Grubby D2C Plant-Based Meals | From Almost Failing to Scaling Profitably

0:00And I realised how much I wanted to be at the forefront of that and tasting things and the team tasting things and feeling like they are part of a food business. Because that is what we're passionate about at the end of the day. You know, it's cooking great food and our customers cooking great food. So if you've not got that at the centre of things, then you really miss it.

0:21Martin Holden-White:it's not often we get to hear about a warts and all story of growth where it hasn't been necessarily a smooth curve in this episode where i talked to martin holden white from grubby a d2c plant-based meals business you're going to hear how they went from a valuation of 26 million i think it was right back down to a much lower valuation and then eventually got back onto a smooth path of profitability, profitable growth and hopefully a really successful future. Let's dive in.

1:02Martin Holden-White:Martin Holden-White of Grubby, welcome to Brand Growth Heroes. Thanks very much for having me on. It's a pleasure to be here. I was actually out on the bike yesterday and had it in my ears. It's my new routine with the Shox headphones on. So, yeah, I love the podcast. Really a pleasure to be on. Thank you so much. Who were you listening to yesterday? I was listening to the Merchant Gourmet podcast yesterday. Okay, yeah. Very interesting, quite relevant. We use some of their products as well. Oh, do you in Grubby? Yeah, yeah. That's fab. So tell all of our listeners who may not have come across the most highly rated plant-based D2C meals and ready meals in the UK.

1:43Martin Holden-White:Tell us all about Grubby, what you sell, who you sell to, how big the business is, and a little bit about the journey that you've been on because it's quite an interesting one. Hold on to your seats, everyone. Yeah, so we're Grubby. We're a plant-based meal kit primarily and we now do ready meals as well. So we essentially provide all the pre-portion ingredients to people we need to make delicious, healthy meals at home. And yeah, I suppose we have been on quite a journey. we at our peak were valued at 23 million we've raised about six million uh to date uh we're now doing about six million we will do about six million in revenue this year um and we've been running about six years lots of sixes in there lots of sixes hopefully lucky sixes yeah um but yeah there's been obviously lots of ups and downs that have fed into that um but we're hoping this year that we're going to have our first break-even year, which again, it's maybe taken us a long time to get there, but we're pleased to be where we are now, but we have been in lots of undulations along that journey, so I'm really happy to talk very openly about what's gone on along that way.

2:56Martin Holden-White:Welcome to Brand Growth Heroes, the leading podcast for the founders of Challenger Grocery brands. I'm your host, Fiona Fitz. My 25 years at global giants such as Nestle and Challenger brands such as Goo Chocolate Puds, Chobani and Strong Roots, as well as coached to over 400 scaling brands, means I have the experience to ask the questions that truly matter and get you the insight that will inspire you to think differently and drive serious growth for your brand.

3:28Martin Holden-White:and that's really kind of you generous of you because being valued at 23 million and then i think you said to me that you had a down round yeah and you're coming here to tell us a bit about that as well as part of the overall story and staying positive and motivated and you know ready to kick ass that that's got to be difficult yeah well it was difficult um and sure but like just very happy to talk about all that and give it warts and all. And hopefully, you know, listeners will find that useful because, you know, as I said, there has been lots of bumps along the way, but where we are now is obviously really pleasing.

4:04And I think there's definitely some lessons that I wish I knew along the way.

4:08Martin Holden-White:Okay, amazing. Well, start by just painting a quick picture of where you are now in terms of like numbers and size of business and all that. So we can see what does that really mean, 6 million? I mean, who's buying you and all the rest of it and what you sell yeah yeah so so we we deliver meal kits direct to consumer so um pre-portioned items that go in recipe bags along with a recipe card and a spotify playlist um to cook delicious weeknight meals we also provide frozen ready meals um so we bought the uh manufacturing ip when all plants went into administration which sort of fast forwarded that process which i'm also happy to talk about yeah definitely want to talk about that yeah and so we now have two different products that we sell direct to consumer which means we deliver it to people's homes um obviously you've got frozen and you've got sort of ambient and chilled which also provides a bit of a challenge from a logistics point of view um and we deliver around uh two and a half thousand boxes a week so about 12 000 boxes a month um and right now the split is about um 80 20 Milk It's 80, Ready Meals 20.

