122. Building a Profitable Empanada Business

Mas Empanadas

Jordan Buckner: [00:00:00] A lot of brands talk to me about the option between self manufacturing and working with a contract manufacturer as they're deciding how to grow their brand. And it's a really tough decision and a lot of brands actually will end up doing both at some point along their life cycle. But I wanted to really break down what that looks like.

And use an example brand to talk through the journey of building and scaling up a C P G brand, manufacturing everything yourself. So for this conversation, I've invited on Margarita Womack, who is the founder of Mas Empanadas to a line of frozen empanadas. They're six years old, has been self manufacturing throughout this journey.

What's great is that they're actually just building out a new manufacturing facility to expand their capacity. And that's going to enable them to further their social mission of supporting immigrant Hispanic women as well. Margarita has raised over or 1.5 million to fund this vision, and I think it's [00:01:00] just a great company, a great product, and a great story.

And so I want to invite Margarita on to share that journey. Welcome. 

Margarita Womack: Well, thank you Jordan. Very excited to be here today. 

Jordan Buckner: So this has been a long journey in those six years in the making. It's short and long at the same time. Tell me a little bit about how you started Mas Empanadas and particularly your decision to start self manufacturing.

Margarita Womack: I started the brand in 2017 at the company and really at the beginning the plan looked nothing like what the company is nowadays. To be honest, it was mostly an excuse to get someone a visa and, give her the option to stay in the us So I Was at a point where I was working full-time teaching, and I had a newborn and two young boys, so needed help.

And it's the first time , as an immigrant myself that I really felt The lack of family, the whole lack of community around you leaves. And so I had a friend of family come and help out and she wanted to stay in the [00:02:00] US and do so legally, and I was more than happy to entertain the idea. So we started what was meant to be a catering company out of my home kitchen to.

Cater to friends and neighbors, but of course you can't really do it outta your kitchen in Maryland to get all the proper permits and licenses. So we went to Union Kitchen, an incubator in DC where then we started the company and quickly we realized that the empanadas were the best sellers in the menu.

And that while a catering company didn't have that much potential, that much growth, that there was a real business opportunity in frozen foods, taking our empanadas in the consumer packaged goods space. And so nowadays we have our own facility that's 12,000 square feet and adding another chunk to it.

And yeah, ready to take over the world, one empanada at a time. 

Jordan Buckner: That's amazing and congratulations, sales, the success so far. I'd love for you to give a sense of the size of the business right now, and so about how many retail stores are you selling in and how's your business kind [00:03:00] of split between?

I know you're selling retail and also food service. 

Margarita Womack: So at three channels actually. So we split among retail branded, we consider then retail, private label, separate channel, and then food service. Last year we wrapped up at around 85%. Private label food service was just starting to come back. It's I expected to.

Probably around triple this year. And retail also actually will more than triple this year. That's our focus right now as we stabilized our production, our operations, and obtained the cash flow through the private label. So this year we should be at around 65, 70 private label and about 20%.

Retail 10%. Our food service, we are currently opened various DC's with Cisco. We opened with Food Pro and we are onboarding with performance food groups, so we should start getting some ramp up on that side. For our retail line, we are around [00:04:00] 2000 doors, mid-Atlantic, northeast, Midwest. Some good news though we're launching with another.

Several hundred accounts, probably another 500 in September, and we should get another 500 or so sometime the rest of Q3. Q4 we distribute through U N F I, KeHe CNS those are our main ones. 

Jordan Buckner: That's amazing. I think one thing that really stands out is the percentage of sales that to private label. A lot of founders and a lot of companies really shy away from doing private label work.

Tell me about your decision to primarily focus on private label, at least at the beginning, and what it's enabled you to do. 

Margarita Womack: For us, it was a survival aspect. When the option came up, it fortunately was at a time where, where it saved the business. So we were producing out of Union Kitchen, had our small space.

It was starting to get pretty tight and We consider going to a co-packer, cuz that's generally the advice you get. In fact, the first time I met self Goldman at, conference, I asked him what [00:05:00] is the biggest piece of advice you would give somebody at the stage and said, do not ever do your own manufacturing.

