Small Business Administration: From Small Potato to Big Business

Humble Beginnings in a Feed Store

Sarah Cohen never imagined she'd spend her life making potato chips in rural Virginia. Growing up in Washington, DC, where she worked in her family's restaurant and hotel business from age 12, she learned work ethic early. However, manufacturing knowledge? That came later—much later.

In her twenties, Sarah launched Route 11 Potato Chips in an old feed store in Middletown, Virginia. The setup was as bare-bones as it gets. "We had wooden floors," she recalls, still sounding slightly incredulous. "I know it sounds like the 1800s." The operation ran on 1960s equipment, and workers literally carried potatoes through the office to reach the peeler. Most remarkably, they stirred batches of chips with a garden rake.

"I thought we must be the absolute most inefficient chip factory in the world," Sarah admits. Nevertheless, something magical happened. The local community grew curious, came to watch, tried the chips, and became advocates. That grassroots support hasn't stopped since day one.

The Power of Transparency

From the beginning, Route 11 did something unusual for its time: they installed viewing windows. Initially, this decision stemmed from necessity rather than marketing genius. Without a packaging machine during the first year or two, the company hand-packed chips and relied on customers coming directly to buy them. The window gave visitors something to do besides standing awkwardly in a "weird little wooden building."

Before long, tour buses arrived. People came out of sheer curiosity to watch food being made—a rarity in manufacturing. When Route 11 moved to Mount Jackson in 2008, the town made "fry viewing" a stipulation of the deal. Sarah and her business partner Mike embraced this transparency wholeheartedly.

"We're very shameless about just showing it as it is," Sarah explains. "This is the real deal. This is how something is made." Today, this openness feels prescient. Craft breweries and artisan food makers routinely showcase their processes, but Route 11 pioneered this approach decades ago.

The Partnership That Changed Everything

Running a chip factory with breaking-down equipment from the 1960s proved exhausting. Sarah attended food shows unable to sell with confidence because she couldn't guarantee production without breakdowns. Then came a serendipitous encounter in a Winchester bar.

Mike, who had been "fixing lawnmowers in his diapers," loved the product but saw room for improvement. An Army veteran with an engineering mindset, he brought manufacturing vision and intensity to complement Sarah's creative approach. "We are very different types of people," she notes. "He's very engineer brain, sees the world in very black and white terms, whereas I'm much more muddled."

Mike's obsession with preventive maintenance transformed the operation. Eighteen years later, visitors consistently comment that the equipment looks brand new. "That's because we take care of it," Sarah says simply. "We baby it and pamper it."

This philosophy stands in stark contrast to many manufacturers who adopt a "run it until it breaks" mentality. As the conversation reveals, preventive maintenance literally saves money, especially in today's world of long lead times for parts. Route 11 maintains stockpiles of commonly needed components because they can't assume availability when equipment fails.

Keeping It Simple: The Ingredient Philosophy

Route 11's chips contain a remarkably short ingredient list. This minimalism serves multiple purposes. First, it lets potato chips taste like potatoes—a revolutionary concept in an industry often dominated by artificial flavors and additives. Second, it reduces exposure to recalls. As Sarah explains, "The more ingredients a product has, the more exposure you have to a recall. If one ingredient gets recalled, then you've gotta pull all that product."

The company operates as a gluten-free certified facility with only one allergen: dairy, found in trace amounts in their dill pickle chips. They've developed careful protocols for running dairy-containing flavors at the end of the day, followed by thorough cleaning.

Interestingly, Route 11 pioneered the dill pickle chip flavor—now ubiquitous in the snack aisle. Sarah, who enjoyed mixing pickle juice with her potato chips and grilled cheese sandwiches, decided to formalize the combination. The flavor garnered press coverage, morning show appearances, and a mention in Oprah's Magazine. "It's the closest thing we've actually formulated," Sarah says. "It's our version of a Doritos."

The Costco Courtship

Route 11's relationship with Costco began unexpectedly. The buying team discovered their dill pickle chips at a Leesburg deli and started calling. Sarah, having just moved to Mount Jackson, felt unprepared. "I was nervous about it," she admits.

Costco persisted, eventually sending their buying team to the facility. They offered flexibility: "Just do what you're comfortable with. You tell us what you can do." This approach proved crucial for a small manufacturer wary of overextending.

Today, Route 11 supplies Costco's northeast region—roughly 20 Virginia warehouses. They've learned that many small businesses mistakenly believe they must supply all Costco locations nationwide. Regional arrangements exist precisely for companies like Route 11. Supplying all 90 warehouses would require two to three truckloads weekly—essentially their entire production capacity.

"We need a separate Costco production facility to be able to maintain this," Sarah jokes. Instead, they've found their sweet spot: getting chips into as many Virginia locations as possible while maintaining quality and reliability.

Costco's rigorous annual audits have elevated Route 11's standards. "Their standards are higher than anybody's," Sarah notes. While the company would maintain high standards regardless, having customers with such exacting requirements pushes continuous improvement.

The Flavor Balancing Act

Route 11 currently offers eight flavors plus seasonal varieties, including the cult-favorite Yukon Golds. When Yukon Gold season arrives, the company experiences what they call "the Gold Rush"—digging, cooking, and shipping the chips as fast as possible before they sell out.

However, Sarah learned a counterintuitive lesson about flavors: more doesn't equal better. "I was very delusional," she admits about her early vision. "I thought everybody's gonna love the chips so much, they would take one of each bag." Reality proved different. People have favorite flavors, and for all potato chip companies, most customers reach for the classic salted variety.

Route 11's lightly salted chips represent 60% of sales. When slower-moving flavors like Chesapeake Crab occupy shelf space, they create holes where the lightly salted should be, hampering overall sales velocity. Consequently, Route 11 actually offers fewer flavors now than when they started. To introduce a new flavor, they must discontinue an existing one.