5:15Ready Meals launched about a year ago, so it's really quickly sort of become quite a significant part of the business and we expect it to grow to more than that as well. And yeah, as I said, we're hoping that this year we can break even, we're very close, we're right on that line. We've had several profitable months, I think it's like six or so profitable months this year, which is a big weight off. I can say that for certain, it feels very different and it feels a bit like we're sort of more of a proper business now as it were um and how many people are working in the business there's 14 of us so we're relatively relatively small team um and we've actually just moved into our new office space um last week so we wanted to bring the the NPD the production kitchen into the office space because we used to have that and then when we went into our period of cutting costs and everything we moved into a tiny we work office and then now we're back and we're sort of like bringing food back into the centre of what we do and having that sort of really right next to the office so yeah it's so really exciting about that isn't it is so important i mean i learned that

6:17Martin Holden-White:when i was at goo you know having product and npd and uh samples in the office all the time having the development chefs in and out all the time everybody getting around to taste something that's just come in quickly you know at the end of a meeting everybody's then growing up in their jobs in this mindset and feeling of being part of it but also understanding how things are made or why they can't be made yeah it really makes a difference when you're selling I think it definitely does and I think we I didn't necessarily realize how much we'd miss it when we went through that cost-cutting exercise and we moved out and we went into an office where the development chefs cooked from home and that happened with a lot of businesses obviously during Covid um where people you know had to move out and stuff but but it really I think we really realized and I realized how much I wanted to be at the forefront of that and tasting things and the team tasting things and feeling like they are part of a food business because that is what we're passionate about at the end of the day you know it's cooking great food and our customers cooking great food so if you've not got that the center of things then you really you really miss it yeah so what do you think are the key strengths of grubby right now in the marketplace like what is helping you to grow well I mean as I said launching the new products was it was a big one um so it was that one took us a bit by by surprise in a way it's something that we sort of wanted to do we've always wanted to be able to provide to be the forefront of plant-based eating not just meal kits like meal kits was like it's always been seen as like the engine room of what we do but then the long-term vision was to add more products add more things like whether that be snacks whether that be ready meals whether that be like different parts of the day that people eat um so that was always part of what we wanted to do and then the all plants thing came about and we added that to our sort of portfolio products.

7:59Martin Holden-White:Tell us about that. The All Plants thing came about because there was quite a bit of news about that. Was that 18 months ago? Yeah, yeah, yeah. Pretty much bang on. Yeah. So okay. Talk to us about that because that was big news that first of all, poor All Plants was going into administration and secondly, that you guys bought the IP. Yeah. And I remember thinking at the time, what does that mean? I mean, what did they actually buy? And what advantage, what value is that other than just like a whole lot of recipes that you could probably get a eye to do in my head now I knew that was simplifying it but I was trying to be um I was trying to be uh what's the word like cynical about it in one way but also challenge myself to think about the actual value that you would get practically and then when we talked it through in our prequel I realized just how valuable it was so tell everybody about that yeah I mean it was a funny old process and I mean the first thing I'd say is that I really don't want to you know bad mouth all plants I think all plants did a fantastic job they were sort of pioneers in the space all the rest of it and they did a brilliant job sort of raising the profile of plant-based in the UK but yeah when it came up we you know we're interested in the assets that were there we heard about it we actually spoke to the administrators something I'd not done before and there was different assets going there was the there was the warehouse there was the the obviously the the i trademark and all the data so that would be like the social media the emails that type of stuff um which is often what what gets sold and then there was also all of the manufacturing the recipe sort of ip of of the things that are actually physically produced in the warehouse so they were split into three yeah exactly it was split into three different bundles that you could bid on and um the easiest way of describing it for anyone who's not done it is it's like buying a house or maybe haven't bought a house, but the blind bidding process was a bit like that where you have to put in a best and final offer for what you're bidding on and you are completely blind to what anybody else is doing.

9:57You don't know what they're offering. So it is quite a weird process in that sense because you have absolutely no idea where to pitch it. So you have to be very comfortable in what you're offering for what, which is tricky because you've got to value things in a way that you think is reasonable. Yeah, and you don't know necessarily

10:16Martin Holden-White:until you get them what value they're going to be. Exactly. You don't know how good the email list is going to be. You don't know how good the quality of these things are. You don't actually get to see the information that you're going to buy at the end of it. So it is tricky and it's a weird one. So come on, what happened then? So basically what happened was we, and I'm pretty sure I'm allowed to talk about this, but we'll see, is that we bid on the data and we bid on the recipe IP because for us it was about speeding up our knowledge of ready meals and how we could produce them. We had no internal knowledge in-house of exactly how to produce that stuff, where to go to manufacture it, et cetera, et cetera.

