Hero Bread raises $21m to fuel retail expansion of better-for-you baked goods

Founded in 2021, Hero Bread offers a range of better-for-you bakery items, including bread, buns, tortillas, croissants and more. Each contains between 0-2 grams of net carbs, 4-7 grams of proteins per serving size and is formulated without sugar or preservatives.

The funding round was led by Cleveland Avenue, Composite Ventures and DNS Capital with participation from existing investor Greatpoint Ventures, bringing the total funding to more than $68.5 million. Hero Bread will invest the new capital in its current retail footprint and new product innovation, Cheng said.

“With the money, we are really committed to investing in the doors we are in and helping drive our great partners like Sprouts, Publix and Fresh Thyme to be really successful with us. We continue to work with them on driving that awareness and that traffic within their store. But also introducing new SKUs there, so that we can increase the dollar contribution rate within the category,” he said.   

‘People have really traded convenience and cost for the core pillar of nutrition and calories’

As consumers reprioritize healthy and more nutritious food, better-for-you bread brands are responding to that demand with protein-enriched​, gluten-free, clean-label and other products.

“In the last 100 years ... people have really traded convenience and cost for the core pillar of nutrition and calories that bread used to provide, and in that, we forgot what bread was originally [supposed] to do,” Cheng said. “A lot of credit goes to Dave's Killer Bread for realizing that. This is something that a lot of households still eat. It is still part of our diet, but we should be getting something out of it instead of just empty calories and sugar and a lot of preservatives.”

DTC remains a pillar of Hero Bread’s growth strategy

While continuing its retail growth, Hero Bread is still seeing success with DTC at a time when many food and beverage startups are struggling to maintain healthy margins within the channel, Cheng explained.

"DTC continues to grow well, and we are personally not seeing the difficulty on DTC that a lot of other brands are seeing, largely driven because of our repeated loyalty rate,” Cheng said. “We are very lucky that we are in a category that can be a weekly [or] monthly purchase, which really drives our success and DTC."

Hero Bread's DTC business benefited from bread's status as a household staple, with its customers regularly subscribing for weekly or monthly shipments, Cheng explained. The bread company also uses DTC to connect with its most loyal fans and provide them with special offers and limited-time offerings to keep them engaged, he added.

“[DTC] is just simply the easiest and the highest quality, most high-touch experience that we can give our consumers, and if you are Hero Bread head, you are going to want to come to Hero.com because you get the best assortment. ... We make it really easy to ship right to your door. We have special limited-time products that you cannot get anywhere else. If you want a croissant or if you want an amazing cheddar biscuit, there is nowhere else to get it,” Cheng said.