September 29, 2023 • 24 mins
The Month End provides emerging inventory-based brands real life knowledge in the accounting, finance, and operational world. Our guests are not only similar brand founders and owners, but key stakeholders and contributors to the industry. Each episode provides a glimpse into the vast experience and insight from its guest’s unique backgrounds in a casual, conversational tone.
• • •
In episode thirty-four, Accountfully's CEO and Partner, Brad Ebenhoeh, talks with Sean Lee, co-COO of Sweety Ice Cream. Sean joined forces with his sister to reinvigorate their family-owned legacy of Asian mochi ice cream and share it with a new generation of consumers. He shares key details of how he made the rebrand and relaunch successful; from local 70’s ice cream shop to national distribution.
For more small business and CPG- focused resources, visit Accountfully's resources page, where you will find helpful articles, guides, eBooks and more.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Brad Ebenhoeh (00:00):
Welcome to The Month End CPG community chat,
The Month End will provideemerging CPG brands real life
knowledge into the accounting,finance and operational worlds.
Our guests will be keystakeholders with no same brands
as well as other keycontributors in the industry.
Welcome to Episode 34 of TheMonth End podcast today we have
(00:21):
Shawn Lee from Sweety ice cream.
How you doing today, Sean? HeyBrad. Yeah, thanks for having
me. Excited to be here.
Absolutely. Sean's co CEO,Sweety and works in a family
business. And I'm excited tolearn more. So let's get
started. First off, Sweety icecream. How long you been in the
business? What do you sell?
Where do you sell? Just give usa little elevator pitch from the
business.
Sean Lee (00:43):
Yeah, sure. So Sweety in its first iteration, as
actually was started back in1978. It was started by my mom,
even before she met my dad asjust like an Asian scoop shop in
Monterey Park, which is a veryAsian neighborhood of Los
Angeles. At that time, shecouldn't really find Asian
(01:03):
flavor novelties or ice cream inthat area of Los Angeles. So she
decided to open up that storeherself. In that process, she
even she was struggling to getlike the ice creams to her
store. So he decided to startactually doing the manufacturing
side of things as well. Andthat's how she got into you
(01:25):
know, the Sweety because ofbranded CPG item. So it's been
around for a while. It's kind ofmostly just been on Asian
supermarkets. We were reallyknown at the time for doing like
red bean popsicles. Durian, andTaro are very, very traditional
(01:45):
Asian popsicle novelties. Mean, me and my sister, we decided
to get involved just a coupleyears back, right before the
pandemic. At that time, thecompany was still very small, it
was essentially just being runby my uncle and my aunt at the
time. And they kind of wanted toretire. So we were at this
(02:08):
inflection point, deciding,like, Hey, what are we going to
do with this business? Do wejust kind of wind it down and
shut it down when they retire?
Or do we want to put some moneyand time into it, reinvest into
it, and then relaunch it? So thedecision was made to kind of,
kind of get involved in thisbusiness. So yeah, me and my
sister, we started doing arebrand. At the time, we had
(02:29):
done popsicles and mochi icecream, we saw a lot of potential
and the ice cream side or thelogical side of the business. So
we decided to just focus on thatside. And now we launched Wow,
right, as the pandemic started,and it's kind of just been a
wild ride ever since?
Brad Ebenhoeh (02:50):
I bet I bet.
That's very cool. Seriously,since 1978, that's crazy. When
you guys took it over? Or youdecided to take it over, like
what was what was that process?
Like? Did you look at everyaspect of operations and say,
Alright, we're starting a newcompany, taking these assets,
taking the IP. Relationshipswith, you know; the suppliers,
(03:11):
the manufacturer, like how didthat whole process go? Or how
did you look at that and executethat?
Sean Lee (03:17):
I think for us, we wanted to kind of preserve a lot
of the things that made Sweetywhat it was. Still a large
piece of our business is stillkind of that original core Asian
supermarket customer. That kindof informed some of the
decisions that we were making interms of we were doing further
(03:40):
R&D on our product. I thinkthat was the first two things we
really did was to revamp thebranding and look at how we can
tweak some of the flavors andR&D some of it. We got rid of
some flavors at the time, we gotrid of the popsicles, but you
know, it was important for us tokind of remain true to some of
(04:00):
our roots. So you know, we stilldo like a red bean mochi ice
cream. You know, we'vecontinued to add, you know,
other Asian flavors, we have aVietnamese coffee, we do an Ube
as well. And along with that, itwas also just, you know, at that
time, back in the day, like, myparents would cook red beans, we
(04:21):
started basically, in ourkitchen, they would cook red
beans, and then they would, youknow, use that the red beans in
the popsicles that we make. Sofor us, we still do a lot of
things internally. You know, weget, you know, raw Ube puree
frozen puree, and we took thatand we use that in our Ube ice
(04:42):
cream, rather than, you know,just focusing on flavoring or
coloring. We like to use theoriginal ingredients as much as
possible. Yeah.
Brad Ebenhoeh (04:54):
Cool. And so then where exactly are you guys
selling all these products now?
Sean Lee (04:59):
Yeah, so You know, we launched and our first large
retailer actually ended up beingWalmart, which was not the plan.
So I mean, that's one of ourbiggest retailers is Walmart,
we're also you can find us anAlbertsons, and Safeway in
Southern California, NorthernCalifornia and Hawaii. And we're
(05:19):
actually going to be launchingin Costco, Los Angeles later
this fall. So, yeah, please, ifyou guys go go to Costco, if you
live in the area and support ourproduct, really appreciate it.
