Undercover Snacks, an OU Kosher certified company, was founded by Diana and her husband Michael. The duo’s commitment to quality and innovation is evident in their diverse product offerings. Together, they’ve managed to grow the company by navigating various challenges in the industry, from understanding UPC codes to developing new manufacturing processes. Recently, they expanded operations to accommodate large orders, such as supplying in-flight snacks for United Airlines. Working tirelessly, sometimes even through the night, Diana and Michael have focused on various aspects of the business, including sales, marketing, and operations, to establish Undercover Chocolate as a noteworthy presence in the market.
OU Kosher: Diana, can you tell us why you started Undercover Snacks?
Diana: I started Undercover Chocolate Company because I’ve always loved chocolate and wanted to create my own business. It was initially a hobby, mainly for events like bar and bat mitzvahs.
OU Kosher: When did you start the business?
Diana: I started in 2013. In 2016, two of my daughters were diagnosed with celiac disease, so I decided to create a gluten-free snack. I experimented with different recipes for months, wanting something delicious but lighter and healthier.
OU Kosher: Was there any chemistry involved in developing the product?
Diana: No, it was just me testing. My family and friends tried it, but I didn’t consult with anyone in the industry. I just kept trying until I came up with this snack, using chocolate as a binder.
OU Kosher: How does using chocolate as a binder work?
Diana: It was unusual. Most products use glucose to bind ingredients, but I decided to use chocolate. It created challenges when scaling up, especially with equipment, but it led to a unique product of crispy quinoa lightly covered in premium chocolate.
OU Kosher: How did you overcome these challenges?
Diana: It was tough. I realized nobody was doing it this way. Chocolate companies couldn’t manufacture it, and cereal bar lines couldn’t accommodate real chocolate. My ignorance became an advantage as I wasn’t influenced by industry norms. I was persistent and determined to make it work.
OU Kosher: Did you plan to create a big business?
Diana: Not at first. I just wanted it to taste good. In 2016, I got into local stores and then into Whole Foods in Newark, NJ in March 2017. That was my main goal, and the process of getting there was a journey filled with learning and experimentation.
OU Kosher: Can you describe the moment when you approached the forager at Whole Foods, brought her samples, and how that led to your product being placed in a store?
Diana: I found an event where I saw a person whose title was “forager” at Whole Foods. It was like speed dating, but for networking. I knew she’d be there, so I brought a bag of samples with our packaging. I talked to her for about three minutes and never thought I’d hear from her again. But suddenly, she called back and said, “We’ll give you a shot.” By September 2016, she confirmed our product would be in one store in March 2017, but I had to redo my packaging.
OU Kosher: Did she taste the product while you were talking?
Diana: I don’t think she tasted it there. I think she took the bag with her, but I can’t recall.
OU Kosher: When you got into the store, what did your kids say?
Diana: They weren’t really paying attention. One of them didn’t even try the product for over a year. My elder daughter, Ariel, did try it and takes credit for suggesting adding quinoa, but overall, they weren’t paying much attention.
OU Kosher: How did your husband react? Did he help fund the venture?
Diana: My husband always paid attention and believed we could build a giant business around this idea. He had experience in the financial end of the food space, and his secret wish was to help scale the business. We mainly funded it ourselves initially and then brought in some friendly investors who got equity. But we control the company, and I own more than 50% personally, which enables us to maintain being a certified women-owned business.
OU Kosher: Can you describe a typical day in your life running the company?
Diana: Michael usually takes care of operations, and I handle sales and marketing, but we both overlap and criss-cross on everything. I’m generally at work by 8:30 in the morning, and I leave anywhere between 7:00 and 9:00 o’clock at night. After going home to perhaps work out and eat, I often find myself doing more work at night, including weekends.
OU Kosher: It sounds like an intense schedule. Has there ever been a time when you’ve had to work overnight?
Diana: Yes, literally to the point where Michael and I have had to work the overnight shift. We’ve done this to keep up with our growing demand, especially since we’ve been running pretty much 24/7.
OU Kosher: Is this continuous operation because of your newest big order or just due to rapid growth in general?
Diana: It’s a bit of both. Before our agreement with United Airlines, we were running two shifts and occasionally three. Now, we’re consistently running three shifts to accommodate the demand. We have plenty of capacity, but the United Airlines business has certainly increased our need to operate around the clock. We started this three-shift system to meet the demands of our growth and this exciting new partnership.
OU Kosher: That’s impressive, working around the clock to meet the demand. How have you managed to sustain that level of effort?
Diana: It’s a combination of passion for what we do and the excitement of growing so quickly. We’ve been running two shifts to keep up, and the hard work has been worth it. The agreement with United Airlines and our rapid growth is a testament to the quality and appeal of our products.
OU Kosher: How did you manage to scale up your manufacturing process?
Diana: When Whole Foods authorized me to sell throughout the Northeast, I started flying around the country meeting with co-manufacturers. I quickly realized that no one could scale up as quickly as I needed, and I might lose control with a large co-manufacturer. So I decided to manufacture myself in a small commercial kitchen, even mixing chocolate by hand. My husband would sometimes assist while still working on his own business. Eventually, I hired a few people to help, but at the beginning, I was mostly doing it by myself.
OU Kosher: How many packages were you putting together for those first two Whole Foods stores?
Diana: Initially, I was producing around 26 cases a week by myself in a rented commercial kitchen. It was small-scale, selling a bit online and self-distributing to stores like Whole Foods.
OU Kosher: How did you scale up from there, especially before Amazon bought Whole Foods in 2017?
Diana: Back then, store managers had more control. I would drive around and demo my product at Whole Foods, selling on the spot. By late 2017, I was able to get a distributor for Whole Foods, and everything started to scale up from there.
