Million Dollar Cookie – How One Cookie Sold for Over One Million Dollars
One of the great things about entrepreneurship is that you’re never too young or old to start a business. However, it’s not uncommon for entrepreneurs to have the entrepreneurial spirit recognizable at a young age. Mark Cuban, Warren Buffet, Daymond John, Juliette Brindak, and Richard Branson all started businesses as a kid. Here’s the story of the million dollar cookie.
Kathleen King started a business as a young girl.
The million dollar cookie started as the idea of a young girl. At the age of 11, Kathleen King took over baking cookies her family’s farmstand, North Sea Farms. The family needed Kathleen’s help because her sister decided to take a job in town.
“The recipe came from the back of the Nestlé bag,” she told The New York Times. “But my mom said that even back then, I was a food snob. If she bought chocolate chips on sale, I’d have a fit, because they were the wrong ones. I wouldn’t use them.”
“I’d be in the kitchen baking,” she recalled, “and when I’d see a customer pull up, I’d run outside to meet them. Then, after I made the sale, I’d always say, ‘I have to get back inside and check my cookies.’ Everyone loved the idea that a kid was selling cookies, so they’d ask if they could buy some, and I’d run back in and bring them a warm bag of cookies.”
From farm-stand to multi-million dollar cookie business.
King kept baking, and by the time she was 21 she was selling her cookies in Southampton, NY. “I’d just graduated from college and my mother noticed there was a bakery for rent. Two other bakeries had failed in that spot, so people said it was a bad location.
“They tried to convince me not to rent it, but I knew I could make it work. They just didn’t have the right ingredients. So I spent the winter testing recipes and opened Kathleen’s Bake Shop with $5,000 that I’d made selling cookies on the farm and to produce stands in the area.”
Just one month after opening her shop, Kathleen was noticed by a reporter from the New York Times. In just three years business was booming so much that she was able to place a $50,000 deposit on her own building.
By the time she was 40, King had transformed that farmstand into a three-million-dollar business called Kathleen’s Bake Shop. Unfortunately that success wouldn’t last much longer.
Bringing in someone to manage the books.
In 1999, she brought in someone to manage her books while she was in Japan for a month. It was a win-win. She could step back from the business and remain the CEO, while the accountant and his brother would take over two-thirds of the business.
The plan was for the brothers to run the day-to-day operations and take the business national. They purchased a facility in Virginia and began using cheaper ingredients. She was told that she took too much pride in her work. “They’d make scones with our baking powder and others with a less expensive brand and make me do blind tastes. Then they’d look at each other dumb-founded, when I was able to tell the difference.”
And, that was just the beginning.
The fall of Kathleen’s Bake Shop and the rise of Tate’s Bake Shop.
The brothers stopped paying bills and even locked her out of her own building. They even tried to convince her hometown that she was stealing from the business.
Thankfully everyone in town had known me my whole life. They knew me through and through and knew what these two brothers were saying absolutely could not be true. “The entire town had seen how I did business for 20 years — and they knew that I couldn’t have become a crazy person overnight.”
“I was exhausted when I brought them in,” she remembered, “and now on top of that, I was in for the fight of my life. But I had to fight back, not just financially, but to prove my life hadn’t been wasted.”
“This is a terrible situation,” she said. “You either fight or flee,” I said. “If it’s fight, you’ll need a good lawyer.”
Kathleen King decided to fight.
King decided to fight for her million dollar cookie. It resulted in a half dozen lawsuits that eventually split the company in three. The two men kept the wholesale business, as well as the business name. Kathleen was able to keep the shop, but had to take on $200,000 in debt.
In 2000, she remortgaged the bakeshop and started over as Tate’s Bake Shop. The shop, which was named after her father, went on to find unprecedented success for King.
Known for her crisp and buttery chocolate chip cookies, Tate’s cookies were sold in the US, Canada, the Caribbean, and Hong Kong. Tate’s was selling about 10 million dollars worth of baked good’s annually. It was also rated the best regular chocolate chip cookie in the country by Consumer Reports and Rachel Ray.
Since Kathleen has a gluten sensitivity, she began offering gluten-free products. “There was a demand for it,” she said. “People were driving for miles to pick up packages and packages of cookies. One woman tasted the gluten-free chocolate chip cookie and cried. She said she never thought she’d eat a good-tasting cookie again.”
Million Dollar Cookie Awards.
Tate’s eventually became the recipient of multiple Gold Sofi Awards. In 2015 their Gluten Free Ginger Zinger cookie was awarded Gold for Best Gluten Free Cookie.
Fast forward to 2014 and Kathleen sold majority stake in Tate’s Bake Shop for around $100 million to Riverside Company, a private equity firm. Kathleen would stay on running product development and quality control.
“Looking back,” Kathleen said, “I can’t believe I gave away two thirds of my company. But I simply couldn’t see this coming. I grew up in a nice town with a great family — no one worried about money.”
“But everyone makes mistakes. Every successful person has made mistakes. You have to learn from them and move on. If you’re looking behind, you’re not looking forward. And today I have a life that’s better than I ever dreamed it could be.”