And then, of course, a lot ofthe Asian supermarkets across
all of the United States.
Brad Ebenhoeh (05:39):
Gotcha. So you are national on with with Asian
supermarkets, but Gotcha. Andthen I clearly like as selling
ice cream, you really, it'sreally hard to dive into direct
consumer aspect, right?
Sean Lee (05:50):
Direct to consumer, yeah, we would. We I'm always
jealous when I see other brandslike being able to do like
little giveaways and direct toconsumer. Yeah, it's, yeah, it's
such a cool way to you know,have access to your customers in
such a direct way and get thatfeedback. Sadly, it's, it's very
(06:12):
tricky to do with ice cream,specifically, just the supply
chain makes it extremelyexpensive. Yeah, even when
you're using a 3PL, it just,it's, it's quite expensive. Your
product goes from, you know,selling at the grocery at around
anywhere from you know, $4.99 to$6.99. And then at selling at,
(06:35):
you know, $12.99 in the directto consumer environment, there's
also just a lot of a lot ofwaste involved in that process,
because you have to add all thisextra packaging from the
insulating materials, you haveto get dry ice. And if there's
any shipping delays, you know,your your product is just lost
(06:56):
yeah,
Brad Ebenhoeh (06:57):
it definitely a disadvantage for the the the
frozen products on the directconsumer space. So then from on
the inventory side of things,like what is your supply chain
like and internallyoperationally, how do you manage
that from supply chain, youknow, raw materials, products?
3PL, etc?
Sean Lee (07:18):
Yeah, I mean, we have a pretty small facility, we
manufacture everything out ofbasically our original location
in Monterey Park. So yeah,inventory management is really
crucial for us. It's also justvery expensive being in a frozen
category as well. So prior tobringing on Walmart, everything
(07:39):
was kind of inventoried at ourown facility, that we've just
been finding creative ways toexpand our frozen storage. Yeah,
we basically, we've been usingkind of these frozen shipping
containers, and that's how we'vebeen able to add additional
frozen storage, when from a realestate standpoint, you know,
we're limited. And that thatgave us kind of a way to kind of
(08:02):
just flex that and slowly add aswe went along and in needed more
frozen space. But you know, oncewe brought on WalMart, on
another game, we brought on a3PL. So basically, they kind of
handle, when you work withWalmart, they, they have
something called, like a pooledsystem. So you ship to a 3PL,
(08:24):
they will pool your inventorywith other Walmart customers,
and then they'll kind of justdistribute out to all the
different DCS. So we almost kindof treat that almost like its
own little its own kind ofsupply chain. Yep.
Brad Ebenhoeh (08:38):
So then, on the, you know, manufacturing side,
like how many, you know, how doyou manage your team? You know,
in terms of making the product?
Do you have an inventory systemspecific, like KPIs you look at
or just kind of how do you guysview that internally?
Sean Lee (08:53):
Yeah, I mean, for the longest time, we, we just did
everything kind of in a GoogleSheet. Yeah, so we, you know, we
had our we built out our salesforecast from our sales
forecast, you know, we know ourBill of Materials, we'd be able
to forecast out what the, youknow, weekly, monthly annual
usage was keep track of kind ofwhat you know, lead times are, I
(09:15):
would come up with basically,you know, what was the safety
stock that we had wanted? Whatwas the reorder quantity? And
kind of basically made up arelatively simple system to
basically say, once I hit thispoint, then my team would know
to go out and reorder this. Onlyrecently, we we started to
(09:35):
transition over to actualinventory tracking software.
Brad Ebenhoeh (09:40):
How's that going?
Is that is that adding morevalue or is it more of a
headache versus just the simpleGoogle Sheet?
Sean Lee (09:46):
Yeah, it's doing that type of transition is always a
process. It takes a while to,you know, do that implementation
and get that, see that return,just because it's just the level
of accuracy that you need. Fromlike, each of your workers, just
(10:11):
because you have to, you reallyhave to be perfect on your lot
traceability on, you know, yourusages it's, it's no moral, you
can't just kind of swag itanymore. And then just like do
an inventory count just like fixthings then. So it's definitely
it's yeah, we only really didthis a couple months ago. So
it's still kind of working outall those kinks. But, you know,
(10:32):
eventually, you're gonna seebenefits from just having that
ease of access to that data.
Whereas a lot of the stuff was,you know, very manual, and you
just didn't have that sametraceability that you have with
something like that. But youknow, what, those systems it's
garbage in, garbage out?
Brad Ebenhoeh (10:49):
Yup. Yeah that's the norm, we, you know, when we
talk to like our brands, orclients who require, if it's
like, there comes a point where,like Google Sheet and Excel
document or however you manageit, it's more time efficient,
more cost efficient, it gets youto where you need to go, there's
a phase your business that'slike, alright, we become more
precise, more real timeinformation. And then that's
when you have to jump tosomething like what you're
(11:09):
talking about, and it's, it'spainful, but once it becomes
part of the company, operatingsystem and workflow, then it's
pretty seamless at that point.
But it can be definitely a pain,but there's advantages with it,
but it's definitely more costlyand more time intensive to do
so. So Well, good. And then interms of, you know, just your
overall manufacturing supplychain, like what are some of the
(11:31):
mistakes that have happened, youknow, you've already mentioned
like, you know, having a frozenproduct and, you know, waste on
packaging with direct consumeror delayed shipment, you know,
the product can be wasted. Butis there any, like big mistakes
you guys made from just more ofa supply chain operational
standpoint that impacted yourbusiness that you learned from?
