The Persistence Needed to Build Hiatus Cheesecake

A hit song funded a hit dessert. Matt, the founder of Hiatus Cheesecake, went from baking with his mom to serving fine dining rooms, then navigated a leap into Whole Foods and, later, Kroger’s Go Fresh & Local Accelerator. We unpack the real story behind the glossy headlines: how a single anchor restaurant paid for a commercial kitchen, how packaging and UPC readiness opened doors with distributors, and how a pandemic-era retail launch became a proving ground for operations, data, and grit.

We dig into the messy middle every CPG founder knows too well: cash flow gaps that stretch from purchase orders to 60-day terms, the pressure to choose between making it yourself or handing the recipe to a co‑packer, and the costly consequences when packaging fails at scale. Matt shares the financing stack that actually moved product—royalties, bar income, family checks, CDFIs, microloans, distributor-enabled ingredient buys, and PO financing partners—plus the vendor negotiations and constant communication that kept trust alive when delays hit. The packaging crisis forced layoffs and a hard pivot to foodservice, but it also sparked a smarter rebuild with domestic packaging and tighter supply planning.

Along the way, mentors and cohorts helped turn a product pitch into an investor pitch. A $25K win, a lean crowdfunding raise, and cleaner financials attracted advisors ready to invest in a clear path to returns. If you’re building in food and beverage, you’ll walk away with practical tactics on retail readiness, distributor onboarding, cash flow management, co‑packer evaluation, and how to present numbers investors actually believe. More than anything, you’ll hear why hope isn’t blind optimism—it’s the discipline of shortening the time between a setback and a solution.

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Transcript

Origin Story And First Customer

Keith Kohler 0:03

Hi everyone, it's Keith Kohler, your financing man, and welcome to episode seven, episode seven of How I Financed It, which promises to be a delicious episode because today we're talking about cheesecake. Your financing man, Keith, will help you get the right financing at the right time. That is Transaction Me. And I also help you with the management of your business finances, which is Transformation Me. And what we do here on How I Financed It, as a reminder, is we chronicle the personal and business journey of our entrepreneurs primarily through the lens of how they finance their business from the very early stages until where they are now. So, as I said, today promises to be a super delicious episode because we're talking cheesecake. And would you help me welcome to the stage Matt from Hiatus Cheesecake? Matt, welcome. Glad to have you here. Glad to be here. Yeah, we're really excited to have this conversation because again, who doesn't love Cheesecake? It it's it's certainly going to be the most delicious one we've had so far. For sure. Awesome. So what I'd love to start with is uh you sharing with our audience a bit of your origin story. What got you motivated to found this business?

Pivots During The Pandemic

Matt Featherstone 1:26

So this all began. I used to bake with my mom pretty much every day. Uh one day a cousin of mine's came in with a cheesecake from Cheesecake Factory, and that's kind of when the obsession with cheesecake began. Um I started making cheesecake for family, friends, and events. Um eventually I ended up in the restaurant industry as a bartender, and I was bartending at this restaurant down in National Harbor. Um, I randomly made a cheesecake, took it into work. Uh, the owner of the restaurant, the executive chef, and my co-workers were so impressed that they convinced me to go into business. So I started um hiatus cheesecake. Hiatus represents a temporary break from your diet. Now portion sizes are single served. We encourage portion control so that you don't overindulge. Um, so while working at that restaurant, um, the owner of the restaurant kind of took me under her wing, um, her and the family, and they kind of helped me through my RD process. And that's when I learned that most restaurants were outsourcing their desserts. Um, that restaurant actually ended up becoming my first customer, and it was a good one. They were on the fine dining side, the restaurant seated 500 people. I was actually able to use their name to leverage my way into an additional 10 restaurants over the next couple years. Um, ended up becoming a vendor of Cisco in October of 2019. Uh, the pandemic hit, and then pretty much lost all that business, had to make some pivots, so decided to start selling to hospital cafes and Whole Foods markets, um, made a pivot into retail there. Um, Whole Foods started us with uh a grocery store in downtown Baltimore and one in downtown DC. Uh my business partner, Brandon, came on board in August of 21. Uh from there, uh we started doing these uh grocery store blitz where I would like go to a grocery store and drop off, and you know, we well my business partner would call up and um pretty much set up, line up maybe like 14 grocery stores in a day. Uh we've been run that probably like three or four days in a week, and I would just go grocery store, grocery store, grocery store. Before I knew it, we were in about 35 grocery stores uh between Baltimore and Virginia. Um then we uh found out about the uh Kroger, the uh Rangeme. Uh we onboarded with the uh with Rangeme and Through Range Me. We were featured on QVC and HSN as a spotlight business. Um we also learned about the Kroger Go Fresh and Local Business Accelerator. Um, and we were one of the five winners back in 2022, I believe. Um and from there, uh we started working on building the supply chain, which was a whole nother monster in itself to start doing.

Keith Kohler 4:01

Oh yeah, and it was during the most challenging times, right?

Scaling Through Whole Foods And Cisco

Matt Featherstone 4:05

Yes, for sure. Um so uh we I say for the entire year, rest of 2022, and and pretty much the majority of 23, we were trying to figure out exactly what that supply chain looked like. We ended up launching in Kroger in August of 23, so about a year later. Excuse me, they started us off with about 17 stores. Uh, we also decided to pivot back into retail. So I forgot to mention that um because of the Kroger Go Fresh and Local Business Accelerator, uh, we were introduced to Gourmet Foods International, which is one of the largest gourmet food distributors in the world. Um and Kroger is our anchor account with Gourmet Foods International. Um, but around that time we decided when we launched the Kroger, we also decided to pivot back into retail. So we added on another distributor by the name of Savile Food Service. They're local in most of their businesses in uh the mid-Atlantic region, but they are the largest independent um distributor in the country. Um, so we have a few anchor accounts uh with Savile. Um and then we recently brought on U.S. Foods and PFG. Uh so that's how we started, and now we're in about 100 grocery stores. Uh we have four distributors, and we're working on uh growing nationally.

