How Hero Bread Rebounded From a Failed Subway Partnership to Generate $54 Million in Revenue

Hero Bread, a low-carb and zero-sugar food brand, has successfully navigated a major business pivot to reach $54 million in annual revenue last year. The company, which was founded in 2019 by Cole Glass to address his severe pollen-related food allergies, recently overcame severe financial strain following an unprofitable partnership with fast-food giant Subway.

In October 2021, Hero Bread entered a partnership with Subway to introduce its macro-friendly bread products to a wider audience. However, by 2022, the deal was proving unsustainable. YuChiang Cheng, who invested in the company on behalf of 444 Capital and stepped in as interim chief marketing officer that year, realized the partnership's unit economics did not work. The company was rapidly running out of cash.

"We were just too small at the time and couldn’t service it, didn’t have the resources and all the infrastructure put in place to effectively deliver that," Cheng said. "So we backed out of it."

Pivoting to a Direct-to-Consumer Strategy

After exiting the Subway agreement, Hero Bread shifted its focus to a direct-to-consumer (DTC) model. This strategy allowed the brand to gather rapid consumer feedback and generate word-of-mouth sales. To streamline operations, the company focused on five core stock-keeping units (SKUs): white bread, seeded bread, burger buns, hot dog buns, and flour tortillas.

Cheng, who officially assumed the role of CEO in November 2023, has since guided the brand through significant growth. In June 2024, Hero Bread announced a $21 million funding round raised in under 90 days. Co-led by Cleveland Avenue, DNS Capital, and Composite Ventures, the round brought the company's total funding to more than $68.5 million.

Navigating Retail Expansion

Alongside its DTC foundation, Hero Bread has aggressively expanded its brick-and-mortar retail presence. Over a two-year period, the company more than doubled its retail footprint, growing from approximately 4,000 to 10,000 doors, which includes a recent launch in Target stores.

The transition to retail required experimentation. Because Hero Bread features a mainstream taste profile, the executive team debated whether to target conventional retailers like Publix and Target or natural food stores like Whole Foods and Sprouts. To resolve the debate, the company launched in Market District, Publix, and Sprouts simultaneously.

After six months of strong performance across all three test cases, the company adjusted its strategy. "We were very, very fortunate in that," Cheng said. "So instead of picking [retail] channels, we decided to pick retailers that were more enthusiastic regardless of what channel they were in."

Balancing Retail Scale and DTC Innovation

While retail offers the advantage of economies of scale—allowing the company to move pallets on trucks far more affordably than shipping individual packages—Hero Bread continues to utilize its DTC platform as a testing ground and a home for specialty items.

The brand's DTC website, hero.co, hosts its "Crafted Collection," which features small-batch, handmade products such as croissants, lemon poppy seed scones, and shortbread biscuits hand-baked in Sonoma with brown butter made by a Michelin chef. It also hosts exclusive collaborations, such as pretzel bites developed with Auntie Anne's.

"[These are] small-batch, largely handmade products that are exclusive to hero.co, where it just wouldn’t make economic sense for us to hand-roll 300,000 to 400,000 croissants," Cheng explained.

The DTC channel also serves to de-risk new product launches. In December 2024, Hero Bread introduced bagels as a limited-edition online release. After quickly becoming a top seller on the website, the bagels transitioned to physical retail shelves within six months.

Reflecting on the company's journey, Cheng emphasized the importance of resilience in leadership. "It’s how many times you can try again, regardless of how many times you’ve fallen down or how much blood you get on your face," Cheng said. "There is a level of courage that is really necessary."