Sean Lee (11:50):
I think for us, because we we made such a big
leap in terms of the scale, justtaking on such a large retailer,
like Walmart, and even then,like, we kind of, we wanted to
slow play it a little bit, werelike, hey, you know, we only
want to bite as, we don't wantto bite off too much. But even
(12:12):
then, like the volume Step Upwas just, it was so huge. So
just like staying ahead of thoseinitial orders, when they, when
they do that initial fill, I getit was definitely intense, like
how much we had to ramp up tokeep up. But even though we kind
of forecasted how much we neededit just yeah, the scale of it
(12:34):
was just a whole nother level.
Once you kind of get past that,then you have, you know, prior
data to be able to try toforecast better, you've you've
gone through you've ramped upeverything. But, you know, being
on both the manufacturing side,and kind of the CPG side, it
definitely was a step up interms of the complexity, just
(12:55):
all that adding all that scale.
Brad Ebenhoeh (12:58):
And your background is like finance and
operations, right? Yeah,
Sean Lee (13:03):
yeah, I've kind of a relatively varied background,
you know, I've done finance andstrategy, asset management, at a
retail environment. Yeah, wentback to get my MBA in at UCLA.
And that's when I startedgetting involved more in kind of
the food business, my family hasother food manufacturing
(13:26):
companies. So that's why Istarted to get more involved on
this side of the industry.
Brad Ebenhoeh (13:32):
So then you also on, you know, operationally with
the inventory side of things oroversee that, but also you're
handling kind of theforecasting, the modeling the
accounting and all that aspect,right? Yep. Yep. So then from
like, a financial standpoint, interms of the model forecast
budget, like what is your planor strategy in terms of how you
do that? Do you keep it updatedmonthly? Do you review it
(13:53):
looking backwards each month,like, you know, do, like what is
your, you know, your justoverall workflow with with your
forecasting model?
Sean Lee (14:02):
I would say it's like, we kind of review the forecasts
on a quarterly basis. I mean,for us, it really depends on
kind of how our cash flowsituation is, you know, the
tighter it gets, the more we'regonna have to kind of look at
that maybe monthly, or evenweekly. Thankfully, you know,
we've been very, very efficiencyfocus to make sure you know, as
(14:22):
a manufacturing facility, youknow, we are trying to, you
know, have cashflow, positive,positive cash flow. And that
gives us you a little bit moreleeway to kind of Yeah, work
within your financials.
Brad Ebenhoeh (14:35):
Yep. Are you then with the way the economy has
changed or shifted last kind ofnine to 12 months with interest
rates, and with fundraising kindof slowing down a little bit...
Has there been any changes interms of how you change your
business from more to you know,expense management efficiencies,
cash flow, or was that alwayshow you kind of looked at your
business even beforehand?
Sean Lee (14:56):
I think you know, the things that some of the
challenges that we've beenfacing As recently as more just
kind of the inflationary impactsthat we've seen on our margins.
I think that's where, you know,we were pretty comfortable
before. But now, it's definitelyconstrained a little bit more
than just keeping ahead of kindof what competition is doing as
(15:16):
well. You know, I would saywe've been a little bit late to
the game in terms of priceadjustments, we've seen that
some other competitors do,essentially, you know, string
inflation. So I think that'swhere it's definitely put some
pressure on us to kind of stayahead of things like that. So,
(15:36):
yeah, that's just kind oflearning and trying to move a
little bit quicker on those.
Brad Ebenhoeh (15:40):
How do you your like retail partners, how do
they take like priceadjustments? Or like, how, what
is that process like?
Sean Lee (15:49):
Each year has been different, right? I think, you
know, you know, last year, youknow, when everybody was raising
prices, you know, they werebasically like, yeah, we're
getting it from everybody else,you know, just put it in, you
know, you started to get alittle bit more pushback
situation has kind of sloweddown a bit. So it just, I see
(16:10):
just kind of changing from yearto year, at the end of the day,
like, you know, we have to makeenough money to be able to cover
our operating margin. So it iswhat it is, we have to be able
to kind of just push thatthrough.
Brad Ebenhoeh (16:20):
Definitely on the on the accounting side of
things, you know, managing cashweek over week, reviewing
financials each month, is thatyour cadence? Are you the one
that handles that? Or do youhave like, I got a team member
that helps support that process?
Sean Lee (16:32):
I mean, thankfully, like, because we have other food
manufacturing businesses, youknow, we were able to leverage
kind of some of that back ofhouse infrastructure. So they're
able to kind of produce thefinancials for me, and then I
reviewed them on a monthlybasis. And then I make sure to
kind of review that with theother departments to get
feedback, because, you know, Idon't have full visibility on,
you know, what are all themarketing promotional activities
(16:55):
that we're doing? So, you know,if something's tracking high,
you know, I want to get thatinput from, you know, Tiffany,
who's our CMO.
Brad Ebenhoeh (17:03):
What are the first three like numbers and
line items you look at in themonthly financials, when it gets
sent to you?
Sean Lee (17:10):
I mean, for me, it's always kind of gross margin is
kind of the big one that we'realways looking at. And just to
go a little bit even deeper,like, again, because we're doing
the manufacturing ourselves,like, just on a daily basis,
even or weekly, like I'mreviewing kind of what our
production yields are for eachof our production runs. And I'm
also tracking, you know, what isour labor cost for each case
(17:34):
that we're producing, or you canalso look at labor hours, for
each cost, just to make surethat, you know, my production
staff is running, or continue torun things efficiently, though,
you know, being in Los Angeles,we know that, you know, your
wages are going to be increasingevery single year. But, you
know, trying to maintain that,that the efficiency, at least on
(17:54):
a labor hour basis is important.