OU Kosher: Did you have to invest more in equipment?
Diana: Yes, by spring of 2017, I knew I needed to create a manufacturing line. I attended equipment trade shows all over the U.S. and Europe. Most ignored me, but one person helped me, and I ended up buying an entire manufacturing line from him.
OU Kosher: What led you to make such a massive investment in manufacturing?
Diana: It was a crazy thing we were doing, and a very big investment. But we saw a huge opportunity, and my husband believed I could figure it out. He was 100% supportive, and so we bought a 12,000 square foot space and a state-of-the-art manufacturing line.
OU Kosher: Can you talk about the growth of your manufacturing space and how you managed sourcing ingredients?
Diana: We moved to a 12,000 square foot space in 2018 and have expanded to about 40,000 square feet. We’ve evolved in terms of suppliers, ensuring that we have more than one source for everything to avoid supply chain issues. Our warehouse is 10,000 square feet outside the main space.
OU Kosher: What was your journey with kosher certification?
Diana: Being Jewish, kosher certification was something we wanted to pursue. We began the process as soon as we were set up in our new manufacturing space. It wasn’t a make-or-break situation with retailers, but it gives us an edge. We’re proud of it, and it’s a good market.
OU Kosher: Tell us about the vegan aspect and other certifications of your product.
Diana: Our dark chocolate products are plant-based, and all our products are certified gluten-free and Rainforest Alliance certified. Our facility is also peanut, tree nut, and allergy-friendly, considering food sensitivities.
OU Kosher: When did the mashgiach (RFR Supervisor) come into the facility for the kosher certification process?
Diana: Once we were set up in our new facility around the summer of 2018, we started working with a food safety consultant. We never had to backtrack; we started using kosher ingredients from the beginning, and the certification process was probably completed by the fall of 2018.
OU Kosher: Did you have to make any major changes to production for kosher certification?
Diana: No major changes were needed. We started using ingredients and set up the plant in a way that was already kosher compliant from the very beginning.
OU Kosher: You mentioned having the OU label on your products and expanding to various markets. Is Europe one of those markets?
Diana: Not in Europe, actually. Our products are in Singapore, Japan, Canada, and Israel. I would have thought Europe before Asia, but we didn’t pursue international business, especially during COVID. This was all inbound business.
OU Kosher: So, by inbound business, you mean distributors came to you?
Diana: Yes, everyone came to us. I didn’t seek out international business; it just sort of came our way. Israel was actually the first country we worked with internationally. It felt right, and there was something heartwarming about knowing our products were going to Israel first.
OU Kosher: Early on, you had concerns about being knocked off by a co-packer. Is that something common?
Diana: I have no idea. It seemed like an obvious possibility, especially when scaling up. It just didn’t seem like a great idea.
OU Kosher: Has any large manufacturer approached you to buy your company?
Diana: We’re not quite ready for that yet, but we would certainly explore it down the road. We still have a tremendous amount to grow in the United States and internationally.
OU Kosher: What advice would you give yourself now if you were starting, knowing the entrepreneurial roller coaster you’ve been on?
Diana: Believe in your product and be incredibly persistent. There are problems every hour of the day, and you have to be a problem solver. You own the problems, so you must work through them.
OU Kosher: Can you remember a specific problem that caused you to hang your head?
Diana: One initial problem was not finding a co-manufacturer. Then, buying a manufacturing line that wouldn’t fit. But I had my husband’s support, even though he’s a big risk-taker and wasn’t paying close attention to the business.
OU Kosher: Sounds like he’s a very positive person.
Diana: He is, but he only saw the companies that succeeded since he was in mergers and acquisitions. I’m more of a realist and detail-oriented, but also a huge risk-taker.
OU Kosher: So, for people who want to start doing what you did, speaking of risk…
OU Kosher: What advice would you give to someone wanting to start their own business?
Diana: My one regret is not starting my own business earlier. There were always excuses, like my kids being too young, but I advise just starting somewhere. Take on the risk you can handle and get going because every little step accumulates. I had to Google what an invoice was, what a UPC code was, but eventually, you build up knowledge and you own it. You make your way through, but you must have the belief that you can figure it out.
OU Kosher: Is your ability to figure things out a significant quality for an entrepreneur?
Diana: Yes, being good at figuring things out is essential. I’m very curious about everything, and I don’t stop until it’s done. You need these qualities, along with initiative, to work in a startup. There’s no roadmap; you need to be able to look at a problem and figure out the solution. It’s tough to find people who fit into our organization, but when you find them, you get these gems.
OU Kosher: How do you approach hiring for your organization?
Diana: It’s tough, but we find absolute gems. It’s not always the first person we find for a position, but we discover different people through various means. It’s not about putting out a job description and interviewing 10 people; you sort of discover them.
OU Kosher: Do you do your own research and development?
Diana: Yes, we’re always experimenting. We’re going to have a new process coming out probably in the next six months. We intend to evolve to manufacture different snacks and do different things. We might work outside, but right now we’re doing it in-house.
OU Kosher: When is your next product launch?
Diana: We roll out new flavors from time to time and have different exclusive flavors going into different retailers. We often have different sizes or formats of our current products. In terms of a completely new product launch, we haven’t announced that yet. It’s probably about six months out.
OU Kosher: Thank you, Diana, for sharing your insights and journey with Undercover Chocolate. Your determination, creativity, and entrepreneurial spirit are an inspiration. We’re looking forward to seeing what exciting new flavors and products you’ll introduce next.
Diana: Thank you for having me. It’s been a pleasure to share my experience, and I appreciate the support from OU Kosher. Stay tuned for what’s coming next from Undercover Chocolate!