Advice Line with Pete Maldonado and Rashid Ali of Chomps

0:05Hello and welcome to the advice line on how I built this lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show who will help me try to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Send us a one-minute message that tells us about your business and the issues or questions that you'd like help with. And you can also send us a voice memo at hibt at id.wondery.com. And make sure to tell us how to reach you.

0:40And also, don't forget to sign up for my newsletter. It's full of insights and ideas from some of the world's greatest entrepreneurs. You can sign up for free at GuyRoz.com or on Substack. And we'll put all of this info in the podcast description. All right, let's get to it. This week, I'm joined by Pete Maldonado and Rashid Ali, co-founders of the grass-fed meat stick brand Chomps. Pete, Rashid, great to have you guys back on the show. Thank you for having us. Yeah, thanks for having us. You were first on the show in 2023. And as always, to anyone listening, if you haven't heard that story, we'll put a link to it in the episode description.

1:15It's an awesome story that eventually led to this amazing brand, Chomps. Pete, you actually came back onto the show for Advice Line. So it's not your first time here. Rashid, welcome to the Advice Line. Thanks for coming on. Yeah, thank you. Before we get to our callers, I want to ask you guys a couple of questions. You know, we're in a protein world today. It just, it seems like people are putting protein in water and yogurt, ice cream. I've seen protein everywhere. You guys have been in the protein business for a long time. And every trend I'm reading, every sort of forecast is saying the protein market is just going to expand and boom and grow.

1:51So tell me a little bit about, you guys are both leaders in this category, but also riding a wave too. Guy, I think we're on the right side of a big trend. But like you said, we've been at this for a while. And we think at some point with any trend, there will be consumer fatigue. Sometimes internally, we talk about the proteinification of everything. You mentioned water and ice cream and popcorn. Chocolate. Exactly. And so Chomps is winning on the current momentum behind protein, but we're going to win on the other side when folks get a little bit fatigued on it. But at the end of the day, I think there's a lot of room for additional protein in folks' diets, especially convenient natural sources and chompses that solve for our consumers.

2:36You know, listen, this is a cultural shift. This is not a fad. People are changing the way they're dieting and eating, and they're educating themselves, and that's not going away, right? And so we always knew, you know, protein was—people needed more protein in their diets when we started this 13 years ago. That's why we're here. but we never anticipated, you know, GLP ones and, you know, doctors all over the place telling their, their patients, you need to eat more protein and it's, it's more protein per calorie. Right. And this is, you know, it's a wave for us for sure. Yeah. I want to talk to you guys about last year because you faced a challenge last year and I'll just kind of give some background, which is there, nobody found it, but there was a possibility that one batch was contaminated with a bit of metal.

3:25And this is something that is not common, but it can happen in a manufacturing process. There's metal equipment, there's all kinds of metal that food goes through. And very rarely, a tiny piece of metal could chip off from a grinder or something and end up in a product. You guys found out about it. Nobody saw metal in their chomps, but it was a possibility and you had to recall just tons and tons of products, which I imagine was a really, it was a low point for you guys last year. Can you talk a little bit about just how that, you know, like just how you kind of handled that? It was one of the hardest times in the business, really just figuring out how to react.

4:11And I'll say it was an isolated incident exactly to what you said we did an internal investigation and identified one of our seven facilities on one packaging line at an evening shift on a friday where something seemed off so to avoid any risk we expanded the scope quite significantly and did a a pretty large scale recall it was painful like it felt like the world was ending even though it was so isolated. I mean, like at the end of the day, Chomps is mine and Pete's baby. We started this from nothing and it's here because of our consumers. So you think about like the potential risk of Chomps putting any of our consumers at risk, we were not gonna do that.

4:51So we went through the process and in the end, we didn't find any metal, right? There was no adverse reactions. Thankfully, no one got hurt. We got through it and it was tough. Like I always say, what I tell the team, one recall is one too many, right? It just, it's not acceptable. we can be better. We have to have processes. We have to have controls in place. But now I can say with complete confidence that we have handled it. We've got through it. And I think the organization and infrastructure is far stronger because we did say we can get tighter here, here, and here. And now we have new processes to make sure that it won't happen again.