Brad Ebenhoeh (17:57):
Gotcha. Has theRe from a manufacturing standpoint,
clearly, you know, you said youmoved to more of a 3PL model
afterwards on on the Walmartside, but is there clearly you
have a family history with themanufacturing facility, things
like that, at any point? Haveyou thought Man, it would have
been easier to use a command orlike differently in terms of
that versus managing, you know,that in that entire process? Or
(18:20):
are you happy in terms of whereyou're at, I'm sure, it's kind
of a push pull at times?
Sean Lee (18:23):
Yeah, it's a push pull up. And it's a nice thing to be
able to have control over, youknow, everything, you know, your
quality, the r&d, like, everysingle input, and just have that
visibility and everything thatcan fall. On the flip side,
like, just from, you know, afuture expansion type situation
(18:45):
like requirements, that aregoing to be necessary to, you
know, grow from a $20 milliondollar revenue business to a 50
to 100. You found kind ofdifferent calculations there.
Because it's not like, we canjust go to a different Co-Man
and get kind of the scale from,you know, just the volume, it's,
(19:08):
you know, we need to figure outhow do we expand our
manufacturing capacity in themochi ice cream space, it's,
it's not really there's not abunch of Co-Mans out there doing
this. It's a relativelyspecialized product. And we like
doing it because I think that'swhat really sets us apart is,
you know, our ice cream and ourdough that we make, it's
(19:30):
different from our competitors.
And it's because we wemanufacture ourselves but yeah,
just the capital investmentrequired to expand is just such
a different calculation than ifyou were kind of a Co-Man-based
Brad Ebenhoeh (19:44):
company.
Definitely benefits on bothsides of the spectrum and you
know, risks and costs on bothsides as well. In terms of just
overall I'm just like on yourwebsite, you guys have what
eight flavors, is that right?
Yep.
Any big plans to expand in theshort term with new flavors?
Sean Lee (20:02):
Yeah, we're always looking at, you know, flavor
innovations, I think. Yeah, it'sinteresting, you know, I have a
very different kind of outlook,then, you know, sales and
marketing, like marketing, theyalways love to do crazy flavors.
And I'm always like, woah, like,like, are we gonna get stuck
with inventory like, and thenwhat happened with that
inventory, you know, when you doa seasonal, but I think that's
(20:25):
just part of the cost of doingbusiness sometimes. Because
certain retailers, they want tohave those seasonal items, even
if you know, from a marginstandpoint, you're gonna
struggle to make that there's acomponent of just marketing. But
at the same time, it's like,it's fun from an operational
standpoint, from r&d in newflavor. I was like, we're
(20:47):
working on a bunch of newflavors right now. And it's
like, what's more fun than like,you know, trying different ice
creams. That's the part that Ireally enjoy.
Brad Ebenhoeh (20:56):
Yeah, every time as a background of an
accountant, or on the financeside of things every time you
look at inventory, like, Couldyou see dollar signs? So it's
always exactly. Alright, well,we're wrapping up are winding
down this podcast for all thelisteners out there, we always
under podcasts with twoquestions, one do and one don't.
So what is, from yourperspective, one, do two fellow
(21:18):
CPG, you know, emerging brandfounders out there?
Sean Lee (21:23):
Yeah, I would say like, be mindful of kind of your
retail go to market strategy.
And just kind of understand thetrade offs that are going to
come with that. I think, youknow, we were in this unique
situation where we werepresented this opportunity. You
know, Walmart has been anincredible partner with us, we
got through their open callprogram and got, you know, just
distribute nationaldistribution, and just like, we
(21:46):
weren't going to turn that down.
But, you know, at the same time,like, that wasn't our initial
plan. Like, we had no idea thatthat was the direction we're
gonna go. It's worked for us wasthat same time? Like, you have
to be aware that, you know,there's trade offs to any go to
(22:07):
market strategy. Yeah,especially in terms of whether
you're doing, you know, naturalor club or conventional. Yeah,
if you go one direction, it canpotentially closed doors to
another another channel.
Brad Ebenhoeh (22:22):
Definitely, definitely. And then on the
other side of that, like, whatdoes one doI n't
Sean Lee (22:27):
I think to go along with that it's like, don't be
afraid to pivot. And just kindof continue to reevaluate what
your strategy is going to be,depending on kind of how you've
pivoted to make sure that, youknow, the rest of the company
and the strategy is aligning. Soyou don't have like a mismatch
of like, let's say where you'reselling versus your, your
(22:50):
marketing or your supportinginfrastructure, whether that be
brokers or distributors, like,just make sure you're being
nimble in terms of reevaluatingand then like, restructure
restructuring, kind of yoursupporting strategies. Yep.
Brad Ebenhoeh (23:06):
Couldn't agree any more on that? Well, Shawn, I
really enjoyed the chat beforethey let you go like Where can
people find sweet ice cream?
With your social your your URL?
What what do you got going onfrom a promotion standpoint?
Sean Lee (23:19):
Yeah, I mean, just you follow us on Instagram, 3d ice
cream, cocoa, or on Tik Tok? Interms of our products, you know,
find us on Walmart Albertsons,Safeway in Southern California,
northern California. You canfind us Asian supermarkets and
then yeah, if again, if you'rein LA, please swing by Costco
and pick up our new combo packthough. Awesome. Awesome.
