$30 Million In Three Years & Profitable. Wildgrain Is Just Warming Up.

0:10Hello, friends. I'm Ray Latif and you're listening to the number one podcast for anyone building a business in food or beverage, Taste Radio. This episode features an interview with Ismail Salhi, the co-founder of Wild Grain, a fast-growing subscription-based brand that sells baked from frozen sourdough breads, fresh pastas, and artisanal pastries. It's something that you've probably never considered, but most Americans eat cold bread. Ismail Salhi and Joanna Hartsheim, who came to the U.S. after living in Paris for years, wanted to give people access to the same warm loaves of artisanal sourdough, flaky croissants, and chewy dinner rolls they ate daily in France.

1:00Their idea was to have baked goods delivered directly to their customers' doors on a regular basis. Everything would arrive part-baked and frozen, but no thawing would be required. Just a few minutes in the oven and voila, fresh, warm bread. Ismail and Joanna launched Wild Grain in 2020 at the outset of the COVID-19 pandemic. Similar to popular meat delivery service ButcherBox, the company ships boxes of frozen bakery products along with hand cut pasta to customers via a subscription-based model. Wild Grain partners with local bakers across the U.S. to produce its food, which is made with no preservatives, no artificial flavors, and no bleached flour.

1:46Since its debut, Wild Grain has become one of the most successful food delivery companies in America. Last year, it generated$30 million in revenue and became profitable. How did Wild Grain achieve its position, and why is the company's trajectory continuing to rise. The through line has always been an extremely high level of customer service, according to Ismail, who I spoke with for an interview featured in this episode of Taste Radio.

2:18Hey folks, it's Ray with Taste Radio. Right now, I'm honored to be sitting down with Ismail Salhi, who is one of the co-founders of Wild Grain. Ismail, great to see you. Thanks for having me. Yeah, thanks so much for coming out here. Not too far of a drive, considering that you're in Somerville, which is about three, four miles away from our office here in Newton, even though it would take you 25 minutes to half an hour to get over here. Yep, that's Boston. It is Boston for you. How long have you been in Somerville? We moved in here from Paris in 2015. That's not a typical move, I would think, for people who live in Paris.

2:53I personally would probably stay in Paris as long as I could, but what brought you here? It was interesting. Yeah, Paris is a great city. I've been there for 10 years. And then we got funded here in Boston to start our previous business, my wife and I. And so they asked us to move to Boston and we said yes. And we came in during the biggest snowstorm. Oh, right. Yeah. In Boston in the last, I think, 10 years. And it was insane. And I thought it was always like this in Boston. I was like, I can't live in a city like this. Yeah. The winter of 2015 was, people who are from this area know what I'm talking about.

3:34Anytime I say winter of 2015, they realize it snowed every single week for a month. And every week we got a foot to three feet of snow dumped on us. the snow banks were no joke, like eight to 10 feet high. We receive more snow in a 30 day period than Buffalo ever has. That's crazy. Isn't it crazy? So yeah, I'm glad you didn't regret your decision and like get on a plane and move right back to France. No, yeah, we couldn't anyway. It was like, well, Somerville is a great city. I love Somerville. I feel like in a lot of ways, that has some European sensibilities to it. A lot of small businesses, a lot of focus on local and, you know, appropriately enough, a lot of great bakeries.

4:19That's right. Yeah, a lot. There's Forge, a very good bakery. There's Vinyl. There is a bunch of very high quality sourdough, you know, bread and pasta and pastries places in Somerville. And more seem to be popping up. It seems like there's been a renaissance for artisanal bakeries, at least in this area. Yeah, I think it's across the country. In big cities, you'll see it more because people, you know, it's the trend across all food, I guess, which is just looking for healthier alternatives to what's in the grocery store. And when you go to the grocery store, bread is kind of like the first thing you notice when you look at the list of ingredients and the process and shelf life and what's in the product.

5:03And I think people aspire to having a more authentic, healthy, simple. I joke that we sell the oldest product on earth. one of the oldest food products on earth. And people have a special relationship to bread. And so I think it makes sense that, you know, with the craft beer, craft ice cream, craft everything, there is a craft return to bread. I always argue that bread was the first processed food. Right. Yeah. You don't grow bread on trees or in gardens or whatnot. Obviously you have to take a bunch of ingredients, mix it all together, bake it, et cetera, et cetera. But I don't think bread was ever intended to be an ultra processed food with like 85 ingredients.

