2018 INC. 5000 RANK: 3481
HEADQUARTERS: San Diego, CA
YEAR FOUNDED: 2011
2017 REVENUE: $3.7 Million
When Kevin Gelfand met Martin Reiman during their freshman year of college, he took note of Reiman's nipple ring and thought, "I'm never going to talk to this guy again." Less than three years later, the pair became best friends and co-founded their on-the-go healthy food startup, Shake Smart.
"He and I are very different, which is why we work so well together," Gelfand, 28, says. "We aren't rocket scientists, we're not launching the next Facebook -- but we're launching something relatable."
Shake Smart markets itself as a "functional nutrition" company that caters specifically to college students, providing them with affordable, quick, and fresh options for their busy lives. Think build-your-own protein shakes, acai bowls, and egg-white breakfast wraps, all for between $3 and $7. What's more, the menu offers vegan, vegetarian, and gluten-free options, and customers interact directly with the company's proprietary self-order system.
Gelfand and Reiman, who built their friendship after pledging the same fraternity, launched Shake Smart's first location in 2011 at San Diego State University, where they were juniors. They raised nearly $1.5 million in startup capital from a variety of sources, including Gelfand's grandmother, who kicked in a $30,000 loan. The co-founders have since opened nine more stores on campuses in California, Florida, and Texas. Last year, the company booked more than $3.6 million in revenue.
While the idea of organic protein shakes may not sound revolutionary, Gelfand and Reiman insist Shake Smart is giving college students something they couldn't get before: nutritional, fast, and affordable meals. The co-founders experienced this lack firsthand when they'd work out at their college gym and then struggle to find something that appealed to their dietary preferences.
"The gym is definitely one of the most populated areas on campus, but the food options never really matched that," Reiman, 29, says. "We would exist off [premade] protein drinks for most of our time there, and most of them are awful."
While there was a juice-and-smoothie place nearby, Gelfand says the price of a drink would double after he was done modifying it to fit his needs. He'd add several shots of protein powder--each tacking another 50 cents to the total--and switch from a yogurt-based concoction to one made with water, to avoid the extra sugar. "It went from a $4 to a $9.50 shake," Gelfand says, noting that the shop's employees dreaded his frequent visits because his orders were so complicated.
Shake Smart set out to differentiate itself from other brands by using healthy ingredients but still keeping prices low for customers. To accomplish that, the co-founders recently implemented a self-ordering system in stores. Customers use tablets to select menu items, with the smart technology making recommendations based on previous selections. The innovation lowers overhead costs, allowing the co-founders to maintain affordable prices for cash-strapped college students.
But getting their business entrenched in the campus culture wasn't an easy road for the co-founders. When they launched the first store in San Diego, they wanted to be included in the meal plan to attract more student customers. But to do that, Shake Smart had to prove it was different from every other dining option on campus, including the juice-and-smoothie place that Gelfand frequented.
"No one was open on the weekends, no one was open past 7 p.m., and no one was open before 10 a.m.," Gelfand says. "So we started to do these things and hoped the students would advocate for us to get on the meal plan."
To fit those needs, Gelfand and Reiman adjusted their course schedules. After six months, the school added Shake Smart to the meal plan and the business skyrocketed. The duo now strives to be included on college's meal plans, allowing its core customer group another way of payment that may be more lenient than cash or credit.
But while Gelfand and Reiman have growth on their minds, they could face competition from the proliferation of cheaper protein drinks in coffee shops and supermarkets. Chrystalleni Stivaros, a food and beverage analyst at IBIS World, cautions that the smoothie-and-juice market, while still growing, hasn't boomed in recent years. Consumers "like the convenience of picking it up in a one-stop-shop," Stivaros says. "There are no overhead costs that way, so people who get smoothies in stores generally pay more for the product."
Stivaros added that input costs, like ingredients and cups, are a big challenge. For instance, pricey superfoods and alternative sweeteners are in vogue but bring down profits for startups that don't yet have contracts with wholesalers. However, Stivaros says there's room for niche players that specialize in trendy ingredients.
The Shake Smart co-founders certainly see it that way. They hope that by the end of 2019, they will have Shake Smarts at 20 campuses across the U.S. And what's more, they plan to continue opening the business up to interested parties who wish to be licensees.
Their friendship has also grown in the years since they launched Shake Smart, with Reiman even officiating at Gelfand's wedding. Reiman has also taken out the nipple ring.