How Chomps is marketing itself to convenience store shoppers

0:04Hello, everyone, and welcome to the Modern Retail Podcast.

0:29numerator. It's been around, I believe, since 2012. Maybe 2013 was its first full year. It's been in many stores like Trader Joe's and Big Box Retailers. Recently, it's been expanding into convenience stores. And I really want to talk just about the convenience store expansion. We're at a really interesting inflection point with C-Stores just in terms of what they're carrying. And Chomps is a really good example of that, where it's what I would describe, though Pete may have a better description of like a better for you Slim Jim. I think he might disagree with that, but we'll talk about that in a second.

1:00But like, I just want to talk about how things are changing merchandising and what's like to expand and to see stores in this current world we're in. But Pete, how are you doing? I'm doing great. Thanks for having me, Kel. Yeah, no worries. So let's, well, first, let's start with what Chomps is. I bet people have seen it because it's on so many shelves, but essentially it's a meat snack. You have beef, turkey, and venison. Is that correct? Yes, sir. Yeah. So we do just sticks. So if you think about meat snacks. Historically, I think jerky really was the bigger subcategory. Over time and more recently, sticks have really overtaken as the larger subcategory or at least the fastest growing subcategory.

1:38And then within meat sticks, it's the better for you meat sticks that are really taking the lion's share of the growth. Yeah. And so how did you get into the meat stick business? Well, I was a personal trainer throughout college and I was training clients up in the Hamptons. And, you know, I think when I was spending a lot of time doing these, you know, elaborate meal plans, grocery lists and all of those things. And what I was finding is it was just impossible for me to keep my clients, you know, following those just because it was it wasn't convenient. They really, you know, back then it was over 20 years ago, too.

2:13So, you know, there weren't the meal delivery programs are kind of a dime a dozen now. I mean, they're everywhere. They're regional, they're nationwide. I mean, you have a lot to choose from. Back then, there was like Jenny Craig, there was Nutrisystem, there was a few. And so it really got the wheels turning on like, what could I bring to market to make their lives easier? And that was just it. I think I started initially with a frozen food company. That was my first foray into entrepreneurship. Learned a lot from it. Eventually shut it down. So it was a bit of a failure there. I think I made some wrong decisions.

2:43But everything I learned from that, I was able to take into starting Chomps and getting it off the ground very quickly and for very little money and was able to prove it out. You know, it was a concept that was going to work. So yeah. So what was the initial business plan? Did you need retail distribution back then? Was that the idea that you were going to get into stores or how did you think about it? No. Well, so we had very little money. So we started with$6 ,500 was the investment that was between me and Rashid and I initially. So he's my co-founder. And well, first, let me back it up. So the initial concept for chomps actually started as a company called logic meat locker.

3:18What we were going to launch was essentially a butcher boxes now, right? Got it. But we found that we did not want to be shipping frozen meat. It was very difficult to do as a subscale business, trying to get it off the ground. What they did, they did it in a way that just at works, they have a great business model, but they got to scale very quickly. And that's how you can survive. We weren't looking at that. This was a side hustle for us. We both had full-time jobs. So we needed something that we can kind of start slowly and over time. So shelf stable was going to be critical for that. Something that could ship easily for e-commerce was also going to be critical.

3:52And then, you know, honestly, we were already selling chomps. They were refrigerated a pack of like eight sticks, essentially. So it was eight ounces of sticks in a big pack. And we were shipping that refrigerated or within the coolers that we were shipping meat. And we found that customers love that. They like those more than they like the actual steaks and ground beef we were selling. So we're like, man, we're onto something here, but we've got to make it shelf stable, single serve and ready to ship. Got it. And so being in 2012, 2013, you're launching, doing a food product and you're relying on e-com.

