Investment Proposal Memo: Salt & Straw

TO: Clark Hansen, CEO, AMDP
FROM: Heather Melendez , AMDP Research and Development

DATE: July 11, 2018
SUBJECT: Investment Recommendation Memo on Salt & Straw

AMDP seeks to invest in companies committed to social responsibility, environmental sustainability, and profit.  Salt & Straw is a new, fresh, budding ice cream company that has only become more popular since its inception.  Still in its nascent form with notoriety in 5 west coast cities, Salt & Straw has lots of room to expand and expose its one-of-a-kind product to new customers across the country.  Salt & Straw stands out from the crowd of ice cream products due to its custom made and unique flavors, all at a time where private labels have become the top source for consumers, as opposed to household names such as Breyers, Ben & Jerry’s and Häagen-Dazs.  With each location becoming success after success, with delivering nearly five star yelp reviews overall, investing in Salt & Straw to expand the product would be profitable to all involved.

AMDP’s investment criteria consist of four parts:  Triple bottom line, corporate social responsibility, social enterprise, and carbon footprint.  As a collection of brick and mortar ice cream shops without large scale industrial activity, aside from the cream that gets churned into Malek's frozen creations comes from the cows at Lochmead Dairy in Eugene, Oregon (1) and therefore methane produced, carbon footprint is somewhat negligible for Salt & Straw.  I will instead review the remaining criteria and explain why Salt & Straw passes each category with high marks in a succinct way.

Triple bottom line:

 treats the externalities of an organization’s activities as a serious focus, as opposed to treating them as a happenstance or byproduct of the organization’s quest for profits.  The variables of triple bottom line are people, planet, and profit.  The “people” element ensures employees are treated fairly, while “planet” ensures the reduction of environmental impact.  When an organization accepts an increased responsibility in these categories, it can make the organization more profitable, with one example being a decreased likelihood of any brand damaging.

People: Working as a Starbucks barista at a time when there were only thirty stores, Salt & Straw founder Kim Malek decided to cash in her 401k to fund her dream of making ice cream.  In an exposé by Forbes, Malek described important lessons learned from Schultz, in addition to her “people first” mentality that she has implemented within her establishment. 

"The number one thing I learned is that you can develop a business model based on people first… The respect that I was being given at my entry-level position made me feel like I was really being entrusted with the future of this company. I knew that this people-centered idea was important." Salt & Straw followed the example, offering all employees three months paid maternity and paternity leave, health insurance for even part-timers and an extensive leadership training school. (2)

Planet: In the month of June 2018, Salt & Straw teamed up with local nonprofit Urban Gleaners to combat food waste, creating five new flavors made using food that normally would be sent to a landfill (3).

Profit: Established in 2011, now with five locations and 120,000 followers on Instagram, Salt & Straw has been on the rise ever since its inception.  Founder Kim Malek has since appeared on Oprah (4) and has been interviewed by major publications.  "Salt & Straw ice cream is the new standard to beat." -Charlotte Druckman, Wall Street Journal (5).  While an exact amount has not been released, Shake Shack founder Danny Meyer recently made a “substantial” investment in Salt and Straw. (6)

Corporate Responsibility:

Despite additional investments and a 15,000 square foot kitchen, co-founder Tyler Malek stated he would continue to use three, five, and ten gallon ice cream machines in order to maintain Salt & Straw’s small-production approach (6), a testament to Salt & Straw’s authenticity and emphasis on more than just profit. Furthermore, Salt & Straw has branded themselves as a "farm-to-cone" ice cream establishment (1). That's more than just a marketing angle. The cream that gets churned into Malek's frozen creations comes from “the local cows at Lochmead Dairy in Eugene, Oregon” (1). Sourcing local yet seasonal ingredients will reduce the carbon footprint. This initiative and  responsibility for its effects on the environment and social welfare promote positive social and environmental change.

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Social Enterprise:  Simply put, Salt & Straw introduces a set of five unique flavors each month that benefits a charity organization. For the month of June 2018, Salt & Straw stated that, “A portion of the proceeds from this series benefits the Share Our Strength Campaign in support of No Kid Hungry!” (7)

Not only has Salt & Straw set a standard for ice cream quality, but it has also set a standard for social responsibility. Each location opened has been successful with plenty of room to expand to more locations.  Salt & Straw remains true to itself with a strong emphasis on customer experience and satisfaction, a winning formula for any new potential locations. Investing in Salt & Straw has a high likelihood of profitability for any investor who wants to become a part of the brand.

Recommendation:

Investing in Salt & Straw would be quickest turn around for your buck. The company founded a unique niche market to flourish in that supersedes customer satisfaction and meets almost all of AMDP’s criteria in one way or another. Investing in this artisanal ice cream brand is a sure way to advance and support the beliefs and standards AMDP seeks to promote.

BIBLIOGRAPHY:

1.     Lindsley, Adam. “Ice Cream Goes Farm-to-Cone at Salt & Straw in Portland, OR.” Serious Eats, sweets.seriouseats.com/2011/06/ice-cream-goes-farm-to-cone-at-salt-straw-in-portland-or-salt-and-straw-alberta-st.html.

2.     Bloom, Laura Begley. “This Disrupter Left A 6-Figure Job To Scoop Ice Cream And Built A Sweet Success Story.” Forbes, Forbes Magazine, 17 May 2017, www.forbes.com/sites/laurabegleybloom/2017/05/16/this-woman-left-a-6-figure-job-to-scoop-ice-cream-and-built-a-massive-success-story/.

3.     Bamman, Mattie John. “Salt & Straw Now Uses Food Waste to Make Ice Cream.” Eater Portland, Eater Portland, 31 May 2017, pdx.eater.com/2017/5/31/15716696/salt-straw-rescued-foods-series-urban-gleaners.

4.     “The Oprah Magazine - Blog.” Salt & Straw, 11 Dec. 2014, saltandstraw.com/the-oprah-magazine-april-2012/.

5.     “About.” Salt & Straw, saltandstraw.com/about/).

6.     Bamman, Mattie John. “Danny Meyer's Union Square Hospitality Group Invests in Salt and Straw.” Eater Portland, Eater Portland, 16 May 2017, pdx.eater.com/2017/5/16/15646978/danny-meyers-invests-in-salt-and-straw-portland.

7.     “Tokyo PB&J - Ice Cream Flavor.” Salt & Straw, saltandstraw.com/flavor/tokyo-pbj.