Food Service & Agriculture, Retail, and Small Business & Startups

The anatomy of a really sweet business deal

Spoonlickers looks to grow, diversify with investment.

February 5, 2016
| By Pat Evans |
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Martin Stein and his daughter Noa, 9, enjoy a treat at Spoonlickers. Stein said he was encouraged to invest in the dessert parlor based on how much his children loved it. Courtesy Spoonlickers

David Darling doesn’t want Spoonlickers to be known as a frozen yogurt place.

As the “dessert parlor” readies for substantial growth following a partnership with Blackford Capital Managing Director Martin Stein, one of Darling’s chief concerns is to make sure consumers know the business serves more than froyo.

“We intentionally gave it an ambiguous name because we knew the yogurt trend could come and go like it did in the 1980s — it’s like inline skates or rollerblades. If it’s self-serve, it’s froyo.”

Stein’s investment is personal and is not connected to the private equity firm he heads. The pair expects to make Spoonlickers a big name in the dessert business.

The business fell out of Blackford Capital’s criteria, but Stein liked the business, as did his family, and decided it had all the attributes to work.

“We’ve been customers since they opened, and my kids love it,” Stein said. “I’ve always been impressed with what David has done and how he’s created a presence in the area and established the company and culture.”

Darling started the business with his wife in 2012 at its original downtown Ada store to help their children learn life and business lessons — because his career in the automotive world was lost on them.

He had seen other frozen yogurt businesses open up in West Michigan and across the country, but was disappointed that most of them were executed poorly with products including corn syrup and other additives.

“I was passionate about food — (the children) can understand food — and it looked like a good business opportunity,” Darling said. “I thought it’d be neat to take my culinary passion and focus on natural and local everything.”

The Darlings knew it was an idea they could expand on and have always had plans to take it to the next level, whether with a larger food service company or a private partner such as Stein.

The growth started early, and within four months of the Ada opening, a second Spoonlickers on Knapps Corner at East Beltline Avenue was opened, followed within a year by a store on Wealthy Street in Eastown, which has become the company’s baking and chocolatier hub.

“It took off like gangbusters,” Darling said. “It was probably too quick, but we made the decisions we made and it worked out in the end. As a small family-owned business, we were riding the razor’s edge.

“The intention was to build it up to a point it could be sold to someone. I knew our resources were limited as to how far we could take it.”

Darling said the business was built from the ground up to be scaled up quickly and easily, whether it was acquired by a larger company or took on an additional partner to help expand it.

Opening additional locations in a short timeframe was one way to accomplish that goal, along with solid standard operational procedures and employee manuals. Darling said many customers assumed Spoonlickers was a chain because of its well-organized operation.

“We found some great real estate after looking at maps and finding the populations we wanted to capture,” Darling said. “We looked at it as what territories do we want to protect, and drew a triangle for our target market.”

The plan worked. Darling said the company was in discussions with a large food service company last year to acquire Spoonlickers in a deal that was initiated by the food service firm.

“It wasn’t something we were pursuing,” he said. “They had too much going on and the discussions tapered off. We weren’t in a rush and we’re not going to force a square peg into a round hole.”

Even the recent deal with Stein, which was made official about three weeks ago, wasn’t one Spoonlickers pursued. Acquaintances introduced Stein and Darling in early October, and things just clicked.

“We personally hit it off very well and that was important. I didn’t want to let the entire business go,” Darling said. “He’s a great guy, a great father, and holds a lot of the same values I do. He’s also a man of resources and knowhow and has an extreme amount of experience in business and deals. That was intriguing.”

The relationship and partnership moved quickly, and the deal is “extremely fair,” Darling said.

The plans for the company’s expansion are still in the works, but Spoonlickers has some high aspirations. Its proprietary products, including a new ice cream that will be released this week, could be offered in grocery stores, Darling said.

“Ice cream might not sound like a big deal, but there are stringent requirements to clear the FDA, and other suppliers to frozen yogurt places buy from one or two suppliers who can’t offer ice cream at a price point that works,” he said.

Darling said the ice cream market is big: As many people eat ice cream as drink coffee on a daily basis.

Along with the ice cream and other new and established products, the company plans to expand corporate stores across the state, open franchise opportunities, expand corporate catering capabilities, and further establish a brand name that can sell in retail locations.

Stein said he knows it’s never easy to grow a business, but Spoonlickers is one with lasting power, as people will always eat dessert with at least some of their meals.

“We’d like to add a few stores in West Michigan and then look to the east side of the state. If that goes well, we’ll broaden beyond that,” Stein said. “It’s a growing, profitable business, and I expect it will be around a long time.”

As the Spoonlickers brand continues to build over the next several years, Darling is confident the association with purely frozen yogurt will fade, despite its positives now.

“It’s a blessing and a curse,” Darling said. “We’re a dessert parlor and we want to capture as much of that market as we can.”

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