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Austin-based Smart Flour Foods raises $3.8 million

After Charlie Pace discovered he was gluten intolerant in 2009, he figured he would never enjoy pizza again.

“I tried so many crusts, but I thought they were awful,” he said. “It didn’t taste like pizza.”

Then Pace ordered the gluten-free pizza at the Brick Oven restaurant on Red River Street. “It tasted like the real thing,” he said. “I couldn’t believe it.”

Pace learned the restaurant got its pizza dough from Austin-based Gluten Free Kneads, and he became a fan of the company. In 2011, Pace, formerly CEO of Austin real estate website SiteStuff, bought the business and renamed it Smart Flour Foods.

Today, Smart Flour Foods sells its gluten-free pizza dough to about 700 restaurants in 31 states. In Austin, customers include Austin’s Pizza, Mellow Mushroom and Mary’s Pizza Shack. It also sells gluten-free hamburger buns and pancake and waffle mix to restaurant customers.

Two years ago, the company entered the retail industry, and now its frozen pizzas and pizza dough are sold in 1,000 grocery stores nationally including Central Market and Whole Foods Market chains.

Smart Flour Foods doesn’t disclose financial information, but Pace said sales have doubled every year for the past three years.

Now, Smart Flour Foods has raised $3.8 million from private investors to ramp up sales and marketing efforts and expand its product line. The company did not disclose its investors.

The company, which previously received $2.5 million from private investors, plans to expand its frozen pizzas beyond its current seven varieties and add new gluten-free products.

Gluten is the main protein component found in wheat and several other grains. Smart Flour Food’s base product is an all purpose gluten-free flour made from grains sorghum, amaranth and teff.

The 30-person company operates a small manufacturing facility near Interstate 35 and Ben White Boulevard and also has manufacturing operations in the Midwest.

The gluten-free food market is estimated to have had sales of $8.8 billion in 2014, a 63 percent increase from 2012, according to Mintel Group.

Smart Flour Foods competes with larger companies, including Udi’s, based in Boulder, Colo., and Amy’s, based in Petaluma, Calif., as well as a growing number of startups.

“Companies have been out there before us, companies came out at the same time, and there are new entrants coming this year,” Pace said. “We compete on taste. People always tell us, ‘I’m so tired of eating pizza that tastes like the package it comes in versus the picture on the box. Yours tastes like the picture. It tastes like pizza.”

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