Written by Shawndra Russell | Photos by Evan Anderson
And indeed, Jael and Dan Rattigan couldn’t know exactly what they might be getting when they founded Asheville’s French Broad Chocolate Lounge. Now, though, amid a significant expansion, they’re feeling pretty confident.
During my first visit to Asheville in early 2013, I made sure to stop in the tiny French Broad Chocolate Lounge on Lexington Avenue. The line was almost out the door—even though it was a random Tuesday at three in the afternoon—as French Broad had made quite a name for itself since first opening in 2008.
Then, when I moved here in late 2014, I learned that French Broad also had a factory and tasting room on the South Slope (on Buxton Avenue), and they were set to open their new 4,200-sq.-ft. chocolate lounge in the heart of downtown, across the street from Pack Square.
Fast forward to 2018, and big changes are afoot once again for French Broad Chocolate’s owners Jael and Dan Rattigan as they prepare for their most significant pivot yet. While the French Broad Chocolate Lounge (FBC) downtown and its adjacent, quick-stop French Broad Chocolate Boutique will stay put as tourism hotspots, factory operations will move from the South Slope to the River Arts Makers Place, aka RAMP, in a 12,000-sq.-ft. facility that will allow the husband-and-wife duo to quickly triple their production capabilities and eventually produce ten times what they’re whipping up today.
Notes Dan, “The new design provides industrial grade power and infrastructure, workflow conducive to new food safety regulations, and capacity for high volumes of visitors, helping us make even better chocolate.” Later this year, guests will be able to see the process up close while being safely separated from the production floor, and FBC will finally be able to host regular events, which they hope to ramp up quickly with guest chefs, pairings, and how-to classes. And perhaps most importantly, the new space has a loading dock, something the South Slope location sorely lacked.
However, they love being part of the growing South Slope district, so instead of shutting down the former factory, they’ve decided to move their creamery—currently operating inside their Pack Square chocolate lounge—to this location. In a happy twist of fate, this move means they’ll be able to produce triple the ice cream, too, in addition to transforming the Buxton Avenue location’s current retail area into a dessert café. “At first, we considered adding additional capacity to Buxton, but then came to realize this was not our ideal building,” Jael explains.
With these changes, the Rattigans forecast they’ll be able to grow their current annual revenue from $3.7 million to between $7.4 and $11.1 million within five years and increase production from 19 metric tons up to 250 tons.
Expanding Smartly
How did they accomplish all of this in just 10 years? Well, it wasn’t by having, in Jael’s words, “budgets, forecasts, and well-communicated annual goals from day one. We thought it was romantic to go from one leap of faith, trusting we would be caught. We are still catching up with not having those foundational elements from the beginning.” In fact, she and Dan owned the business 50/50 as co-CEOs until late last year, when they sold 16 percent of the business to 25 accredited investors in a private offering under rule 506 of Regulation D of the Securities Act in order to help fund these expansion plans.
Selling off this percentage of the business funded the down payment they needed in order to secure a bank loan to complete these expansions in the spirit of heeding the advice of one of their advisors, who told them, “Debt is the cheapest money you can buy.” Adds Jael, “These investors are mostly local individuals or couples, and mostly people who we already knew or are close to someone we knew.” Some of these investors will be invited to join FBC’s new advisory board along with a few other outsiders, who they will rely on to bring key insights from their related industry experience.
Keeping the percentage sold off to the lowest amount possible was also important to the Rattigans because they want to leave plenty of flexibility as they step into the next decade of owning French Broad. They want to leave room for employee-focused initiatives, such as offering employee shares. “We want to offer our employees meaningful career paths as well as more challenging roles and growth opportunities,” says Jael. But this line of thinking has daunted the couple, too, during some of their late-night board meetings at home. “A lot of people are relying on us. It’s a big responsibility,” she says.
They’ve been planning this iteration of their business loosely for three years, but became serious and wrote a business plan in early 2017, which led to working with their lawyer to create a private placement memorandum for potential investors. This PPM launched on July 4 and closed by December after the funds they needed for their expansion plans were raised in just five months. But for most of their business’s incredible journey, it’s just been Jael and Dan, trusting their instincts. “I’ve discovered that seeing what’s next is easy for Dan and me, seeing what’s beyond next is a skill we are still working on,” Jael says, adding, “We have already exceeded every expectation we had for this business when we first opened our doors—only now do we see the potential we have to grow and make an impact.” This admission might surprise those who, like me, have watched French Broad grow by leaps and bounds during the past decade.
