How One Woman Created, Lost And Then Rebuilt A Multi-Million-Dollar Cookie Empire

First Posted: 02/01/2013 10:22 am EST Updated: 02/04/2013 11:18 am EST

One of the reasons I started my website is that I wanted a place for women to come together and dream. We women need to know that we don't have to hang on to an old dream that has stopped nurturing us -- that there is always time to start a new dream. This week's story is about a young entrepreneur who started a wildly successful cookie business -- only to have it hijacked by two dishonest businessmen. She fought back by rebuilding her business at 40, and today, it's worth 16 million dollars. What a comeback! -– Marlo,

By Lori Weiss

Kathleen King was the queen of cookies by the time she was 11. Having grown up on a farm, where hard work was as natural as the yearly harvest, the day her big sister announced she wanted to take a job in town -- one that offered more opportunities to meet boys -- Kathleen took over the duties of baking cookies for the family’s roadside stand.

“I’d be in the kitchen baking,” she recalled with a smile, “and when I’d see a customer pull up, I’d run out. Then, after I made the sale, I’d always say, ‘I have to get back inside and check my cookies.’ Everyone loved the idea that a kid was selling cookies, so they’d ask if they could buy some, and I’d run back in and bring them a warm bag.”

“My parents bought the ingredients and I got the eggs from the farm, so everything I made was 100 percent profit. I was selling so many cookies, after a while, my father renegotiated that deal!”

By the time Kathleen turned 21, she was ready to put her baking skills to an even bigger test. She took her cookies to the street -- a street just seven miles from the family farm, but in the center of the bustling resort community of Southhampton, New York -- just hours from Manhattan.

“I’d just graduated from college and my mother noticed there was a bakery for rent. Two other bakeries had failed in that spot, so people said it was a bad location and tried to convince me not to do it, but I knew I could make it work. They just didn’t have the right ingredients. So I spent the winter testing recipes and opened Kathleen’s Bake Shop with $5,000 that I’d made selling cookies on the farm and to produce stands in the area.”

“I thought, what’s the worst thing that could happen? I live at home. I don’t have a family. All I can lose is my money.”

But that was far from what happened -- at least at that point. Within a month of opening her doors, the feisty entrepreneur caught the eye and the taste buds of a reporter from the New York Times. Like others before her, the reporter was taken not only by Kathleen’s baking skills, but by the work ethic she’d developed at such a young age.

“People kept saying, ‘You’d better get prepared for all the new customers.’ But we didn’t get the Times. That’s what the summer people read. I had no idea at the time what an article in the New York Times meant.”

But it didn’t take long for Kathleen to find out. Within three years, she had enough business and enough money in the bank to put down a $50,000 deposit on her own building. And her cookies began selling way beyond Southhampton. Gourmet stores in Manhattan and throughout the country were lining up for the chance to carry her crispy creations.

By the time she turned 40, she’d grown her little farm stand operation into a three-million-dollar business. And that’s when Kathleen thought that maybe it was time to add a little balance to her cookie cutter life.

“I felt like I was never really young,” she said. “I’d had so much responsibility so early. At 40, I thought it would be a great time to have less responsibility and more time.”

What she didn’t know, was that she was about to make a deal that would crumble her cookie empire.

Article continues below slideshow.

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  • The Sweet Taste Of Success

    Kathleen was devastated when the business partners she trusted hijacked her baking company, but she wouldn't go down without a fight. Within three years of the ordeal, Kathleen had rebuilt her business back up to the three million dollar mark.

  • Hard To Resist

    Pictured here are Kathleen's M&M cookies, featured in her cookbook, "Tate's Bake Shop: Baking With Kids."

  • A Golden Opportunity

    When Kathleen was 11, her big sister Karin announced she wanted to take a job in town. Kathleen seized the opportunity to bake cookies for the family's roadside stand and quickly became a local sensation. Here, the sisters pose with a Valentine's Day cake.

  • Down On The Farm

    Kathleen grew up on North Sea Farms in Southampton, NY, which is owned and operated by her family. It was here that she first sold her freshly baked cookies as a young girl.

  • Big Risk, Big Reward

    Right after graduating from college, Kathleen took a big risk and used $5,000 she had earned from selling cookies to rent a bakery near her family's farm. Two other bakeries had failed in the same location, but Kathleen knew she had what it took to succeed. Here she is with her parents at North Sea Farms.

  • Kathleen Meets The Press

    Within a month of opening her first bake shop, Kathleen was featured in The New York Times. The reporter who wrote the story was impressed not only by Kathleen's cookies, but also by the strong work ethic she had developed at such a young age.

  • The First Time Around

    Within three years of opening up her first shop, Kathleen's cookies were selling at gourmet stores around the country. The boom in business also allowed her to put down $50,000 on her own building. By the time she was 40, Kathleen's cookie business was worth three million dollars.

  • The Bakery Namesake

    When Kathleen rebuilt her cookie business, she decided to name it after her father, Tate King. The childhood lessons that Tate taught Kathleen helped her weather the legal battle with her former business partners and rebuild her company from scratch.

  • Starting From Scratch

    After losing everything she had worked so hard for, Kathleen remortgaged her bake shop and started slowly rebuilding her cookie empire. The local community hadn't forgotten about Kathleen's sterling reputation and its residents rallied behind her, making Tate's Bake Shop even more successful than Kathleen's Bake Shop had been. Here is what the shop looks like today.