Keith Kohler 5:26

That's a really terrific overview. And I think what was cool and interesting, and we're gonna go back and explore that a bit more, is you used the word pivot a few times during that discussion, right? So we're gonna go back and dive in deeper a little bit about what motivated that, or what were the events, either from a sales perspective or operations or supply chain perspective, that kind of made that path happen that way. I think it was exciting when you said um cooking in the kitchen with mom, right? So cheesecake was probably one of the things you made. Just curious for our audience, what were some of the other favorites that you cooked up?

Matt Featherstone 6:02

I mean, surprise so cheesecake was the one thing that I decided to like start doing myself. Like when I was my mom would bake bread, so we would do um French bread, we would do croissants, um, and they give you a backstory on that. We were a pretty large family, so um, it was me, my two brothers, so three boys, and my sister, and then my grandfather was ill, so she took care of my grandfather as well. So a decent sized family, and then my mom said that she started making bread because we were eating eating up all the bread so she could save money, she started making it herself. Um, so uh initially I would be in there, we would make, like I said, a French bread, dinner rolls, croissants. Um, and then as far as uh my mom cooked everything, like just an amazing, my mom's an amazing cook. Um, so that was the the cheesecake part uh was literally because I had been you know baking and cooking with her so much when I tried that cheesecake factory dessert, I I loved it so much, I was like, well, I'm gonna figure out how to make it myself because you know you can imagine in a middle class um family in Baltimore, we didn't if and with that size, we didn't go out to eat as much. So I wouldn't um wouldn't have had the chance really to try it again had I not learned how to make it myself. So that's kind of you know what initiated me figuring it out myself.

Make It Yourself Or Co‑Pack

Keith Kohler 7:29

Well, I think the whole world is happy that you chose cheesecake instead of French bread, right? Because the savory experience and everything that you've put into it with a lot of heart and soul. And I'm sure I imagine as you produce the product, a lot you think of your mom and those experiences and you recall it right from the beginning, you've always made it yourself, haven't you? Yeah, yeah, yeah. And I think for a lot of folks who are in who are having consumer package goods, that's one of their first key early decisions, right? Is can I make it myself, which not that many people do. So versus a co-packing. And I'm wondering, was it a very straightforward, easy decision to say I'm making it myself, or did you consider options? What was kind of going through your head at that initial period?

Matt Featherstone 8:18

Well, at the time, I really didn't know, I didn't realize that cold packers existed until we started building out that supply chain. Um, I had heard from um so some of the other restaurants that I'm in. I would talk to their owners and they'd say, hey, you should you can just get someone to make it for you. And I really didn't understand that they were speaking about cold packers at the time. I I just have always been the type of person where when I come to a hurdle, I figure it out, you know. So um initially it was I used Graces as kind of an RD, you know, platform. So um, and it was, I mean, it was truly a blessing for them to allow me to, they allow me to have my own menu there with my name on it. Um, on the back of the menu was a description of how hiatus started and um the background. So I was a and I was able to get at least for about a good I say that those first three to five years, I was able to serve my product to their customers, get feedback, honest feedback from them, and then go back and make the changes. So during that time, I mean, because when I first got here, I'm at Beamore Kitchen right now where I work, but when I first got here, I didn't, I had never mass produced any cheesecake. I didn't know how half of the equipment in here worked, you know.

Early Financing From Royalties And Tips

Keith Kohler 9:39

So it was more well, yeah, and I appreciate you sharing that, right? Because I don't think any of us goes into any of it, any of it knowing perfectly what's gonna happen, right? Right, and even experienced manufacturers will probably say that there's always something new. What I really appreciate about your saying is you talked about, hey, you you met you're very decisive, right? If you decide it, you're going for it. And I think what's also cool is you making it probably because that's what you knew. You were already an experienced baker from your family experience. So you're like, hey, I can do this. Yep. Um so when you made that decision, right? You're starting to produce the cheesecakes. When you when you started spending money on ingredients and everything, how did that come about? Was it your own savings? Was it something from friends and family? What was that initial financing?

Matt Featherstone 10:32

So prior to hiatus, uh, my other career was songwriting. Uh, me and my brothers have a uh right, okay. I'm not even sure if I've still shared this with you before, but my background is in music production. So me and my brothers have been writing songs since we were kids. Uh, we are assigned to a publishing company called Artist Publishing Group that works very closely with Atlantic Records, Warner Chapel, all of that.

Keith Kohler 10:59

We Atlantic label. And isn't that the Atlantic was the Aretha Franklin label, wasn't it?

Matt Featherstone 11:07

Correct, correct. So we've written songs for um some of our biggest hits have been with Drew Hill. We wrote a hit for Drew Hill, we uh Trey Songs and Nicki Minaj, Chris Brown. We have a song in Fast and Fury 7 and the theme song for Fest and Fury is eight. So we all were getting you know royalty checks from our um from all the work that we had done. I think at that point we had sold about 11 million records. So um we were trying to figure out what to do as far as investing those royalties because of like with most industries like that, it's a bell curve on your royalties as far as you know, as you'll still can think of it.

Keith Kohler 11:47

Like a quick ramp up in income and then it comes down really quick and like little ripples, right?

