The Million-Dollar Crunch



Gregory Cherin



When we caught up with Kelly Flatley not long ago she still had granola on her mind — and on her palate.

Kelly was hard at work, in fact, at a food plant outside of Battle Creek, Michigan. That made sense because she and fellow twenty-something Brendan Synnott had recently sold their successful granola company, Bear Naked, to Kashi, a subsidiary of Kellogg’s, and Kelly was sticking around a few extra months to help with the transition.

Now on the telephone from the site, she was describing how Bear Naked had evolved since the Darien natives appeared on the cover of New Canaan•Darien Magazine (“The Granola Twins,” February 2005.) She was saying something about greater distribution and more sophisticated marketing when someone at the plant interrupted her in mid sentence.

“I’m sorry,” Kelly said into the receiver. “I have to test this product. It just came out of the oven.” What followed for the next five to ten seconds was the sound of Kelly dutifully munching on some granola — vanilla almond, as it turned out.

“What we’re trying to do is to move the production process and the baking facility into Michigan,” she said when she returned to the interview. “So I’m spending this week at a copacker out here, and we’re doing a bunch of baking trials. We’re trying to qualify all of our items here on their equipment.”

When asked about the taste test, she laughed. “It’s very hands-on,” she agreed. “Thankfully, I don’t have to work with Tony the Tiger when I’m doing it.”

Kelly, twenty-nine, was never exactly a Frosted Flakes kind of girl. And Bear Naked, through a combination of wholesome ingredients and savvy branding, was a company diametrically opposed to Kellogg’s big cat, as heartily as he recommended those sugary flakes.

As fate would have it, Bear Naked’s healthful image was the very thing that fueled the cereal giant’s acquisition of the Norwalk-based company late last year. (The exact sale price is unknown, but a Securities and Exchange Commission filing indicates that Kellogg’s paid $122 million for both Bear Naked and Gardenburger, an unrelated business in Irvine, California.) And though Kelly and Brendan came away considerably richer, the deal would ultimately leave both of them with no place to be on Monday mornings and plenty of time
to ponder their separate futures, among other questions.

“It’s more surreal now that I’ve been away from it for a little bit,” says Brendan, calling from Vail, Colorado, where he recently bought a home. “When you’re waist deep in it and running as fast as you can, you really don’t feel it. It’s more after the fact when you’re like, ‘Oh, my God, whoa, this is what happened? And what does it mean?’”

Bear Naked began as a humble idea that Kelly hit upon after college, while visiting a friend in Paris. The business gathered momentum when she teamed up with Brendan, whom she knew from their days at Darien High School.

Driven by youthful passion, the pair went from their first big order of $2,000 from Stew Leonard’s in 2002 to $60 million in sales last year. They started with one product, Kelly’s fruit and nuts granola, and ended up with nineteen, including various trail mix concoctions. In 2007 Bear Naked was the top-selling granola in natural-food outlets around the country and number two in grocery stores.

Brendan, twenty-nine, the company’s chief executive officer, was by all accounts an entrepreneurial whiz. Kelly’s official title was master baker, and, among other roles, she provided a steady hand and uplifting presence for the sixty workers at the company’s commercial kitchen in Stamford and forty corporate employees.

Flush with investor dollars, Bear Naked was able over the past few years to recruit top-level talent from corporate behemoths like Pepsi, Unilever and Kellogg’s.

Veterans of the food-industry wars, the new hires boosted the company across the board, from research and development to distribution to marketing. “The dominoes started to fall when these people came to us,” says Kelly. Success, however, brought imposing challenges.

For starters, the competition for granola sales on store shelves had gotten more fierce.

With Bear Naked’s rapid growth, meanwhile, came the need to continue growing. That would mean that the company would soon have to add riskier product lines, like granola bars; hire more employees; expand the management team; and start spending on advertising.

What’s more, the company was selling so much granola that building its own manufacturing plant became a distinct possibility. (By the end, as much as half of Bear Naked’s production was being contracted out — not uncommon in the food industry.) 

In other words, lots of capital was going to be needed. 

“It was a natural point to sit back and decide whether it makes sense to sell or take it to the next level,” says Henrik Vanderlip, chairman of Viking Capital Partners in Cos Cob, one of Bear Naked’s financial backers. “As an outside investor, I made such a fabulous return that keeping the money that I’d made in the company and risking it while trying to take the company to the next level would not necessarily have been a good decision.”

For Brendan, Kelly and the rest of the board, tough issues had to be faced. The long and short of it is that Kellogg’s/Kashi had expressed interest, a variety of options were considered, and ultimately the deal was done. And though Brendan agreed to the sale, in his heart he wanted to hang on. “I would have loved to run Bear Naked forever,” he says. “It was everything I wanted and loved in a brand.”

Kelly, for her part, was ready for new challenges. “This was the single most difficult decision I’ve had to make in my entire life, and I’m sure it was for him,” Kelly says of Brendan. “But the preferred outcome for me was to turn the company keys over to another organization that could continue to grow Bear Naked.”

Under Kashi, Bear Naked’s corporate offices will move to La Jolla, California. Connecticut operations will probably go dark this summer. And though a handful of employees will relocate, the rest will have to find new jobs. Between stock options and a generous severance package, Brendan and Kelly expect most of them to land on their feet. 

Out of work himself after the sale, Brendan headed to Africa for two weeks with friends who are involved in philanthropic efforts in Rwanda and Uganda. Interested in someday starting a charitable organization, Brendan wanted to learn some of the ins and outs of such work.

“I want to see how the best people are doing it, how people I admire are doing it, and to try to understand what’s making them successful, or if they’re not successful, why are they failing,” he says. “I want to try to get as much information as possible so that when I start to build my philanthropic group I know as much as I can.”

Brendan has been spending most of his time in Vail. He was engaged to be married but says that is no longer the case. He’s been skiing a lot, digesting his experience with Bear Naked, and considering what to do next.

When he is ready, Brendan wants to build another brand. Technology, electronics, music and travel are all areas that excite him. Maybe he will buy a small business, he says, or start one from scratch, or buy into one. “The biggest thing that it’s going to share with Bear Naked is that it’s going to be honest and it’s going to be transparent,” he says.

Kelly too has been thinking about the future. She and Brendan are restricted from competing with Bear Naked’s new owners, but she remains open to other possibilities in the food industry.

This winter Kelly returned to Paris and, among other stops, visited the place where the idea for Bear Naked first came to her. “It was neat to go back to the café where the lightbulb went off and to think about all that has taken place in the last five years,” she says. “I couldn’t help but stand there and smile.”

Was she hoping that another lightbulb for another good idea would come on in that moment? “I was, actually,” she admits. “I was like, ‘Can anybody flip a switch here?’”

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