And here we are doing our own manufacturing, but I think it actually paid off for us in ways that we couldn't really have foreseen at that point in time. The traditional path of going to co-packer simplifies your business model. You pretty much just focus on your sales and your marketing and your structure is just so much easier to manage.

Having your own operations is indeed, I don't know what to call it, but the complexity, the headaches, the amount of stress that comes with it is quite significant. So certainly not the path for everyone. For us, when we were at this juncture in the path that we go kopac where do we do it was.

The opportunity just literally fell on my lap. I guess I've had always a good star. But there was a local small manufacturer that made in bananas. He decided to close his business. So this happened at the same time. We were debating what to do and so we were able to step in, take over the lease buy the [00:06:00] equipment and here we go.

We're out our own manufacturing facility ready to start, and we're doing mostly food service at that point, hoping to grow the brand organically because we were hoping to mostly bootstrap and food service, we had good margins is something that would bring in sufficient cash flow to then slowly take the brand where we wanted it to be.

And then Covid hit, right, so over 80% of our sales that were tied to social events disappeared. And so we're kind of stuck, like, what do we do? We had been in the space not even a year, and we had assumed this lease, we had all these responsibilities already, and we had started consuming the possibility of private label.

We had without a friend that was doing it had recommended us and so we decided to give it a shot. It was a big jump. We were not necessarily quite up to speed at the point , to grow so faster production, but hey, we were gonna make it happen. And we made it happen. Had to double the size of, the facility.

We had to [00:07:00] purchase all these equipment. We had to hire all these people in the middle of Covid. Not fun. I think it was a few months where I practically was working 24 hours and lived at the plant. And It fortunately worked out. We were able to deliver. People loved the product, and so we got a permanent account that then allowed us to be sustainable as a company versus The path of, Hey, well we have a great product.

We're planning to get acquired in just a few years down the road, so it's okay. We just raise some money. Have a terrible bottom line, but it doesn't matter because whenever we get acquired, they'll be able to take over operations and do a much better job. And we just exit. Here we have something.

That proved to be much more post covid friendly, where we're getting closer to a break even, where we have a structure that can go a long way and not necessarily have the need to raise money constantly and be on the lookout for that quick exit. But if the. If option comes, wonderful. If it doesn't, we can [00:08:00] keep on going on our own.

Thank you, 

Jordan Buckner: Margarita. That I will have to say, like you in the journey that you've lived has been the model that I recommend CPG founders take as the default in this space, which is. Finding a way to build the business to be breakeven or profitable as quickly as you can because it gives you more options.

Exactly how you mentioned, if there's an opportunity to take on investment and you have the right foundation, you can do it. If you wanna keep operating on your own, you can do that. Or if you want, there's an opportunity to be acquired, you can survive. But. You know, it's all about being able to build a sustainable business and having the foundation that supports your growth and gives you optionality where any of those paths are open versus being forced down a certain route to raise money or else go out of business because that's a very terrible position to be in both from a emotional and mental standpoint, but then also in terms of ownership of the business in the future of that.

Margarita Womack: Exactly. If you get yourself cornered and you don't have any options, very difficult position to be in if you [00:09:00] leave many door opens if you give yourself various options. Cause the world changes so fast, your company changes so fast, what the market's after, so you gotta be able to have these options.

And for me that having the manufacturing provided those options and private labels only growing in popularity. So we have this hybrid business that Yes is much more complex to manage that. Pre covid was considered a huge risk nowadays is a huge advantage. And so it's a model , we really think makes sense.

Jordan Buckner: For the private label accounts, did you approach those people to make the product or did they approach you? 

Margarita Womack: So the first account was , more of a connection through a friend. Okay. That they were looking for something we could make now are days we reach out to accounts. They have dedicated private label buyers.

And there's also, in fact, a show in Chicago that is all about private label. It's not as obvious as the big buyers in retail [00:10:00] and. It's something that happens more under the table. People don't talk about it. It's not widely promoted, but it's certainly just as big of a business, if not larger.

