The trio and the chocolate factory
It all started when Lezlie Karls decided to make a healthier version of a chocolate bar to quell the afternoon munchies of her Oh Henry!-loving roommate-turned-spouse, Nick Saltarelli.
“At that point, we thought nothing about it,” explains Karls. Little did they know that this would turn out to be an early version of Fudge Yah, the first product of their Montreal-based snack company Mid-Day Squares. Now, five years later, the company is forecasting $10 million in sales this year with ambitions to become a snacking staple.
Prior to the launch of Mid-Day Squares, Karls, who had been running a luxury women’s ready-to-wear clothing line called Hektor, and Saltarelli, who had a software company, had decided to team up and work on a new company. They opted for the food business and initially started a hot cereal line, but it never quite caught on. But after Saltarelli came across data showing the plant-based and real chocolate markets were growing exponentially, “he had this ‘aha’ moment in the shower,” Karls recalls, and realized the chocolate bar she had been making for him fit perfectly.
Still, the product didn’t yet have marketable attributes for grocery, Karls says. The goal was to “change the way people eat chocolate” and make Mid-Day Squares “functional,” with protein and fibre benefits, good fats and to satiate hunger between meals. So Karls reached out to the food science department at Montreal’s McGill University, where they received guidance on reducing the sugar, increasing protein and adding fibre to their product using ingredients that include unsweetened chocolate, pumpkin seeds, hemp protein concentrate, sacha inchi protein, maca and dates.
Having a good product wasn’t enough, though, explains Saltarelli. They also needed to make some noise. Problem was, Saltarelli and Karls are “super introverted” and needed help creating hype around the product. Enter Jake Karls, Lezlie’s brother, who was running a clothing brand called Chase & Hunter, which was hugely successful at generating social media buzz, but was losing money.
Jake Karls joined the team and immediately decided, “Let’s show the real ‘good, bad and ugly’ of what it is to start a business. We ended up filming everything.” They started broadcasting on Instagram in August 2018, and sales soon started coming in.
To get the bar into people’s bellies, Mid-Day offered Fudge Yah for 50 cents in a money-losing sampling program. Along with the bars, the founders included “wacky” Polaroid pictures of each other with personalized captions. That “automatically set us apart from every other brand out there,” Jake Karls says.
Since the founders initially couldn’t afford shipping, they hand-delivered the product. “We got to go into people’s homes and have tea and get to know who our actual customers were,” Jake Karls says. Their shocked customers would post about it online. Those customers started asking stores to carry the product, and the rest, as they say, is history. Mid-Day is now sold in 1,200 stores across Canada, including Sobeys and Metro, and that number is expected to grow to 1,800 by late summer when Loblaw begins carrying them. The bars are also in 600 U.S. outlets, and the brand aims to enter mass grocery down south by next year. Online currently represents 40% of sales.
The sales potential is much higher, says Jake Karls. Canadian grocery stores “are not used to refrigerated snacking” and are placing Mid-Day in the dairy section, where impulse buyers don’t often venture. Instead, Mid-Day is trying to convince grocers to follow the U.S. example and stock its product in the produce department alongside cut-up fruit and pressed juices.
There are now three flavours—Peanut Butta and Almond Crunch! followed Fudge Yah—and a fourth is coming this fall. And while Mid-Day was initially made in Karls’ and Saltarelli’s condo kitchen, they quickly outgrew the space. After visiting co-packers, who tried to get them to vastly alter their recipes, they decided to build their own plant. Eighteen months and $1 million in R&D later, Mid-Day now has its own 11,000-sq.-ft. plant that can produce 90,000 bars a day.
A loan from Investissements Québec funded the plant and two series of financing have raised US$6.5 million. CEO Lezlie Karls, COO Saltarelli and rainmaker Jake Karls own 63% of the 42-employee company. “Our goal is to become a household staple in the snacking space,” Jake Karls says. “The end goal here is not to sell this company, but to build [it to] the magnitude of a Hershey’s in the better-for-you chocolate snacking space.”
This article appeared in Canadian Grocer's June/July 2021 issue