5:27Yeah. I mean, the way it reminds me of Jenny's Splendid Ice Cream. She had a recall early on that brand. And the way she handled it was so same way, you know, instantly. There was, nothing was confirmed, but it was like simply because of the possibility they recalled their ice cream. It cost them millions of dollars. And consumers really appreciated that preemption and that, you know, sort of overcorrection. And at the end of the day, you know, not only did it not hurt the business, but the business just grew exponentially. And I imagine, you know, you had a similar reaction from your customers.

6:02But I imagine it cost you a lot of money. A painful amount of money. It did. And it's still TBD as far as the ultimate exposure. At the end of the day, when we were going through it, the cost or expense never crossed our mind. The goal was to remove any consumer risk, any product risk, and make sure we make the right decision, long-term decision. So like, yes, it was a material cost. We're still kind of weeding through the total impact, but no regret. Yeah. It sounds like you guys handled that really, really well. All right. What do you guys say? Let's bring in our first caller. Shall we do it?

6:43Absolutely. Let's go. All right, let's go. Let's bring our first caller. Welcome to the advice line. You are on with the co-founders of Chomps. Tell us your name, where you're calling from, and just a little bit about your business, please. Hi, Guy, Pete and Rashid. I really appreciate you having me here today. My name is Yadi Darius. I am the co-founder of Yadi's Artisanal Empanada here in New Paltz, New York. Awesome. Welcome to the show, Yadi. And Yadi's Empanada, so I'm assuming you make empanadas. Do you sell them in stores and grocery stores? Tell me about the business. Sure. So Yaris empanadas really started, I was a formal teacher for 23 years or so, but food has always been a passion.

7:27So I come from a Latin culture. Empanadas is just something that I grew up eating as a childhood favorite. And as it became something trendy, and I realized that culturally it was catching on, I honestly couldn't find an authentic empanada anywhere. And everywhere we try empanadas, they were either greasy, not freshly made. They didn't have enough filling. I felt like empanada was really quickly becoming like a quick fast food. Yeah. And so I really wanted to elevate a street food into something that you feel good about eating, that's made with fresh ingredients where we're not compromising the quality and the flavor.

8:12And so that's really where it all started. I love it. So you were a teacher. And when did you start this business? Did you left your teaching career to start this business? I sure did. So I thought for 23 years. And in 2021, I decided that I will resign. And I would start the business right from my kitchen. And so for about a year, we focused on just selling to coworkers and friends and schools. And then from there, we landed in a commercial kitchen. Did that for a little bit. We ended up starting farmer's market, pop-ups, events. We then bought a food truck in 2023. Wow. And from the food truck, we landed at SUNY New Bolsa.

8:58The opportunity came. At the university there? At the university there. So you opened a brick and mortar space or a physical space on the campus there? So I think that's, so while it is a space that we have, we started our first location was we, August of 2024, we opened at the far end of campus inside a small convenience store. So previous to that, we were making the production from the commercial kitchen. But when the opportunity came in to go on campus, it wasn't approved for us to be producing from the share space. And so the compromise was for us to produce right from their campus, but at a hefty fee.

9:46Got it. Okay. So you now, you sell most of your empanadas on the SUNY New Paltz campus now? I do. And tell me a little bit about your sales. How did you do last year? So the first year we did, from day one, our sales were really good. We were averaging about 1 ,500 a day on daily sales right from day one. By the end of that semester, they had moved us into a bigger location, centrally located on campus, because we were doing so well. And within a week there, we had double our sales. Our sales are currently and have been now for a whole year on average of$3 ,000 daily. Wow. That does go up some days to$3 ,500 on really good days, but average we're making$3 ,000 a day.

10:39So$3 ,000 a day, I mean, that's pretty great. I mean, you're maybe doing$700 ,000 or more a year in sales. Correct. Wow, amazing. Okay, so before we dive in further, what is your question for us? We're wondering at what point do we think about a second location, brick and mortar, since right now, technically, while I have this location, it's not really ours. Do I move into other colleges and really duplicate what we have into other schools? Do I go back to distribution? So is that that sort of like road? And what do we do? All right. So sales are strong at this location on the SUNY New Paltz campus.