Restaurant Growth To Retail Readiness

Matt Featherstone 11:53

You got it, you got it. So at that point, when we were like coming down on that bell curve, we're like, okay, well, what are we gonna invest in? So we all kind of went different ways investing in different projects. Um, and then with this particular project, I brought my brothers in, told them what I wanted to do. They already knew that I could bake, you know, obviously they grew up with me. So we each put up $2,000 apiece. It doesn't sound like a lot, but that $2,000 um that $6,000 got me into Beamore Kitchen to start. Um, I had already had Grace's Mandarin. I had hadn't got in yet, but I had taken samples of them and they said that they were bringing me in, but I needed to be able to mass produce them. So I found out about Beamore Kitchen. Uh, we went ahead and made the investment. Grace started Black Friday, November of 2016. I started in Beamore Kitchen in October of 2016. Um, so then from then on, Grace's was a biggest enough customer where they were putting in about 2,000 between $2,000 to $2,500 cheesecake order every month. So my rent here. I mean, my rent here for kitchen at the time is just a thousand dollars. So that was that was my first um bringing that customer on. Once I saw that I had a customer that would pay my rent for where I was, and only thing I had to do was build on top of that, I knew I definitely had something. So I just went forward and kept going.

Keith Kohler 13:30

Yeah, so what's great is you knew that when you put that money down and your brothers did it, that you did have a customer for it, right? It's not like they will come. The good news is you had some degree of certainty that yes, this initial sale will happen. We're not we're not putting money out there that we don't know what's gonna happen in the world, we're gonna get it back, we're gonna sell, etc. Correct.

Matt Featherstone 13:54

I'm curious. Yeah, I don't I wouldn't have made that investment had I not known that that customer's lined up. Um, and then I I had on top of just having um a customer, I had a customer that I had skin in the game with. I had already been working for them for eight years. They knew what type of work that I've done just from working with them. So they believed in they believed in me, you know.

Keith Kohler 14:17

You know, I really love that phrase because I think if all of our founders reflect upon that, sometimes the entrepreneurship journey can feel lonely, right, or isolated. And yet, if we all call to mind how many people have believed in us throughout the process, right, whether it's a customer or a vendor or a family member or an investor, I like to call that to mind from time to time because when it does get hard or when it is challenging, we can reach out and remind ourselves that we do have that support. And when you think of how you and your brothers were thinking at that time, were would you say all of you were at a similar enthusiastic level? Was one more than others, or or was it pretty good alignment from that beginning period?

Matt Featherstone 15:06

I think that with my on the hi-atus side, they believed in, they didn't really understand as much about the bacon industry. And honestly, at that time, I didn't realize as much about the bacon industry or how huge the industry was. Um, so they just, I think initially their investment was just investing in me because they knew that I was gonna go for it and they, you know, they knew what type of person I was. Um, which I think is very now that I've called it called to mind as many times at this point that I've pitched to investors, um, and now you always hear the term um the investor invest in the person. Right. And that happened to me right from the yeah, especially at the earlier stages, right?

Keith Kohler 15:49

Because we know that um, and again, that's a great reminder to all our viewers and listeners about hey, the only thing we know about projections or a business plan is it's just not gonna happen exactly the way we have it written on paper. That's all we know. But what we know about Matt is Matt is gonna get the job done. If you if you have something you know you need to do, you'll you'll focus on that task in hand. So it's a great reminder to all of us that at those early stages, it's a big C character, right? It's who is Matt as a person? Um, what's it gonna look like when times are great or when times are not as great?

Matt Featherstone 16:29

Right.

Mentors, Cohorts, And Financial Literacy

Keith Kohler 16:30

How will he lead a team? How will we grow a team? All of those different things are in consideration, and it's great to know that your brothers and you all together said, great, we may not know exactly where it's going, but we feel there is something here. We have a good customer, and we're trusting and believing that something can grow from it, right?

Matt Featherstone 16:49

Yep, yep, and it and it did you know that initial investment. Um, like I said, from at that point, we started off with Graces. I say that was in 2016. I say by the time I got to about 2017, uh I was in 10 restaurants.

Keith Kohler 17:08

That's true. So you focused on other restaurants? Were they different styles of restaurants?

Matt Featherstone 17:13

Um that first year, I just had to become comfortable making cheesecakes every single week whenever they had buyouts. Um, so the first year I just focused on Graces, you know.

Keith Kohler 17:29

You had your head down, right? And was really focused on your head.

Whole Foods Launch And Volume Reality

Matt Featherstone 17:32

Uh because I mean, I tell you, there were some issues back then that I had to learn with the cheesecakes. Like literally, even though I had baked with my mom, I didn't go to Culinary Yard School. So I had to learn the proper way to make meringues or buttercream. I had to, you know, learn it's so many things that I had to learn in order to get right in order to start going to other restaurants. So that first year was just that. Uh second year, the word has started to get around that you know, one of the bartenders at Grace's had cheesecakes at National Harbor. So I went around the corner. There was one restaurant called Bobin Keys. I went there. Um, and then we went to uh I was living in Bolton Hill at the time in Baltimore, and around the corner there were was a little eatery, uh, the brass tap that had just opened. And I went in there and sat and started telling them that I made cheesecakes. They ended up picking up, picking me up at that brass tap. I then got into brass tap at Towson, and then I got into a brass tap down in National Harbor. Um, and then it was other small restaurants around Baltimore, Marie-Louis Bistro, I was in um uh poppy cuisine, black swan, just just locally in different restaurants. Um, and then um once I had started to get to a point where I could see that this had potential, but there was information that I just didn't have. And I knew that it was like I needed to get that information in order for me to progress. So at that point, I started to look to other businesses that in the kitchen and see what they were doing. And I learned about um, I did one, it was called ICC, Inner City Capital Connection. Um, I did that, it was like two days, and they had Harvard business professionals come and try to educate the small businesses. Only thing with it was great information, but it was all crammed into two days, so it was it was a lot of absorbed. I didn't have Chat GPT to just like put all the information in in store. It was a lot. Uh so then I started looking for something that was more cohort kind of oriented. Um, and Loyola, one of the businesses here, had just completed uh Baltipreneurs with Loyola University. Um, and I asked him about it. He um recommended, you know, at by then I was already in Whole Foods Markets, I believe. Yes, I think by then I was already in Whole Foods Markets. Um region or well, yeah, so yeah, before I get to the to the um me doing that search, uh the way I so I had um I was yeah, let me rewind back actually a little bit.