“A Network of Support”
Since the Rattigans don’t see themselves as business experts per se, how much credit does Asheville itself earn for contributing to their massive success? Heavily, says Dan, and in more ways than one. “We have become a small part of Asheville’s amazing food and beverage landscape. As part of that greater whole, we owe our success to the individuals and businesses who have made Asheville so special.” He also notes that together, these small businesses have helped Asheville’s well-documented popularity grow, which in turn helps the small businesses themselves grow—a cycle made possible by the community’s values and determination to not be swallowed up by big chains and outside investors. Perhaps even more importantly, these small businesses support one another and have cheered on FBC during every leap of faith. Jael sums up Asheville’s entrepreneurial community thusly: “In one word—collaboration. Every Asheville business owner I have known has been open and eager to support one another. We work together on philanthropic endeavors, co-create amazing products, and provide a network of support that is encouraging and inspiring.”
French Broad Chocolates has also benefited greatly from the entrepreneurial support infrastructure developed by organizations like Venture Asheville. “We have a team of experienced, intelligent, and caring mentors who go above and beyond to guide us,” says Dan, casually mentioning that on top of Jael’s already daunting work schedule and raising two sons, she’s also been working toward her MBA at Lenoir-Rhyne University for the past two years. “Basically, I am a humble student and sponge for knowledge and information, and I will accept teachings from everywhere!” says Jael.
The school work is paying off, helping push the Rattigans to divide their responsibilities into two clearly separate roles for the first time since opening. Moving forward, Jael will focus on the marketing, HR, and retail operations as CEO, while Dan will become FBC’s visionary, responsible for production operations, sales, and finance, but more importantly, continuing his role as “an idea machine, a creative problem solver, and the person most knowledgeable about chocolate… the person accountable for making sure our products stay awesome.” Part of this bifurcating of roles came from recognizing that it can be confusing for employees when two people are in charge. “It made it challenging to make timely decisions. Now, I’ll manage the leadership team and make sure everyone is aligned around common goals.”
A big part of those goals revolve around FBC’s commitment to upholding their recently earned B Corporation status. It took them over a year to complete the B Corp survey and provide all the documentation needed to receive this certification. “You really can’t fake your way to a B Corp status,” explains Dan. “It is a rigorous comprehensive examination of all aspects of a business; it’s like LEED for a green building, Energy Star for energy usage, and Certified Organic for sustainable agricultural practices, but all wrapped into one certification.” Another motivating factor for earning B Corp certification was to show their commitment to their triple bottom line philosophy, which Jael defines as “making a profit, but not at the expense of people or the planet.”
One unexpected benefit of going through the B Corp process was receiving an 81 out of 200 score, only one point above the minimum passing score. “Considering we didn’t really change our business to achieve this, we felt pretty good,” Jael explains, “But, it’s also humbling, showing us how far we have to improve our impact, and [it] encourages us with quantifiable steps we can take towards our goal of being a positive impact business.” And like joining the supportive Asheville business community, becoming a part of the B Corp community has been a huge bonus. “We’ve received inquiries for chocolates from B Corps across the country, and the other Asheville B Corps celebrated our achievement with a happy hour at New Belgium. It’s a great community to be a part of.”
Values System
Another important community that has helped fuel their success resides in Puerto Viejo de Limon, a small village in Southeast Costa Rica where the Rattigans opened their first business, a café and dessert shop named Bread & Chocolate. They eventually sold that business to one of their cooks, but they continue to buy significant quantities of cacao from that region through their former restaurant’s head baker. “He grew up in cacao production, and we’ve worked together to create a fermentary and drying operation,” says Jael. “It’s wonderful to remain connected to this place we lived and worked for two years, the place our first son was born.”
And since the Rattigans feel that fair trade certifications don’t always lead to the best outcomes for the farmers and producers, they’ve made a commitment to pay higher prices for all their cacao than the fair trade certification would require. Currently, fair trade premium is typically $200 per ton of dried beans, over the commodity price, which currently averages $2,500. The minimum FBC pays to their producer groups is $4000 per ton. “Some of the cacao we buy is fair trade certified, but a lot of it is not. Certification models are complicated,” admits Dan. The couple also own a small cacao bean farm there that currently serves as a hobby farm, but with Dan and Jael’s work ethic and growth, that farm could very well turn into a part of their burgeoning business down the road.
