COMPANY:Cece's Veggie Co.
2019 INC. 5000 RANK: 3
HEADQUARTERS: Austin, TX
YEAR FOUNDED: 2015
2018 REVENUE: $24.9 Million
3-YEAR GROWTH: 23,880%
When doctors told Mason Arnold that he and his two young children should adopt a gluten-free diet for health reasons, he set out to create tasty and healthy substitutes for favorite dishes, so they wouldn't get stuck eating heavily processed alternatives.
"I didn't want them to miss out on spaghetti and meatballs," says Arnold, who would go on to found Cece's Veggie Co., which makes noodle and rice alternatives out of fresh vegetables. "And as a parent, you always want your kids to eat more vegetables, too."
His timing couldn't have been better. Arnold launched the Austin-based business in 2015 as the popularity of gluten-free products--and consumers' interest in healthier, low-carb foods--kicked into overdrive. The global gluten-free pasta market is expected to reach $1.28 billion in 2025, up from $909.8 million in 2017, according to a May report from research firm Allied Market Research.
The diet trend has helped transform Arnold's kitchen experiment into a business that today sells in roughly 3,500 Whole Foods, Kroger, and Costco stores across the U.S. In 2018, Cece's booked $25 million in revenue, and in 2019, it landed the No. 3 spot on Inc.'s annual list of the fastest-growing private companies in the U.S.
Of course, getting people to eat their veggies--even if they're cut into the shape of pasta noodles--can be tricky. He researched the attributes of pasta that consumers deemed essential, so he could replicate them. First, was fork behavior: People wanted their butternut squash "veggiccine" to swirl around their fork like traditional fettuccine. Second, the noodles had to hold sauce. "Most people use pasta to shove sauce into their pie hole," Arnold says. "The goal was to most closely replicate traditional pasta and give people that comfort-food experience."
Arnold invented a machine that spiralizes raw vegetables into long, noodle-like shapes. Cece's launched with two items--zucchini noodles and sweet potato noodles--and finished 2015 with $104,000 in revenue and 10 employees.
He bootstrapped Cece's--even putting the company's payroll on a personal credit card once or twice--until 2016, when he took a $100,000 loan from angel investors and closed a $1 million convertible note. Still, growth stalled as the startup struggled to keep up with back orders. A year later, Arnold raised $14 million in a private equity round led by Encore Consumer Capital to build a 40,000-square-foot facility in Austin with greater manufacturing capacity.
Since then, the company has grown to about 200 workers and released new products including beet noodles, a macaroni and cheese-like dish made from butternut squash shells, and cauliflower and broccoli rice. Arnold is now working on developing a ramen soup kit made with veggie noodles.
"The flavor has to match the expectation that customers have," says Darren Seifer, a food and beverage analyst for market research firm NPD Group. He notes that Cece's has succeeded by sticking to familiar dishes. "If it feels the same way on their tongue and the flavor is the same as they are expecting, they will make the switch to the new product."
Cece's isn't the only company finding success with gluten-free products. Private label manufacturers, regional stores, and larger companies like Green Giant Fresh and Mann's sell their own versions of veggie noodles or rice.
Cece's, which expects to book between $35 million and $40 million in revenue this year, also faces challenges with distribution. The company's signature noodles have a shelf life of just two weeks, so staying on top of expiration dates is crucial. And, like most entrepreneurs, Arnold says hiring is always tough. Identifying the right talent for Cece's is particularly tricky: Employees need to be able to withstand noodle making in 38-degree rooms so the vegetables stay fresh.
"It takes a wonderful kind of person to do that and to do it well," he says.