Keith Kohler 20:24

Yeah, please. However you want to go.

Kroger Accelerator And Supply Chain Build

Matt Featherstone 20:26

Yeah, I'm trying to because I want to make sure the order is right. I Whole Foods. Okay, yeah, Cisco was first. All right, so I was in those 10 restaurants, and I was um trying to figure out how I could um expand. I had a friend of mine's who was working for, I believe she was working for Cisco. And Cisco, she invited me to one of their food shows. And um when I went to the food show, Cisco was interested in bringing me in. Um, so but in order for me, I decided to go into Cisco with the retail, um, with the retail option, which I now sounds like a bad idea, but I didn't know any better. So at that point, I started to work on getting um the packaging and everything correct with um for for Cisco. Um my dad had connections at the time with the Chinese, he was importing um products, you know, like MP3 players and different things he would import and sell um online. So we did have connections over there at the time. Um, and I was able to develop packaging labels and boxes and had import them over here. And that was the beginning of me having you know importing my packaging, and that's how I got ready for Cisco. By this time, I had been pretty much financing hiatus on myself between the money that I was making bartending because I was doing really well as a bartender, you know, um, and I was able to use pretty much all of my money from bartending, my royalties, and then whatever money that I was making from hiatus with the 10 restaurants, and started to you know build a little a little bit of cash flow there. So um, and then on top of that, you know, my brothers would still, if we had big purchase, we would do initial you know injections that we if we needed to make them um in order to you know get things covered. So um the we launched in that's when I first started learning all about barcodes, GS128s. Um all the compliances that I needed to have. Um I started that with Cisco. Um, so once I I got that ready for Cisco, just months later, Whole Foods comes to the kitchen and is looking for um is looking for local businesses to bring in. Um about three of us applied and I got in.

Keith Kohler 23:28

The cool thing is in a specific region?

Matt Featherstone 23:31

Yeah, in this specific region. So the cool thing is that I had already um been working on getting all of that stuff together for Cisco because I launched in Cisco with a retail product. So by the time it rolled over to Whole Foods, when I actually went into the Whole Fleet Foods meeting, I already had my packaging, already had all the all of our UPCs and everything together that I had to get together that I got um together for for Cisco. So it was kind of like I think because I had all of that set up already, that they that's one of the reasons that I got in.

Keith Kohler 24:04

Um it was easy for them to say yes, wasn't it?

Matt Featherstone 24:08

Yeah, yeah.

Keith Kohler 24:08

So in addition to great product, you were ready to go.

Matt Featherstone 24:12

Correct, correct. So all of this kind of happened at the same time. Um, like within that year or two, uh, then I started to realize that I needed more information. I did the ICC, uh, I got a referral to Baltipreneurs uh from one of the um other businesses here in the kitchen. I applied, got into Baltrepreneurs with Loyola University, and they paired me up with a mentor. Uh the mentor that they paired me up with was David Wise, and he had he was one of the presidents of the Abnel, I forget how to pronounce it, I think it's Abel. But um, yeah, he was he was one, he was um the organization that he was the president of raised money for businesses, um, and like millions and millions of dollars for businesses at all stages from startup early stages. I wouldn't say not necessarily early stages, small business and and larger. Um he helped like zesty uh companies like that, like raise no series A rounds. So it's he was my mentor. Um, and while one of the first things that he had me do was do a uh financial growth statement. So I had to, it was my first time ever doing one, and he gave me a template, and I did it for like the past two years, and he helped me work on that, and that's when I started really starting to first understand how PL's cash flow statements, violence statements, how they work. In addition to that, um Matt, can I ask you something on that? So sure this was this was about two years in, right? This may have been a little further. So I started in 2016. This would have been like somewhere if Brandon came on in 23. This would have been like around pandemic time, somewhere between 2019 and 2023, like within that realm. Okay, up top. All of this started happening in that time.

Keith Kohler 26:32

Before that time, like a lot of founders, you were really like it was cash in, cash out, right?

Matt Featherstone 26:38

It was, it was total like I was bartending, was part of the cash flow. Bartending uh the 10 restaurants that I was at, and then my music royalties.

Cash Flow Strain And PO Financing

Keith Kohler 26:49

So between all of that was what was kind of funding the business to grow to different stages until such time as you knew, okay, you're set up in Cisco and you're set up in Whole Foods, which I know you know this because you've talked to a lot of other founders. That's extraordinarily unusual and early, right?

Matt Featherstone 27:10

Yeah.

Keith Kohler 27:10

For an early stage company to go to essentially, it's like kind of like going from little league to major league, just almost just like that. I'm saying that, of course, because your hat is perfect for a baseball analogy. I had to go there. And I was wondering, so here you go, Cisco and Whole Foods. Did they give you a sense of what the volumes could be, what the plan?

Matt Featherstone 27:38

And that's one thing that I think that um that I think is different from well, kind of that sets founders apart as far as some people are afraid, you know. Like that's one of the things that people would say, like, oh, you're gonna try to, you're gonna go for Whole Foods. Do you think it can handle that volume? Automatically they start planting that seed of doubt. Um, but you don't really know know what the volume is gonna be. So I to me, I just looked at it like, all right, I see Whole Foods over there, and I know that that's gonna have some type of volume of growth, and I see where I've come from, and I'm trying to grow. So it was just like, hey, well, sink or swim. You know, you're gonna get in here and see it, see what happens. So I didn't have a sense of exactly what the volume would be. What I did is I told them where I worked, what I how many restaurants that I was in right now. And then they started me with what they thought I could handle. Um, so it was just one initially when I first started, it was one Whole Foods market. And I was doing my own number crunching as far as the volume that that store does, and what the dessert, what the dessert and bakery does in that store, and um trying to figure out where the numbers would fall, but it was literally just three cases a week, three cases, 72 cakes a week, you know. So it wasn't nearly as many cakes, and I was already producing about three, four hundred cakes a week for graces, you know, graces alone, you know. So um yeah, it wasn't it wasn't that big of a deal initially when I first started. So that kind of gave me a little like reprieve, like, okay, I can handle this. Um so as we added, as we started to add more grocery stores, I started to get the data that I needed to see exactly how how products move. Um, and you know, it gave me a little bit more confidence on bringing on more customers.

