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News > Companies
Bagels: The new frontier
February 13, 1997: 11:17 a.m. ET

America is in a frenzy for bagels, but can bagel stores turn a profit?
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NEW YORK (CNNfn) - Boston has its baked beans. Seattle gave us a thirst for coffee. And Los Angeles put alfalfa sprouts on salads from coast to coast.
     But it's the New York bagel that is taking the nation by storm.
     A $1 billion industry just two years ago, bagel sales topped $2.3 billion in 1996. And experts say sales could go even higher this year as Americans who live outside the East Coast discover the pleasure of a fresh bagel with a schmear.
     "Bagels first grew in popularity from the supermarket chains that sold bagels in their frozen food sections," Mark Weinreb, chairman and chief executive officer of New York-based Big City Bagels, told CNNfn's "Before Hours" Wednesday. "Now the proliferation of retail bagel stores is growing throughout the country."
     Weinreb says bagels are "the new frontier" in the food industry.
     Big City Bagels now has 14 bagel shops in California and the Midwest, produces raw bagels for other stores and sells bagels to such diverse clientele as Northwest Airlines and the Ritz Carlton.
     Revenues at the company have grown as the company expanded its base, topping $1.7 million for the first nine months of 1996, up from $1.6 million for all of 1995.
     Profits have been harder to come by, however. In the first nine months of last year, the company reported a $1.8 million loss, due in part to expansion costs.
     Despite the lack of profits, Weinreb said his company (trading under Nasdaq Stock Market symbol BIGC) is at the helm of a nationwide boom that should lead to a healthy bottom line in the future as the company becomes the first to reach untapped markets.
     Plans call for the opening of 20 stores in 1997 and another 20 the following year. In addition, the company says it is likely to broaden its holdings through acquisitions.
     Success in the bagel industry, Weinreb said depends less on selling bagels than it does on selling toppings to go with bagels. Fancy cream cheese and cold cuts are the key to broadening profit margins, he said.
     But before a store can make money selling cream cheese, it has to win over customers with a variety of bagels that appeal to regional tastes.
     In New York, for example, people like traditional flavors such as onion and pumpernickel. Not so in California, however, where chocolate chip ranks as Big City Bagels best-selling batch. (242K WAV) or (242K AIFF)
     Weinreb, not unaccustomed to ribbing from traditionalists, is undeterred by criticism of such "blasphemous" flavors as chocolate chip and even pumpkin. "There are regional preferences that one must address," he said with a chuckle.Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.