Brad Ebenhoeh (23:46):
Well, Sean, I really enjoyed the chat. Hope I
hope the listeners do that. Hopethe listeners did as well out
there. We're signing off here onepisode 34. The Month End
podcast Sean Lee. Thanks again.
Sean. Take care. Yeah, thank
Sean Lee (23:58):
you for having me.
Welcome to The Month End CPG community chat,
The Month End will provideemerging CPG brands real life
knowledge into the accounting,finance and operational worlds.
Our guests will be keystakeholders with no same brands
as well as other keycontributors in the industry.
Welcome to Episode 34 of TheMonth End podcast today we have
(00:21):
Shawn Lee from Sweety ice cream.
How you doing today, Sean? HeyBrad. Yeah, thanks for having
me. Excited to be here.
Absolutely. Sean's co CEO,Sweety and works in a family
business. And I'm excited tolearn more. So let's get
started. First off, Sweety icecream. How long you been in the
business? What do you sell?
Where do you sell? Just give usa little elevator pitch from the
business.
Sean Lee (00:43):
Yeah, sure. So Sweety in its first iteration, as
actually was started back in1978. It was started by my mom,
even before she met my dad asjust like an Asian scoop shop in
Monterey Park, which is a veryAsian neighborhood of Los
Angeles. At that time, shecouldn't really find Asian
(01:03):
flavor novelties or ice cream inthat area of Los Angeles. So she
decided to open up that storeherself. In that process, she
even she was struggling to getlike the ice creams to her
store. So he decided to startactually doing the manufacturing
side of things as well. Andthat's how she got into you
(01:25):
know, the Sweety because ofbranded CPG item. So it's been
around for a while. It's kind ofmostly just been on Asian
supermarkets. We were reallyknown at the time for doing like
red bean popsicles. Durian, andTaro are very, very traditional
(01:45):
Asian popsicle novelties. Mean, me and my sister, we decided
to get involved just a coupleyears back, right before the
pandemic. At that time, thecompany was still very small, it
was essentially just being runby my uncle and my aunt at the
time. And they kind of wanted toretire. So we were at this
(02:08):
inflection point, deciding,like, Hey, what are we going to
do with this business? Do wejust kind of wind it down and
shut it down when they retire?
Or do we want to put some moneyand time into it, reinvest into
it, and then relaunch it? So thedecision was made to kind of,
kind of get involved in thisbusiness. So yeah, me and my
sister, we started doing arebrand. At the time, we had
(02:29):
done popsicles and mochi icecream, we saw a lot of potential
and the ice cream side or thelogical side of the business. So
we decided to just focus on thatside. And now we launched Wow,
right, as the pandemic started,and it's kind of just been a
wild ride ever since?
Brad Ebenhoeh (02:50):
I bet I bet.
That's very cool. Seriously,since 1978, that's crazy. When
you guys took it over? Or youdecided to take it over, like
what was what was that process?
Like? Did you look at everyaspect of operations and say,
Alright, we're starting a newcompany, taking these assets,
taking the IP. Relationshipswith, you know; the suppliers,
(03:11):
the manufacturer, like how didthat whole process go? Or how
did you look at that and executethat?
Sean Lee (03:17):
I think for us, we wanted to kind of preserve a lot
of the things that made Sweetywhat it was. Still a large
piece of our business is stillkind of that original core Asian
supermarket customer. That kindof informed some of the
decisions that we were making interms of we were doing further
(03:40):
R&D on our product. I thinkthat was the first two things we
really did was to revamp thebranding and look at how we can
tweak some of the flavors andR&D some of it. We got rid of
some flavors at the time, we gotrid of the popsicles, but you
know, it was important for us tokind of remain true to some of
(04:00):
our roots. So you know, we stilldo like a red bean mochi ice
cream. You know, we'vecontinued to add, you know,
other Asian flavors, we have aVietnamese coffee, we do an Ube
as well. And along with that, itwas also just, you know, at that
time, back in the day, like, myparents would cook red beans, we
(04:21):
started basically, in ourkitchen, they would cook red
beans, and then they would, youknow, use that the red beans in
the popsicles that we make. Sofor us, we still do a lot of
things internally. You know, weget, you know, raw Ube puree
frozen puree, and we took thatand we use that in our Ube ice
(04:42):
cream, rather than, you know,just focusing on flavoring or
coloring. We like to use theoriginal ingredients as much as
possible. Yeah.
Brad Ebenhoeh (04:54):
Cool. And so then where exactly are you guys
selling all these products now?
Sean Lee (04:59):
Yeah, so You know, we launched and our first large
retailer actually ended up beingWalmart, which was not the plan.
So I mean, that's one of ourbiggest retailers is Walmart,
we're also you can find us anAlbertsons, and Safeway in
Southern California, NorthernCalifornia and Hawaii. And we're
(05:19):
actually going to be launchingin Costco, Los Angeles later
this fall. So, yeah, please, ifyou guys go go to Costco, if you
live in the area and support ourproduct, really appreciate it.
And then, of course, a lot ofthe Asian supermarkets across
all of the United States.
Brad Ebenhoeh (05:39):
Gotcha. So you are national on with with Asian
supermarkets, but Gotcha. Andthen I clearly like as selling
ice cream, you really, it'sreally hard to dive into direct
consumer aspect, right?