10:58So that was huge for us, a big part of it. Obviously, the data, the email list, the social media was another big thing, great to acquire that number of really relevant customers for us because these sorts of things are really specific. When a company goes into administration, if it's the right type of business for you, that's a huge thing when it comes to data obviously because these are the types of customers that that are also looking for what we're doing um so that's why we valued it relatively highly anyway cutting a long story short um we did on both things we were then asked to put in a best and final um on on those items we had a long discussion about it we tried to value what we thought these different parts were going to be worth and ultimately we landed on a thing of saying well if we don't get it are we happy that this is the maximum amount we're putting forward that's what you have to i think ask yourself if you don't get it then are you comfortable that you shouldn't have gone any higher and that's what we that's where we got to um we could do what we did what we could afford and and what happened was we lost out on the data side of it um which um everybody now knows uh ellen mills and and plants got that that piece um so they rebranded as as all plants um and that that went there and then after that i went to the administrator and said you know what's what's left and she told me that we we were um very close unfortunately um but and i said what about all of the recipes and the manufacturing stuff and she said oh no um that that hasn't been hasn't been sold um and i was obviously you know jumping for joy silently on the phone and sort of said uh right well let me have a think about that and we we re-offered a different different price at that point um and a lower price and yeah we were told the the following afternoon that we'd uh we were successful and that we got these things and and what that allowed us to do was basically really fast track the npd of that product but also it meant because of the pr that it got because you heard about it other people heard about it was on the gross etc it meant loads of manufacturers came to us so we were like this is great like you know we could just speak to all these manufacturers and it was the perfect sort of pr storm in that sense because they came to us we spoke to different people immediately we knew we got all these recipes and how to produce them we were able to go to them it creates the tech specs the technical

13:18Martin Holden-White:specs the product specs the ingredients the nutritionals that what works what doesn't you know i suppose six months of npd per per meal like is it too much salt is it because it doesn't like you know you can't just come up with something without balancing all of these things and what you can balance in a kitchen doesn't necessarily balance out on a production line right yeah for sure and i mean essentially it was basically just one massive spreadsheet with all this information um uh you know if you're thinking about what the actual stuff was that we got yeah um but as i said the knowledge gap you know it would have taken us a long time to acquire that that kind of information and obviously a testament to what all plants did because they did do a great job at product and we have now evolved that and put our own spin on it.

14:06We've learned loads as we've gone along the last year, 18 months. And yeah, it allowed us to get the manufacturing partner that we now work with up in Blackpool.

14:20Martin Holden-White:Hey, just a quick word about Brand Growth Hero's partner, Jolson. So look, as a founder, you've got loads on your plate. Fundraising, shareholders, co-founders, co-manufacturing, product, NPD, you name it. Scaling is really complex and the legal side of scaling can be really complex too. Who your legal partner is really matters because it's not something we can afford to get wrong. That's why I work with Jelsen. Jelsen have worked with brands like Little Moons, Trip, Two Chicks, Graze, Costa Malika, and they've even advised the innocent founders on their sale to Coca-Cola. And they still work with them today at Jam Jar.

14:54Martin Holden-White:And for me, it's not just that they're brilliant at what they do, but they're also really good people. They care about founders, they care about doing things properly and that really matters. And they're also one of the few law firms that's both B Corp certified and a member of 1 % for the planet. Recently, I asked Jolson managing partners Phil Hale-Smith and Paul Chappie why it's important that founders consider engaging with a commercial law firm that really understands consumer packaged goods. Ultimately, we're here to provide legal advice but actually that legal advice is sort of irrelevant if you're not putting it into context.

15:27Thinking about how you make a consumer business, co-packing arrangements, understanding the supply chain, thinking about your sort of cost of goods, all of that is essential to ensure that we're delivering how do you actually make a business work in the consumer space from a legal point of view, but understanding the marketplace fully. And having worked with consumer brands for the last 25 years, we have a great understanding of the whole space, whether that's manufacturing, the customer, the supply chain, the branding part of it. And all of that requires some legal input as well as understanding how the parts fit together.