5:43Yeah. And with like, you know, the process of making slow fermented bread was usually up until the 19, maybe 20s or 30s with the war, actually, when they started trying to make it faster. It was usually in 24 hours at least to make a loaf of bread. Now you can make Wonder Bread in 20 minutes. Wow. From start to finish. Yeah. You had a few soldiers, right? Yeah. I mean, it was the right call to do during wartime. We're no longer in wartime. We can go back to a normal way of making bread. Yeah. Well, hopefully it stays that way. You know, I was in London a couple of weeks ago with a few of my colleagues and we all said the same thing.

6:23And this is a common refrain from people who go to Europe or live in Europe and then come here. I feel really good having eaten all the food I ate overseas, whether it's bread, meat, fruit, what have you. You come back here and the same items, bread, meat, food, make you feel not well, or in some cases sick. Why is that? I think the ingredients come to mind and the process. These are the two main differences between European, especially in cheese and bread. And there are significant differences in the industrialization of these food products. And the flour in Europe is notoriously different than the one you find in the US.

7:05same with other ingredients and I think that makes people feel the difference there's also in bread particularly a difference in just culture I think one of the reasons why we started wild grain is even though there are amazing bakeries in the US bread is cold when you buy it from the bakery in Europe or at least in Paris when you buy bread or a croissant it's warm it's just got out of the oven. And I think just the demand and the availability of it is so huge. And the culture is so surrounded around, you know, waking up, grabbing croissant and coffee that you need that. There's enough demand to make that infrastructure where I can make fresh, warm carbs and breads and pastries out of, of these bakeries.

7:50And in the U S it's not the case. And so when you go to a bakery in Paris, the bread literally was sitting for 20 minutes and it's still warm and fresh versus here. The bakers are doing exactly the same job, the same product, but the bread has been sitting for two hours. So when you taste it, it's not the same. And I really was frustrated by that. I was like, oh, there's a ton of good bakeries, but look, the croissant has been sitting there for like three hours. I don't want to eat that. I want to eat a fresh one. I never thought about that. I never thought about bread being cold when you buy it.

8:21We call it the delicious window. There is like a 30 to 40 minute delicious window for every baked good. That's where the taste just dips quite significantly after that. And think about the smell, everything kind of dips after 30 to 40 minutes when the bread is fully cold or when the croissant is fully cold and the butter flavor is slightly deactivated. Everything kind of the sugars, everything is dimmed down. and having it fresh off the oven is just a totally different experience. So what do they do when they don't sell bread that's been sitting out for 30 minutes? They toss it or? They don't toss it.

9:01It's just people take it. Like they run out. Like they manage their inventory. I mean, my bakery down my street, there's four of them and they all, like sometimes you go and you have to wait for the croissants to come out. That's how well they manage their inventory. And in the rare cases where they leave croissants cold, they use them the day after and they do almond croissants with them. So they cut them in half, put a little bit of cream, put a little bit of almonds, press them and put them in the oven again. And in the morning you come in and you eat it and it's delicious. It's more indulgent.

9:30It's even more indulgent, but it's delicious. You're making me very hungry on this Monday morning. I think you're right. Again, I've never really thought about it as much as you have and were frustrated by it, but I think Americans just take for granted that our bread is cold. However, whenever you walk into a kitchen where fresh bread is being baked or any kind of baked good is being made you're like oh my gosh you smell so good and you get so enticed by it and you get so excited by it and everyone's like when is it going to be done and i've made your croissants in my kitchen and they're fabulous and i made them in the morning and now everyone's just like we couldn't the only problem was you got to let them sit for a few minutes otherwise you start tearing it apart it's kind of still a little doughy yes yeah yeah we tell people to not to touch them but they still want to eat them and then they say oh it's a little bit doughy i was like did you let them sit for 10 minutes just 10 minutes but you have to do it if you don't do it they come out a little bit it's just the it's as important as baking is to let the bread and the pastries sit yeah but yeah we know we have kids too and they don't let them sit well the thing is you get rushed in the morning so you're like okay well i'm gonna make some bread for myself or my kids or whomever.

