No Loans in 70 Years: How Mordens' of Winnipeg Beat COVID and Inflation

Mordens' of Winnipeg has operated for nearly 70 years largely debt-free, and that discipline carried the Manitoba confectionery through a pandemic that wiped out tens of thousands of dollars in business overnight.

Mariel Morden-Miller had just launched an e-commerce website for the family business when COVID-19 hit in 2020. The storefront shuttered. A dozen employees locked down. The company's new online presence and virtual payment system kept orders flowing.

"If we didn't have that during COVID, our sales would have taken a pretty big blow," said Fred Morden, 67, the second-generation owner. "Everything sort of snowballed from that decision, and it worked out perfectly."

For weeks during the lockdowns, only the immediate family bubble ran the shop. They filled online and phone orders, roasted nuts, operated the chocolate enrobing machine, hand cut marshmallows, made deliveries and served curbside pickups. The company refused government loans, leaning on longer and harder work instead.

What keeps the business out of debt?

Mordens' follows a founding principle of "grow from within": expand or survive tough times through effort, not borrowing.

"It's a philosophy that every square foot of business has got to make you money," Fred said.

Danielle Walsh, a partner in Ottawa with advisory firm MNP, said the pattern is common among successful small family businesses. "There's an interesting dynamic where a lot of my small family businesses I work with don't have debt," she said. "It's almost the founder was debt-averse, and so then the next generation also tends to be."

That describes the Winnipeg shop precisely. Fred's father, Blake Morden, bought it in 1959 — in cash, with an $1,800 severance after a railway layoff just before Christmas. He taught himself to make fudge and peanut brittle from scratch, then moved operations to the current location west of downtown in 1961.

Fred started at the shop as a teen and gradually bought shares beginning in the early 1980s, with a significant amount of "sweat equity" credited for his years of underpaid labour. He largely assumed ownership a decade later. Since then, sales have quadrupled, driven partly by partnerships that put Mordens' products on grocers' shelves provincewide. The company now produces several tonnes of chocolates and roasted nuts annually.

How did the company survive the inflation surge?

When postpandemic inflation sent cocoa prices soaring, Mordens' bought inputs at spot prices and kept what it charged customers steady, betting costs would settle — and aiming to sell more instead.

"It was difficult because you can't go, 'Now this box of Russian mints is going to be 60 bucks,'" Fred said.

Holding prices mattered. During the holidays, Manitobans buy more than 14,000 boxes of Mordens' mint chocolates, which won top prize at the 1984 New Orleans World's Fair.

Who takes over next?

Mariel Morden-Miller, 32, and her sister Hilary Morden, 34, began like their father — with part-time teenage jobs at the shop. By 2020, Mariel ran financial and administrative management while Hilary led operations.

"We were always encouraged to get experience outside of working here," Ms. Morden-Miller said, though the business "was constantly talked about around the dinner table."

Walsh called the transition an ideal succession in many ways, because both daughters want to be involved. Where some children opt in and others opt out, families need more structured planning on ownership, operations and compensation.

"Having active and inactive family members can really create havoc because family members' goals are not well aligned," she said. The core question is whether the enterprise is a career path or an inherited asset. "Most other decisions around succession will naturally flow from that decision."

She also flagged co-ownership friction: "That's where having a formalized decision-making structure can help ensure ongoing success."

Fred expects his daughters will eventually buy the company, much of it paid through sweat equity as he did. For now, father and daughters make major decisions together; Fred has final say but stays open to their ideas.

The next big call — whether to expand nationally, possibly requiring debt financing for the first time — will likely belong to the future owners. "If that's what my daughters decide eventually, I'll certainly help them with that," Fred said.