Business Spotlight: Crunch Time

When KSPR-33 news anchor Christine Daues decided to step out of the on-air spotlight and into a role as domestic CEO, she didn’t realize it was less of a move and more of a shift in energy.

With her increased focus on home and family came the realization that health-conscious, on-the-go food options were lacking. Daues dug out an old family recipe and began making the breakfast granola, and the idea for Granolove was born at the Daues’ kitchen table.

“There are so many subpar food products on the market, if you go to the store and read the labels,” she says. “I wanted something that we could be proud of, a product that we could stand behind.”

Product samples gave rise to exposure and shared batches of the crunchy concoction led to demand. After a successful debut at the Farmers Market of the Ozarks in August 2010, Granolove LLC was officially incorporated later that year.

The company posted impressive early growth, doubling production in 2011 and again in 2012. Local retailers gradually embraced the new product, and during the next two years Granolove became available at supermarket chains Harter House, MaMa Jean’s Natural Foods and Price Cutter, as well as in single small-shop settings such as Homegrown Food, Dancing Mule Coffee and Heroes Coffee at the Springfield Regional Airport.

Daues began seeking a local facility to manufacture Granolove’s four products: original with blueberries and cranberries; the best-selling Peanut Butter Chocolate; Dark Chocolate Cherry, made with Ghirardelli chocolate; and Moka Java, with crushed coffee beans sourced from Springfield wholesale roaster Heroes Coffee. Surprisingly, there was no local operation that could meet her recipe specifications and process requirements. Daues found there were only five companies nationwide that could accommodate Granolove’s small-batch orders.

“With food production, there are so many concessions that can be made all along the way,” she says. “We didn’t want to cut any of those corners. We wanted to keep our high-end ingredients – the expensive nuts, the Heroes coffee, the premium chocolate.”

Answer in the desert
Daues and her co-owner husband Joe, also a former KSPR news anchor, selected Lehi Valley Trading Co., a 30-year-old food manufacturer in Mesa, Ariz., that produces private-label and co-packaged specialty snacks, such as nuts, dried fruit and popcorn. In 2004, the company acquired a specialized kitchen to prepare soft-baked and cereal granolas and increase capacity for small-batch customers.

“The framework of our model is around private labeling,” says Seth Campbell, Lehi Valley’s chief production officer. “We have a lot of flexibility in how we can customize, and we’re willing to cater to a lot of unique situations.”

There is big business in small-batch foods. According to the Specialty Food Association, 95 percent of specialty food manufacturers recorded sales increases in 2012, riding two-year growth of 22 percent that pushed sales to nearly $86 billion last year.

Lehi Valley ships pallets of Granolove by refrigerated trucks to storage space in Springfield Underground. From there, local distribution is mainly handled by the Daueses, often en route to school pickups, sports or family errands.

Production hurdles aside, sticking to quality ingredients has directly impacted profit margins.

“In specialty food sales, 30 to 40 percent is a good target,” Daues says, noting grocery stores take a bigger cut on specialty foods. “Given our quality ingredients, it’s been challenging to hit that consistently. But we come pretty close.”

Despite a solid product, strong startup and stable manufacturing, Granolove’s third full year was a difficult one. The introduction of smaller 5-ounce packaging was mildly successful in independent venues, and the promise of a golden ticket in Branson nearly proved to be a dagger.

Daues says placement on Silver Dollar City’s retail shelves, and the prospect of tapping into the attraction’s 1 million-plus annual visitors, was an entrepreneur’s dream. Granolove placed its largest order to date – only to watch the pallets of product go to waste as sales at SDC failed to materialize.

“There were a lot of reasons, but it just didn’t sell well at Silver Dollar City,” she says. “Granola still has somewhat of a health halo around it, and people who vacation there are looking more for fudge, funnel cakes and cotton candy.”

Social mission
Absorbing the shrinkage cost of that order, Granolove posted its first flat year in 2013, generating nominal profit and considerable anxiety for the entrepreneurs. After regrouping, Daues is again seeking a regional distributor.

“We are hopeful that we can secure a second-tier distributor that is willing to place our product on regional supermarket shelves,” she says. “Many of them don’t want to deal will a small outfit like ours that has just a few SKUs. Some don’t have refrigerated trucks, or they only deliver to food service, not the retail outlets that we need.”

The Daueses’ journey got them speaking in front of over 100 entrepreneurs at a recent 1 Million Cups meeting at The eFactory downtown.

“We’re two people who don’t have a ton of food manufacturing experience,” she told the entrepreneurial networking group, noting she worked several years at Noble food marketing agency. “This is a make-or-break year for us. We feel like we have the product and the passion, but just haven’t found the right partners.”

Some risk this year will hang on development of new product lines.

Granolove is working toward a summer rollout of a gluten-free product and testing a line of granola bars. Later this year, the company will be certified as a woman-owned business, shifting to 51 percent ownership by Christine.

The company’s social mission will not change. Since founding, the Daueses pledged to donate 10 percent of annual profits to the Shriners Hospital for Children in St. Louis, which has treated their daughter, Jude, for a birth condition that left her with missing and malformed bones. Granolove has donated at least $500 each year – even last year, when their flat earnings left no profit margin to speak of.

“Jude’s condition was really the impetus for starting this business,” Daues says. “Both Joe and I really like having high ideals, higher plans and a mission for this company. Beyond making money and running a profitable business – which we really need it to be – what are we going to do long term with Granolove? We want it to do something in this world to make it better, and Shriners is how we are going to do that.”[[In-content Ad]]