How We Built Our Own Chocolate Factory (After Losing $200,000 Trying Not To)
This is Chapter Two of the Moon Magic Founder Series — watch the video above, or read the full story below.
Founder Series, Chapter Two — by Shawn Brown, Founder of Moon Magic
The short answer: We built our own chocolate factory because outsourcing failed. After trying to scale the world's first no-sugar-added, low-calorie vegan milk chocolate through several co-manufacturers — and losing roughly $200,000 in the process — we had no realistic path left except to build a customized facility ourselves. We did it by breaking an intimidating project into five departments: finding a space, choosing equipment, getting health-authority approval, sourcing all the supporting gear, and learning to actually make the chocolate. Two and a half years later, that first factory runs efficiently, produces a range of products, and has become the foundation for a larger facility down the road.
Here's how it actually happened — including the parts that were stressful, uncertain, and far from guaranteed to work.
Why we didn't just use a co-manufacturer
Most young candy and snack brands don't own their production. They use co-manufacturers (co-packers) — third-party facilities that make the product for you. It's the standard playbook, and for good reason: building your own factory is expensive, slow, and risky.
We tried the standard playbook first. It didn't work for us. (That's the full story of Chapter One.)
Moon Magic chocolate is unusually nuanced to produce. It replaces sugar with allulose and uses a specific blend of ingredients to hit the texture and melt of traditional milk chocolate — while landing at roughly 130–140 calories and about 1g of sugar per bar. That nuance is exactly what makes the product special, and it's also exactly what made it hard to hand off. After working through several different co-manufacturers, the effort ultimately failed and cost us around $200,000.
That failure left one option standing: build a factory customized for how Moon Magic chocolate actually needs to be made.
The problem: how do you build a chocolate factory when you've never made chocolate?
This is the honest starting point, and it's worth being candid about it. I had never made chocolate myself. Being handed the job of building an entire chocolate factory from that starting point was, at the time, extremely daunting.
The thing that made it manageable was refusing to treat it as one giant, impossible task. Instead, I split it into five separate departments, each with its own clear objective. If you're a founder facing something that feels too big to start, this is the single most useful thing in this whole story: divide the overwhelming project into discrete, ownable pieces.
The five departments of building a chocolate factory
Department 1: Find a creative, affordable, workable space
The first job was securing a physical location that was creative enough to work in, practical for production, and affordable for a startup. This one went smoothly — it didn't take us long to find a space that hit all three.
Department 2: Choose the right commercial chocolate-making equipment
This was a research problem. I reached out to every industry professional I'd met along the way and asked for tips, advice, and machine recommendations. Once I'd gathered enough input, I made the best decisions I could about which entry-level commercial equipment would perform best with Moon Magic's very particular chocolate.
There's no perfect formula here for a first-time builder. You collect the best available expertise, weigh it against your specific product, and commit.
Department 3: Get the space approved and licensed by the health authority
This was the most stressful department, and it's worth understanding why.
Health authorities don't pre-approve a space. You can't submit a plan and get a yes before committing. You have to commit to the space first, set it up, and only then have them come in to inspect. That means you're financially exposed before you know whether they'll approve it — or whether they'll demand expensive renovations you can't afford.
In our case, it worked out. The inspectors were fine with our space, and the only change they required was adding one additional commercial sink to another part of one of our rooms. A real relief — but not something we could have counted on going in.
Department 4: Source all the supporting pieces
A chocolate factory needs far more than the headline equipment — utensils, sheets, stainless steel tables, and countless other supporting pieces. I'll admit practical details aren't my strength. Fortunately, Carla on our team is excellent at exactly this. She researched and identified everything the factory would need and did a great job — we ended up with everything required, nothing missing.
The lesson: know what you're not good at, and put the right person on it.
Department 5: Learn to use the equipment and make the chocolate perfectly
This was the painful one — a genuinely difficult learning curve. It's also a big enough story on its own that I'm saving it for a dedicated video and article rather than compressing it here.
Where we are two and a half years later
The first version of the Moon Magic Chocolate Factory has now been running for two and a half years, and I'm proud of where it's landed. It's become genuinely efficient. We produce a variety of different products there, we've grown and added more and more equipment over time, and we're now running at capacity. Even at capacity, we keep finding new efficiencies and making it better.
That experience is what will eventually let us graduate to Moon Magic Factory Number Two — a bigger sibling to the first. And I believe that over time, this is how we become real production experts at what we do. That's why all of it — including the $200,000 lesson — will have been worth it.
Frequently asked questions
Why does Moon Magic own its own factory instead of using a co-manufacturer?
Because outsourcing failed. Moon Magic chocolate is highly nuanced to produce, and after losing around $200,000 working with several co-manufacturers, building our own customized facility was the only viable path to make the product correctly and consistently.
How do you build a chocolate factory with no chocolate-making experience?
By breaking the project into discrete departments — space, equipment, health-authority approval, supporting equipment, and production training — and tackling each one individually rather than treating it as a single overwhelming task.
What was the hardest part of getting the factory approved?
The health authority doesn't pre-approve spaces. You have to commit to and set up a location before inspection, which means financial exposure before you know whether it will pass or require costly renovations. Ours passed with only one required change: adding a commercial sink.
Is the factory at full capacity now?
Yes. After two and a half years the first factory runs efficiently and is currently at capacity, which is part of why we're planning a larger second facility.
▶ Watch Chapter Two on YouTube: https://www.youtube.com/shorts/J3OXC00_dDg
Previous chapter: Why our first chocolate nearly broke us — the $200,000 scale-up failure
Next chapter: The painful learning curve of actually making the chocolate — (link once Chapter Three is published)
This article accompanies Chapter Two of our Founder Series video. The Founder Series documents the real, behind-the-scenes work of building a transparent young candy factory — the R&D, the scale-up struggles, and the honest challenges of starting a chocolate company from the ground up.