Jordan Buckner: Yeah. And that's like the, the P L M A Private Label Manufacturers Association puts on a show., I love that. So I know a lot of our founders are kind of thinking of like, what is that? Business look like as I start to grow in that manufacturer. So you started off at Union Kitchen, you then grew into another larger facility, and you're gonna be opening up a third even larger facility from here.

So what has been , the challenges of self manufacturing, especially as you've grown and hit different obstacles? 

Margarita Womack: I honestly had no idea what I was getting into when I first started and remember, it was not supposed to , get to be this kind of thing. And catering is so much easier to manage overall.

But manufacturing, doing your own manufacturing is a huge responsibility, and if not managed properly, it's. Certain death. There's so many aspects around food safety and [00:11:00] quality assurance, quality control that you have to get well-versed in to do a good job and also find the support to be able , to run your manufacture.

Something you can't just do on your own as a solopreneur, at least at scale. So We are also a meat producer, right? We manage meat products. Therefore, we are a U S D inspectors facility that is two sides of a coin as usual good and bad. Well, a, going through the hoops at the beginning of getting all your paperwork aligned and your grant of inspection and working out the schedule with your inspector, et cetera, et cetera.

It can be painful, but the other side of it is actually a huge plus because it prepares you, keeps you on your toes. You have an inspector on there that is there to help you keep your production on track and with the right filters and quality assurance aspects. So then you have to go also through FDA, through your local department of health.

And as you grow, it only gets more complex. Nowadays we are an [00:12:00] S Q F facility. We got our audit last year and are about to renew a certification that puts us at the highest level possible you know, comparable to the large plants of, say, an Nestle or Coca-Cola. It took a while to get there at the beginning when the first time I was told like, where's your hassa plan?

Like my what? Sorry. Oh, okay. Yes. I gotta go do a lot of learning. So that's where you start a lot of learning, and it takes a while to figure out what your hassa should look like, what your proper processes are. And as you evolve your production and you grow, it changes. So it's something, it's a living document and it has all these processes that have to go along with it, that happen on a daily basis.

It's mostly routines. So there's U S D A per se has good support, good help. There are consultants you can reach out to. There are manufacturing groups that are, tend to be statewide that also have supports in the sense, but it's very, very important from the beginning to be very mindful of understanding why you're doing it, how to do [00:13:00] it and be, I mean, anal about it.

You really have to stick. To your processes because any kind of recall any kind of food safety issue can't just destroy your business overnight. So that's a part that I just cannot insist about how important it's,

Jordan Buckner: and I think a lot of founders might see this as an annoyance at the beginning, right?

Like, oh, I have to have the Hasset plan and think about food safety. But if you're making a product, the number one thing that you need to do is make sure that it's safe for the people , who are consuming it. And both from a business standpoint, but also from an ethical standpoint of, you know, you wanna make sure you're producing something that people can trust.

And I think it's something that, yeah, we take as for granted as a default or as a given these days. But they're. Even large companies have lots of recalls and problems that happen, and so I love that you're so focused on that process. Are you managing the production facility and everything now or have you been able to build out a team that's managing the production?

Margarita Womack: I am so happy to say I have a team now that I. [00:14:00] I can really count on. And this has been really of the last year. So 21, I was still pretty much managing everything myself and it was gonna kill me. Literally. It's too much. And this past year I was able to bring in a C O O. A head of food safety and quality assurance, and also someone head of sales that now transition actually full-time as vice president of sales.

And it's certainly required now. That's why I waited. So we were absolutely ready to, and had the need to raise money and mostly to able to bring a team and also start focusing on the trades spend needed to support our retail growth. But that's completely changed things because I can.

Actually sleep at night and not wait for the three o'clock call, like the truck broke down on the side of five and we dunno what to do. The power went out, , the myriad little calls and little things that operations involve to then have a team that can manage that completely. So can focus more on strategy, , on fundraising, [00:15:00] on marketing.