  • Achieving Balance

    Kathleen finally found balance in her life when she married her husband Zvi at 45, and formed a family with him and her son, Justin. Here, the couple relaxes on the beach in their hometown of Southampton.

  • All In The Family

    Kathleen's son, Justin, pitches in at Tate's Bake Shop. Here, they pose behind the counter in a tent set up outside the shop.

  • An Athletic Release

    Kathleen has always enjoyed biking, but she started doing it more seriously once she turned 30 -- she even takes a bike trip to Europe once a year! When she lost everything from her business deal, Kathleen kept biking and used the activity as a natural stress reliever.

  • Overseeing Production

    Kathleen poses next to the assembly line in her cookie factory. She looks like she could be starring in the famous "I Love Lucy" candy factory episode!

  • Behind The Scenes

    Tate's Bake Shop staff packs chocolate chip cookies at the bakery in East Moriches, NY. The company produces 1.7 million cookies every week!

  • A Gold Standard Product

    Kathleen took home the gold Sofi Award in 2011 for her Whole Wheat Dark Chocolate Chip Cookie. The award was presented to her at the Fancy Food Show in Washington D.C. Here, she shows off the award alongside "Top Chef" Cat Cora.

  • Sharing Her Story

    In 2011, Kathleen was invited to speak at The Wall Street Journal's "How I Built It" event. Here, she spoke about the collapse of her first business and how she was able to reinvent herself.

  • Saving A Trip To The Supermarket

    A few years ago, Kathleen was too busy to buy s'mores ingredients at the supermarket, so substituted her chocolate chip cookies as stand-ins. They were a hit with her friends, and now they've become a staple at beach get-togethers.

  • Cookie Queen Meets Cake Boss

    Kathleen joined Buddy Valastro, better know as "The Cake Boss," for a fundraising event to raise awareness about epilepsy.

  • Kathleen's Biggest Fan

    The Cookie Monster loves Kathleen! Here she goofs around with her husband and a friend in Times Square.

  • A View From Inside

    Here is an interior shot of Tate's Back Shop in Southampton, NY. The shop sells more than just cookies -- they stock a variety of specialty goods, and Kathleen even sells her popular cookbooks here.

“I’d brought someone in to manage the operation while I went to Japan for a month as an exchange business person. I liked him and he liked the business, so we became friends and I hired him full-time as my bookkeeper. And not long after that, he expressed interest in becoming a partner in the business -- and bringing his brother in as well.”

“I thought we’d grow the business together, so we made a deal -- they’d pay rent on my building and pay me for the equity over time. And we became partners -- one third, one third and one third. I thought we’d all be equal.”

Kathleen saw it as the perfect opportunity -- and so did her new partners. Only their idea of perfect was different than hers. They now owned two thirds of her business -- a controlling interest. And they were determined to take control.

“They began buying cheaper ingredients,” she explained, “and told me I took too much pride in my work. They’d make scones with our baking powder and others with a less expensive brand and make me do blind tastes. Then they’d look at each other dumb-founded, when I was able to tell the difference.”

But the real turning point came when the partners locked her out of her own building -- meeting her at the door with a security guard -- and telling her that she was fired.

And then, according to Kathleen, they added insult to injury. They tried to convince people in the community that she was stealing from the business she’d begun from scratch.

“I’ve been here my whole life. Everyone in town knew me and knew what they were saying couldn’t be true. They saw how I did business for 20 years -- that I couldn’t have become a crazy person overnight.”

“I was exhausted when I brought them in,” she remembered, “and now on top of that, I was in for the fight of my life. But I had to fight back, not just financially, but to prove my life hadn’t been wasted.”

So fight back she did -- but the court simply split the company in three. The two men got the wholesale business and the name she’d spent 20 years building. She kept the bake shop and was forced to take on $200,000 in debt -- a third of what the men had incurred since becoming her partners.

But what they couldn’t take was the reputation she’d built in the small village of Southhampton.
“I re-mortgaged the bake shop and began again,” Kathleen said, with tears beginning to well up in her eyes. “And the community rallied behind me. A local graphic designer changed my labels, we got a new sign up and Kathleen’s was transformed to Tate’s Bake Shop in two weeks time.”

Tate is Kathleen’s father’s name -- a fitting tribute to the man who taught her the benefits of hard work and how to survive a storm. But the woman who began her cookie empire on the family farm did more than survive. She thrived. Three years later, Tate’s Bake Shop was back at the three million dollar mark and the two men who hijacked her business were out of business.

Today Tate’s Bake Shop produces 1.7 million cookies every week and they are sold throughout the country at Whole Foods and Fresh Market, along with many other upscale supermarkets and grocery boutiques. The cookies have made their way to Canada, Hong Kong and St. Barts, but of course, they’re still sold in Kathleen’s Southhampton bake shop, and at her family’s roadside farm stand. The once exhausted entrepreneur has turned Tate’s into a 16-million-dollar business.

“Looking back,” Kathleen said, “I can’t believe I gave away two thirds of my company. But I simply couldn’t see this coming. I grew up in a nice town with a great family -- no one worried about money.”

“But everyone makes mistakes. Every successful person has made mistakes. You have to learn from them and move on. If you’re looking behind, you’re not looking forward. And today I have a life that’s better than I ever dreamed it could be.”

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