The company employs their “triple bottom line philosophy” in other business operations as well, including the decision to try a different business model than the increasingly-popular Living Wage Certified. French Broad was in fact Living Wage Certified for several years before trying a new compensation model that Jael describes as being based on “skill, problem solving, and accountability to create a system of internal equity where our employees would feel fairly compensated for their contribution to the company.” However, this model meant that a couple of positions were below the Living Wage’s standards, which led to employees expressing a desire for the company to re-seek Living Wage Certification by the end of 2018. All full-time employees are also eligible for medical, dental, vision, and other supplementary insurance options, and FBC is part of the YMCA employer network and an EAN, or Employee Assistance Network, which gives employees access to free counseling and job training. Last year, the company paid out $1.7 million in wages, and that number will certainly increase once both new spaces are open for business.
While their compensation experiment wasn’t a home run, the Rattigans’ willingness to forge their own path has served them extremely well since the very beginning, when they dropped out of graduate school and moved to Costa Rica in their vegetable-oil powered school bus to open Bread & Chocolate. Their lack of a 5- or 10-year business plan also allowed of them to make some important pivots, like evolving from chocolatiers to chocolate makers in what Jael considers their first major milestone. “We used to buy the chocolate as an ingredient, like most chocolatiers and bakers,” she says. “But to live up to our sourcing values, we made the leap to become connected to the source of our cacao and make the chocolate ourselves from the bean. This had the effect of changing our identity—from a retailer that makes its products, to a manufacturer with a robust retail model. Subtle, but the implications are major for our long-term strategy.”
The expansion also marks a shift in their business model as they now intend to focus on growing the business-to-business (B2B) side of operations after years of being business-to-consumer (B2C) focused. In fact, the wholesale side of the business currently only accounts for five percent of the business, and all of those orders have come from businesses that make first contact. “We’ll have to learn a new skill now—sales—but we are optimistic that B2C will continue to forge ahead with the Creamery and the new factory store, bolstered with our e-commerce continuing to grow,” says Jael. This decision again showcases how they refuse to operate a business laser-focused on only the bottom line, since the expansion would feasibly allow them to make four-and-a-half times more annual revenue if they only focused on B2C.
The new RAMP building will help French Broad grow into its B2B goals, but they chose it for more than just its size. Local architect Brent Campbell, with whom they’d worked on previous projects, suggested they take a look at the space, and they fell for it immediately. “When we stepped into it, our dreams were activated—it was what we were waiting for,” says Jael. She describes the space as “energized and engaged. It’s an inviting space, everyone engaged in their craft, sharing the experience and their energy.” Other vendors that occupy spaces in RAMP include Meherwan Irani’s Spicewalla spice company, Better Than Unicorns virtual reality studio (profiled in the April 2018 issue of Capital at Play), and a stream of UNC Asheville students and faculty utilizing the school’s STEAM studio (Science, Technology, Engineering, Art, and Math). Some of the new equipment that will fill their factory floor is coming from Italy, where the Rattigan family traveled over the summer to scope out the products and visit the owners, with whom they shared a kinship as the heads of two family-owned-and -operated businesses.
The Rattigans make it a priority to take family vacations, but inevitably, work comes along on these trips as well. To help maintain their sanity year-round, Jael relies on Pilates, while Dan enjoys Tai chi. As a family, everyone has the cooking bug, so they spend a lot of time in the kitchen together when they do have some free time, which is rare since they work seven days a week most weeks and their kids, ages 11 and 13, are both into sports.
Through it all, Jael and Dan have made sure to be good citizens to the community that helped make all their dreams and more come true. They support several nonprofits that work towards promoting social justice, food security, sustainability, women, and children, including The Downtown Welcome Table and MANNA FoodBank. They donate to many local school fundraisers and initiatives to support teachers, and Dan also notes that the FBC crew makes a point to do a river cleanup annually “to help take care of our namesake, the French Broad River.” On the business side, they work with 136 vendors to keep their family business running smoothly behind the scenes, all located within 100 miles (and 92 right here in Asheville).
No matter what level of success they reach, Jael and Dan will be forever grateful that Asheville called to them after their stint in Costa Rica. “The values of our business align with those of the Asheville community,” she concludes. “We owe our success to its support.”
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