Can Mama’s Creations monetize an Italian grandma’s recipes to the tune of $1 billion a year?

As more consumers prefer buying ready-to-eat meals, Mordor Intelligence expects this market to reach $402.9 billion in 2024 and $512.7 million by 2029. It is in this segment that a small company called Mama’s Creations is building its business. Having started out selling dishes based on recipes of its cofounder’s Italian grandmother, it has set its sights on $1 billion in revenue, a tenfold increase. Since the beginning of the year, Mama’s Creations stock has gained more than 50%, and analysts believe there is still room for further gains.

Grandma’s recipes

Mama’s Creations — known as MamaMancini’s until 2023 — was founded by Dan Mancini (whose real last name is Dougherty) and Carl Wolf in the late 2000s.

Mancini was an outsider to the food industry. At the time, he co-owned a garment manufacturer in New York. He got the idea to commercialize his grandmother’s recipes, who had emigrated from Bari, Italy, to Brooklyn in 1921. Wolf, on the other hand, was a food industry veteran. In 1983, he started a cheese company, which he sold to Land O’Lakes for $62 million in 1997, according to the New York Times.

In 2001, Wolf bought a frozen food appetizer plant. In 2008–2009, things were not going well, and Wolf hired a consultant to explore new opportunities, which led him to Dan Mancini, according to a 2021 report put out by Alta Fox Capital Management, a minority shareholder in MamaMancini’s at the time. 

The partners began producing meatballs at the facilities of Joseph Epstein Food Enterprises (JEFE), owned by Wolf and his son-in-law, Matthew Brown.

This was the beginning of MamaMancini’s. Its logo featured a childhood photo of Dan being held by his Italian grandmother. Wolf took the role of CEO, while Mancini became the public face and voice of MamaMancini’s. Mancini retained intellectual property rights to his grandmother’s recipes, and MamaMancini’s paid him royalties. His responsibilities included interacting with the media, starring in advertising, and appearing on various shows. For example, after Dan Mancini’s April 2009 appearance on the popular cooking show of Martha Stewart, the company was selling its meatballs in 200 supermarkets across New Jersey, says specialist portfolio manager Simons Chase.

Alta Fox Capital Management reports that Wolf was very financially and emotionally invested in the business, funding it with personally guaranteed loans. He was focused on the business and knew the industry and his company’s metrics extremely well, though Alta Fox notes that sometimes his “expectations were simply too high out of the gate.”

In 2013, MamaMancini’s went public by merging with a SPAC. It was listed on the Nasdaq but traded on the OTC market. Wolf and Brown became the largest shareholders (each holding a stake of 24.8%) and took the roles of CEO and president, respectively. Since July 15, 2021, MamaMancini’s shares have traded on the Nasdaq Capital Market.

Growing the business

In 2011 (when MamaMancini’s released its first financial report), the company was supplying products to 11,000 outlets. By 2013, this figure had grown to 22,600. Its revenue jumped 24% in 2012 and 90% in 2013. Meanwhile, losses also grew: in 2013, the net loss came in at $3 million, almost 4.4 times the figure two years earlier.

But in the 2018 fiscal year, the company turned a profit for the first time, with net revenue at $319,000.

At that time, the company hired investment bankers Akin Bay and Kernick Advisory Group “to investigate strategic options” for growth, including acquisitions, mergers, or a sale. Two years later, it engaged investment bank B. Riley Securities “to assist in the exploration and evaluation of strategic alternatives for enhancing shareholder value.” Wolf hired these consultants because he believed that MamaMancini’s was undervalued.

In 2021, Alta Fox highlighted MamaMancini’s as a potential great acquisition target for a strategic buyer. The company offered 26 products in the refrigerated, frozen, deli, and “to-go” food sections, selling mostly to supermarkets and mass-market retailers. About half of MamaMancini’s products were sold  under other companies’ brands (so-called “white-label” products).

Alta Fox said that “this business could easily receive more than 10 times EBITDA in a sale.” The Alta Fox report indicated that MamaMancini’s had growth potential — it often only supplied stores with 1–2  of its 26 products. Consider that each additional product at a chain means $3–5 million more in annualized sales.

Turning point

In 2021, MamaMancini’s announced an active search to acquire complementary food product companies.

Prior to that, it had only acquired JEFE from Wolf and Brown in 2017.

In 2021, MamaMancini’s acquired food manufacturer T&L Creative Salads and olive supplier Olive Branch for a combined price tag of $14 million, including $11 million in cash when the deals closed (a mix of own funds and loans) and a $3 million promissory note, as stated in its financials. These acquisitions proved successful, providing the company with over 3,000 new locations and more than 10,000 spots on retailer shelves.

In 2022, MamaMancini’s acquired a 24% minority interest in prepared food maker Chef Inspirational Foods for $1.2 million and exercised an option to increase its stake to 100% a year later. The remaining 76% interest was purchased for $2 million in cash and $1.5 million in common stock (payable in 2025, based on the market price of the company’s common stock at that time).

At that time, MamaMancini’s saw a management reshuffle. In 2022, Wolf stepped down as CEO, a move that had been anticipated. Alta Fox noted that he was then 76 years old and “did not want to run MamaMancini’s forever.”

He was succeeded by Adam L. Michaels, who had worked at Mondelez International, the producer of Jacobs Monarch coffee and Alpen Gold chocolate, for nine years. Wolf said that Michaels’ experience aligned with the current stage of the company’s development, which is about accelerating growth through innovation and M&A. In 2023, Wolf sold 6.2 million shares at $2.50 per share, followed six months later by Brown, who sold his own stake of 5.6 million shares at $3.50 each shortly after retiring.

Michaels started putting together his team: Joselina Peralta from Henkel was tapped to become the company’s first chief procurement officer; Lauren Sella, Michaels’ former colleague at Mondelez, was named chief marketing officer; and Skip Tappan, who had worked at Walmart, Procter & Gamble, and Campbell Soup, was appointed as chief operating officer. After Tappan’s appointment and the company’s fiscal-2025 second-quarter results were announced, two of the four analysts covering Mama’s Creations raised their target prices.

MamaMancini’s changed its name to Mama’s Creations in 2023, “reflecting the evolution of the company from its origins as a home style, old world Italian food company to a broader provider of products featuring… refrigerated foods for sale in retailers around the country,” the company stated in its financials for the fiscal-2024 full year (ended January 31).

Now, Mama’s Creations sells fresh deli prepared foods in more than 8,400 stores across the U.S., with its products also available on Amazon and QVC, the largest home shopping network in the U.S.

The company’s goal is to become a one-stop-shop for natural and easy-to-prepare foods. The new CEO’s 2030 vision is to generate $1 billion in revenue, wrote Simons Chase. For comparison, in fiscal year 2024, revenue came in at $103.3 million (up 11% year over year) and net profit at $6.5 million (up 184%).

Its growth strategy is based on the idea that deli areas are becoming more important in the context of supermarkets, wrote analyst Marc Gerstein in a blog post on Seeking Alpha.

Currently, the average target price among the four analysts covering Mama’s Creations is $11.00 per share, indicating upside of more than 48% versus the last closing price.

Mama’s Creations stock is up more than 50% since the beginning of the year and over 67% over the past year. Among the risks for Mama’s Creations investors Chase cites growing competition and a limited number of retail chains where its products are available. Another risk has been highlighted by the company itself — its stock has low liquidity, potentially meaning higher price volatility. Still, this is a quite common feature of small-cap stocks.