10:42And you got 30 minutes to do it. And it takes what, 15 minutes to make the croissants. And then, you know, you need 10 minutes to cool down. By that point, your car keys are in hand, you're running out the door. And so, yeah. I found the thing, which is I usually used to turn the coffee machine first and get the stuff ready. Now I go and turn the oven first and we have a small toaster oven that's pretty decent. and I turn it on, it preheats while I'm getting the kids dressed and stuff and then come back with the croissants. And then the timing kind of works better that way. Or you make them the day before and you reheat them, but it's not as good as fresh.

11:18I imagine it's a dream to run a baking. Well, you know, it's not a baking company. It's a baked goods company. And we'll talk a bit more about your business model, but getting here and talking to me right now in 2024, if you said I I was going to be in this business 10 years ago, I think you'd think I was crazy, right? It's funny you say that because I used to have this crazy startup ideas. And one of the ideas I had that I never executed on was to open back when I was in Paris to open a bread store that does bread of the world. And so you would come in and eat different breads and there would be like workshops every week and you can try like, you know, Afghani bread or Indian bread or because it's, you know the oldest product and every society has a huge you know attachment to whatever bread products that they're making and that was an idea that i had and then it completely you know went into the ether i never executed on it and then i totally forgot about it and then i went to do a tech business and then after that my wife and i came back to this and so yeah to answer your question it's not it didn't come totally out of nowhere my wife is a baker i'm not professionally and i'm the cook in the household.

12:28And so we're very much into food and our investor, one of the decisions that made them invest in the company is they saw that we had a food Instagram that nobody followed, but we were just posting in it consistently and taking good pictures and of all the bakes and all the food we were doing. And we were doing it for ourselves, not for anybody. And they liked that about us as, you know, we're anything but food professionals. We were, I come from tech, she comes from product design, but they knew there was a connection. We had this special connection with food. And that kind of brought us to this.

13:02But when I had my PhD in computer science, I didn't think I would end up selling bread in the United States. Well, I'm glad that you are, because again, you make some fantastic products. You know, going from concept to idea or concept to finish brand is not a straightforward process. and especially when you're already involved in one business and building one business and trying to get into another. Talk about the business that you were in and how you made that transition to the business that you're currently in. It was actually very related in a way. I joke that this business came out of the trauma of the previous business.

13:41So my previous business was a hardware consumer tech music product that my wife, that's how I met my wife, by the way, She was the co-founder of that previous business. And we weren't really dating or anything. We were just co-founders. And we started working on this music project. And then we got money here in Boston. We moved in here. Bose Ventures invested in it. And so we were designing a hardware product, as hard as that is, with firmware and, you know, injection molding and trips to China and all sorts of things. And it's a different business to run because it's hardware requires a lot of capital.

14:17It requires a lot of work and the go-to-market is very long. You have to spend two or three years on R &D. You have the idea and then you spend two or three years to build it. And then after two or three years, you go to market and you're like, oh, we made this mistake, this mistake, this mistake. Let's raise more money and fix them and go. You make it sound so easy. Yeah. I mean, that's oversimplifying it by a lot. But the problem we had was when we did what we did, we raised the money, we went out, we launched our first 500 products got feedback great feedback came back to the investors then invested in us was like okay this is next one phase one we did it let's go to the next phase and the vcs were like no we're kind of done with hardware the hype cycle with hardware went off you know we raised during the 3d printing era and all sorts of like hype cycles that were happening around hardware then and then it was it went away and they moved on to crypto and blockchain and things like that after that.

15:14And I was, oh, this is a problem. Like I put six years of my life in this thing and it's very hard to raise money for it and give it, you know, the juices it needed to, to keep going to market. And then long story short, that failed and we couldn't raise more or we couldn't raise enough and we couldn't sustain it. My wife and I were completely broke. We didn't take salaries. We were just working still on it as hard as we could. And a lot of, you know blood sweat and tears but nothing came out of it and then when we started thinking about the new this new business i was like okay the trauma of that was you know long go to market i don't want that anymore i want that something quick that i can test quickly and if it doesn't work spending a year on it is fine but i don't can't spend five or four years on on something anymore i needed it to be bootstrapped something that you can raise a little bit of money and then go out and fund and get to profitability real quickly.

16:12And I didn't want to rely on VCs for it to survive. And so those were the business kind of things that informed the creation of Walgrain. And in retrospect, they were really instrumental in how we went to the business. I'm curious about how you felt like you could bootstrap something when you were broke. Well, we needed some infusion of cash and we wanted, first, we thought naively that we can bootstrap it with just, you know, friends and family get 10 grand here, 10 grand here, and then go and do some Facebook ads. But then we, to their credit, the investors who invested in my previous business, Axel, their partner called me and said, Hey, in his office and he said, what are you doing next?