Keith Kohler 29:38

There you go, Matt. So Whole Foods one store, right? And this is uh 2020, 21, something like that.

Matt Featherstone 29:45

Yeah, I started in Whole Foods at during the pandemic. So the pandemic started on what's that 2020 of March. I launched in Whole Foods in June of 2020.

Packaging Crisis And Tough Cuts

Keith Kohler 29:58

Unbelievable because For almost everybody else, everything went on pause, right? Yeah. They were not accepting new products. Everything was kind of circle the wagons or hide under their shelf for a while, or I'm use all the different metaphors. Everyone, it seems like retailers went into hibernation, and yet again, you're the exception. So you're showing really in this early stage in early growth stages, you're doing things so uniquely and with exceptional achievements versus what your peers were doing in other categories and just in the general CPG industry. So that's really a tremendous early stage growth story. So you got to Whole Foods, you got to Cisco, and then at what point did you know, okay, bartending and royalties and income from operations isn't going to cut it enough. I need to find additional sources of capital.

Rebound Through Foodservice

Matt Featherstone 30:56

Um so that happened with Kroger, is when that happened. Um so I ended up Brandon came on board when um what was it? It was so I had David as my mentor, and he put me on the phone call with Jay Field over SST. And Jay said, at some point, you're gonna have to either come out of the kitchen and sell, or you're gonna have to get someone to sell, and that kind of really stuck with me. I was like, okay, I'm gonna need help here. So um I put it out to a couple friends that I would give them 10% on everything they brought in. Um as an example, 10% of yeah, like a commission. Um, Brandon came in and I gave him the uh the job of bringing on um what was it? It was festivals, like direct to customer. That first month that he came on, which was he said, I remember I'll never forget. He said, We're gonna get this email together. And once I get this email together, then we're gonna be good. So he literally pulled the email out of out of me. We were booked with festivals every Friday, Saturday, and some Sundays from August all the way until the end of the year. At that point, I knew I was like, oh no, this guy's gonna end up being my business partner. Um, so once we got through that year and then he started to see how we're in Whole Foods Markets and all of this, it was like a whole other part of the business. He dived right in and started. We ended up in 30 grocery stores from there. Um at this point, as we're scaling this, this is my first time doing this big scale. Then the financial strains started to start getting more extreme, right? I mean you go from two grocery stores to 30 in a matter of a couple weeks. Um, that's like when you that was the beginning of me seeing the strain between sales and production and the capital that you need. That was like the first lesson. I didn't really understand it until the next year. That next year when we uh was started to build the supply chain for Kroger, and you know, they were mentioning 1200 stores. We want you guys in 1200 stores. And I was like, I don't think I can produce that much. Um, so we started to do research on and learn about co-packers uh and and really getting the cost of how much all of how much this would cost to do um and how we would go about doing it. Um as we started to go down the co-packer journey, we clearly realized that we would need to really pull it off, we would need an investor or some type of be able to raise some type of capital. Um during the pandemic, um, even though I had Whole Foods um and hospitals, I only had during the pen most of that pandemic, I only had two Whole Foods markets and just two hospitals. And the volumes were not really, really high. So during that time, I as far as me being um uh having my credit being in a place where I could go get a loan, uh that kind of got messed up along the way, you know, um using my credit cards to get by, and and it just it became tough. So I wasn't bankable um coming out of that as we were also going into Kroger. So we just started trying to find all different types of ways of funding. We had we were talking to CDFIs, we were just wherever we could try to get some type of funding to just get us over the next hump. You know, if it was like a little um if it was a loan for like 10, 10,000 adjustment that we could take out through um whatever organizations that they have here locally in Baltimore, but that would pay for a box order um that would then turn for us to be able to get an order off, you know. So we was just kind of like piecing these POs together for a long time. Um, and and that's really like for that that year of with Kroger of when they first launched, I say that year we were working on seeing how we were going to get the supply chain together. Um, what ended up happening is by the time we had all of these relationships with all of these co-packers and we saw what the price was to bring the co-packers on, or it would may have been a thing where they wanted to they wanted to move really, really quickly, and I just didn't feel like I was ready as a founder to just let all of the production go and not have the capital to make sure the product was right in that in that space. Um, so I decided to start making it myself first. Uh, when we first launched in the Kroger, they launched, and that was another scary decision because volume for you know 30 markets. Um, I had even though I had that data for 30 markets, if you increase you already in 30 markets and then you add 17, I was a little little nervous. Um, the difference between uh having 30 markets that you deliver to directly is different from 17 grocery stores that we launched into that the distributor is picking up. And I just have one delivery point. Um, so I didn't I figured that I would possibly be able to handle it, you know, from there. Now it was rocky at the beginning. Like I said, to get through a lot of those POs when we first launched, we were wherever we could borrow money from to get them done, we did.

Keith Kohler 37:02

Um Matt, what was the average size of those POs and kind of how was it scaling?

Pitching, Clean Books, And Investors

Matt Featherstone 37:08

Well, we started some mind you, when we started in that's another like that whole year we were seeing sales constraints, like the sales were growing faster than we could produce. So since we were, I should actually go into some of the issues that we went into as well.

