Small Food Comes of Age Mary Ellen Kuhn | September 2017, Volume 71, No.9

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Dan Staackmann Nicole SopkoDan Staackmann on Upton’s Naturals Slow, Steady Buildup
For most entrepreneurs, long hours come with the territory, leaving all too little time to focus on the rest of life. Dan Staackmann, founder and CEO of Chicago-based vegan foods maker Upton’s Naturals, has found a way to help solve that common entrepreneurial dilemma. A few years back, he had a combined factory/office/residence built, and now he lives right above his office.

The three-story building is located in an historic manufacturing district of Chicago that is also home to a residential neighborhood. The building includes manufacturing space and a vegan café on the first floor; office space on the second floor; and, on the third floor, an ultramodern apartment for Staackmann and his girlfriend and Upton’s Naturals vice-president, Nicole Sopko.

Staackmann says there’s been no downside to living above the office. “It has helped remove the stress of commuting and made operations problem-solving while not at work more convenient,” says Staackmann. “For the most part, employees have been respectful in regard to trying to ask for things if we’re home but not technically working. I’ve received a handful of text messages, but no one has ever come banging on the door.”

Upton’s Naturals Thai Meal KitsA longtime “ethical vegan,” Staackmann, 40, decided to venture into the food business when he realized that there weren’t a lot of companies producing one of his favorite products, the wheat-based meat alternative seitan. Staackmann spent some time tinkering with product formulations before rolling out Upton’s Naturals seitan in 2006. Funding the start-up with a home equity line of credit and working in shared kitchen space, “We did all the build-out for under $40,000 and then approached Whole Foods,” says Staackmann. “We were able to get placement in seven stores and once those did well, we got into 20 in the greater Chicago area.” Within six months, Upton’s had distribution in all Whole Foods Market’s Midwest region stores and eventually reached national distribution in Whole Foods.

In 2015, Upton’s introduced its first meat alternative made from the versatile tropical fruit jackfruit, which is high in fiber and has a meat-like texture when it’s harvested before it ripens. Recent Upton’s rollouts include vegan mac and cheese and a line of four Thai meal kits.

Staackmann is quick to credit Whole Foods with a large share of his company’s success. “They’ve really been the greatest partners we could ever ask for,” says Staackmann. He notes that unlike many other supermarket chains, Whole Foods does not charge slotting fees to take on new products, which opens the door for companies like his to gain a foothold. Staackmann initially focused on expanding his business in the natural channel, but recently he’s found growing interest from mainstream grocery retailers. Staackmann doesn’t disclose Upton’s Naturals revenues, but he says the company is profitable, and he expects 2017 sales to be up 40% over last year. Although many entrepreneurs turn to venture capitalists to grow their companies, Staackmann hasn’t sought funding from outside investors. He says that when he was getting started, “none of that outside money was an option. … Who was going to give me—some twenty-something guy with a strange-sounding product—any money?”

And now he doesn’t think it’s a path he needs to go down. “I’ve personally put so much into this business,” he says. “I’m not willing to give some up without good cause. What most companies want is to buy in at 20% or 30% and within five years to sell the company at three to seven times valuation. I’ve seen some of those deals be very successful, but you have to give up a lot of control. All of a sudden, it’s not your company. You have to deal with people who have a much different agenda than you. I haven’t been eager [to do that].”


ENTREPRENEUR TALK: Dan Staackmann
Essential Entrepreneurial Skill: “There’s not a book or even a website that tells you how to do this. I attribute a lot of my success to being an only child and figuring things out.”

Secret to Success: “All of the products that we offer are quite unique in each of their categories. I think that’s definitely made a big difference.”

Given the Chance for a Do Over: “Maybe I would have been one of those companies that would have looked at outside money.”

 

 

 

Mary Ellen Kuhn is executive editor of Food Technology magazine (mkuhn@ift.org).

IFTNEXT is made possible through the generous support of Ingredion Incorporated, IFT’s Platinum Innovation Sponsor.

References

Caldbeck, R. 2017. “The Product Launch Fallacy of Big CPGs.” CB Insights, March 20. https://www.cbinsights.com/research/circleup-guest-post-product-launch-fallacy-big-cpgs/.

Lenhardt, E. 2017. “List: Food Startup Accelerators & Incubators.” RealFoodMBA, July 19. http://realfoodmba.com/food-startup-accelerators/.

Nielsen. 2017. “Amid the FMCG Downturn, Small Manufacturers Are Tapping Big Growth.” Press release, June 1. The Nielsen Co., New York, N.Y. nielsen.com.

SBA. 2016. Frequently Asked Questions. U.S. Small Business Administration. https://www.sba.gov/sites/default/files/advocacy/SB-FAQ-2016_WEB.pdf.