Sean Lee (05:50):
Direct to consumer, yeah, we would. We I'm always
jealous when I see other brandslike being able to do like
little giveaways and direct toconsumer. Yeah, it's, yeah, it's
such a cool way to you know,have access to your customers in
such a direct way and get thatfeedback. Sadly, it's, it's very
(06:12):
tricky to do with ice cream,specifically, just the supply
chain makes it extremelyexpensive. Yeah, even when
you're using a 3PL, it just,it's, it's quite expensive. Your
product goes from, you know,selling at the grocery at around
anywhere from you know, $4.99 to$6.99. And then at selling at,
(06:35):
you know, $12.99 in the directto consumer environment, there's
also just a lot of a lot ofwaste involved in that process,
because you have to add all thisextra packaging from the
insulating materials, you haveto get dry ice. And if there's
any shipping delays, you know,your your product is just lost
(06:56):
yeah,
Brad Ebenhoeh (06:57):
it definitely a disadvantage for the the the
frozen products on the directconsumer space. So then from on
the inventory side of things,like what is your supply chain
like and internallyoperationally, how do you manage
that from supply chain, youknow, raw materials, products?
3PL, etc?
Sean Lee (07:18):
Yeah, I mean, we have a pretty small facility, we
manufacture everything out ofbasically our original location
in Monterey Park. So yeah,inventory management is really
crucial for us. It's also justvery expensive being in a frozen
category as well. So prior tobringing on Walmart, everything
(07:39):
was kind of inventoried at ourown facility, that we've just
been finding creative ways toexpand our frozen storage. Yeah,
we basically, we've been usingkind of these frozen shipping
containers, and that's how we'vebeen able to add additional
frozen storage, when from a realestate standpoint, you know,
we're limited. And that thatgave us kind of a way to kind of
(08:02):
just flex that and slowly add aswe went along and in needed more
frozen space. But you know, oncewe brought on WalMart, on
another game, we brought on a3PL. So basically, they kind of
handle, when you work withWalmart, they, they have
something called, like a pooledsystem. So you ship to a 3PL,
(08:24):
they will pool your inventorywith other Walmart customers,
and then they'll kind of justdistribute out to all the
different DCS. So we almost kindof treat that almost like its
own little its own kind ofsupply chain. Yep.
Brad Ebenhoeh (08:38):
So then, on the, you know, manufacturing side,
like how many, you know, how doyou manage your team? You know,
in terms of making the product?
Do you have an inventory systemspecific, like KPIs you look at
or just kind of how do you guysview that internally?
Sean Lee (08:53):
Yeah, I mean, for the longest time, we, we just did
everything kind of in a GoogleSheet. Yeah, so we, you know, we
had our we built out our salesforecast from our sales
forecast, you know, we know ourBill of Materials, we'd be able
to forecast out what the, youknow, weekly, monthly annual
usage was keep track of kind ofwhat you know, lead times are, I
(09:15):
would come up with basically,you know, what was the safety
stock that we had wanted? Whatwas the reorder quantity? And
kind of basically made up arelatively simple system to
basically say, once I hit thispoint, then my team would know
to go out and reorder this. Onlyrecently, we we started to
(09:35):
transition over to actualinventory tracking software.
Brad Ebenhoeh (09:40):
How's that going?
Is that is that adding morevalue or is it more of a
headache versus just the simpleGoogle Sheet?
Sean Lee (09:46):
Yeah, it's doing that type of transition is always a
process. It takes a while to,you know, do that implementation
and get that, see that return,just because it's just the level
of accuracy that you need. Fromlike, each of your workers, just
(10:11):
because you have to, you reallyhave to be perfect on your lot
traceability on, you know, yourusages it's, it's no moral, you
can't just kind of swag itanymore. And then just like do
an inventory count just like fixthings then. So it's definitely
it's yeah, we only really didthis a couple months ago. So
it's still kind of working outall those kinks. But, you know,
(10:32):
eventually, you're gonna seebenefits from just having that
ease of access to that data.
Whereas a lot of the stuff was,you know, very manual, and you
just didn't have that sametraceability that you have with
something like that. But youknow, what, those systems it's
garbage in, garbage out?
Brad Ebenhoeh (10:49):
Yup. Yeah that's the norm, we, you know, when we
talk to like our brands, orclients who require, if it's
like, there comes a point where,like Google Sheet and Excel
document or however you manageit, it's more time efficient,
more cost efficient, it gets youto where you need to go, there's
a phase your business that'slike, alright, we become more
precise, more real timeinformation. And then that's
when you have to jump tosomething like what you're
(11:09):
talking about, and it's, it'spainful, but once it becomes
part of the company, operatingsystem and workflow, then it's
pretty seamless at that point.
But it can be definitely a pain,but there's advantages with it,
but it's definitely more costlyand more time intensive to do
so. So Well, good. And then interms of, you know, just your
overall manufacturing supplychain, like what are some of the
(11:31):
mistakes that have happened, youknow, you've already mentioned
like, you know, having a frozenproduct and, you know, waste on
packaging with direct consumeror delayed shipment, you know,
the product can be wasted. Butis there any, like big mistakes
you guys made from just more ofa supply chain operational
standpoint that impacted yourbusiness that you learned from?
Sean Lee (11:50):
I think for us, because we we made such a big
leap in terms of the scale, justtaking on such a large retailer,
like Walmart, and even then,like, we kind of, we wanted to
slow play it a little bit, werelike, hey, you know, we only
want to bite as, we don't wantto bite off too much. But even
(12:12):
then, like the volume Step Upwas just, it was so huge. So
just like staying ahead of thoseinitial orders, when they, when
they do that initial fill, I getit was definitely intense, like
how much we had to ramp up tokeep up. But even though we kind
of forecasted how much we neededit just yeah, the scale of it
(12:34):
was just a whole nother level.