16:04At the end of the day, if you don't have someone that's been in the trenches day in, day out for a couple of decades, you're going to be disadvantaged.

16:13Martin Holden-White:You're not going to believe this, but Jolson is actually offering a free legal consultation to any founders who listen to Brand Growth Heroes podcast, and I would definitely take them up on it. You'll find a link to book now directly here in the show notes below, or just drop a comment underneath the episode and I will connect you with them directly. And now let's get back to the show.

16:40Martin Holden-White:And you'd said to me that, you know, having meal solutions rather than just meal kits was always going to be an important part of your growth and has that having ready meals available d2c has that made a big difference to the success or the you know types of people who you are targeting or who are coming back and repeating yeah definitely i mean i think it's just like a really different type of customer and that was also quite big in our thinking that we we knew we had a certain type of customer and our customers are people that enjoy cooking they don't have the time they're time poor but they want to create something really really delicious on a weeknight without having to think about it, without having to go to the shops, etc.

17:16But then there is also the even more time poor people, lunch today where back-to-back meetings, whatever, you want to just go shove something in the microwave or cook something quickly, but it's still healthy and still has the nutritional value. That's where Ready Meals comes in. And there's obviously two very different customer types there that allows us to bring in different types of people that otherwise wouldn't have probably come to us for meal kits.

17:44Martin Holden-White:More of the market. And then now, so what we're trying to do is upsell combo boxes because people can obviously interchange the two and have a ready meal for lunch and cook properly in the evening. And what's wrong with that? I do that every week, you know. Absolutely. Yeah. And it's more difficult, isn't it, if you're plant-based or particularly if you're vegan and you're, you know, um it's there's less choice in your local co-op or your local asda marsons or wherever you are particularly if you're not in the middle of london yeah or in the very center of a city it's it's difficult to to have the right ingredients and and then the time yeah i think it's worth saying at that point they're like you know our customer base is it's about we obviously take you know surveys and whatever every year it's about 60 non-vegan and about 40 um you know vegan and vegetarian.

18:41Martin Holden-White:So flexitarians, people just wanting to pepper their week with plant-based food to reduce their meat intake for whatever reason that might be, health or... Yeah, yeah. But we're becoming very much more, like we're really about taste as much as anything else and making the cooking experience really exciting. And that's a big part of what we're on a drive to do at the moment is increasing the quality of all the ingredients that we use and the brands that we work with and the partnerships that we do like we're you know about to go and partner with mildred's again in um relatively soon a nice amazing restaurant group in london and and like sort of dialing up the quality of of everything that we're offering from a food perspective because okay i'm not i'm not vegan myself and i think i mean i've always been totally open about that um i probably plant-based four or five days a week um oh she get grubby every week so that helps but for me it was all about at the start I was trying to reduce my meat intake and I was a chef when I was 16 um and even even with that knowledge I didn't really know what I was doing with with plant-based cooking and everybody you know 70 % of the population in the UK are still cooking at home the majority of the week um but yet they don't have the skills or the knowledge to cook with plant-based ingredients and make it taste freaking amazing um so that's always been part of our like mission is just making it simpler for people because people want to eat less meat but they don't know how um and eating out is now really quite easy to eat great quality plant-based meals but eating in not so much and that's what we're trying to sort of shift and who is your your your customer you know your kind of average customer yeah where's your bullseye in terms of your super fans yeah um so i mean i said headline summary i guess is is predominantly female the the ones that are initially by i mean that doesn't necessarily mean they're the ones doing the cooking um because obviously when you get home most of those people are in couples um but yeah predominantly female um between sort of 25 and 45 we have some actually really loyal older customers as well who's sort of new to it maybe maybe their sons or daughters are speaking to them about reducing the meat intake and they're like oh actually maybe grubby can help me do that um people like my parents um and uh active eco-conscious and just you know value taste and quality that's sort of like probably it in a nutshell from a demographic perspective and is the one thing that brings them in that's that they all have in common in terms of their lifestyle is that they're busy oh for sure yeah like convenience is you know a massive thing ease convenience is is uh you know huge people don't want to think about what they're going to in the evening and you know yes you've got company amazing companies like mob that you know provide you with great recipes online but they're not physically giving you the ingredients and stocking your fridge um and and that is the link that we're trying to make is is being like you know almost like the mob but where we literally give give it to you and it's there for you okay okay that's yeah the d2c mob and so what kind of brand partnerships have you done or or or influencer partnerships and how do you come how do you show up on social media yeah you know what it's actually i think if i'm being really candid and blunt i don't think we've done a very good job at social media historically um and you more recently probably you know nine months or so we have been massively focusing on it uh maybe a year um because we've just seen the the value that organic social brings to to us as a business and you know cost of acquisition is the biggest problem for any dc business everybody knows that um you know roughly speaking i mean again don't mind sharing we spend about 50 pound acquiring a customer so you know to get 50 quid back you've got to get them ordering quite a few boxes and some of the bigger brands out there their cost of acquisition definitely higher you know i sort of know that um because the longer you go on often it's harder to acquire customers then you've got to spend more and get them to spend more so um yeah cost of acquisition is huge and if you can get people into the business through organic ways like instagram or TikTok or whatever, you know, that makes a huge difference because they're essentially free.