4:24This is, and we're going to talk about a lot of stuff later, but I'm really fascinated because you're really ahead of the curve there. I feel like there weren't a lot of food brands doing that. Yeah, exactly. So, you know, again, and I learned that from my previous business, you know, people were not ready to buy food online back when I was doing that. But then I think in 2012, the tides were turning. People were kind of getting used to it. The other thing we were able to do is we started so, so niche. We went through to CrossFitters and Paleo dieters. Those were our initial customers. And so we were looking for people that we knew were going to be actively looking for this type of product.

4:58And that's where we focused. So again, we gave us a little more bang for our buck. We were able to kind of make more of an impact working with those influencers. I guess they weren't called even influencers at the time, but they were the thought leaders, the people that actually had some influence, bloggers, whoever they were. And that's who we started working with. But I would say when we started, though, luckily, I think people were ready to buy. And we started converting pretty quickly on our website. Got it. That's very cool. So can you just give me a little brief history of your distribution?

5:28Correct me if I'm wrong, but I think Trader Joe's was your first big account. Is that right? Yeah. So we did four years of direct-to-consumer and Amazon. So all e-commerce, really. We had a really small, we had a separate wholesale portal on the website. So with Shopify, we just kind of create that second instance. We had another website, wholesale.chomps.com. And we were able to sell to, it was the CrossFit gyms. It was doctor's offices, chiropractors, you name it. And then, so they were ordering direct through us. And then they were getting shipped to from the same exact order fulfillment partner, the 3PL that we had.

5:59Did that for four years, right? And like I said, starting very, very niche within these trending diet communities. fitness communities, Whole30 was one of them. Whole30 took off like wildfire and they were a great partner for us and we love working with them to this day. But what I would say is that gave us exposure to people like the buyers at Trader Joe's. And so they would have never seen us, I think otherwise. So they put us in the store there as a branded item in late 2016. So that was a game changer for us. I mean, literally overnight, you've got millions of new customers and people trying the product for the first time.

6:35And it really just snowballed from there. Got it. And so did you ever expect that this would be a mass product? Was that the initial idea, especially like going from a place like gyms, you know, Whole30, things like that, that seems like a good business, but a very niche business. And now you're seeing mass retail. Well, no. And we actually had no aspiration to go to retail. And we had no aspiration to make this anywhere near the scale that it is right now. This was going to be a side hustle that was going to be something that we're going to grow on the side in our spare time, nights and weekends.

7:05I was doing real estate. Rashid was an operations consultant. So we were both pretty busy with our day jobs. And I think for me in particular, in the real estate business, the thing I hated about it was as you're doing deals, you're basically working yourself out of a job, right? So as soon as you close that deal, you've got to start from scratch. And once you have a really good pipeline of deals going on, you can have these kind of lumpy income. And so I hated that. I wanted something that could build over time and something that would actually be recurring revenue, but also passive income. So that's what I was looking for.

7:36Chomps had other plans for us. And then when Trader Joe's kind of forced our hand to, I love, by the way, that was like my favorite store to shop at when I was living in Chicago. It was right down the road from me. So I was there all the time. And when they said they wanted to put us in, I'm like, done, changing the business model right now. And we'll figure this out. This will go into what we'll talk about later. But just as you hit more mass channels, did you have to change your messaging or even your packaging in terms of like when you're talking directly to Whole30, they know what it is. But I imagine Trader Joe's shoppers maybe, but Walmart shoppers not as much.

8:09So how have you approached that? What's the evolution of that? Oh, man. When we start, so first off, being that we had no money, I couldn't pay a designer to create nice packaging for us or the website, right? So I had to create all this stuff. I had just kind of learning as I went. I was just teaching myself how to do this. I bought a$99 dollar Photoshop elements subscription and started messing around trying to find. And I went to the store and I started buying all these different types of packaging and took little bits and pieces of the things that I liked from various packages and put it together on ours.