This disciplined approach extends to their mission statement, which Sarah describes as "not very exciting": make a great product in a clean and safe environment. For a single-facility operation, one recall could prove catastrophic. Larger manufacturers can shift production to different locations; Route 11 has no such luxury.

Crisis and Innovation: The Ukraine Connection

The war in Ukraine delivered an unexpected blow to Route 11. Ukraine supplies 90% of the world's sunflower seeds, and when shipping stopped, the entire vegetable oil market seized up. "This is how we're gonna go out of business because we can't get any oil," Sarah remembers thinking.

Their oil supplier found peanut oil—more expensive and carrying the stigma of being peanut oil—but something proved better than nothing. Route 11 had to apply different labels to every single bag, creating what Sarah describes as a "dizzying" OSHA hazard. Fortunately, the situation lasted only a couple months, and loyal customers understood.

Yet this crisis sparked innovation. While desperately searching for sunflower oil, Sarah discovered a North Carolina farmer preparing to press his own oil. Soon, Route 11 will receive their first tractor-trailer load of oil from this farmer—just five hours away. For the first time, they'll purchase directly from a farm rather than through distributors.

"I would not have necessarily found him had we not been turning over every single rock," Sarah reflects. This development aligns perfectly with Route 11's original vision of being regional, local, and sustainable. They already work with local potato growers in Dayton, Virginia, and certified organic sweet potato growers in Mattaponi, Virginia. Adding a sunflower oil supplier completes the circle.

The Sweet Spot of Growth

Route 11 now employs 53 people and operates on a four-day, 10-hour workweek. They cook during the day, with no Saturday or night shifts. This schedule reflects a deliberate choice about growth and quality of life.

"We could add another shift if we wanted to," Sarah acknowledges. However, additional shifts mean accelerated equipment wear, increased maintenance costs, and the prospect of 2 a.m. phone calls about breakdowns. "That's the beauty of having your own business," she says. "You can make decisions like that. We know what we can manage."

This philosophy recognizes a truth many businesses miss: there's a profitability sweet spot. Beyond a certain point, scaling up means doing more work for proportionally less profit. Route 11 has found their equilibrium—large enough to matter to suppliers, small enough to maintain quality and control.

Instead of adding shifts, they've focused on optimization. Recent investments include a bigger water line for faster cleaning, an additional warehouse for better organization, and new oil tanks for receiving directly from farmers. These improvements help them "eek out more pallets of product" without fundamentally changing their operational model.

Retail and Tourism: The Other Revenue Stream

While wholesale accounts like Costco generate significant volume, Route 11's retail operation remains vital. The facility welcomes visitors who tour the production area, purchase chips, and browse merchandise including t-shirts and tins. The company ships nationwide, serving customers far beyond their regional grocery footprint.

This retail presence serves as their primary marketing channel. People experience the product, see how it's made, and become evangelists. The model has proven so successful that Mount Jackson now hosts an annual Tater Fest—a potato-themed festival celebrating the town's most famous product.

Lessons from the Trenches

When asked what advice she'd give aspiring food manufacturers, Sarah's immediate response is characteristically honest: "Don't do it. Whatever you do." Then she elaborates more seriously.

Small business ownership is all-consuming, like having children. Everything that can go wrong does go wrong. Success requires time, money, deep pockets, and support systems. Sarah deliberately avoided investors, unwilling to be "enslaved" to return-on-investment demands or have others dictating shortcuts for profit.

Realism matters, but so does a touch of delusion. "If I had been realistic, I never would've done it," Sarah admits. Vision must balance with number-crunching. She credits the Small Business Development Center where Bill helped her develop a business plan and understand concepts like breakeven points.

The timeline proves sobering: Route 11 took nearly seven years to break even. During that period, Sarah worked part-time at a pizzeria while her co-founder worked as a line cook at the Wayside Inn. They put every dollar back into the business, personally making no money.

"You have to be in your twenties," Sarah jokes. The energy and resilience required make this a young person's game. When people call seeking mentorship while envisioning running their company from a beach in St. Barts, Sarah's response is blunt: "No, sorry. If you're already envisioning yourself running your company from the beach, you probably should not even start."

Manufacturing demands on-site presence. It's like being a conductor, orchestrating multiple moving parts simultaneously. Customers calling with problems don't want to hear ocean waves in the background.

Looking Ahead

Route 11's future involves maintaining and growing thoughtfully. The pandemic forced a holding pattern, but Sarah feels ready to resume trade shows and active selling now that they've optimized production capacity.

Challenges loom, particularly federal government layoffs affecting the DC market—a significant customer base for Route 11. Many restaurants are closing due to reduced lunch business, and Route 11 has been part of that ecosystem. Adaptation will be necessary.

Yet Route 11's greatest strength remains reliability. "The most important thing about selling to somebody is that you're reliable," Sarah emphasizes. Potato chips move quickly, and if you can't deliver on time, customers find alternatives. Route 11's commitment to reliability has built trust that transcends market fluctuations.

From wooden floors and garden rakes to Costco shelves and 53 employees, Route 11 Potato Chips embodies the American manufacturing dream—not the fantasy version where entrepreneurs run companies from tropical beaches, but the real version requiring grit, adaptability, community support, and an unwavering commitment to quality.

As Cohen surveys her 20,000-square-foot facility, the journey from that cramped Middletown feed store seems both improbable and inevitable. "It's just a very interesting story," she says with characteristic understatement. For anyone who's ever tasted a Route 11 chip—crispy, perfectly salted, tasting unmistakably like actual potatoes—the story is more than interesting. It's inspiring.