11:18You're wondering whether you should open a second location or focus on distribution or a combination. But Pete, Rashida, I want to bring you guys in. Thoughts or questions for Yadi? Yeah, Yadi. Nice to meet you. This is Pete. Yeah, you're speaking my language here. I grew up eating a ton of empanadas. I'm Colombian and my grandmother used to make them all the time. My mom makes them now. It's the only thing I asked for for my birthday, which is coming up at the end of this month. So I'm very excited to get my batch of empanadas. Batch of empanadas. But okay, so my first question is about, you know, labor and management at this first location that you have.

11:52Is this thing running itself? Like while you're here talking to us, is there somebody there selling empanadas? So it really is now. So when it started, it was really my husband and I and my children. So it was really family working around the clock, 18, 20 hours a day. My husband will leave his job, go there. Now we have a team of nine people and I have a manager that's being trained now. Family also is really trying to keep it family as much as we can. And so, no, I don't have to be there now for Yadis Empanadas to run. That's great. Yeah. So it sounds like from like a product standpoint, you know exactly how to replicate this in terms of equipment and all those things, recipe, it's, you know, it's all pretty much replica, but you know, you can just do this over and over again.

12:33I think, you know, for, for me, it would be like, you know, management and labor pool would be the biggest question marks. And then it would be like, you know, real estate, I would say real estate. That's the other question is like, do you have, do you have a unique situation in the current environment where as you start thinking about secondary locations or scaling, are you going to occur an additional cost? So like, Yadier, are you currently profitable in the existing, like at the 700K, like you are profitable? We are. I've worked with a consultant to help us figure out where our costs should be in terms of food costs, employee costs, payroll.

13:12I think the only concern, well, one of the concerns is that with a college campus, while we do really well those months that we're open, it is closed during the summer. It is closed for a whole month for the winter. So we have all these breaks. And what I found last summer is that while we made great money and there were still profit, I now have a period of four months where I'm not making any money. So that's where we are right now. Yadi, the seasonality aspect of working with colleges, that makes a lot of sense. But then you mentioned before the food truck idea. I think that's the solve. I mean, if you have a food truck and you can have a campus that allows you to have space somewhere on campus, you can hit that target market.

13:53And then as soon as school's out, you go move that truck somewhere else where it's going to be, you know, get some foot traffic. Yeah, I guess you answered the first question that Pete had, which is, it sounds like this location can run without you on site, right? This existing location. And so is there a person on your team who could potentially run a second location if you opened it tomorrow? Yes. Great. And I think that the other questions, and it speaks to this idea of real estate, right? You are in New Paltz, New York. I guess you're between New York City and Albany, right? I am. And New York City is a top, I mean, that's challenging.

14:32But I think, you know, based on what we know from franchise businesses that have been on the show, their expansion strategy usually begins with one location within 45 miles. So within an hour or so drive. So you can handle that second location to kind of test market it. We've actually looked into Connecticut. We're really beginning to do our research and investigate Connecticut. We like Connecticut because from New Pools to Connecticut, we're less than an hour away. New Haven's got students, right. It's got plenty of colleges. And so I think it's really, really trying to figure out, do we just continue this path of colleges since it's a niche and seem to be working?

15:12and or do I just think about opening some sort of a kitchen, my own sort of commercial kitchen with maybe a little bit of a front store where I can maybe combine both? I like that latter idea, but if you pair it with, think about delivery. Like it seems like such a portable grade item if you think of like DoorDash or Uber Eats, like that option out of a kitchen. So true. So scalable. And then maybe you have a second arm where you have somebody that's focused on maybe within a 20 mile radius, bookstores or coffee shops, like you're morning dropping off the empanadas during that, like there's other opportunities where you can kind of be creative about how to scale and get as many empanadas in people's mouths as possible.

15:55Yeah, that's a commissary model. It's very similar to like what the bagel industry up in New York area. It's the same exact thing. So they'll make a ton of bagels and deliver them, you know, daily or whatever to all the bagel stores all over the place. You can do exactly that. And whether you're serving your own food trucks or various locations that are, like Guy said, and it's got to be close enough to where it makes sense. Absolutely. And I think that sort of solidified that idea that distribution is where it is, the cost of renting, the cost of the overhead of expenses, of training, of employee.

16:25While I enjoy it and really is so gratifying to see the students come in and people enjoying a meal, it is a lot. Whereas when we started and we were doing distribution, you make empanadas, I really didn't have to work so hard at getting people to get them. But, you know, empanadas, it's not like there's an empanada shop on every corner, like there's a burger joint every corner, right? But it's got the potential to be something really interesting, especially if you're finding success in a college town. And so it does make sense to me that you're looking at a place like New Haven, where you've got a lot of students.

