SAN DIEGO — The founders of Chubby Snacks for many months pondered how to produce peanut butter and jelly sandwiches faster. Demand for the brand’s frozen handhelds had outpaced supply, forcing the company to pause its online business for the better part of the past year while expanding into more grocery stores across the country.

Enter the Chubb-O-Matic, a fully automated peanut butter and jelly machine that will substantially increase the company’s output while vastly reducing the cost of goods sold.

“It allows us to go from 120,000 units per month to over 2 million units per month,” Dillon Ceglio, co-founder and chief executive officer of Chubby Snacks, told Food Business News. “In 2024, we could essentially hit 30 million sandwiches for the year.”

The machines are housed in a dedicated 5,400-square-foot room within a manufacturing facility in Colorado. Chubby Snacks’ new bread supplier is a local bakery that delivers fresh loaves each day, Mr. Ceglio said, noting, “the bread is produced within 24 hours prior to being put into production, which increases the malleability of the bread, helps keep the crimp closed, and ultimately provides a better product for the consumer.”

Described as “a premium yet practical choice for nostalgic, health-conscious consumers on the go,” Chubby Snacks’ line of crustless sandwiches feature organic wheat bread filled with peanut butter or almond butter and jams sweetened with dates and thickened with chia seeds. A sandwich has less sugar, fewer calories and more protein and fiber than the leading brand, Smucker’s Uncrustables, which generates more than $600 million in annual sales. Chubby Snacks debuted as a direct-to-consumer brand in the early months of the pandemic.

“When we first launched it was all sandwiches by hand, just the same way you would make them in your own kitchen,” Mr. Ceglio said. “Obviously that was not sustainable or scalable, so the goal was to continuously look inside our production and see where we could optimize for more output for our input. We did that time and time again. We laugh and call ourselves the Albert Einsteins of peanut butter and jelly manufacturing because we really did try 100 times in all these different ways to see how we could make the most sandwiches with the least amount of people and at the cheapest price.”

Last year, the brand transitioned from self-manufacturing in a commercial kitchen in Los Angeles to partnering with a contract manufacturer in the Midwest. However, Mr. Ceglio pointed out, “that was very unsustainable and not very profitable by any means.”

“We always knew it was a means to an end and that the goal was to get automated,” he added. “Being a bootstrapped-type company and not having a lot of experience in food and beverage, it took time to be able to convince investors to make a bet on us in order to be able to purchase automation and implement it.”

Late last year, an investor “decided to take the risk on us and gave us $1.5 million to put down on the machine,” Mr. Ceglio said. Production began on the manufacturing equipment early this year, and what the founders have dubbed the Chubb-O-Matic was installed in October. A small tweak to the recipes was required in the new production process; cocoa butter was added to thicken the nut butter.  

“Prior to the machine going live, we had the ability to potentially be in 2,500 doors,” Mr. Ceglio said. “Prior to the machine, we expanded into about 2,200, but we had to turn off our direct-to-consumer and Amazon business… We’ve always been handcuffed to our inability to produce enough sandwiches.”

Chubby Snacks has charted recent expansions into additional Kroger banners, including Fred Meyer, QFC, Ralphs, Smiths and Fry’s, as well as H-E-B and select Target locations. The company also is making inroads in the convenience channel as well as corporate offices, college campuses and professional sports teams locker rooms. The brand’s sandwiches also are sold at Foxtrot, Fresh Thyme, Central Market, Giant, ShopRite and select Whole Foods Market stores.

“We built the machine to be copy- and paste-able, so ideally within six months we can turn on another machine,” Mr. Ceglio said. “So that would be huge for us in the future where expansion is our goal. The more we can move product, the more we could invest in an additional machine.”

With automated production now underway, Mr. Ceglio said “we get to turn back on our direct-to-consumer business and are a few weeks out from turning on our Amazon business for the first time.” The brand also recently debuted its first-ever marketing campaign, highlighting the product offering as a wholesome, “hangry”-disrupting snack in a playful ad spot.

“This is a new beginning for the company,” Mr. Ceglio said. “The commercial … it’s a really good conversation piece for investors as well as buyers. We want to showcase this to our buyers that we’re all in on building the brand.”

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