Robert Armstrong started his company with an expansive $7, 500 line of credit, based on his Toyota 4Runner.
Imagine launching a business, winning not only Cracker Barrel but even Wal-Mart as customers and then coming perilously close to losing the enormous contracts — all for want of a suitable oven.
That’s what happened to Selma entrepreneur Robert Armstrong and his fledgling brand, G Mommas Cookies.
Armstrong launched his business in 2009, hand-making cookies from his grandmother’s chocolate chip pecan and butterscotch oatmeal recipes.
“I couldn’t make them fast enough to make a living, ” says Armstrong. “I was losing money. I didn’t know how to ramp up production. I didn’t know enough about production, and I couldn’t get a contract bakery to pick me up, because I was a nobody.”
He took the company dormant for about a year and a half, then relaunched in 2013, but still he was haunted by the lack of a bakery — especially after he won the coveted contract with Wal-Mart this year.
His business with Cracker Barrel led the way.
Then a Wal-Mart buyer checked out Armstrong’s website, including its video about the company’s roots, and was intrigued enough to stop by a local Cracker Barrel to purchase a bag of cookies.
They must have made quite an impression.
She contacted a regional broker, who called Armstrong, president and founder of Selma Good Co. In March of this year, Armstrong and a regional broker met with Wal-Mart officials at their corporate office in Bentonville, Arkansas.
“We presented them with our price, and they were happy with it, ” Armstrong says. The meeting lasted only 20 to 25 minutes, and G Mommas Cookies were on Wal-Mart shelves in July.
Now, G Mommas Cookies are sold at 253 Wal-Mart stores, more than 700 Cracker Barrel locations and 40 other stores in Alabama and the Florida Panhandle. The cookies are also available at about 100 Hy-Vee supermarkets in the Midwest.
It turned out to be simple for Wal-Mart to stock G Mommas Cookies, and Armstrong has used a master broker and regional brokers to work with retailers. He calls them his sales arm.
Throughout the company’s brief history, the major obstacle has been finding a bakery to make the cookies.
After outgrowing a hand-made production system, a contract bakery seemed like the logical step. The problem with a contract bakery, he says, is that they require minimum quantities.
“I called every bakery — it felt like — in the United States that did contract baking and nobody would deal with me, ” Armstrong says. His young business lacked the volume. He recalls one contract bakery telling him that they won’t turn on their ovens unless they are baking 30, 000 pounds a day.
“You can’t be selling to 35 little stores and then baking with a contract bakery because what you’ll have is 90 percent of your product sitting in a warehouse and it will never get sold and will go bad, ” he says.
The bakers would ask Armstrong how many pounds are you doing a month. They didn’t like his answer: “Nothing. That’s what I’m trying to get you guys to do.”
Finally, one contract bakery recommended another in Pennsylvania. It was an older facility but under new ownership. The bakery said “yes” to Armstrong “because they needed the business.”
The agreement was that the bakery would make the cookies and not charge for hand packing them. The bakery planned to buy new packaging equipment but ultimately decided against the investment and, in turn, decided to charge Armstrong for the packaging. His costs escalated. Again, he says, “Basically, I’m not making money.”
The 29-year-old realized he had two choices — sell the company for very little or do something different with production.
“I wasn’t ready to let go of it yet, ” Armstrong says. “I decided that I had to get back control over my costs and my business again. The weakest link from the very beginning has been contracting the baking out.”
Now, all of that is behind him. He is leasing a 9, 000-square-foot property in Selma that once housed a Dollar General store. He and his three partners have invested about $250, 000 in equipment. Armstrong, who began his company with a $7, 500 lien against his 2009 Toyota 4Runner, now has a line of credit that grew from $50, 000 to the current $125, 000.
He was expecting to be fully operational by the end of August — producing and packaging G Mommas Cookies with a capacity of about 1, 000 pounds daily. Until August, although he was distributing cookies out of the Selma facility, they were still being baked in Pennsylvania.
“It’s pretty scary, ” he says, about plunging into the baking business with his own production facility and plans to hire four to seven part-time employees. He currently has one full-time employee.
“I feel like I’ve gotten to the point where I have a proven product and a proven product market fit. Now, I’ve got way more confidence in the product — me personally in the product and the company. I’ve got some sales records and I’ve got some pretty large customers and the company is growing.”
By seizing control of the baking and reducing costs, Armstrong says he is now able to focus on growing the company that had sales of $265, 000 in 2014 and projected sales of $275, 000 in 2015, which he called “a tough year.” If all goes according to plan and goal, Armstrong expects sales to surge to $500, 000 in 2016 and maybe even reach $1 million — a nearly fourfold increase from 2014.
The reason for his optimism is solving the production issues so he can sell the cookies for less and introduce a 2-ounce bag at gas stations and convenience stores. “I haven’t been able to focus on growing (the company) for literally over a year, ” Armstrong says.
He hopes the 5.5-ounce bags of cookies will sell for 50 cents to $1 less a package. Wal-Mart sells the cookies as a specialty product at $3.98 a bag. The price at Cracker Barrel is $5.99. Reducing the prices will spark a volume increase, Armstrong believes. He would like to have agreements with the retailers to pass on their savings from G Mommas Cookies to the customer.
Two more large distributors have told Armstrong they will sell the mini bags when they are available. Those distributors represent 1, 000-plus stores in the Southeast, but Armstrong expects that his products will be at 200 or so locations.
With his company’s ovens nearly ready to handle G Mommas’ baking, Armstrong is broadening his horizons — hoping to add other products and foods. He would like to offer two more cookies, including a peanut butter type, in the next nine months.
“When the cookies grow beyond this facility, which we hope it does — we will put in a different oven; a different production facility that would be similar to the one in Pennsylvania, but we will use this facility to develop new products.”
And if they’re successful — who knows? He even has an eye on the space next door.
David Zaslawsky and Art Meripol are freelance contributors to Business Alabama. Zaslawsky is based in Prattville and Meripol in Birmingham.
Text by DAVID ZASLAWSKY • Photos by Art Meripol