Mid-Day Squares is not a traditional chocolate company: the CPG industry knows it, and entrepreneurs hope to take lessons from its lightning path to a multimillion-dollar business glorified by a burgeoning enthusiastic fan base.
The Montreal-based confectioner, best known for its refrigerated chocolate bars that come in three different varieties — Fudge Yah, Almond Crunch, and Peanut Butta — coupled with its founding team’s rambunctious reality TV show on Instagram and frequent social media activities, reportedly sold 325,000 chocolate bars in June, exceeding the total number of bars sold during its entire first year.
These three SKUs, which are available across 1,600 North American retailers, have also driven the company to achieve $10 million in revenue to-date, 40% of which comes from direct-to-consumer.
Full Transparency On Entrepreneurial Journey
Mid-Day Squares’ growth trajectory and ultimate goals are crystal clear: With a recently raised $6.5 million financing round from investors, including Boulder Food Group, Selva Ventures, Harlo Capital, and Mike Fata, as well as an additional $3 million debt financing through the local Québec government, the company is looking to expand south of the border rapidly in 2021 with already secured Sprouts and Whole Foods listings, and is aspiring to become one of the largest snacking players in the region with an anticipated $100 million sales within the next five years.
“We will be a conglomerate,” said Jake Karls, a fashion industry veteran who helped cofound Mid-Day Squares with his sister Lezlie Karls and her husband Nick Saltarelli, and has since risen to become the main character driving the virility of the brand.
Unlike other legacy food and beverage brands, Mid-Day Squares pivots its strength on full transparency that allows consumers to tag along the journey of its founding members. “Kraft was started by a human, and that human was similar to us. But now it’s a big conglomerate, and you don’t know who runs Kraft,” Mrs. Karls said.
“We never want Mid-Day Squares to feel like that, even when we become a conglomerate, we want you to know us at every stage,” she said, noting how creating tribalism by taking lessons from brands such as Nike and Lululemon is the company’s core strength that has helped attracted a slew of investments.
Kiva Dickinson, cofounder and managing partner of Selva Ventures, stressed how he quickly hit it off with the Mid-Day Squares team upon their first meeting in March 2020. Dickinson said: “The team at Mid-Day Squares is willing to be unapologetically themselves on camera to thousands of people. They show everything to their community, including the mishaps and emotional rollercoaster that comes with the entrepreneurial journey.
“Putting yourself out there as they do can be scary but it invites a human connection with your consumer that many people are craving.”
Grabbing Opportunities In A Saturated Market
However, that wasn’t necessarily how Mid-Day Squares set out to be four years ago.
In fact, its launch story sounds all too familiar and even a little generic: Saltarelli, who used to run a software company, was a junk food eater. Mrs. Karls, who was his girlfriend and roommate at the time, wanted to make Saltarelli heathy alternatives to KitKat and Snickers using plant-based ingredients. After learning how plant-based and chocolate are growing exponentially through market research, the duo decided to commercialize a product that can effectively capitalize on both of these categories.
“We knew we were missing one thing, and that was Jake,” Mrs. Karls told me. “Jake had been working on a [now defunct] clothing company called Chase & Hunter. It was not succeeding, but one thing that was so crazy and powerful is that he was able to build hype around a brand and get people excited about this community.”
Then it took three months to convince Mr. Karls with their chocolate business idea, “as if we were convincing fucking Madonna to leave her tour,” said Saltarelli, citing the former’s initial concerns around a saturated category where competition was further heightened by brands including Hu Chocolate and Lily’s Sweets, recently acquired by Mondelēz and Hershey, respectively.
Mr. Karls said: “When you went deep, you can see there was a wide open water where no one was tapping into the combination of the two [plant-based and chocolate]. So, we jumped on this gap like sharks. We knew we had longevity because we didn’t choose a niche. Chocolate is a $140 billion market… there are a lot opportunities to grab by making changes in this saturated space.”
Making chocolate by hand was easy at first, but scaling up with co-manufacturers turned out to be a major challenge due to Mid-Day Squares’ unique product format of what Saltarelli once described as a “Hu chocolate bar slapped on top of a Perfect Bar,” forcing the team to build its own production plant that is currently able to make 90,000 bars per day.
“After meeting 26 co-packers across North America, the common denominator is that they wanted us to change our recipe and that was a ‘hard no’ for us,” Mrs. Karls said. “It’s amazing to have control over your own manufacturing, so that you can control quality and own your process.”
As Mid-Day Squares starts to roll out in the U.S., the company also hopes to locate its future manufacturing facilities close to distribution and shipping centers across major metropolitan regions. “The goal would be to build these micro plants all around North America as we need,” Mrs. Karls explained.
Instagram Its Way To IPO
Mid-Day Squares’ expansion proves to be effective due to its online strategy. Behind those quirky, entertaining Instagram posts showing dances, production crews, and even founders revealing their vulnerabilities are a team of social media strategists closely monitoring their engagement with followers, which will in turn help the team decide how to better target consumers.
“The follower concentration that Instagram provides on a city basis gives us a very strong indication of how strong the brand is in that area,” Saltarelli explained. “It allows us to make decisions on where to do our distribution. We wait for a specific threshold to launch in physical retail in a city.”
Rather than counting the number of likes or views, the ultimate KPI in these social media activities is whether they are adding value to the brand, according to Mrs. Karls, “because if you’re not paying to play, you truly have no control, that’s why you should always look at your views with a grain of salt.”
As buzz continues to build about a possible IPO by Mid-Day Squares in the coming years, the team said going public is an overly-romanticized financing event that’s supposed to reward consumers who believe in their missions, stressing how the current challenge is dealing with “blitzscaling” that has affected Mid-Day Squares’ business infrastructure, meaning the company needs to constantly find new resources to keep up with its capacity.
“Our dream one day,” Mr. Karls said, “is to have a destination where refrigerated snacks are placed for the consumer to easily purchase, and for us to become an impulse buy, a convenience buy, instead of just a listed item.”