Mother’s Day is still six months away, but David Habib, founder of Clearwater-based Yo Mama’s Foods, had better start shopping for an extra-special gift for mom. A maker of condiments such as pasta sauces and salad dressings that were inspired by recipes created by Habib’s mother, the company saw its growth go nuclear in 2022.
That includes growth domestically and overseas. Even so, a difficult-to-predict economy, along with supply chain, inflation and labor market challenges, looms over the business.
Back in February, his products were in about 11,000 stores nationwide. That number grew to more than 16,000 over the course of the year, thanks to the addition of BJ’s Wholesale Club and Walmart to the Yo Mama’s Foods distribution roster. Harris Teeter Supermarkets Inc., a regional chain of grocery stores, also started carrying Habib’s products, and shopping TV channel QVC featured them in September.
“We've never done TV selling until this year,” Habib says. “So, that's been fun. Our first QVC event was the day Hurricane Ian hit, and I couldn't get it rescheduled. I didn’t want to reschedule it, because it took us two years to get that air date. Fortunately, we didn’t lose power.”
Publix also increased its business with the company, so much so shoppers can now find Yo Mama’s Foods products in every store the Lakeland-based grocer operates throughout the Southeast.
“We’ve been focusing on the big-box retailers,” Habib says. “There’s been a lot of international growth for us this year. We’re seeing a lot of growth in Mexico and Hong Kong, and we started exporting to Panama and Australia this year.”
Yo Mama’s Foods accomplished all of that despite launching just one new product, a buffalo sauce, in 2022. Habib says that’s the fewest number of new items introduced in a single year since the company was founded in 2017.
But there were good reasons for it.
“We took this year to concentrate on the retailers that we were already working with, and grow our assortment instead of adding more categories,” he says.
Supply-chain challenges also contributed to the dearth of new products.
“Shipping was brutal until about July, when we started to see some relief,” Habib says. “But overall, I’d say shipping has been a little better than this time last year.”
New products are back on the menu for 2023: plans are in the works for Yo Mama’s Foods to enter the pasta category. In addition to traditional pasta, the company will also offer specialty pastas made from ingredients such as kale and quinoa.
“There’s a big trend toward veggie-based pastas,” Habib says. “That’s where we’re looking for innovation next year — meeting customers’ needs and retailers’ requests. A lot of the innovation is based on conversations with buyers.”
Habib also has deals with Kroger and Sam’s Club that will go into effect in the first quarter. He declines to discloses specific revenue figures and projections, but says sales doubled from 2021 to 2022 and he’s expecting similar performance in the year to come.
Remarkably, the company has accomplished all that with just 15 employees, but Habib says he’s looking to add more sales and business development personnel.
“As far as turnover goes, we’ve been really fortunate this year,” Habib says.
The firm’s success has also come despite increasing its prices by just 2% — well below what’s needed to offset its rising costs.
“Retailers are being very strict on their price-protection policies,” Habib says. “However, on the supply side, we’re not seeing any slowdown of price increases. That puts us in a position where we just keep getting squeezed, where the retailers are telling us one message and suppliers are telling us another. It's a constant negotiation.”
Because of inflation, Yo Mama’s Foods' costs have risen 20-30%, cutting into profit margins. Higher sales volumes have helped blunt that sting, Habib says, but retailers’ orders have been inconsistent at best.
“The market, in all honesty, doesn’t look that optimistic for next year,” he says. “Most retailers are tightening their inventory, making sure they're not sitting on excess inventory because they’re planning for a recession. Orders aren’t as frequent, but they are larger. That’s been a little bit challenging on the planning side.”
Despite economic headwinds, Habib believes Yo Mama’s Foods, with its emphasis on products made with a limited number of simple ingredients, is still well positioned for long-term success.
“Customers are looking for cleaner, healthier, fresher items, and they don’t have the budgets to eat out as much,” he says. “They want homemade alternatives that are readily available without having to slow cook or prep for a bunch of hours, and that's where we've been able to create a good placement for our brand.”