Kim & Scott's Gourmet Pretzels: A New Twist on Success

Many entrepreneurs admit that their business sometimes ties them up in knots. But in Kim and Scott Holstein's case, it's part of the business model: They make pretzels.

What began as a side project in their home kitchen has blossomed into Kim & Scott's Gourmet Pretzels, a $10 million, 80-employee company that specializes in classic soft pretzels but also includes stuffed varieties like "Pizza Pretzel" and "Grilled Cheese" that double as meals. The couple initially sold to local bakeries and cafes in Chicago, but now find their Bavarian treats on the shelves of Whole Foods, Super Target, Walmart and other major grocery chains across the country.

Scott, 43, is the chief operating officer, while Kim, 44, calls herself chief inspiration officer. Like many great businesses, Kim & Scott's began with day-job frustrations. In 1994, Scott concluded that his acting career wasn't really taking off, while Kim was a stressed-out advertising exec. They met in a bookstore, fell in love, married and had three kids. And in the process of raising a family, they raised a very successful business.

So where did this idea come from? Kim, I guess it's safe to say you weren't very happy in the advertising industry?

Kim: It is so safe to say that. It was really stressful, and my passion was this pretzel dream. I read an article about different pretzels being sold at the farmer's market and it didn't leave my mind. I kept imagining a business selling different flavored pretzels, and I became obsessed, partially because this was the time when different flavored bagels were really popular. The hours in advertising were crazy, long hours, and my soul yearned for something I could put my heart into and make a difference with.

Scott: We had a dream of a certain lifestyle, and in many ways, this was a vehicle that allowed us to have that. Some married couples have things they work on as a special project, like building a house together and they really get into it, and at the end, there's this sudden emptiness. Well, this business is almost like a project we took on, one with 80 employees and international distribution, that keeps us engaged as a couple.

And if you're lucky, it never truly ends. But why pretzels?

Kim: I love salty, flavor combinations and I've always loved pretzels. And I'm big on crazy concoctions. The pretzel is our vehicle, and we take the flavors and have fun with it. And as we evolved, we realized we could stuff the pretzel with food and go away from being just a snack to an anytime meal, and that's been our focus -- that on-the-go person who may not be eating a three-course meal but just wants a smaller fix and has something in the late morning or after dinner.

Scott: I agree. It started out as a savory concept, something to deliver small individual flavors, but now we have egg and cheese stuffed pretzels, and grilled cheese pretzels, chocolate brownie stuffed pretzels. It's been interesting to see how far we can stretch the pretzel.

Is there anything that has surprised you about the food industry that you hadn't considered when you first got into this?

Kim: One has been the challenge for a small business to not only get on the shelf in the frozen isle, but to stay there. It's a very competitive marketplace, often owned by the big companies. They have the funds for slotting fees so they can buy and hold their space. It makes it very difficult for the little guys to succeed. However, we have been making our way, and being a WBE [Women's Business Enterprise] certified business has helped us tremendously with reducing the slotting dollars or eliminating the dollars usually needed.

Your business does quite a bit of charity work, donating portions of profits to schools and Special Olympics. Tell us about your Pretzels with a Purpose campaign.

Kim: It's our commitment to make a difference in our world community. We started this right from the beginning, when we began the business. Pretzels with a Purpose is our mantra to make a difference, and we do that through our different initiatives, including Pretzels for Peace, Pretzel Power and Pretzel Dough.

Scott: These initiatives have been a vehicle for us to incorporate social responsibility into the model of our business, and it's something we're very passionate about. When Kim had this idea for pretzels, I thought we could give back to the community and have a business that was a force of social good. I had admired what Ben and Jerry did with their social causes, so we kind of wanted to Ben and Jerry-ize the frozen pretzel industry. With Pretzels for Peace, we get involved in local community efforts, with everything from breast cancer research -- for instance, we developed a breast cancer ribbon pretzel -- to Crohns and Colitis Foundation, and other efforts. Pretzel Power is our commitment to empower others, from students wanting to learn about being an entrepreneur to women who want to start their own businesses. Our Pretzel Dough program is our initiative to help schools raise funds through selling pretzels and also collecting box tops of our pretzels with a donation to the school.

So where do you see your business in, say, 10 years?

Scott: In 10 years, we plan to be the world's most delicious pretzel company, with pretzels in grocery stores around the country, and we'd like to expand our café concept. There are enormous opportunities with pretzels we haven't yet capitalized on. Our passion is with pretzels, and there are many new markets and opportunities.

Name: Kim and Scott Holstein
Company: Kim & Scott's Gourmet Pretzels
Ages: 43 and 44
Location: Chicago
Founded: 1995
Employees: 80
Annual revenue: $10 million
Website: www.kimandscotts.com

Geoff Williams is a regular contributor to AOL Small Business.