22:56So we are on a massive drive now to create really great food content and recipe content that has no other purpose than just being super engaging and useful. And we want to build that into our tech platform as well so that the content that you have on social is also within the app and everything, and it all sort of ties together. Like a flywheel. yeah totally um so because obviously people save recipes on instagram and never make them again but you know the thinking is is that if our recipes you can just save them and they'll save to your app and you can then just get the ingredients delivered to your door like amazing so it sort of takes that like thinking out of the instagram saving a recipe reel and never cooking it kind of dilemma yeah um so but yeah i mean for me social is you know a huge part of the next sort of 12 months for us and really increasing the engagement on that and bringing in more customers just organic are you going to we use yeah i mean we use um paid already a lot um i mean that's that's a big channel for us i think it is for most dc businesses um but you know again it's like we spend far too much money on that i would love to give meta far less money than we do you know we spend hundreds of thousands of pounds a year with meta um and you know it drives me nuts really i'm I'm sure it drives most founders nuts that, you know, we give so much money to these huge conglomerates.

24:22And it's about trying to find alternative ways of getting customers through the door for less. But I would just say on paid social is that now that paid social, the quality of paid social content has got to be so exceptionally high to get people for Instagram to be pushing out your paid ads. I mean, I hadn't really got my head around, you know, two years ago or whatever. that if the quality of those ads is not exceptionally engaging, Instagram are not going to be putting them in front of people. And then that has a negative effect on how many people see it, how many people come to your website, and then the cost of acquisition goes up.

24:58So improving the quality of your paid social now is just so huge as well as organic.

25:05Martin Holden-White:I work with a brand who is reluctant to use paid social. yeah they want they want it all to be organic um and they talk about you know bold bean has only done organic over the years whatever and they're doing some paid now is that realistic i mean maybe i suppose it depends on the type of brand you are i think because we're a d2c business and we rely on getting people to our website to buy the product i think it is a little bit different for a product that is just directly stocked in a supermarket or or in those types of environment because you're getting them to a physical store as opposed to a digital store, which I do think that is a bit different.

25:45So maybe if your organic social is, like, shit hot, then you can probably get away with not having paid social that much, if at all. But I think for a D2C business, it's, unfortunately, it is better the devil you know, if you know what I mean. I think you sort of do need to engage with paid social, would be my quick answer on that.

26:10Martin Holden-White:Thank you. If you're getting value and insight out of the conversations we have with the founders and business leaders on Brand Growth Heroes podcast, then please like, follow, subscribe wherever you're watching or listening to the podcast, whether that's iTunes or Spotify or YouTube or whether you're connecting with us on LinkedIn or Instagram. It really matters. It matters that you click that button. It matters that you comment. It matters that you engage. We love hearing from you. So write a comment, write a review on iTunes. Tell us if it's making a difference to you. Tell us if you like it.

26:41Martin Holden-White:Thank you so much. And so let's go back to then the wobbly bits that we mentioned over the trajectory. So talk to us about like the big peaks and troughs over the years, the six years that you've been around. Yeah, there's been a few. Well, I suppose, you know, we started, I mean, quick fire journey. I started making the recipes in my flat and the first bit of, I guess, fundraising we did, I went to a thing called Helm, which is previously known as a supper club, a bit like a Dragon's Den pitch, where I walked in with my bag of ingredients and a very crap slide deck and pitched to 12 Dragons, met them, got 100k from one of them after a protracted set of conversations over several weeks.

