How 2 friends turned their fun Poker night idea into a $500 million snack empire

Pete Maldonado turned his passion for a certain snack into a multimillion-dollar company. It all started one night over a friendly game of poker. His future business partner, Rashid Ali, was first introduced to Maldonado in 2011 at a Chicago friend's house. During a break in the game, they started talking about guilty pleasures.

Maldonado fondly remembered his go-to gas station treat, Slim Jims. As a kid from Long Island, New York, he used to ride his bike to the local 7-Eleven and stock up on these beef jerky sticks, devouring them before reaching home.

From passion to business venture

Later, while working as a physical trainer, Maldonado discovered that Slim Jims weren't the healthiest option due to additives like corn syrup and mechanically separated chicken. He continued to crave the taste though. He told Ali about his plan to make a low-calorie, high-protein and equally delicious alternative to the meat stick. As a business consultant, Ali recognized the idea's potential. Not long after, they launched Chomps, a company that sells healthier beef jerky as a side project out of Maldonado's Chicago apartment. 

Chomps has grown in popularity across the country as a brand that appeals to consumers who are health-conscious in the $17 billion meat snack market. Since their founding as co-founders and co-CEOs, Maldonado and Ali have overseen the sale of more than 350 million jerky sticks. Here's how Ali and Maldonado took Chomps from a side project to a business that anticipates making close to $500 million in sales this year.

Crafting the recipe

In 2012, Maldonado and Ali inquired of friends in other states about their favorite snacks and spent months testing out hundreds of jerky sticks from various Chicago stores before they finally found the basic recipe for Chomps at a small corner store about a six-hour drive away in Greentop, Missouri. They received some beef sticks from a friend of theirs in Missouri. The maker, Kevin Western is a local who sells his homemade goodies on the side. Impressed by the quality and flavor, Maldonado and Ali contacted Western who consented to assist them in creating the original formula for Chomps. He also mentioned that his family operated Western Smokehouse, a local business in Greentop, which could help manufacture products on a larger scale.

Ali explains, “We wanted to use grass-fed beef and remove a lot of ingredients jerky typically uses like sugar and nitrates which can create a lot of manufacturing challenges. A lot of manufacturers didn’t want to deal with those challenges and do the old way of approaching it. But the Westerns were willing to work with us, and together we came up with a recipe that’s similar to the one we still use today.”

The main ingredients in Chomps include grass-fed beef, water, celery powder, sea salt, and red pepper.

Launching Chomps

To launch Chomps, the co-founders contributed about $6,500 of their own funds. This included Facebook marketing, website development, packaging design, and the initial production run. The original beef jerky stick was Chomps' debut product, and it was released online in December 2012. It was priced at roughly $2 each stick at first (it is currently about $2.49 each). The response was very good and within a month, the business was making more than expected. Maldonado and Ali initially managed Chomps alongside full-time jobs, hand-packing and shipping orders themselves. In 2013, Chomps' first year, they sold about $50,000 worth of meat sticks. The following year, sales doubled to $100,000, and the numbers kept rising driven by the popularity of diets like paleo and keto. They marketed Chomps as a low-carb, sugar-free snack, selling directly to consumers and various outlets across the U.S. Introducing new flavors like jalapeno beef, the company quickly gained traction, often struggling to keep up with demand on their website.

Trader Joe's breakthrough

In 2016, Trader Joe's called Maldonado and Ali, excited to sell Chomps beef sticks across the country. They heard about Chomps from a Trader Joe's executive's daughter who liked it while on the Whole 30 diet. Trader Joe's ordered a million meat sticks, a huge deal for Maldonado and Ali, who were still managing Chomps on the side. This sudden growth made them rethink their business strategy. Before Chomps made about 10,000 pounds of meat per month, but now they needed 120,000 pounds in just a few weeks. To manage, they rented more space and hired extra workers. Chomps hit Trader Joe's shelves in July 2016, marking its first big store deal. Maldonado left his real estate job to focus on Chomps, and Ali stopped consulting in 2018 as Chomps grew. Despite doubters, they believed in Chomps' success.

Retail success and appeal to women

Following its entry into Trader Joe's, Chomps saw rapid growth in sales, going from $45 million in 2020 to roughly $250 million in 2023 at Whole Foods, Target, and Walmart. Maldonado and Ali attribute a large portion of Chomps' success to the company's appeal to women, who comprise more than 70% of their clientele. They revamped the packaging to appeal more to female customers to fortify this bond.

Strategic investment and growth

Following 10 years of self-sufficiency, Chomps could acquire an investment of $80 million from Stride Consumer Partners in 2021, which allowed for more growth. Chomps, which employs 78 people and has offices in Naples and Chicago, is nevertheless careful about growing to preserve its startup mentality. Despite the challenges of the snack industry, Maldonado and Ali are driven to make a positive impact, especially now that they both have families.

Editor's note: This article was originally published on March 15, 2024. It has since been updated.