Bagel makers bake up plan for fast growth
Take knack for old-style production, blend in sales savvy, create a stir by Tina Traster As everybody knows, making bagels right requires boiling them in water before piling them into the oven. As everybody also knows, all too many bakers don't do it that way. "It's not that easy to find a water-boiled bagel, especially outside of New York," says Clifford Nordquist, president of Bronx-based Just Bagels Manufacturing Inc. "We still bake like a little bagel shop." However, Just Bagels is a company that pumps out its products around the clock, at a rate of 1.5 million a week, in a 34,000-square-foot plant. Customers including Starbucks and FreshDirect are lured by its old-fashioned approach to producing chewier, heartier bagels. "Our bagel sales went up 10% in the first three months after we started using Just Bagels as a vendor," says Matt Porter, cafe coordinator for Barnes & Noble's nearly 700 stores nationwide. "This company knows how to make a great product." Just Bagels had its recipe nailed from the outset. But Mr. Nordquist and his partner, Southern Connecticut State University classmate James O'Connell, fell short on sales. The two men--who had backgrounds in copier sales and baking, respectively--spent two years in a small shop on Westchester Avenue in the Bronx, baking great bagels but not selling many. In desperation, they put the business on the block in 1994. Instead of a buyer, they found Charles Contreras, a former banker and mortgage company owner. He offered management experience plus a cash infusion in exchange for a stake in the firm. "Charlie brought a business plan and taught us how to sell through distributors," says Mr. Nordquist. He also brought a bigger appetite for risk. Using cash from Mr. Contreras and $500,000 worth of leased equipment, the three men quickly set up production in a 10,000-square-foot facility in Hunts Point. They began pitching wholesale accounts, detailing plans for dependable deliveries of high-quality products from a state-of-the-art plant. Within three years, Citarella, Dean & DeLuca and American Airlines had signed up. When the bagel chips are down Gambling that demand would continue to grow, the three men lined up a $1 million loan in 2001 and bought an 18,000-square-foot facility nearby. Then things turned ugly. The subtenant at their old plant backed out, forcing the three men to carry two facilities. Meanwhile, staffers had trouble getting used to the company's new $1 million ovens. "We were behind the eight ball," says Mr. Contreras. To survive, the trio took big pay cuts and began targeting food distributors. A contract with a single big distributor got Just Bagels onto shelves at Publix, Stop & Shop and two other big supermarket chains. By last year, business was good enough that the owners doubled plant capacity by buying the building next door, and expanded the firm to 90 staffers. Revenues are expected to hit more than $10 million this year. The three men donate bags of bagels to charity fund drives and to homeless shelters. They also participate in a program that gives learning-challenged children exposure to the workplace. Printed from NewYorkBusiness.com