Keith Kohler 37:30

Yeah, please.

Matt Featherstone 37:32

Yeah, so um when we were um about to launch into Kroger, the we also had started re-engaging in food service. So when we we brought we got the GFI PO and the Savile PO at the same time.

Keith Kohler 37:55

At the same time.

Crowdfunding And Nontraditional Capital

Lessons In Communication And Grit

Matt Featherstone 37:56

At the same time. Savile's first PO, I think theirs was four pilots. I think they both were four pilots. So initially, that initial payment um to pay for boxes and and overhead. What we did is we worked a deal with Savile, where they would um we if they put a PO in, we would be able to purchase our products from them and they would deduct it from the PO. So that's how we got the ingredients. We got the ingredients because off the SAVL PO we bought the ingredients for everything for both PO. So now the only thing that we had to do then was come up with the money for the boxes. Um, we had started that a couple months ago. It's uh an organization here called Innovation Works, and they have like these micro loans. So we took out one of those micro loans, and that's how we got the boxes. So for that first PO on that August of what's that 23, that's how we got those POs off. Um so then we were everything was going smooth. CGFI probably put another, and both of them probably put another PO in a few months later. Then um during that time, we were still purchasing our boxes out of China. I don't know what it was. I would say God, this was God. God was it said move my boxes domestic. I don't know what it was. Something just said, right? It just I just knew, and this is before everything started happening. Um, so um I told Brandon, I said, I think that we need to move, try to find a domestic partner. Uh, we're gonna run out of boxes by May. This was October. I said we'll run out of boxes by May. We have until May to figure this out. We started contacting everybody inside of our network trying to find out who could, who knew, who, where we could get boxes domestically from. Um, we found a partner. We didn't find that partner until like April. Issue is is that the box we initially had a square box, the box that we found domestically was a round box, and it had been proven that for our product that round boxes work better for customers as far as data. So we said, okay, we're gonna switch the round if that's a better sale. Um, but it required a label change. The label change required artwork. So you're coming in May, and I'm like, okay, the last of the boxes just went off to the distributor, you know, so we need to have these labels ready by next month. The labels were not ready until September. So for, and mind you, we had ramped up. Like at this point, we got you know the sales are going, right? Yeah, going up, you know, we got pallets, we were pushing about two to four pallets consistently every single month at this point. So it had really become a part of our revenue, our cash flow, you know. So coming, and I had employees and everything. So we lost that revenue, that consistent revenue for three months, three, four months, um, which was a major hit. I had to let some employees go, pretty much mostly everybody. Um, and that was a very, very, very tough time. If anything, that showed me that you need um showed me the dangers of, I don't know, it's it's important to strike to get to the to the success point, um, but you should always be looking for capital everywhere you can, always. Um, and it showed me the importance of if in order for us to scale, we would need some serious investment in order to make this work, uh, just because there are so many different things that can happen. Um, so um we ended up pulling through that we uh we were able we still had that was the retail, so we still have food service. The way that we made our pivots during that time is we started selling heavy food service, heavy, heavy food service. We um that's when we worked, we started engaging with U.S. Foods, we started engaging with PFG. Uh we hadn't become vendors of them yet, but we started that engagement process. Um, we started really laying into the Sabo Food Service. That packaging was a lot easier to get to um because it was already domestic. And that's kind of what helped us slowly get back on track. I had to make a lot of um agreements with a lot of the predators and uh that we had had, and they were, I think the biggest thing when you go through times like that is communication. You really gotta talk, let them know and see exactly what your plan is, and that you're not just freezing and like, oh my god, I'm gonna go bankrupt. No, you have to you have to really be in communication with everyone, let them know that you that the that it's on the way and and give them a clear picture of when it's happening, and then follow through with your word, which is what we did. Um we in the the boxes came in that September. Um, I think we did probably like that summer we ran. I mean that that uh winter, I think we were we got back up to about four pallets. Four by December, we were back at four pallets now. Um, so go on.

Keith Kohler 43:45

No, that's good, Matt. What I want to do is recap a little bit of that, right? Because I think there are a lot of really good important lessons. Right. Um what you did is you used probably every single access capital thing that you could in this early stage, right? Between you yourselves and your brothers, you're looking at uh quick question.

Matt Featherstone 44:10

Um they're so upstairs, they're getting ready for an event. Is that's not coming through the camera, is it? I mean coming through the you don't hear that, do you?

Keith Kohler 44:19

Oh no, we are, and that's part of part of the fun, right? Oh man, I'm sorry. Oh, don't worry about it. You know, you're you're in a workspace, right? So we're gonna have noises and things come up from time to time. So we we certainly learned in how I financed it, we just roll with it. Got it. Okay, okay. Okay. Um and I think what again, you've used all those different capital points, right? Again, CDFIs, you looked at grants, you looked at you yourself putting money in, negotiating effectively with your vendors is a big thing, right? And a lot of people forget that. That's one of the things where even at early stages, I think our vendors want to see us all succeed. And what I really appreciate about all that you did in that period is you put it out there, right? Like, I gotta get this done, I'm gonna sort it out. You know all your cash flows, and so you've gotten to that point, and now you're gonna continue to grow, right? What and what's again, what's so unusual is again, Cisco, Whole Foods, and then food service, still in your early stage period is incredibly unique, right? Most people are doing direct to consumer, or they're doing again local retailers, right? But here you have restaurants and all these other things, it's just such a unique story. And as you said, you knew cash in, cash out, right? And then it came to the point where I think you said uh, you know, in our previous discussions that we've said is you knew you needed to get the financials organized, right? Because you knew that you were gonna need to go out, as you said, and really do something more significant than raising capital. So tell us a bit about that and getting to and that next phase.

