How one small bakery made it through receivership, the GFC, and a global pandemic – and came out stronger each time.
Not many entrepreneurs can turn a struggling bakery into a 21-year success story, but that’s exactly what Jacky Magid and Ken Mahlab have done with Charlie’s Fine Food Co, a wholesaler and retailer of gourmet baked goods.
It all began when Ken bought the tiny Moorabbin-based wholesale bakery out of receivership in 2004. Four years later, Jacky left her corporate law career to join the business, securing major contracts with stadiums, airlines and hotels.
Then, 15 years in, Covid hit, and Charlie’s was forced to make a bold pivot across to retail. The gamble paid off. In 2025, the business is selling its cookies in major retailers nationwide, as well as D2C online.
ISB caught up with Jacky to find out how the business survived insolvency, the GFC, and a pandemic – here’s the conversation.
ISB: Your husband and business partner, Ken, bought the business out of receivership in 2004 when it was a tiny wholesale bakery. Tell me about those early days – what made you decide to take on this beast, and what was it like running a business for the first time?
Jacky Magid: Why did we do it? Ken was looking for a business to invest in, that’s the first thing. But we both had a real passion for providing really delicious food. We grew up in families where food was really important – it made people happy, it brought people together, and it was a way of showing love. So when Charlie’s came about, we felt it gave us sort of the perfect platform to do this. Cookies are shareable; they make people happy. You don’t ever see someone looking sad when they’re eating a cookie.
The early days were stressful. I wasn’t involved other than being the wife of Ken for the first three to four years. But I watched it being stressful for him. It was a very steep learning curve. He was learning a new industry, all the time working with new products, new channels, new markets, trying to turn it around and ensure financial viability, because it wasn’t in good shape when we picked it up.
How did you transform Charlie’s from a struggling bakery into a successful, profitable supplier?
There were five people working in it when I joined [in 2008] and took over sales and marketing. By then, it had stabilised, but it hadn’t grown in those first three years, which gave me the opportunity. It was a matter of, you know, how can we supercharge this now?
And, of course, that was all very well, but I joined in the beginning of 2008, and then the GFC hit, so the stress rose a little bit. But I guess what it did was it pushed us to, you know, prioritise the markets where we were making money. Charlie’s had never been a successful B2C brand, but it was quite successful in selling wholesale cookies to food-service operators like five-star hotels, engine centres, sporting centres, you know, those sorts of places.
The chefs valued quality, reliability and consistency. A couple of them said to me, ‘We love working\ with your product, because it looks like it comes out of our pastry kitchen.’ So that was really, I think, the value proposition of Charlie’s back then.
Even though we were a wholesale business, I wanted our brand to be on as much as possible. So that might be an individually wrapped cookie with our brand on it, for example. Because what was happening was people would go to the MCG and get a cookie, but they didn’t know if it was mine or yours or baked in their kitchen. I also provided a fresh set of eyes, and I was quite ambitious; that’s just who I am. When I joined, I was asking questions like, “Why can’t we sell to Qantas? Why can’t we sell to PFD and Bidfood?” So we took our values and said, ‘How can we take this to other places?’ We had to grow our product range and our offering, but we went into cafes and we went into airlines.
The year 2010 was a major moment for Charlie’s – you got your cookies on Qantas’s planes. How did this partnership come about?
It came about by ambition and persistence. At that time, Qantas changed its menu every three months, so you had to be thinking about the next product before you’d even got the first product on. I flew up to Sydney every three months for three years [to pitch to Qantas]. And I kept going and changed the product, changed the pack format, and every time, I learnt a little bit more, and a little bit more. They had a pretty specific brief. You had to build a product to a price, to a size, to a flavour profile.
And just after three years, we got our break. Maybe they felt that they couldn’t say no for the 12th time – or maybe it was through my listening and my learning. We have supplied them on and off, but mostly on, for about 15 years.
You’ve transacted with quite a few major companies and distributors over the years. What were some key lessons you learned from doing business with these big players?
I think there are a couple of things. I think my background in corporate life has helped in that I’m a sort of structured thinker, as a result, I follow processes. I think the big companies like that. I think they also like that we’re a smaller and more agile company, so we can be more flexible. The other thing is understanding the needs of your customer. I just don’t think it can be underestimated. People might call it relationship building, but I think your best chance of success – especially if you can be a bit bespoke – is to understand what they’re looking for, where their pain points are.
