Crain’s Detroit Business
By Sherri Welch
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Local food startup Pop Daddy Popcorn has secured a first round of investment to support its expansion into other Midwestern states.
In exchange for the undisclosed investment, the Green Oak Township company is giving investment fund Pop Vision LLC a 25 percent stake in the business.
“The trend in food and snacking is moving toward simple ingredients. People want to know where their food came from,” said Andrew Dickow, director of Birmingham-based Greenwich Capital Group and a Pop Vision member.
Photo by Pop Daddy Pop Daddy hit $1 million in revenue last year and its popcorn is now in more than 1,000 retail outlets.
And Pop Daddy co-owner Mark Sarafa is at the forefront of that trend with his all-natural, simple products, Dickow said.
After three years in business, Pop Daddy hit $1 million in revenue last year. Its popcorn is now in more than 1,000 retail outlets, including Busch’s, Kroger, Meijer, Whole Foods, Plum Market and Wal-Mart. And it’s going head to head with national brands like Skinny Pop, Smartfood Popcorn and Angie’s BoomChickaPop.
Global sales of popcorn are expected to increase more than 40 percent to $12.4 billion between 2016 and 2020, with the U.S. share of the market declining slightly to about 59 percent, Bakeryandsnacks.com reported last year, quoting projections from global market analyst Technavio.
“There’s an opportunity to leverage some of (the) relationships (Sarafa) has built with customers and distributors … now that he’s got his foot in the door,” said Dickow, who met Sarafa as a judge of the inaugural Crain’s Food Summit pitch contest, in which Pop Daddy was named the winner in the startup category.
Pop Vision’s members also include the principals of Vision Investment Partners LLC, the Bloomfield Hills firm that bought the Bert’s on Broadway building in downtown Detroit and a Randolph Street building in December and is the Michigan franchisee for California-based smoothie company Jamba Juice.
The principals of Vision Investment, which launched in August, include Mark and Kevin Denha and Omar and Saber Ammori, majority owners of Bloomfield Hills-based Wireless Vision Holdings LLC. In September, they recruited former Bank of Michigan president Mike Sarafa — brother of Pop Daddy’s co-owner — to serve as group president for management and investments.
Aside from the family connection, Vision Investment’s Kevin Denha is a lifelong friend of Mark Sarafa.
It was at the inaugural Crain’s Food Summit held at Detroit’s Eastern Market last August that Vision Investment’s members met Dickow. Before joining Greenwich Capital, Dickow had spent nearly 10 years working at General Mills in various financial and operational roles, from finance manager and corporate development working on mergers and acquisitions to supply chain and operations and as a controller at one of the company’s manufacturing sites.
Attracted by his experience and potential to consult on the food investment, Vision Investment Partners invited Dickow to co-invest in Pop Daddy.
Dickow, in turn, brought his own brother, Randy Dickow, into the deal. Outside of Pop Daddy, the pair own Calexico, an upscale Mexican food franchise that opened in the building at One Campus Martius in Detroit in August, and three other Detroit restaurants: Lunchtime Global, Freshii Detroit and Sweet Lorraine’s Fabulous Mac n’ Cheez in the Renaissance Center. They also bought the Mad Hatter Bistro in downtown Birmingham in November.
“I’ve seen what works in the marketplace,” Dickow said. ” I’m excited to bring that to … try and help mitigate any chance of failure as we look to expand” Pop Daddy.
Mark Sarafa and his wife, Erin, began making the popcorn at home after he discovered reported health concerns with microwave popcorn and banned it from his house.
They use a red kernel that pops smaller and has a crunchier texture than other popped versions, popped in olive oil, and use natural flavors to produce five varieties: original with olive oil and salt, kettle corn, white cheddar, black pepper and a hot-sauce-infused version.
Photo by Aaron Eckels Pop Daddy Popcorn Inc. was the winner of the “startup” category of the Crain’s Food Summit pitch competition last year at Eastern Market. From left: Mark Sarafa, Pop Daddy Popcorn co-founder; Fermin Mendez of Varnum, which will provide legal consulting for Pop Daddy; Dan Duggan of Crain’s Detroit Business; and Erin Sarafa, Pop Daddy Popcorn co-founder.
Mike Sarafa said his brother’s background in the food and beverage industry is as compelling as his popcorn.
“A lot of people have a product. (Mark) worked for Coca-Cola, Frito-Lay and Absopure in sales, so he knows how to get his product out there in the trade channels,” Mike Sarafa said.
The “turn” or replacement rates for Pop Daddy Popcorn in the stores are proof it’s gaining a consumer following, as well, Sarafa said.
“He’s going head to head with the nationals in the places he’s in, and he does well,” he said. “We think the company has a really strong value. We’re poised to do this now and (invest) more later if we can help him become a regional and then a national product.”
Pop Vision’s investment will fund marketing efforts designed to expand Pop Daddy into other Midwestern states.
Mark Sarafa said the company plans to exhibit at food distributor shows and national trade shows that attract retail buyers, like the Sweet and Snacks Expo in Chicago in May.
Pop Daddy also plans to do more sampling with consumers at Midwest fairs and festivals and to do more tastings at retailers in those areas.
The hope is to double revenue this year, Sarafa said. But it wouldn’t be possible without the Pop Vision investment.
“Traditional bank loans are still not available to us; we’re still very risky as far as the bank is concerned,” he said.
But Pop Vision’s members bring background in the food industry and have all built businesses themselves.
“I think I can learn a lot from them,” Sarafa said.