Pride, Advice, And The Power Of Hope

Matt Featherstone 46:09

So the way I learned this is um we so when I was in Baltimore, Baltipreneurs, we were also learned how to pitch. But initially it was a product pitch. I actually used that product pitch to get into Whole Foods. Then um I was I got accepted to Baltimore Homecoming a couple years ago, and uh the mentors that they connected me with helped me to turn that product pitch into an investor pitch. Um, and I actually was able to use that investor pitch to um pitch at Baltimore Homecoming, and I won $25,000, which was another thing that was on time, right? Right, that's a win. That's a lot of money, right? Yes, yeah. Keep in mind that that $25,000 came in the next month after we came off of back order. So September, rough time just getting everything back up and running. October pitched and won $25,000.

Keith Kohler 47:07

You manifested it.

Matt Featherstone 47:09

Yeah, right. It was literally, it was like literally, I have to win this. So from that pitch, um, we were able to take that pitch and develop that into what is now turned into an investor pitch. And I've learned while working on this um how much, how tightly all of your financials have to be in order for someone to feel comfortable enough to say, hey, I'm gonna give you money, not only because I believe in you, but I but I can clearly see where the return comes and how much I how much the return would be a clear path, you know, a no-brainer. So um we did that. Uh Brandon strategically like had me pitching to so many people. I mean, and then every time we recorded, every time I pitched to somebody, we were we were uh he would record the pitch, I'd go back and listen and I would make updates. So literally, we have I've probably pitched, I would say at least 30 to 50 times, and then just kept changing it and changing it and learning exactly how to word it in a way where um it would you know make someone want to invest. But as good as that pitch pitch is, you know, or can be, at the end of the day, once you've make that sale, they want to see the financials, you know, and if the financials aren't adding up to what you're selling, then it'll make them afraid to invest. So uh that's when we learned that the importance of making sure that your books are very, very clean and people can clearly see where your cash flow is, you know, they can see the revenues that they're making, they can see even if, like we said earlier, that a forecast is just a plan that most likely will not come true. At least at least um it's a plan nonetheless. And if if you can people can you say what?

Keith Kohler 49:16

Yes, I I that's I I love the way you said that is no, it's not gonna be right, but at least it's there, it's a it's a map, it's a north star. Fill in your favorite metaphor. At least you can act towards executing upon.

Closing And How To Connect

Matt Featherstone 49:31

Yep, and if people can see what your history is as far as how you have worked through plans, the pivots that you make, that gives them more confidence, yeah, more confidence in saying that, okay, I see this a forecast, but based off your history, I know that you're going to still get to your goal some sort of way. It may not be exactly how this is set up, but you'll get to the goal. Um, so um I think that that during that time period is where we um during the during the pitching and and seeing the financials, that's how I'm sorry, perfecting that pitch, I should say, um, really put us in the direction of really getting our books cleaned, you know. Um and along that way, I I want to definitely mention some of the some of the partners that we've had along the way um in financing. Um, like Ion has is a big partner that came on uh when we were going through a tough time, and even even now, like they had um we brought on brought on ion financial as a way to as a means to kind of finance our POs. Um, because we had the issue that we had is like a lot of times when you go to uh finance companies, it's uh receivable financing. So what'll happen is you you have a PO, you produce the PO, but then you may not get paid from that PO for about 30 to 60 days. So by the time when the when the PO is in the hands, excuse me, in the hands of the distributor, then they don't pay you for 30, 60 days, then you can excuse me, send that over to a receivable, uh, accounts receivable, um, fine receivable financer, and then they'll give you the money, and then you just then once you receive the money, then you can pay them back, and it kind of helps your cash flow move a little better. But if you're a startup, you may not even have the money to produce it, you know. So it's like so you have to um, especially when you're at the very beginning of it, you may not even if you have a PO for you know thirty thousand dollars and you're you're making even if you're making 50% off of it, you got to come up with 15 grand in order to produce that. So if you don't have the 15 grand, then where are you gonna get it from? Um, so we have partners like well, I mentioned Sabo was was definitely a partner where we were able to kind of get our ingredients funded working along with our distributor. Uh, then we had ion who would kind of help us get through the um labor part of it. Uh and um that's kind of how we kind of scaled up, you know, using you know companies like ion and and axion opportunity fund. Um yes to to help us uh get over those humps. But um now sorry, I'm kind of jumping all over the place. Are you good? And I wanted to make sure I mentioned them.

Keith Kohler 52:42

No, but I think I really appreciate that you're acknowledging throughout our discussion all the different, as you call them, partnerships that got you to where you are. But your comp your comp your originally with Grace, I think it's the perfect name to start with, right? Yes, a lot of it is about Grace, and then the restaurants that helped along the way, and then who was next after all of that. And I think what's interesting too is again, you used all the different early stage things. We acknowledge, of course, Ion and what was the other name of the company again?

Matt Featherstone 53:13

Axion Opportunity Fund. Axion Innovation. Innovation works was another one locally. Um, that invest that uh we were able to do a small, small loan with. Um, and I think those are those three were the oh, I almost forgot one. Very important. Um, we did a crowdfunding raise. We did that too. We crowdfunded with uh honeycomb, honeycomb credit. Um, that was interesting. We actually, you know, our campaign ran for about three months, and we were able to raise about 35,000 through crowdfunding.

Keith Kohler 53:54

Was that your goal? Was that the amount looking for? That's right. Yeah, because I think, isn't it interesting? And Matt, I'm sure you saw this over your evolution. Crowdfunding was kind of a big thing in the late 2010s, and then we don't hear about it as much anymore today.

Matt Featherstone 54:11

Correct. Yeah, and and the the crazy we didn't raise when it was a big thing, we raised when it was kind of like just a few years ago, we raised did the crowdfunding.

Keith Kohler 54:21

So kind of the big, as you said, with royalty that you're on this. Right, right, right. Because it's it's funny, and the hundreds of founders I talk with at the early stage, I rarely hear crowdfunding anymore.