And the third thing with major companies is to understand your value chain and your cost structures, especially when you go to a new customer or into a new market. The stakes get bigger. If you don’t cost your product right for a cafe, OK, they spend $2000 with you a year. But if you don’t cost your product properly for Woolworths, and they spend $200,000 or $2 million, or whatever it is, you find yourself in a much bigger hole. And every customer has, you know, different cost drivers. Sometimes it’s a rebate, sometimes it’s promotional money upfront. Sometimes it’s marketing spend. Make sure that you know it.
In 2021, Covid changed everything for your business. Can you tell me a bit about this time and the effect it had on business?
The first couple of weeks were just a shock. We had no business, no need to make cookies, and nowhere to sell them. In fact, we had a warehouse full of things that we had to clear.
Just before [former PM] Scott Morrison introduced [The JobKeeper subsidy program] we made the difficult decision to shut down and put off all our staff. You can’t quite imagine emotionally what that meant. We had 40 people on Zoom, and Ken teared up and told them that, you know, until we knew more, there was nothing. That was on the Friday, and then [Morrison] announced JobKeeper on the Sunday – so the next Monday we had another Zoom call where it was like, ‘Well, you know, you’re all on staff still.’
Then, in April, a purchase order from Sam’s Club or Walmart came. It was significant, and it was enough to reopen us – and that came in conjunction with a couple of other things. Some people came to us for some contract manufacturing, for supermarkets and various other things.
After Covid hit and business dried up, you pivoted to a B2C model. What was on your mind during this time? Why did switching feel like the right decision?
I’ve always said this was the silver lining for us with Covid. When you’re in a B2B business, answering to chefs and purchasing managers, it can be quite demanding. As soon as we had that downtime, we had the headspace to go, ‘OK, this could be our moment to go to retail.’
[Before 2020], we didn’t really have the products on the site. We had no accessibility, not online, but a huge number of people would [get in contact] via our website, saying, ‘I had this on Qantas. Where can I get it?’ And we’d say, ‘Oh, there’s a cafe that sells it. Or, if you go to the Australian Open, you can buy it during the tennis.’ It wasn’t like [consumers] could buy it. And retail was also our only chance, because retailers were the only ones that were selling food. Cafes were closed, airlines were closed, and hotels were closed. So it was a natural pivot for us.
What was involved in the business pivot? Where did you start?
We did a lot of things wrong. Probably the biggest thing that we did wrong was not taking that [lesson] from B2B around asking our customers what their needs were. We just assumed that, if the hotels loved our cheese bites, we could just put them in a nice box and put them on a retailer’s shelf, and they would sell. Or if Woolworths or Coles says, ‘That looks like a good idea’
We thought it was enough to fulfil their needs. But ultimately, they’re not the customer.
What we’ve had to do is find out what consumers are looking for. We’ve got this internal language at the moment that if it’s not ‘smashable’, we don’t pitch it. Meaning, if you open a bag and you have one and you go, ‘Oh, that was really nice’, and you put it down, that’s not smashable. We’ve also subtly reiterated our packaging and our logo probably two or three times in the last five years.
What key actions did you take to make the reinvention so successful?
Really understanding the value chain and how different it is in retail to what it is in food service was really important. The other one was learning to listen to our consumers and to invest in focus groups. I think that also helps you believe in what you’re doing. And the customer’s belief in you really helps you believe in yourself.
Building community is important to us. We have full-time people on socials, and we’ve been actively building a database in recent years. We communicate through EMS, and we can see click-through rates. There probably are better [martech] tools out there than we use, but our stuff interfaces with our accounting software, which is also a manufacturing software. So we’re a little bit limited in that space as a manufacturer.
What’s next for Charlie’s?
We’ve got a serious focus on retail now. We’ve fixed the brand, we’ve fixed the packaging, we’ve listened to the customers, now it’s really about getting the product out there as much as we can. A lot of people who know me personally still say, ‘Where can I buy your stuff?’ So we want to become more visible on the shelf and more accessible to our customers.
[In July, we launched] our first product in Aldi, which is incredibly exciting for us. It’s under our own brand, and it is the most delicious make-it-at-home cookie dough.
We’ve also been talking to some of our retailers about how we get off location. You know how Arnott’s, for example, has all of those bins and stands all over the store. That’s one of the things that, fingers crossed, we’ll do more of by the time this goes to [print]. But it all costs money. Arnott’s gets all of these off locations, but they pay millions. And for us, we’re in the tens of thousands, so that’s a lot to compete with.
So that’s why the challenge for [smaller] businesses like us is to develop products that people want. It’s the consumer who puts the pressure on the supermarkets.
This article first appeared in issue 50 of the Inside Small Business quarterly magazine.