16:53I know this is not going well. It's not for the lack of trying, but what are you doing next? We would like to be involved if you do anything. And I told him about this bread business that I'm thinking of. And I thought he would laugh me off and say, Oh, that's cute. Thank you. And he was like, no, pitch us when you're ready. And so when we were ready, we pitched them. We brought bread and pastries and to the pitch meeting and had a business plan and slides and stuff. And they loved the first meeting and we got into more meetings. And then at the end they funded the business. So we raised$750 ,000 from them in 2020.

17:25And was this a firm that had ever invested in a food or beverage brand in the past or was it mostly tech? Usually mostly tech. Okay. Wow. Your presentation must have been pretty amazing. The bread was really good. Well, that goes a long way, right? I talked to other entrepreneurs who bring the food, bring the beverages into the office and they got the sale right then and there. It was warm and we made sure there was, you know, French butter and great sourdough and they went through a full loaf within the one meeting. Was it right early in the morning? Did you tell them not to have breakfast or something?

17:54They came in at 11 and it was, yeah, it was perfect. That's outstanding. And it's$750 ,000. It's not a chump change, yeah. At the time, were you focused on a subscription model or was this okay so because i we had chatted before we hopped on the mics and you said originally this was the plan to be a vertically integrated bakery but that's right you can you can only make so many croissants if you're having a national for a national brand yeah it was always a subscription model one of my mentors is mike salguero who is the ceo of butcher box yep and also a boston-based company yes yeah and he bootstrapped butcher box from zero to I think 500 million at peak or 600 million at peak COVID without any external capital.

18:36And I was always in admiration of how he did it. And so part of his key to success was the subscription model because it makes the unit economics of a food business radically different. You know, when you are selling one-offs every time to new customers, you don't really care about your previous customers. You only care about getting more new ones. when you're a subscription, you're obsessed with your existing customer base and what they want. And they're the best advocates to help you build a great product. And in retrospect, it was absolutely the best decision we've made in the business model is to make it a subscription first.

19:12It's not easy to build a subscription business. Again, you have to have a loyal group of followers and get those people to advocate for you. I think even before you get to that point, the logistics and complexity of getting a product from point A to point B can be really challenging. You work with contract partners to help make your products. How do you find these folks and how do you build a network that is not only consistent in terms of the quality that you want, but consistent in terms of the demand that you have? So two things. That's a great question. We're not a traditional food business in the sense where you will never have the same sourdough, whether you're from Wild Grain, if you're even in Boston in two months, it's different.

19:57The weather changes, the sourdough starter changes, the humidity in the bakery changes. So there are some differences between a loaf and the same loaf a month later, a week later. And we explain that to our customers and they understand it. We're an artisanal first product manufacturer. And so we get you products that are just like coffee, the bean from the same, you know, farmer going to taste different depending on the season, just like wine, just like you can't have a hundred percent consistency. So we focus on the quality, but not on consistency, which is an interesting play. And then in terms of the logistics of getting it, it was interesting because it happened by accident.

20:42And so at first we wanted to be fully vertically integrated to control quality, to control the product volume and output that we wanted and to have, you know, full control of our destiny and make the best products we can make. And so my wife and I spent literally a year and a half learning how to make really great sourdough. We had a mentor in Milton who helped us learn how to do it. And then we started making them and making the products. And then the pandemic happened and And we had a baby in the same quarter, basically. We started the company, we had a baby and a global pandemic happened. And so when people started ordering more, we couldn't really deliver because she was nursing in the bakery.

21:26I was making pasta on like a small pasta machine, not even an industrial one. And just in a commercial kitchen here in Woburn. And then one night I was like, I can't, I was just passing out. We were just exhausted. I was still handling e-commerce, the website. I was handling the deliveries. I was handling everything. And she was just exhausted from the baby and making, you know, 500 croissants and 300 loaves of bread. You had no 3PL. It was just both of you. It was just both of us. Wow. And then we hired a marketing person and she started bringing more customers and we're like, oh my God, this is not good.