8:38And it's actually funny though now, but if you look at it, we had cow hide as the background, which is so like, this is so off brand right now. But, and, uh, and the logo actually looked like a cow brand, like a rusted, like cow brand. If you could imagine that, um, I'll find a picture and shoot to tea after this, but yeah, I want to see. It was extremely masculine, but it was also very, um, what can you do? It's almost like a, like a hardcore paleo dieters. I went, it was just like way off brand to what, for what we were going for. So I think, um, what we did is when we got into Trader Joe's, we started obviously doing well, found out a lot more about our customer.

9:14As we started growing the business, made a little more money. We were able to invest in data. It was something we really didn't have. We had, we had our e-com data, but we didn't have, we didn't have a ton of it. So we started investing in panel data and we got really, really smart about who our core customer was. We knew that we were leaning more heavily female, but didn't really realize to what extent. If you think about meat snacks in general, it's very male dominated, right? Most of the incumbent brands are all, it's Sasquatch. They got the blacks, the reds, it's all just super, super masculine.

9:45So we were like, okay, let's find out more. We found out that 70 % of our customers were female and not just the people buying the product, the people consuming the product. So if you do an attitude and usage study, you find out who's actually eating the product. And we were finding it that's 70 % female, which was very differentiated, but also incredibly incremental to the category. And then what we kept finding out was that as we launched into these, into other smaller retailers, we were able to gather more data and finding that 60, 70, 80 % of the people that were buying chomps at their store never bought meat snacks at their store ever before.

10:23So we were growing the business and it wasn't growing by cannibalizing or stealing share from these incumbent meat snack brands. We were actually growing the category from just pure income mentality, bringing new people to this set. So when you could prove that to that, to a category manager or a buyer at a retailer, that is music to their ears. They're like, you're going to grow my category. So within the same footprint, we're going to bring new customers rather than ever, you know, just kind of switching back and forth, who's going to buy what brand next. And so, yeah, that was the initial selling story for us.

10:55And we proved that early on. And that's never changed. And that's where all of our growth comes from. That's super interesting, especially since it's, you know, incremental, and it skews so female. Do you think of that specifically because of the whole 30? I feel like the whole 30 is something that probably has a bigger female audience. Maybe I'm wrong about that. So early on, yes, for sure. That's that it was like, that was definitely why it started that way. And also like, I think the way we grew the business was through social media, right. Which was also heavily female. But then when we had that data in 2018, we went through a brand refresh and we had some money now to get, she hire a real designer and make some nice packaging and the website and all that.

11:33We leaned into that. And so we wanted to create was we went back and forth to like, we can't create a feminine brand because we had a lot of females on the team and they were like, we don't want, we don't like anything that's feminine. We want something that's female friendly and inclusive, but we don't want something that's feminine. So there was like a fine line of like what you could do. So we opted to do like a flood of color, but bright colors for all the packaging. And if you think about our messaging, the branding, everything else that we did from there was, again, it was more inclusive without being overly feminine, if that makes sense.

12:07I think some other brands have tried to do something similar after us. And they went way too feminine, like pinks, and it ended up looking like a cotton candy brand or something like that. I can't even explain what they did there. But we found that right spot and that right positioning that really resonated with our core customer. And from there, we just continued building. Can you go a little bit more? You have a color scheme. You can make that look somewhat feminine, but not completely feminine. How did you, especially if you're trying to get new shoppers and you're trying to reach this new type of customer.

12:39What did your package actually say? That convinced people, this is a meat stick, but it's for someone different. It's a little better for you. What did you do on that front? Our core customer, we define them as the active achiever. If you think about what we were looking at, all of the messaging is going to be really about this product is going to help you reach your diet goals and be very convenient while you're on the go. It helps you reach your goals in general. Right. And so we kind of really leaned into that. We still do that actually too. So like, like we love the idea of, we call ourselves ourselves the champions.

13:13Our company is called, we are the champions LLC. Right. And then our, our core customers are the champions. And so we really leaned into that as well. So we want to be able to do is say this product is for the everyday person that wants to wake up in the morning and crush life. And it doesn't matter what you do. You know, we want to be there to support you. So if you think about the influencers that we started partnering with, it was like, it was less about professional athletes. We didn't actually, I wanted to steer clear of that. I'd rather partner with and feature a mommy with three kids that's working a side job and running from soccer practice to tutoring to wherever.

