New dough revives Lancaster Food Co.
After a brief shutdown, a crowdfunding campaign and a last-minute save by a group of anonymous angel investors, Lancaster Food Co. is back in business.
Founded by serial entrepreneur Charlie Crystle, the company closed production and ceased shipments of its bread, cookies and syrups to hundreds of vendors in December when a private lender backed out of a $250,000 loan, denying the company key operating funds.
“During the shutdown period, I kept in touch with our customers and we were able to do some good business. Our customers, our stores, our managers have been incredibly gracious and supportive,” said Crystle.
Crystle’s efforts to sustain the company included the launch of a crowdfunding campaign on GoFundMe, through which Crystle hoped to raise $20,000. As of press time, the campaign had fallen short of its goal, having raised $12,401 from 124 donors. Contributions ranged in size from $5 to $1,000.
Seeing the need for a more permanent solution, nine new angel investors flooded the company with cash to keep its mission alive, but according to Crystle, they’ll also be expecting a return on that investment.
“The reason we were able to raise capital during a time when we weren’t producing anything is because we built up some real value in the company. They see a solid business and a solid business model and a team that works incredibly hard,” said Crystle.
Founded in 2014, Lancaster Food attracted its earliest investors with its mission to offer living-wage jobs to ex-convicts while making organic baked goods with all-local ingredients. The company opened with a starting wage of $12.50 per hour and now offers $15 an hour for manufacturing staff with future plans for employee stock ownership.
Crystle said he modeled the company after the Greyston Bakery in Yonkers, N.Y., which gained fame for its brownies.
“They say ‘we don’t hire people to bake brownies. We bake brownies to hire people,’” said Crystle.
Originally housed in a 1,000 square-foot facility on East Liberty Street in Lancaster and armed with $150,000 from the Community First Fund, investors were willing to be patient. But according to Crystle, it isn’t just the company’s philanthropic mission that has kept investors on board.
“As long as you’re showing progress and a path to profitability that is rational and funded, then they’re patient,” said Crystle.
At the start of 2017, the company moved to its current location in East Lampeter Township, an 8,200 square-foot manufacturing facility staffed by 20 full-time workers.
While the old facility could produce 700 loaves of bread a day, said Crystle, the new facility can produce 10 times that at full capacity. It was producing 3,200 loaves a day when the company halted production in December.
With that increased scale, however, came troubles of a different kind. The company was devoted to independently distributing its products, said Crystle, but that vision presented multiple problems when carried out on a larger scale.
Of the three distribution routes the company was running itself, said Crystle, “Two of the routes were not profitable, and you run into lots of issues. We had three accidents, there’s always kind of scheduling and logistical issues. That’s just not our core competence.”
The brief shutdown came as a major disappointment to local customers of Lancaster Food, who came to rely on the company for locally sourced organic products.
Jim Switzenberg, director of operations for John Wright Restaurant in Wrightsville, York County, was an early adopter of Lancaster Food Co.’s bread, having met with Crystle before his company began baking bread.
“I knew his mission and I knew what he was trying to pull off, which was ideal. We use all local products and local farms, so for us to be able to know our bread was organic and coming from local farms, that was a great reason for us to want to use them,” said Switzenberg.
When Switzenberg first heard the company would be forced to cease production, John Wright Restaurant hoped it could stock up so it could continue offering Lancaster Food products throughout the winter.
“When they said they were going to have to stop, we asked to stock up on their freezer product and get as much bread out of them, hoping they were coming back. The day they announced they were coming back, we were ready for our first order,” said Switzenberg.
“We like their mission as much as the bread,” he added. “And thank goodness the bread was good.”