Crain’s Chicago reports that a local protein bar company called RxBar is being acquired by Kellogg’s for $600 million.
RxBar was started by some friends in their early 30s with $10,000 in funds. They initially built it out of their parent’s suburban kitchen, then into a commercial space in the city. They now have $120 million in revenue, employ 75, are hiring 40 more, and the owners (and any later investors they may have) are about to become spectacularly rich:
Four years ago, Peter Rahal was making protein bars in his parents’ Glen Ellyn kitchen. Today he agreed to sell his company, Chicago Bar Company, to Kellogg for $600 million.
“We couldn’t have dreamed of this opportunity,” says Rahal, 31, who co-founded the company that makes the RXBar—made from only eggs, dates and nuts—with his childhood friend, Jared Smith. “We started with $10,000 dollars. We didn’t go to investors. We just f—ing did it.”
This is the kind of company that’s a perfect Chicago entrepreneurship story. The city has an agro-industrial heritage, and as I’ve mentioned before that translates into a lot of food and consumer goods businesses today.
RxBar isn’t a Silicon Valley style tech company, but a food company. So it’s right in Chicago’s sweet spot. It isn’t a huge employer, but probably does disproportionately employ blue collar workers, assuming it still does its manufacturing in-house. And this will be a nice wealth injection into the city.
There’s nothing stopping folks in Chicago from doing a tech business, nor other cities from creating artisanal food companies, which are widespread in America. But with its base of expertise and deep history in food and consumer goods products, Chicago would seem to be a great base to launch these kinds of companies.
How much has Chicago marketed this angle? It sounds like the makings of a great marketing campaign to me, given the city’s respected history as hog butcher for the world. Food is sexy right now. Being a center of food innovation is something that I think most people would find intriguing. Kraft, McDonalds, Quaker Oats Company, Tootsie Roll Industries, Sara Lee, and now ConAgra – together those companies own a lot of well-known brands. You can probably trace half of your local grocery store’s products back to Chicago one way or another. Companies like La Preferida add an inspiring ethnic side to the story that I think people would find very interesting.
Chicago also has a world-class culinary scene for those people that scoff at mass-produced goods. The city definitely is a leader in foodie trends. To expand the scope again, Goose Island has been a big force in expanding the craft beer movement to bars across the country.
I’ve even thought up a bad slogan: “Chicago: It’s What’s On Your Plate.” I expect a generous royalty cut from any subsequent marketing campaigns.
Sad that they sold out to a monster corporation in order to succeed, though. If every niche is filled by large corporations’ acquisitions, this eliminates yet more avenues for this kind of innovation.
I am think of once-micro brews and coffee companies now owned by Nestle (ugh)
Same with micro-breweries now converted to “brands” by ABInBev, including Goose Island.