The facility – part of a $10m (debt-financed) investment to almost triple capacity - consolidates manufacturing in one site (currently Bobo’s has one bakery in Boulder, one bakery in Loveland, and some partial manufacturing at its Loveland warehouse), and will significantly improve efficiency, CEO TJ McIntyre told FoodNavigator-USA.
The headquarters will remain in Boulder, said McIntyre, who joined Bobo’s in January 2016, and brought with him a “maniacal focus on margins.”
“It’s going to be a gamechanger for our business. We're going to go from 55,000 combined square feet of manufacturing, to 123,000 sq ft, which will work a lot harder, because you've got an open box to lay out things efficiently, so we're moving towards far greater throughput and automation.
“We’re accomplishing this facility with $10m for equipment, and all of it is debt-financed, so there’s no dilution; we’re a profitable business.”
Bobo’s is predicting 40%+ growth this year and revenues ‘just shy of $50m’
Many of the employees that currently work at the Boulder bakery live north of Boulder, so working in Loveland will be more convenient, said McIntyre, who is predicting revenues “just shy of $50m this year,” representing more than 40% growth vs 2020, a figure that could have been a good deal higher without some of the labor challenges the firm has experienced over the past year, he said.
“We will grow 40-43% this year, depending on how the next six weeks work out, but we could have grown probably 55-60%; we've missed a lot of opportunities and turned down new business.”
‘We've been on allocation as a business since April’
Bobo’s grew in 2020 despite COVID-19, “but at the beginning of 2021, the consumer came back to the nutrition bar and cereal bar category in a manner that we could not have forecasted, which was great,” said McIntyre, “but we couldn't hire enough people [to take full advantage of the increased demand] so we've been on allocation as a business since April.”
Meanwhile, owing to the supply chain woes impacting the entire industry, he said, equipment that Bobo’s used to be able to order in 8-12 weeks now takes 12 to 24 weeks to arrive. “There’s some equipment that we ordered in the first quarter that we still don't have."
He added: “We can only fulfill 80% of the orders that are coming in. We’ve hired over 100 incremental folks, and we've wanted 50 on top of that, and we can't get them despite taking wages and benefits significantly up, so that has also encouraged us to move away from such a labor-dependent model, so there are aspects of our production where it's unintelligent to not automate things.”
‘We're about whole ingredients, not paleo, not high protein, not keto, unabashedly full carbohydrate, and we're doing a lot better than we were before the pandemic’
So what is driving growth at Bobo’s, which is now in around 30,000 stores in natural, grocery, club, and mass channels, and has a fast-growing e-commerce operation through Eatbobos.com and Amazon.com?
The bar category is awash with brands jumping on nutritional or dietary bandwagons, said McIntyre, but Bobo’s – which makes simple, wholesome, and satisfying oat-based bars and bites - with will be around long after CBD-infused keto bars have crashed and burned.
While a whole Bobo’s original oat bar - which contains two servings - contains 340 calories and 18g of sugar, it is extremely satiating, contains ingredients that consumers can understand, and pairs perfectly with coffee, said McIntyre, although Bobo’s now offers a variety of products with smaller portions (bites with around 150 calories) and more protein (nut butter protein bars with around 10g protein).
“What I love is that Bobo's has really accelerated comparatively versus the brands we compete with because I think that some of the cache around some of the diet trends has kind of quieted down. We're about whole ingredients, not paleo, not high protein, not keto, unabashedly full carbohydrate, and we're doing a lot better than we were before the pandemic.
“Some of our club and mass success is really beginning to encourage our customers to expand with us and prioritize us on key promotions.”
Supply chain issues: It’s the worst I’ve experienced in my career’
So aside from labor challenges and the lengthened lead times for equipment delivery, how else are the current supply chain challenges impacting Bobo’s?
According to McIntyre, “It’s the worst that I've experienced in my career and the worst Bobo's has ever seen. We're seeing increases in every input, even though our business is growing 40% this year and will likely grow 40% next year, we’re still anticipating that the best we can do at the moment is hold flat.”
A major challenge has been securing oats, Bobo’s core ingredient, he said.
“The yield on oats in North America was about 45% of the historical average due to drought in the upper MidWest and most definitely in Saskatchewan where we and most of the brands in the natural and organic space source oats from.
“So we’re on allocation and manufacturers are pivoting for the first time to Australia and Europe for supplies, which will take a couple of quarters to really get established because North America has not been an importer of oats historically.”
Overworked drivers, missed appointments…
As for transportation, he said, there are a ton of missed appointments in the industry right now.
“So we’ll hire a third party carrier to take our product to Kroger or to Albertsons Safeway, for example, and then they miss appointments because you've got overworked drivers and then similarly, even our largest customers, they miss their appointments, picking up, every single day.
“It’s also costing people because retailers fine you [for missing delivery windows].”
So when might things get better?
“It’s only getting worse at this point. We're not seeing any improvement,” he said. “And we have no reason to believe that once we get through the holidays, that it's going to be better.”