27:31That was obviously huge because the business was not even doing any revenue. It was basically pre-revenue at that point. We were stocking offices because we weren't a DTC business at the start. We were called Royal Creation and we were stocking our kits in these smart fridges and office receptions. So that's how the business started. It was a retail business. Then COVID happened, threw a massive spanner in the works. I landed back at my parents' house for that really hot lockdown at the start. And then we raised grant funding through Innovate UK, which is probably worth pausing on because grant funding is, is let's just say it's free money it's it's not you're not giving away equity for that money and innovate uk is a government-led program that funds innovation and um we did an application for that failed the first time got it the second time and that was another 100k which is that which was which was huge i mean i almost fell off my chair as you know i think did you have to match it was it matched funding nope okay that's really interesting because in ireland um enterprise Ireland would be the equivalent and often it's matched funding so that's really interesting I

28:33Martin Holden-White:don't know I don't hear a lot about innovate UK I might put a link in the in the show notes I think they still they were at um they were at Ideas Fest actually last year so they're still very they're still very active and I think they still have a lot of different grants and um yeah there's there's you know it's covers like cross-sector stuff and they're very specific types of grants so you have to sort of keep an eye on what's out there and what types of grants they're doing because some of them might be something that's completely different to your section. There's no point in going for it. So, yeah, so that was the Innovate UK thing.

29:04That really changed it because we were almost dead by that point. We probably had, like, weeks left at that stage. And then what that did is we went and did crowdfunding. So we did two crowdfunding rounds. And prior to the crowdfunding round, we raised through angel investors because I think the other myth with crowdfunding is that you can just launch on Crowdcube or other platforms that you can use and just raise money. It's just not the case. So we raised through several angels. We got a round together that was solid. I think we raised about 600, 700K through all these different angels, six months of phone calls that I did.

29:41And then we used that money to go live on Crowdcube saying we've already hit 600K because that's sort of how it works. You build that momentum by having that money almost ready to go.

29:53Martin Holden-White:so it was i think it's a prerequisite isn't it you can't you have to have what percentage of the money 60 percent of the money at least yeah yeah so that's how that's how crowdfunding creates that that momentum and then we ended up raising um like 1.3 million i'll actually forget exactly the amount now but it's around that on on the crowd um on top of you know including all the angel investment um and and then since then we then brought on bigger there was like one particularly big angel investor that we got and a VC. Are you allowed to share names? Yes, so Love Ventures were the venture capital firm that invested in us.

30:31And then, I mean, the angel investors probably not, but we do have an angel on the cap table that's invested over 2 million. Wow. Yes, fairly wealthy guy. So, yeah, and then multiple angels that have put in north of 500K. And so getting those people early on and getting them bought into the journey, I think, was a really important part of growing the business. And when we go to the wobbly moments in a bit, you know, those angels were the ones that saved our bacon, really, when it came to the crunch.

31:09Martin Holden-White:And so talk to us then, what was the valuation at this point after the second crowdfund? So I think the first crowdfunding round was 5 million valuation. And then the second, yeah, it was 5 million valuation the first one. And we were doing something like a million in revenue. And then the second one was 23 million valuation. And we were doing about three and a half, four, which obviously looking back is completely bonkers. There's no way in a million years that a company would get that valuation now. pretty much, I mean maybe in the AI sector you might But at the time were you just delighted because you're like wow, you know, it's almost saying everyone sees the opportunity everyone believes the opportunity is massive and was there anything in your head at the time thinking God, how will I be able to raise on this valuation in the future this is setting a precedent here It was like, it's really weird to say this but at the time we were pushing for like 30 plus And I was genuinely, which was ridiculous, I was like disappointed in that.

32:13Which, you know, is insane. But that's what the whole sector sort of made you think, like the whole way that VCs were working at the time. They were, you know, there was so much hype around the sector, like there is currently around, you know, AI and everything. The same thing will happen. It will come to an abrupt halt at some point, and there'll be a lot of people that will lose a lot of money. um so yeah it's uh it's these hype sort of circles i guess where yeah that can happen but