Once you kind of get past that,then you have, you know, prior
data to be able to try toforecast better, you've you've
gone through you've ramped upeverything. But, you know, being
on both the manufacturing side,and kind of the CPG side, it
definitely was a step up interms of the complexity, just
(12:55):
all that adding all that scale.
Brad Ebenhoeh (12:58):
And your background is like finance and
operations, right? Yeah,
Sean Lee (13:03):
yeah, I've kind of a relatively varied background,
you know, I've done finance andstrategy, asset management, at a
retail environment. Yeah, wentback to get my MBA in at UCLA.
And that's when I startedgetting involved more in kind of
the food business, my family hasother food manufacturing
(13:26):
companies. So that's why Istarted to get more involved on
this side of the industry.
Brad Ebenhoeh (13:32):
So then you also on, you know, operationally with
the inventory side of things oroversee that, but also you're
handling kind of theforecasting, the modeling the
accounting and all that aspect,right? Yep. Yep. So then from
like, a financial standpoint, interms of the model forecast
budget, like what is your planor strategy in terms of how you
do that? Do you keep it updatedmonthly? Do you review it
(13:53):
looking backwards each month,like, you know, do, like what is
your, you know, your justoverall workflow with with your
forecasting model?
Sean Lee (14:02):
I would say it's like, we kind of review the forecasts
on a quarterly basis. I mean,for us, it really depends on
kind of how our cash flowsituation is, you know, the
tighter it gets, the more we'regonna have to kind of look at
that maybe monthly, or evenweekly. Thankfully, you know,
we've been very, very efficiencyfocus to make sure you know, as
(14:22):
a manufacturing facility, youknow, we are trying to, you
know, have cashflow, positive,positive cash flow. And that
gives us you a little bit moreleeway to kind of Yeah, work
within your financials.
Brad Ebenhoeh (14:35):
Yep. Are you then with the way the economy has
changed or shifted last kind ofnine to 12 months with interest
rates, and with fundraising kindof slowing down a little bit...
Has there been any changes interms of how you change your
business from more to you know,expense management efficiencies,
cash flow, or was that alwayshow you kind of looked at your
business even beforehand?
Sean Lee (14:56):
I think you know, the things that some of the
challenges that we've beenfacing As recently as more just
kind of the inflationary impactsthat we've seen on our margins.
I think that's where, you know,we were pretty comfortable
before. But now, it's definitelyconstrained a little bit more
than just keeping ahead of kindof what competition is doing as
(15:16):
well. You know, I would saywe've been a little bit late to
the game in terms of priceadjustments, we've seen that
some other competitors do,essentially, you know, string
inflation. So I think that'swhere it's definitely put some
pressure on us to kind of stayahead of things like that. So,
(15:36):
yeah, that's just kind oflearning and trying to move a
little bit quicker on those.
Brad Ebenhoeh (15:40):
How do you your like retail partners, how do
they take like priceadjustments? Or like, how, what
is that process like?
Sean Lee (15:49):
Each year has been different, right? I think, you
know, you know, last year, youknow, when everybody was raising
prices, you know, they werebasically like, yeah, we're
getting it from everybody else,you know, just put it in, you
know, you started to get alittle bit more pushback
situation has kind of sloweddown a bit. So it just, I see
(16:10):
just kind of changing from yearto year, at the end of the day,
like, you know, we have to makeenough money to be able to cover
our operating margin. So it iswhat it is, we have to be able
to kind of just push thatthrough.
Brad Ebenhoeh (16:20):
Definitely on the on the accounting side of
things, you know, managing cashweek over week, reviewing
financials each month, is thatyour cadence? Are you the one
that handles that? Or do youhave like, I got a team member
that helps support that process?
Sean Lee (16:32):
I mean, thankfully, like, because we have other food
manufacturing businesses, youknow, we were able to leverage
kind of some of that back ofhouse infrastructure. So they're
able to kind of produce thefinancials for me, and then I
reviewed them on a monthlybasis. And then I make sure to
kind of review that with theother departments to get
feedback, because, you know, Idon't have full visibility on,
you know, what are all themarketing promotional activities
(16:55):
that we're doing? So, you know,if something's tracking high,
you know, I want to get thatinput from, you know, Tiffany,
who's our CMO.
Brad Ebenhoeh (17:03):
What are the first three like numbers and
line items you look at in themonthly financials, when it gets
sent to you?
Sean Lee (17:10):
I mean, for me, it's always kind of gross margin is
kind of the big one that we'realways looking at. And just to
go a little bit even deeper,like, again, because we're doing
the manufacturing ourselves,like, just on a daily basis,
even or weekly, like I'mreviewing kind of what our
production yields are for eachof our production runs. And I'm
also tracking, you know, what isour labor cost for each case
(17:34):
that we're producing, or you canalso look at labor hours, for
each cost, just to make surethat, you know, my production
staff is running, or continue torun things efficiently, though,
you know, being in Los Angeles,we know that, you know, your
wages are going to be increasingevery single year. But, you
know, trying to maintain that,that the efficiency, at least on
(17:54):
a labor hour basis is important.