22:00And so one night I told Johanna, like, we can't stick to our model. We need to change it. And she got really, she pushed back a lot. And she's like, we're going to lose in quality. And I'm like, no, we'll make sure to have the right systems to vet the quality. And you'll have a say on who works with us and who doesn't. Because she's very product obsessed. And so I started calling people out and asking like, hey, you lost some business due to COVID. You're not doing hotels. You're not doing schools. Do you have a room to make our par-baked bread? And to be honest, a lot of them said, no, we don't do frozen.

22:33Frozen sucks. It's not good. and it came from like this reputation but none of them has ever tried it so i would push back on the meetings and say hey go try it don't take us don't take our business but go take a loaf because we tried it at home and it works we know you bake a bread you pay bake it 75 percent of the baking time let it cool put it in the freezer get it out the day after put it in your oven and finish the bake and you you won't notice the difference and a lot of you know bakers are a particular breed of people. They're very passionate about their craft. And some of them said no, and some of them said yes.

23:07And the ones who said yes, we work with still to this day, and we help them scale beyond Whole Foods, beyond Trader Joe's. We're now their biggest customer. Yeah, I think that's an interesting aspect of your business in that when you think about fresh bread, you never think that it's frozen before you eat it or before you actually make it. that part of your business though is inherent to a subscription model. And a subscription model, I think really relies on people who buy it once. And then as you mentioned, buy it again and again and again. I think the problem with that is when I was really interested in subscription grocery businesses and food businesses, like a butcher box or a wild grain, I loved it during the pandemic.

23:53It was like a godsend for me during the pandemic. And then I think in 2022, I kind of stopped all that. How'd you keep it going? How'd you keep people interested in the brand and the business? Well, we were worried about that too. We were really worried about what happens post COVID. And if people are just going to stop using the subscription, we didn't see any of that. Luckily, I think part of it is it depends where you live. And so if you have access to everything we sell within a mile or two, and you can, you're happy to do, and you're not too busy to go get it on a weekly basis, that's great.

24:29But most people don't. Most people either are too busy to go to the bakery twice a week and get fresh, warm bread from there. And the other piece is some people don't have access. The closest bakery they have is a Walmart. And it's not good, at least not as good as our bread. And so I think that that's part of what made people stick around. And if anything, our growth accelerated post-COVID. Yeah, I guess I live in a bit of a bubble where I can go to a bakery down the street. And it's typically quality, but, you know, some bakeries are better than others. Yes. I just want to go back for a sec to the outset of the business when everything was chaotic and hectic.

25:11and you're wondering how you're going to fill orders and apparently acquiring new customers wasn't too difficult, but that could have been a very dangerous time for you in that, let's say the quality suffers or you didn't get product to a customer in time or for some reason, you know, the freezer packets were missing or the product melted or, you know, was room temperature when it got to the customer. I mean, how did you manage that such that you didn't get off to the, on the wrong foot or into a bad start? The true answer is we did. We did, all of the above happened. So we delayed orders because we couldn't fulfill them.

25:52You know, we were still like going through our first summer shipping frozen products and we didn't know what we were doing. The kind of thing that saved us is being fully transparent with our customers. And so we had a loyal customer base who understood that we are a small team. Even a few months in you had a loyal customer? yeah a few months in we had very good numbers in terms of retention and people loved the product i mean it was during the pandemic so having fresh bread at home was really nice for people who already tried what to do sourdough and realize that it's not as easy as as it did you remember that when everyone became a baker that's right everybody was making sourdough and everybody those flat loaves that didn't look like it looked a lot like the first loaves we were trying to make when we were learning sourdough.

26:38So we were fully transparent. We would email them and tell them, listen, this is what happened. We're sorry about that and we'll make it right. And so we would always try to make it right. And we noticed that the advantage of subscription is it creates this culture of the whole business. Every division of the business is focused on pleasing existing customers more than the new ones. Most businesses care about getting new people in the door. We care about keeping the ones that are with us because we're a long tail business. because of the unit economics, we spend a lot of money up front on inventory, on advertising, and then we only make money if you stay with us box three, box four.

27:16So that makes us really upset when someone cancels at box three or box two or box one. And that's why we try to go above and beyond in customer support and service and speed of delivery and quality of products. And so it creates this incentive structure within every department of the business to just overperform and keep the existing customers happy. And anytime I talk to a food entrepreneur, I ask, can you make this a subscription first? Because it will change your mentality on how you're treating your customers. It's like Amazon. And you know, when you go to Amazon, you're never afraid of like buying something and not having Amazon not make it right to you, even if there was a hiccup.