Kodiak Cakes’ CEO: ‘We’re growing 80% year-on-year and approaching $100 million’
Kodiak Cakes burst into the national consciousness in 2014 with an appearance on ABC’s Shark Tank, but the company’s origins can be traced back to the 1980s when current CEO and Co-founder Joel Clark would go door-to-door with a little red wagon selling his mom’s signature whole grain pancake mix to neighbors. Then, in the mid-1990s, Joel and his brother John decided to start a business using their mother’s pancake recipe.
“It’s like we’re a 20-year old start-up,” Joel Clark told us. “For years we were selling to ski towns in Utah and Wyoming, just bootstrapping along the way.” That all changed in 2014. “That was the inflection year,” said Clark. “We launched our Power Cakes product in January 2014 and then in April 2014 we went on Shark Tank.”
Clark told the sharks that Kodiak Cakes would make $20 million over the span of four years. Despite being unable to convince the sharks that $500K for 10% of the brand was a good decision (the best offer from a shark was $500,000 for 35%, but Clark turned it down), the company has since blown those projections out of the water.
“The timing in 2014 was unbelievable. Power Cakes became an explosive product. Shark Tank gave us an exposure bump and we used that to build our distribution base.” Today, Kodiak Cakes is growing 80% year-on-year and is approaching $100 million.
Growing the brand, growing the category
At the time of Shark Tank, the company had two mixes that made up about 85% of their business, said Clark (there was also the Minute Muffins brand, but that had limited distribution, he recalls). Editing of the Shark Tank segment meant that Target was the only retailer mentioned, and viewers therefore concentrated on seeking out the products in Target. The Buttermilk Power Cakes Flapjack & Waffle Mix rapidly became the number one pancake mix SKU at Target.
“We grew the category 20%, overtaking the lead brand at the time – Aunt Jemima – by 20%,” said Clark. “We’re still number one with 54% category share.”
The last few years has seen the company “growing like crazy”, he said, and the products are now available in most major retailers.
The overall pancake mix category is worth about $370 million, he notes. “Our growth in the pancake category has been an amazing experience, but the category's reach is limited! We want to extend our whole grain, high protein, and non-GMO position to other categories and bring our healthy alternatives to the masses.”
The sizes of the prizes
Last summer the company launched into the frozen waffle category, historically dominated by one player – Eggo (Kellogg’s). “There wasn’t a lot of innovation, and our frozen toaster waffles are just killing it,” said Clark. “Our Buttermilk & Vanilla Power Waffles are the number one frozen waffle SKU in terms of volume in Target in the stores they are in. That’s exciting because that’s an $800 million category.”
The multi-billion dollar baking mix category is also firmly in Kodiak’s sights. “We’re heavily going after that,” said Clark. “There’s a big opportunity to bring health benefits to something that’s a treat. We’re launching a high protein brownie in a cup and box, and high protein muffin mixes.”
So any mistake along the way? “The Granola and Oatmeal products are doing OK. We probably jumped into those prematurely,” admitted Clark. “There’s a lot of noise and a lot of innovation in those categories, and we didn’t go into it with massive plans to keep innovating.”
The company also had one product that was an organic pancake mix that went into “pretty limited distribution”. Retail buyers were not convinced and since the company’s protein SKUs were “setting the world on fire”, Kodiak decided to drop the organic mix and focus on protein.
“One success factor is sticking to your position. It was taking a long time to get Kodiak Cakes to where we wanted, and we did wonder if we should do a white flour pancake mix. I formulated a really good white flour mix, but the best thing we ever did was to not launch it. We’re all about whole grain and protein. As an entrepreneur it can be tempting at times to get sidetracked, but you need to stick to your position.”
