10, and we’ve launched our full line of keto cookie bites. We also started contract manufacturing some gluten-free baked goods for a meal prep chain called My Fit Foods.

For our website, we’ve seen double digit year-over-year growth as we’ve built-out an email list of over 13K subscribers and a SMS / text messaging list of over 3K subscribers.

Online Wholesale Platforms

With regards to wholesale revenue, we’ve leveraged online wholesale platforms like Faire and Abound to sell our products to independent retailers across the country. Some of our customers include grocery stores, supplement shops, juice/coffee bars, meal prep stores, boutiques, and even hotels (you can find our cookie bites in the rooms of the Equinox Hotel in New York City).

Speciality Grocery Chains

We also have gotten our products into several smaller, specialty premium grocery chains like Central Market and Yoke’s Fresh Markets. Up to this point, we’ve avoided going through distributors and have built our wholesale relationships one store at a time with direct emails and phone calls. Looking ahead, we will likely work with a larger natural foods distributor in 2022 to further expand our wholesale presence.

Amazon & Email Marketing

Our e-commerce business has seen strong growth mainly from our investment into Amazon (ads and fulfilled by amazon FBA) and email / SMS marketing. We worked with an independent consultant to optimize our Amazon listings with things like better pictures, keywords, and A+ content, and started to invest in direct advertising on Amazon to drive sales.

We also started sending inventory into Amazon’s warehouses to participate in their FBA (fulfilled by Amazon) program, which puts the “Amazon Prime” badge next to our products, greatly increasing conversion rates. We believe that Amazon favors listings that are fulfilled by Amazon, so we’ve tried to send in large amounts of inventory to keep those listings in stock.

Website

For our website, we’ve seen double digit year-over-year growth as we’ve built-out an email list of over 13K subscribers and a SMS / text messaging list of over 3K subscribers.

These channels regularly account for over a third of our website revenue. We’ve leveraged co-sponsored giveaways with other online food businesses to grow our lists, and developed automatic email / SMS flows based on customer behavior using Klaviyo for email and PostScript for SMS.

Both apps work seamlessly with Shopify, the hosting service we use for our website. To further boost engagement and excitement with our followers, we now offer regular small-batch flavors where we’ll make a limited amount of a special flavor (e.g., white chocolate raspberry, lemon blueberry, chocolate peanut butter), based on survey results asking our followers what flavors they want to try. We regularly sell out when we run those promotions and it helps guide our overall product development as well.

Facebook & Instagram Ads

One area of particular weakness lately has been Facebook and Instagram advertising with recent iOS14 changes limiting the ability to track user behavior on our website. We’re actively seeking alternative growth channels such as affiliate marketing (we use ShareASale), podcast advertising, and customer referral programs.

What have been your biggest lessons learned in the last year?

The post-covid economy is a wildly different and more difficult space to operate in for a company like ours. Global supply chains are broken, and we’ve seen significant increases in our ingredient, packaging, and freight costs. We’ve also had a very difficult time sourcing some of our more specialty ingredients like allulose.

As a leader, you need to have more inner strength than anyone on your team, and you can develop that by adopting good habits.

This is forcing us to regularly evaluate our suppliers for better pricing and quality and to actively raise more money to help us purchase larger amounts of safety stock inventory. These changes will also drive our future product development as we seek to reduce the risk of relying too heavily on specific specialty ingredients.

The labor market is also widely different now, with candidates harder to find and general wages rising significantly. As of November 2021, we are paying our production specialists an average of over $19 per hour and we have invested a lot of time and effort in new processes to make sure our employees are heard and excited about working for us.

With labor costs rising, we are pushed to invest more into improving efficiency via automation and in 2022 we will have some new production equipment that should allow us to create many more cookies with the same team we have today.

What’s in the plans for the upcoming year, and the next 5 years?

Looking ahead we hope to further expand our wholesale retail sales by onboarding with a large natural foods distributor who can help us get our products into 5-10 more specialty grocery chains. We’ll also be investing into our production equipment and processes to make sure we can keep up with the growth.

Product-wise, we are working on several new products including a high protein cookie, a savory biscuit bite, and even a low calorie dessert option. We hope to be able to launch a new product into retail wholesale in early January as well.

We’ve been keeping a close eye on trends in the food space and could see our marketing focus shift away from Keto and more towards other things like low carb, low sugar, diabetic friendly, and high protein.

Over the longer term, you could see ChipMonk gain placement in a larger regional grocery chain like HEB, and we would have to either build out a larger production facility or work with an existing contract manufacturer to make our products for us.

That growth would also entail us raising outside money from individuals or even a strategic partner like a larger food company. We’ll continue to focus on creating unique products that maximize both taste and health, and we’re excited to see where it all goes!

Have you read any good books in the last year?

Startup Confidential by Dr. James Richardson is an amazing podcast for specialty food entrepreneurs as is his book Ramping Your Brand: How to Ride the Killer CPG Growth Curve. Seriously, if you are starting or have been running a CPG company, you must read his book.

Traction: Get a Grip on Your Business by Gino Wickman is another amazing book for entrepreneurs with a lot of tools for building out processes to help your team and company grow. We’ve implemented a lot of tools from the book, including setting key metrics that our leadership team tracks on a weekly basis (daily e-commerce sales, customer acquisition cost, daily wholesale sales, production efficiency to name a few).

I’ve also been listening to Gary Vaynerchuk’s podcasts lately, as they offer really good insight on organic digital marketing on platforms like TikTok and LinkedIn.

Advice for other entrepreneurs who might be struggling to grow their business?

Invest in people. Clearly define and communicate your business’s core values and regularly discuss them with every person on your team. Setup regular one-on-one’s over coffee and/or regular team meetings (we do a lunch every Thursday) to get a gauge of how things are going and to share your vision and company milestones.

Do everything you can to compensate your people well and to invest in their personal development so they can grow with the company. Give your employees ownership (stock options) so they benefit from the company’s success as well.

Take care of yourself physically and mentally. Make sure you are eating well, have a consistent sleeping schedule, and exercising. As a leader, you need to have more inner strength than anyone on your team, and you can develop that by adopting good habits. Ideally build a team around you so you can take time off when needed to focus on yourself and the broader direction / strategy of the business.

Are you looking to hire for certain positions right now?

We are looking for a digital marketing intern to help us with social media marketing and content creation. It’s a paid, part-time position but could easily evolve into a full-time role. Ideally we’d want someone either in school or recently graduated who is simply hard-working and intellectually curious. If someone is interested, they can shoot their resume over to [email protected]

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

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David Downing, Founder of ChipMonk Baking
Pat Walls,  Founder of Starter Story

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