16:58It's not that expensive. And you can generate a lot of buzz around it. Like, oh, hey, I heard, you know, Yachty's Empanadas are coming to New Haven, you know, especially if you work with like local alternative weeklies or the Yale newspaper, whatever local websites or food writers are out there and you kind of build buzz, it could be a really interesting place to be. I think you're very right. And I see that in our future. As always, you know, there is that feeling of are we ready? Are we not? but having this conversation today with all three of you really does give me that confidence and the trust and belief that if it's now or never, just what can I have nothing to lose?

17:39I quit my job four years ago and I'm here. So moving forward now and taking that next leap of faith and going to the next level, I got nothing else to lose. All right. Rashid, final thoughts? Any final thoughts, Riyadi? I'm hungry. I don't know why we did this so late in the day. I know. I'm so hungry. I want an empanada now. I'm going to make sure somehow, some way you guys get some amazing empanadas. I want them right now. Once you try them, you'll know what I'm talking about. I believe you. Yadis Reese, founder of Yadis Empanadas. Thanks for calling in. Good luck. Keep us posted. Thank you so much for having me today.

18:12Thank you. We're going to take a quick break, but when we come back, another caller, another question, and another round of advice. I'm Guy Raz. Stick around. You're listening to The Advice Line on How I Built This Lab.

18:37welcome back to the advice line on how i built this lab i'm guy roz my guests today are chomps co-founders p maldonado and rashid ali uh pete rashid you guys ready for the next call let's do it all right let's bring in our next caller welcome the advice line tell us your name where you're calling from and a little bit about your business. Hi there. I'm Zachary. I'm a co-founder of Noble Pies. Our bakery is located in the Hudson Valley. We make both sweet and savory pies with real ingredients and an all butter crust. In 2025, we officially launched our wholesale line and we have three retail stores outside of New York City and are launching our first New York City store in 2026.

19:19Awesome. Thanks for calling in. So Noble Pies, sweet and savory pies are based out of the Hudson Valley. How long have you been the pie business? Yeah, our business started in 2008 unexpectedly when the financial crisis hit. My family owned a horse business and overnight we pretty much lost our business. Horses are a high commodity item and luxury. So my mother went back to her roots and she resurfaced some old recipes from my great-grandmother. And she dropped off me, my brother and my sister at the local orchard to pick a bunch of fruit. We brought the fruit back home. We baked about 50 pies and we set up a little picnic table on the side of the road of our farm.

20:05And literally within an hour, we sold out of pies and it turned into an every weekend business. And now we're here. Wow. So tell me a little bit about the business. Where do you primarily sell your pies today? Most of our business is out of our retail stores and farmers markets. And our main wholesale account is Fresh Direct. Fresh Direct. Okay. And how, and tell me a little bit about your sales. What do you guys expect to do or what'd you do last year? Yeah. So between our three stores in 2025, we did about$2.2 million in sales. Wow. And our first year of wholesale with Fresh Direct, we did about$200 ,000.

20:48And these are frozen pies or fresh pies you're selling? So these are fresh frozen pies, single serving, sweet and savory. Got it. Okay. Before we bring our Chomsko founders in, tell me what question you have for us, Zachary. so uh since we just launched our wholesale line we feel like we're ready for larger retailers like whole foods and target i've applied to their regional supplier programs um and did not have any luck in the in the past few years so i'm looking for new tools strategies and approaches that work in today's market to break through yeah all right makes sense uh awesome i want to bring Rashid and Pete in, guys.

21:30So Double Pies, they've been doing this for a while. They've got a clear track record. What do you think? Any thoughts, questions for Zachary? Yeah. Hey, Zachary. This is Pete. Great to meet you. Yeah. Great job, by the way. You said 2.2 million. I couldn't believe it. I was like, okay, that's great. In terms of scaling from here, what's your capacity and how many pies could you make in a day or a week or however you're looking at it? That's a great question. So we can put out about 10 ,000 pies per week in the facility that we're in now. And within six months, we can triple that with some modifications of our bakery and a little bit of expansion.