13:47And we're there in the van and she's not only, you know, feeding herself, but she's feeding the kids. That's who we want to serve. And because this is a product for everyday life, it's not for the aspirational, like climbing a mountain, you know, whatever you're going to do on the weekend. this is for something for every day. And that was kind of, that really worked for us. Let's talk about, you know, it's been now what, 12 years, you have some new distribution points, I think sheets and Wawa are the two convenience stores you're in. Is that correct? Yeah, yeah. I mean, it makes sense to me, it seems pretty obvious that a product like yours, it's on the go, it has a very specific packaging, I could understand myself going to a convenience store and buying it.

14:27But I guess my first question is, what took you so long to get to the convenience stores? Confidence in it, right? So that's not a lie. So if you think about those incumbent brands that we compete with, those guys, about 60, 70 % of their revenue comes from the convenience store. And they have very, very strong networks, boots in the ground. And that's tough to compete with. What we wanted to do is continue building a brand that was so strong that when we go in, And despite not having those boots in the ground, we want to be able to have pull off shelf and be able to compete from a velocity perspective.

15:03And the way we think about distribution is brand awareness needs to stay light years ahead of distribution. There are hundreds of thousands of doors that we could potentially be in in a C store. We're currently only in 20 ,000 doors. As of today, we're in 20 ,000 doors. That's not a lot. Let's put it that way. And it's a lot to handle, too, from a management perspective. Like we have a very small team. We always run lean and mean. We wanted to be able to figure out, you know, just wait, wait till the time was right. I mean, that was, that was really the gist of it. And I guess, well, let's talk specifically about these.

15:37Cause I think of all the C stores, these are two sort of, they're both regional, but they're kind of cult favorites at the same time. Was that by design? Yeah. We were looking for the Trader Joe's of convenience stores, right? That's it. It's like, it's very easy. Like, and also I think they have a more affluent customer. And so we thought that somebody, you know, that we'd start there versus going to kind of rural, whatever you want to call them, Circle K's or whatever stores. They have a lot of great stores as well, but I don't think we were ready for that. So starting regional, it gave us a little more control over it.

16:07We felt we can manage that versus going national right away. Got it. And did you like, A, I guess the first question is, I've never actually asked someone about conversations with buyers from C stores. I know buyers from Walmart and the national chains, but did you really have to give them a real case for why they should carry you? No, no. Actually, we had a lot of great data and we still do have a lot of great data. We've been very successful in every category that we've launched in. And actually, we explained to them what we wanted to do. We are very specifically looking to partner with you as the first C-Store that we're launching with because we want to learn.

16:44We want to figure out this channel. We're looking for a partner that's going to want to come in and learn with us. And we're going to invest. We're going to lean in here. We want to make sure we're all successful. And then we were able to kind of provide them with data and things that we've seen work across other channels. I think they appreciated that. You know, that's kind of, you know, we said we're coming in, we're going to start really small and we're not going to go anywhere until we make sure we're successful. And that's honestly what we did when we launched with Trader Joe's. We didn't go to another retailer for over a year.

17:12It was probably a year and a half. We had an interest, but we were like, no, we need to be. make sure that we're buttoned up. We want to make sure that we understand, you know, we're being the best Trader Joe's vendor we could possibly be. Well, first off, they're, they're a, they could be a fickle customer anyway, cause they, they are a private label shop, right. For the most part. And we're a branded item in there. So what we wanted to do is say, listen, like we, we just want to show them like that we could be a great partner. There's no, no reason to go private label. Like we're going to be a great partner.