So that's changed my world. 

Jordan Buckner: I read at one point you might still be doing now that you're running three shifts, essentially 24 7, just to make sure that , you we're able to make enough product, right? 

Margarita Womack: Yes. So that was that ramp up, that original ramp up the way to do so was throwing people at it, which is not a long-term sustainable option.

Now so my COO is somebody that has 30 plus years of experience, knows what he's doing. I was just learning as I was going, and you can do so for a certain period of time. I had no experience in the food industry before and, but I'm a quick learner and I'm good at studying, so I was able to do by trial and error and go learn the information I needed, come back, apply it, but it gets to a size where you can't do that anymore.

There is no room for error. There's no time. , to learn as much. So having someone that actually knows and understands has the experience to then quickly organize and turn things around. So , we produce actually more than we did with three shifts with [00:16:00] two. Nowadays, it's actually, , and they're fewer people per shift also.

So we are well on track , to decrease significantly our labor costs and with our new plant will be much more automated. So those cost of goods will get even slimmer as we grow. 

Jordan Buckner: That's exciting. For anyone who is maybe currently self manufacturing and looking to make the decision to continue doing so or maybe move to a co-manufacturer what advice would you share with them?

Margarita Womack: So the first piece of advice I would have is to make sure you're up for it it's hard to say exactly why. I think it's probably easiest to think of an analogy. For those of you out there that are parents, people tell you it's very hard to be a parent and you don't know what you're getting.

You know what's coming your way and ooh, sleep now that you can. And you're like, okay, whatever. Leave me alone. And you don't quite understand what's involved until you have that kid. At home and you run into all these issues is this kid breathing properly? Is this the right way? Well, is this all [00:17:00] these diapers?

Like, how do I manage all these diapers and wait, I'm just going ballistic with lack of sleep. I can't think straight., you don't quite anticipate what it's involved, but, so you wanna make sure you're mentally prepared for it, yet you have the time to dedicate to it, and that you have the grid, the resilience to take the amount of stress.

That comes with it. So that's the first part. So say if you're a new parent, now that we're talking about new parents, probably not the right time to think about doing your manufacturing. Do one at a time. The other bit is make sure you have cash around you have to get machinery in order to scale, and you have to be ready to figure out how to finance that machinery.

You can certainly start small. That's what we did. We used to make green bananas with little plastic molds and transition to this new space with little plastic molds. And the huge upgrade was going from a pan to fry am to a McDonald's lifestyle french fry fryer. So you gotta be creative in that sense and grow slowly, try different things, especially trial and error, [00:18:00] that stage is huge.

Will this work? Try it. Discard don't go the huge jump. Like say now our fryer is a conveyor belt fryer that measures 15 feet and it's awesome and I love it. And it changed the world, but we were not ready a to afford at the beginning. We didn't have a use for it really at the beginning. And I know friends that bought similar fryers that didn't work for them, and they pretty much, they had to just jump up.

So. Don't just jump into big piece of machine to start with. Try smaller things, smaller steps to grow into that big machine and make sure you have a way to finance those machines and the people you need to help. I

Jordan Buckner: love all of those and I think they're spot on. You know, with my previous brand TeaSquares we went back and forth between self manufacturing and working with contract manufacturers, and so I've seen both sides , of the coin.

And I think you're right, like when you're managing manufacturing yourself, knowing that. You're going to change multiple times of facilities. The building itself, the equipment is really key. And the other big learning, which you kinda mentioned as well, is it's almost like running two [00:19:00] businesses. You have like your brand and your sales.

In that side, which is a completely different kinda mentality than running a day-to-day manufacturing facility, which is about managing labor and employees and ingredients and supply chain. And it's two sides of the brand. And so you almost have to be prepared to run two businesses if you decide to continue self manufacturing.

Yeah, that's exactly right. I love that. Margarita, thanks so much for being on today. I am so impressed by everything that you've accomplished so far and can't wait to continue following your journey. 

Margarita Womack: Well, thank you Jordan. Really appreciate the time today. It was fun to chat.