Brad Ebenhoeh (17:57):
Gotcha. Has theRe from a manufacturing standpoint,
clearly, you know, you said youmoved to more of a 3PL model
afterwards on on the Walmartside, but is there clearly you
have a family history with themanufacturing facility, things
like that, at any point? Haveyou thought Man, it would have
been easier to use a command orlike differently in terms of
that versus managing, you know,that in that entire process? Or
(18:20):
are you happy in terms of whereyou're at, I'm sure, it's kind
of a push pull at times?
Sean Lee (18:23):
Yeah, it's a push pull up. And it's a nice thing to be
able to have control over, youknow, everything, you know, your
quality, the r&d, like, everysingle input, and just have that
visibility and everything thatcan fall. On the flip side,
like, just from, you know, afuture expansion type situation
(18:45):
like requirements, that aregoing to be necessary to, you
know, grow from a $20 milliondollar revenue business to a 50
to 100. You found kind ofdifferent calculations there.
Because it's not like, we canjust go to a different Co-Man
and get kind of the scale from,you know, just the volume, it's,
(19:08):
you know, we need to figure outhow do we expand our
manufacturing capacity in themochi ice cream space, it's,
it's not really there's not abunch of Co-Mans out there doing
this. It's a relativelyspecialized product. And we like
doing it because I think that'swhat really sets us apart is,
you know, our ice cream and ourdough that we make, it's
(19:30):
different from our competitors.
And it's because we wemanufacture ourselves but yeah,
just the capital investmentrequired to expand is just such
a different calculation than ifyou were kind of a Co-Man-based
Brad Ebenhoeh (19:44):
company.
Definitely benefits on bothsides of the spectrum and you
know, risks and costs on bothsides as well. In terms of just
overall I'm just like on yourwebsite, you guys have what
eight flavors, is that right?
Yep.
Any big plans to expand in theshort term with new flavors?
Sean Lee (20:02):
Yeah, we're always looking at, you know, flavor
innovations, I think. Yeah, it'sinteresting, you know, I have a
very different kind of outlook,then, you know, sales and
marketing, like marketing, theyalways love to do crazy flavors.
And I'm always like, woah, like,like, are we gonna get stuck
with inventory like, and thenwhat happened with that
inventory, you know, when you doa seasonal, but I think that's
(20:25):
just part of the cost of doingbusiness sometimes. Because
certain retailers, they want tohave those seasonal items, even
if you know, from a marginstandpoint, you're gonna
struggle to make that there's acomponent of just marketing. But
at the same time, it's like,it's fun from an operational
standpoint, from r&d in newflavor. I was like, we're
(20:47):
working on a bunch of newflavors right now. And it's
like, what's more fun than like,you know, trying different ice
creams. That's the part that Ireally enjoy.
Brad Ebenhoeh (20:56):
Yeah, every time as a background of an
accountant, or on the financeside of things every time you
look at inventory, like, Couldyou see dollar signs? So it's
always exactly. Alright, well,we're wrapping up are winding
down this podcast for all thelisteners out there, we always
under podcasts with twoquestions, one do and one don't.
So what is, from yourperspective, one, do two fellow
(21:18):
CPG, you know, emerging brandfounders out there?
Sean Lee (21:23):
Yeah, I would say like, be mindful of kind of your
retail go to market strategy.
And just kind of understand thetrade offs that are going to
come with that. I think, youknow, we were in this unique
situation where we werepresented this opportunity. You
know, Walmart has been anincredible partner with us, we
got through their open callprogram and got, you know, just
distribute nationaldistribution, and just like, we
(21:46):
weren't going to turn that down.
But, you know, at the same time,like, that wasn't our initial
plan. Like, we had no idea thatthat was the direction we're
gonna go. It's worked for us wasthat same time? Like, you have
to be aware that, you know,there's trade offs to any go to
(22:07):
market strategy. Yeah,especially in terms of whether
you're doing, you know, naturalor club or conventional. Yeah,
if you go one direction, it canpotentially closed doors to
another another channel.
Brad Ebenhoeh (22:22):
Definitely, definitely. And then on the
other side of that, like, whatdoes one doI n't
Sean Lee (22:27):
I think to go along with that it's like, don't be
afraid to pivot. And just kindof continue to reevaluate what
your strategy is going to be,depending on kind of how you've
pivoted to make sure that, youknow, the rest of the company
and the strategy is aligning. Soyou don't have like a mismatch
of like, let's say where you'reselling versus your, your
(22:50):
marketing or your supportinginfrastructure, whether that be
brokers or distributors, like,just make sure you're being
nimble in terms of reevaluatingand then like, restructure
restructuring, kind of yoursupporting strategies. Yep.
Brad Ebenhoeh (23:06):
Couldn't agree any more on that? Well, Shawn, I
really enjoyed the chat beforethey let you go like Where can
people find sweet ice cream?
With your social your your URL?
What what do you got going onfrom a promotion standpoint?
Sean Lee (23:19):
Yeah, I mean, just you follow us on Instagram, 3d ice
cream, cocoa, or on Tik Tok? Interms of our products, you know,
find us on Walmart Albertsons,Safeway in Southern California,
northern California. You canfind us Asian supermarkets and
then yeah, if again, if you'rein LA, please swing by Costco
and pick up our new combo packthough. Awesome. Awesome.
Brad Ebenhoeh (23:46):
Well, Sean, I really enjoyed the chat. Hope I
hope the listeners do that. Hopethe listeners did as well out
there. We're signing off here onepisode 34. The Month End
podcast Sean Lee. Thanks again.
Sean. Take care. Yeah, thank
Sean Lee (23:58):
you for having me.
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