17:40And so that's what we've, we did that for a very long time. And we still, you know, to this day, like they are a priority you know, whenever they, if they have ever have an issue, they reach out, I drop everything and I make sure that I'm responding. So, yeah, I mean, it's rare to be a branded item in Trader Joe's. And so was that a tough sell actually? Absolutely. Yes, it was. But in reality, we wouldn't have been able to launch with them if they wanted to do private label because essentially private label is like managing a separate brand, right? Yeah. We were two guys. It was, it was Rashid and me and that was it.

18:12Like we didn't have a full team. So for us to go and manage our single brand, that was already tough. And then sort of add on another, you know, a Trader Joe's brand on top of it, that would have been impossible for us. We do like hand inspections. So we're doing, it would just be like a logistical nightmare too for us to try to manage that. So anyway, that was, you know, we explained that to him. Like, listen, we would love to launch with you. We can support it in terms of volume and all of those things, but we, we're not going to be able to do it as a private label item. We'd have to be branded.

18:42And so they said they'll make an exception for us. Then we came out, you know, they gave us a projection of what they thought we would do. We surpassed that by a few multiples and, um, it's never slowed down. It's only grown since. So we launched with a single skew. Now we have three, but yeah, the velocities are pretty ridiculous at that, at a retailer. Wow. Is that your biggest account? Uh, no, they're, they're a huge account, but that's not the biggest now. So we've got, But a lot of, yeah, we've grown substantially. Got it. Let's go back to the sheets and Wawa. How did you think, given that you're a product that is in there, but not in the same way and being marketed in the same sort of, I guess, voice?

19:25And so how did you think about overall presentation merchandising, where you would be on the shelf? Like, did you just want it to be next to the incumbents and like have it there as a people comparing it? Or what did you, how did you approach that? So we usually have a pretty substantial trade budget and trade strategy. So what we want to make sure is we're getting off shelf. We want to make sure we're able to get in front of customers, but then also have some sort of messaging, whether it's like a shipper or whatever it might be, shelf talkers, try to get as much messaging out there because we just want to make sure that when customers see it, especially in a new channel, they could see it and for within two seconds, they understand what it is, the value proposition and decide, is this for me or no?

20:08And we hope that they would try it. Once customers try it though, our repeat rates are so strong, they're in the high 40 % range that the business just usually just builds from there. So it's a matter of getting food in people's mouths. And I mentioned Costco, we could do like demos, right? And hand out samples at a Costco. We can't do that in C-Store. So it makes it very difficult. Well, that was sort of my next question is that it's a different type of shopper. Like with Costco or even with Trader Joe's, that's a grocery shopper. That's a repeat shopper. And yeah, people go to convenience stores frequently, but they don't do grocery.

20:45You know what I mean? Like they're going there to make an impulse decision every time they go there. How do you take that into account? Yeah. So when we think about C-Store, we think about that with travel almost on all in one. So we call it, it's a small format and that's, it's the same team on our team that manages that. And we actually started really small within travel. So we were in SIBO. And so we were looking at is we want to understand price points. We want to understand velocities. We want to understand how the customer treats it for exactly what you're saying, right? Somebody's in an airport one time in a year, they see your product, they're going to buy it.

21:20They're not, they're not even coming back there again. So we, we wanted to kind of understand what does that look like from a repeat perspective? we found that multiple things. I mean, price points, we were able to get a much higher price point, obviously, but then also velocities were a lot stronger than we ever anticipated. So that was great. And so, yeah, we were able to kind of have that, those data points before we launched into these retailers. So we had a kind of an idea of how we would perform. That really built up the confidence. I would tell you that because we were, we were nervous about going into a lot of stores and then it's just not turning.

21:53Like, what are you going to do? Yeah. But we found that, you know, with the right placement again, like that's like key, you got to make sure you're on the shelf and you've got a good brand block. You've got, you have decent placement, but merchandising these, the other thing with our boxes, for instance, like if you go to some retailers where there's poor merchandising, they like rip the boxes up and it just looks terrible. There's sticks flying everywhere. So we have those conversations with the retailers as well. Like how can we best partner with you to be successful? Do we need to have boots in the ground or do you have, you know, are your teams good at merchandising?