Globe and Mail article on UBC-affiliated Naked Snacks.
Neil Thomson likes his food tasty and naked; that is, free from preservatives and wholesome. He also covets convenience and he’s betting there are more people like him out there.
The founder of Naked Snacks, an online healthy snack store, started off with a good idea: create easily accessible snacks that can be ordered online and delivered to the customer’s door.
Mr. Thomson says they went about their business plan “a little backwards.” The idea was sound and there was a buzz about the 30 items the company designed for customers, but Naked Snacks encountered a problem when they wanted to produce the food.
“We led with designing great products and then went out to find someone to make them for us, instead of the industry standard of starting with a food producer and selling the products they already make,” explains Mr. Thomson.
Initially, the producers they approached could only agree to produce customized products on a large scale – 50 to 60 kilos of one product at a time. And with 30 products in need of production, “it would be a massive amount of food to store in our warehouse and cost around $30,000.”
This choice didn’t seem economically savvy and clashed with their ideals about fresh foods, so the Naked Snack team needed a creative solution, explains Mr. Thomson.
“We weren’t prepared to compromise on our products though, so it was a make or break situation for us,” he adds.
The company launched its line last December with the tagline: Delicious snacks, delivered right to you.
At Naked Snacks, the customer experience starts with the colourful, easy-to-use website. The user navigates through the purchase process, choosing their snacks – five snacks per box – and their delivery option.
But the idea was years in the making.
After he completed his undergraduate degree in business from the University of Johannesburg, Mr. Thomson headed to London to work in the financial sector. Over the next six years he saw the poor snacking habits of his colleagues, which got the wheels turning. “They love their snacks, items like muffins from the corner store,” he says. “And that’s when I first realized that convenience locations are dominated by bad, processed foods. It’s really difficult to get healthy food you can just grab and go.”
When Mr. Thomson started his MBA at the Sauder School of Business in 2010 he still had these unhealthy snacks on the mind. “It wasn’t part of an assignment, but I did start thinking more about the idea while I was working full-time at UBC after the program,” he says. “That led me to get in touch with the entrepreneurial community on campus to figure out how to make it happen.”
“They were hugely supportive in helping me identify the opportunity during those early days.”
Before they could launch, the Naked Snacks team needed to solve their production issues, so they began looking for more unconventional food producers.
“We had to ask: ‘Who would have an interest in producing this food for us, and what would be the benefit to them beyond simply making money’?” says Mr. Thomson.
The team started talking to chefs in the Vancouver area and their journey brought them to the doors of chef Don Guthro and his catering company, Culinary Choreography, which employs his students at the North Shore Culinary School.
“Chef Don agreed to produce our food at a more realistic rate of 10 kilos at a time,” explains Mr. Thomson, adding that it was a mutually beneficial culinary match.
“They have a lot of staff preparing food and smart people that are hungry to do good work,” he says. “We can also see what customers like as they can make it in small quantities and see how it’s received, before we invest in our own production facilities.”
With keeping the size of their food production small, Naked Snacks is keeping its snack line nimble and its options open for expansion.
“We can keep growing the line,” says Mr. Thomson, “People love variety and we would like to have more than 50 products by the end of the year.”
The next stage is to start to track the online data of what their customers like, so Naked Snacks can produce more of the snacks its customers love. Within the next couple of months the team plans on updating their system to allow its customers to customize each order.
Naked Snacks has also tapped a new market: corporate clients. Businesses order boxes of 40 snacks at a time for their break rooms and Mr. Thomson sees this side of his company really catching on.
“The plan is to keep expanding and make sure we are getting the right products to the right people in the right places,” he says.
“Without finding a creative fit with our current production partner we wouldn’t be in business today.”
Paul Cubbon is a marketing instructor at the UBC Sauder School of Business. This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Tuesday on the Small Business website.
Read the full Globe and Mail article here.