Kodiak Cakes was officially created in the mid-'90s, but technically it began much earlier. The brand gained nationwide attention in 2014 when it appeared on ABC's Shark Tank, looking for $500,000 for a 10 percent stake in the company. While the company did get offers from the sharks, Kodiak walked away, sans deal.
A costly move ... for the investors, as Kodiak Cakes now rakes in an estimated $160 million in sales.
For our On Brand series, we spoke with Kodiak Cakes CEO Joel Clark and CMO Cory Bayers, who recently joined the brand following a five-year stint as head of global marketing at Patagonia. The pair discuss building out the pancake category, using whole grains to take on products made with white flour, and making healthy food that tastes good.
"It was my mom's idea to make a pancake mix and sell it," says Clark. "She had this awesome whole wheat pancake recipe that she would make for us. There were fewer healthy options in grocery stores, I think, in the '80s when I was growing up. So we packed up a bunch of brown paper lunch sacks with whole wheat and other ingredients, and we made these homemade pancake mixes. I went around the neighborhood and sold them out of my red wagon when I was 8. In the mid-'90s, my older brother Jon wanted to start a business and he was talking to my mom one day about it. And she said, 'Why don't you do that pancake idea? Take the family recipe and make a real product and create a brand and sell it.' And Jon loved the idea.
"He's the one who actually created the brand Kodiak Cakes in the mid-'90s, created our first product, and asked me to help him start selling it. We started out in ski towns like where we are today, like Park City, Utah, we went to Jackson, Wyoming, and Sun Valley, Idaho. And in the first couple of weeks, we drummed up about 50 gift shops to carry our one pancake mix that we had. The business was just a side hustle for many, many years ... then I finally went full-time with it in 2004 and it's been growing ever since."
Kodiak disrupted the pancake and frozen waffle space where brands like Bisquick, Aunt Jemina—now Pearl Milling Company—and Eggo reigned supreme, devoid of much competition. Buyers were skeptical that consumers would embrace mixes that were healthier (100 percent whole grain) and cost more, too.
"What was interesting is the buyers in the grocery stores, especially when we were first trying to break through in the '90s or even early 2000s, it was so price-driven for them," Clark tells Muse. "Think about the category we went into. Very commoditized. All about price. Super cheap. Dominated by some big brands. A few big brands selling really inexpensive products. The buyers just really felt like, 'I don't know if this is going to work, guys.' And we just kept believing—we really believed we had something.
"As we've grown and looked at some of these other grain-based categories that are dominated by white flour, where does it make sense for us to go? And where can we innovate with whole grains, protein and better-for-you products, yet make them taste awesome so the mainstream consumer and families would really love these products? Frozen waffles was a great example of that. Dominated by Eggo, one big player, mostly white flour in the space, and so we felt like that was a natural fit for us to go into that category. Since then, we've gone into oatmeal and we've gone into baking mixes and starting to get into bars, like granola bars, and also into the cookie and cracker space, where we're bringing whole grains and protein as well."
Bayers joined Kodiak Cakes in November as the company's CMO from Patagonia, a company steeped in brand purpose and conservation. At Kodiak, he hopes to deepen the connection between the Kodiak brand and its tight community.
"What I bring—hopefully—is a fresh perspective on the industry as a way to deepen the connection that we have as a packaged food brand with our community," says Bayers. "And what does that look like? What does it mean to be on purpose and to grow this movement and to lead the industry in different ways, to lead it in terms of the product we're putting out there, to lead it in terms of our responsibility, whether it be environmental and conservation or other areas we're looking at?"
Somewhere within the last decade, protein became a hot topic. Consumers were wanting to include more of it in their daily lives and searching for options aside from protein shakes and bars. Kodiak Cakes filled both a personal and categorical void when it added protein to its pancakes in 2014.
"We thought, if we can bring a healthier item that really is a step up in terms of nutrition, but make it taste really good, we really believed consumers would love that and that they'd pay more for really high quality," Clark says. "And that really did work. When we added protein in 2014, it worked even more. It started to bring even more people into the category. What we learned was that we weren't just this new, innovative brand coming into the category, stealing market share. What we did is we brought new consumers into the category. It became this real incremental growth story.
"Protein was starting to trend more and more. And I was looking for more protein. And one day, I was making pancakes and the vanilla protein powder was literally sitting next to the stove and I'm like, 'I wonder if that would be good as a pancake?' So I took a bit of protein to mix it into my Kodiak cakes that morning, made it, and it was really good.
"Where I think we've been unique and different as a brand is we've been disruptive, but yet we didn't hurt other businesses, really," continues Clark. "We just brought more, and grew the whole pie. Where can we go and do that in other categories across the center store? We're not just this functional product, but we bring this unique, outdoor, mountain vibe. Cory will be able to amplify that, and help us really, like he said, build community, and make this brand even stronger. And help us pursue the right path as we grow. We're trying to build a brand that's going to be here for the next 100 years."
Kodiak's target audience is broad and far reaching. Incorporating healthy foods into one's lifestyle spans all ages and ranges of activities.
"It's not a really narrow focus. It's someone looking for a healthy alternative with protein that tastes great. That's convenient," says Bayers. "So that spans from athletes, whether they be gym, whether they be outdoor athletes, all the way to families, millennial moms, and families wanting to give their children and their family a healthier alternative and a nourishing alternative to breakfast time."
"We want consumers to really love this brand," says Clark. "That requires us to really execute well and build a great brand that is meaningful to consumers and create products that consumers love."