Matt Featherstone 54:34

Yeah, it's just it was uh it's it was uh it was hard actually to get that crowdfunding. We we did a lot of um had to do a lot of different like pop-ups and and just trying to get people to it's a big marketing, it's a big marketing experience, and you have to have the videos and everything.

Keith Kohler 54:56

It's not just a deck, it's all that additional promotional stuff, right? That builds the sizzle and the excitement and the you know, the the what would make someone want to invest beyond just a deck, right? Yeah, and Matt, so you did that and so you got the 35,000.

Matt Featherstone 55:17

Yep, we got the 35,000 through them. Um, so that was those were the creditors that kind of helped us get through um or bring us to where we are today. Uh I would say. Um, so by the time we while we were getting funding from you know all of those different partners, um, I was also at the same time working on building that pitch deck.

Keith Kohler 55:42

Okay.

Matt Featherstone 55:43

So now currently where we are right now is we are getting out books completely brought up to date and pristine. Um, however, while we're doing this, we do have um advisors and mentors that have shown interest in investing even prior to that being done.

Keith Kohler 56:04

Great.

Matt Featherstone 56:05

So yeah, so they've been following the story, um, and they honestly believe that the main thing that we need right now is capital. They can see where we're headed and they believe. So we've already started getting investors, investments from um some of our mentors and advisors.

Keith Kohler 56:22

Terrific. So you secured both real actual money coming in plus investments or plus commitments, sorry.

Matt Featherstone 56:31

Correct.

Keith Kohler 56:32

And that's where you are today, right? So that's the whole financing journey, which you know, the it's it's perfect timing. We're ending at right the right time in the content part. And what I really want to witness with you, Matt, and of course, we're acknowledging Brandon and everybody else who's been a part of it, is you've shown throughout this process a lot of curiosity and willing to learn, willingness to learn and research, both in your product development, learning how to be not in a commercial kitchen, but co-packing or the choices. You learn these different product segments or sorry, the distributors and uh channels of trade, and you went in right with a lot of faith and I think a very abundant mindset. You didn't, it seems like throughout this process, sure, there may have been times of fear or doubt, but I don't think it really stuck with you that long. Versus a lot more founders in the early stage may be overwhelmed sometimes by those feelings. And yet that was really not a part of your journey.

Matt Featherstone 57:40

No, I think that um I heard something recently about the importance of hope, you know, and like what exactly what it means to hope. Um, and it's not necessarily uh being blind, it's that if you have the um the hope in place, then you only put yourself in places where you're headed towards that hope. You know, so it's like if I know and in my heart I feel like it's gonna be successful, I'm not gonna even allow the thought of failure to fester. I'm gonna all always be walking in the direction of where I hope and know that it'll be. Um, so that's kind of that's pretty much the attitude that I've maintained. I uh failure is not an option. I if if something I try to find the lesson in every mistake, you know, so that it can be corrected and then continue to move forward. And as long as I that's been working for me, I can definitely say that.

Keith Kohler 58:51

And may it continue to work for you because I think um hope is so powerful, and I it's a word I don't hardly I hardly ever hear, Matt, when we're talking about financing or even strategy. And in fact, I think it's really cool that you get to own that in your way, that you know it makes sense for you and your team. And really want to thank you for sharing your story today. And what we have a tradition here at how I financed it. I end with two different questions that I'd invite you to uh share your thoughts on. And the first one is what are you most proud of?

Matt Featherstone 59:27

What am I most proud of? I would say the first thing that pops in my head, I am I'm proud of the the person that I'm proud of the person that started this journey. That's what I'm proud of. If I could go back and I can see that person that started this journey, I'm proud of them. Proud that they kept them.

Keith Kohler 1:00:02

Well, you know how good you are intuitively, in addition to all the other talents that you have, because that is indeed the second question, which is what would Matt today tell Matt when he was just starting out.

Matt Featherstone 1:00:20

Yes. I definitely have some support to tell him some things. Um what I would tell myself is now I felt that I have worked hard, but I feel that I could there are certain certain things that I could have gotten quicker that I could have learned faster that would have eliminated as much stress that I've had to go through. Um so I would tell myself to like I don't know. I'm trying to exactly figure out how to word it in a way. Um give me some time to think about it.

Keith Kohler 1:01:14

Whatever comes to mind.

Matt Featherstone 1:01:16

Yeah, yeah. Um, I do know what I would tell myself. Um, I think that it's important to exercise the muscle of the pivot and knowing when, like every time you go through something, it's human to be sad, human to be upset, but that's a muscle that has to be exercised. And the quicker that you can allow yourself to get in and out of being down or upset or depressed, the faster that you can get past that and get to figuring out the problem, that's what I would tell myself to exercise. Learn how that emotion is going to be there, that you're going to be upset, and that's fine. Don't stay there long. Allow yourself to be human and then get right back on the path and keep on moving. That's what I would tell myself.

Keith Kohler 1:02:16

It's a great lesson, Matt, and thank you for sharing that. Um thank you for being here today and sharing the story of Matt and his journey, as well as the journey of hiatus cheesecake. It's really, again, you are so unique in many of the ways that you develop the business, both intentionally and receiving the gifts of how things kind of showed up for you as well. And that unique and unusual combination of the restaurants, that music this all really started with music, right? And music funding cheesecake and the contribution of your brothers, the contribution of all the partners. It's a terrific story, and I think one with many lessons. And I'm sure our listeners and our viewers will be happy that they spent time with us today to hear about all of this. So thank you, Matt, once again for being with us. And this concludes episode number seven of How I Financed It. Thank you all for being here with us. Thanks for having me. Thank you so much for joining me on this episode of How I Financed It. I encourage you to reach out to me on LinkedIn at Keith Kohler1, and I look forward to connecting there.