22:11And then in terms of distribution, you're shipping these or are you hand delivering these to the stores or how's that working? Yep. So right now we're self-distributing so that we can stay as lean as possible. It allows us to reinvest as much as we can into our business so that when it's time to pull the trigger with that bigger account, we can be ready. Shelf life, how long do these, I get that they're frozen, but I'm just curious from a shelf life perspective because obviously when you layer in distribution, you're adding days. It's about four months. Zachary, a question for you because frozen pizzas have been, I mean, that's been completely redone, right?

22:53There's all kinds of interesting frozen pizzas, but frozen pie hasn't been upgraded in the same way. So what is the argument you make that these pies are better than what might be available right now from like the, I don't know, Sara Lee or whoever's in the Safeway or even the Whole Foods freezer section? So at Noble Pies, we're so true to what is actually in our pies. Our pies are made with all butter crust. Our filling is made from scratch in smaller batches, but it can be made in larger batches. And we advertise how few ingredients are in our pies. When you go to the grocery store now, those product labels are pretty populated with the ingredients.

23:37So that's our marketing and branding point. And also the fact that we actually try to source as much as we can from New York state. So we also brand, you're getting a taste of New York and the Hudson Valley because we have tons of farms here. It's a beautiful place. So you're making the argument to a buyer that you are the upgrade from whatever's out there right now, that it's unlike pizza, which has a bunch of options. There aren't that many options in pies. You're that upgrade. But I think, and Pete and Rasheed, you guys can speak to this, which is the reality of buyers for these big chains, whether it's Whole Foods or Target or whatever, is they don't always discover brands.

24:20It's not always their job. Their job is actually to manage risk, right? And to focus on velocity. You're basically, you want to show that by bringing this product on, they are de-risked in a sense. Is that a fair argument, Rashid and Pete? No, it's absolutely. You also want to be able to have a good sell story. And I think one of the stories that Rasheed and I were able to get with Chomps, it was from the data that we had, was incrementality, meaning we're bringing new customers to the set. You need to be able to find a way to tell that story to the buyer because they need to know that you're not just going to be cannibalizing.

24:58If he's going to take somebody else out, another brand out and put you in and sales stay flat, what's the point? So he's got to figure out, okay, I'm going to put them in and they're going to bring new customers to this set that were never shopping here before and grow the category. So like that's the name of the game. Yeah, and I'd add because you have a four month shelf life, like that's, I assume that's somewhat low in the, I don't know Frozen that well, but I would assume four months is probably a little bit on the lower side. So like you have to prove that you have strong velocities that the product will turn and you further have to prove your repeat rate that not only are you going to get that first customer in, that they will come back and buy it again.

25:37Okay. Zachary, you have that data. You're going to have six to 12 months of that velocity data. You can focus on one skew. You don't need to show the data for all the products because at the end of the day, it's the store manager who's going to be your biggest advocate. Like if you can get a store manager to be your advocate with Whole Foods, that's going to have more weight than you kind of cold calling them, right? I've always wondered if that still works in this day and age of Whole Foods. And I'm so glad that you're answering that question for me because I haven't walked in and talked to a store manager just yet.

26:16So I'm definitely going to try doing that. I think those are the people you want on your side. And to answer your initial question, I think it's going to sound odd, but getting into the retailer is honestly the easiest part of the process. It's staying and performing. So you've been at this for a while. it seems like your product is differentiated there's something there and it'll succeed in retail but you're going to succeed if you can have some focus like pick not just whole foods but you should do the northeast region or just a pocket of stores and keep it really focused and build the story and grow over time because the problem is right now you're self-distributing once you introduce distribution into your business it's a level of complexity and cost that you don't fully understand and then you introduce trade requirements which you currently don't have and and it's it's like this the slippery slope where retail sounds great but sometimes it's just a feather and a cap or a vanity metric like if if you if you have a model that works in your retail stores and the farmer's market and fresh direct where it's a direct program that's great but you got to continue to grow depth in those channels and then pick one more channel and grow that and then pick another and that's what we did at chomps like we're we say like we're a 13-year overnight success i mean it took us a long time before we approached the targets of the world right before we went to the club channel because if you go too quick too early it can really start unraveling and introduce so much complexity and cost where it can materially challenge the business that's great advice because i always feel like i'm a little fish in the sea and you know it's true i should just stay focused on those first customers and continue to serve them and get that feedback.