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Thursday, Mar 28, 2024

Bucking the National Bagel Trend

By Thom Senzee Contributing Reporter Conventional wisdom says it is a given in the franchise business: Markets are already saturated with bagel and yogurt shops; find something else to open. Yet a bagel chain that already has 228 locations in 22 states including California recently established a beachhead in Agoura Hills with the help of a pair of new, locally based franchisors. As it turns out, the level of market saturation in the retail bagel industry hit its peak almost 10 years ago. “Generally, the number of bagel retail outlets have been declining for the past several years,” said a spokesperson for NPD Group, a market-research firm headquartered in Port Washington, New York. But 41-year-old Brad Van Gundy and buddy Stephen Lindemann are bucking the national bagel trend. Ever since third grade, the friends say they knew they would one day start a company. Today Van Gundy is general manager of that company’s first store, while best buddy Lindemann wears the CEO hat of the bakery’s parent company, Rolling Bagel, Inc. “It’s kind of interesting because when we were kids, we worked at a local bagel company that is now one of our competitors,” recalls Van Gundy. But, he says, going into the bagel business in 2008 was by no means preordained. “Before finding Bruegger’s we looked at other franchises and even started early phases of some, but backed out before we got too locked in.” Then, last year, Van Gundy got a call from Lindermann. “Steve had stumbled across Bruegger’s and called me on a Friday morning,” Van Gundy said. “We were on our way to San Diego on a family trip, and we stopped in Brea because he said there was a Bruegger’s store there near the Brea Mall.” Bruegger’s has weathered the downsizing of bagel-land-USA and grown as a chain, while others have contracted. In fact, nationwide in the fall of 1999, there were 5,286 bagel retail outlets. By the fall of 2007 the number was just 3,595. The East Coast has the most stores; the South has the fewest; while the western U.S. falls somewhere in the middle with 495 stores in the fall of last year (two points down from the previous year, according to NPD Group). The Van Gundys’ reconnaissance mission in Orange County revealed a packed Bruegger’s Bagels and some of what Van Gundy says is the best coffee he has ever tasted. “My wife liked it, I liked it and apparently the customers really liked it because when we stopped again on the way back up from San Diego Sunday morning, there were even more people in the store; I was sold.” That was a little more than a year ago. A little more than a month ago, Bruegger’s Agoura Hills had its grand opening with proceeds benefiting the Alzheimer’s Association. “We had a respectable turnout considering the fact that we did very little marketing,” Van Gundy says. Lindemann and Van Gundy are beginning to make a focused marketing push in local print advertising, with mailers and community involvement. Van Gundy says marketing is important for his and his business partner’s first Bruegger’s Bagels store because of its location at the Agoura Hills City Mall. “There is no anchor store here,” he said. “In fact, at first I told Steve I thought it was going to be too expensive, because it required that we buy an Italian restaurant that was here before ours. It was quite a chunk of change to do that.” But in the end Van Gundy came to believe that with comparable locations leasing at $4.50 per square foot, buying out the previous tenant was like paying points up front on a mortgage to get a better interest rate. “We ended up paying half what we would have per-square-foot in any similar space.” Besides, he adds, there is a dance studio in the mall that brings in 1,500 to 2,000 students, parents and teachers every week,not to mention a kosher grocery store next door. Bruegger’s Bagels selling points to consumers include free WiFi, boiled-and-baked bagels that aficionados say give the product one of the thinnest crispiest crusts in the business. “But the real to-die-for item is the cinnamon-sugar bagel,” Van Gundy says. “lt is unbelievable,like a donut without being fried.” Also on the menu are chocolate-chip bagels, rosemary-olive bagels and honey grain. “Another thing that makes our bagels somewhat unique is the fact that we they are baked on a burlap stick and flipped right on the rack.” Van Gundy says the biggest challenge for him running a bagel store so far has not been managing his crew of 15 local teenagers, but being managed during corporate training. “After years of owning my own business and being my own boss, I had to go through a training from the corporate office in order for our store to be certified.” Van Gundy says taking orders behind the counter was hard, but he had to “suck it up.” But, with expected earnings of $500,000 their first year, he and partner Stephen Lindemann believe the effort and the undisclosed initial investment to open the store will be worth it. “This is really Steve’s baby and I’m following his lead,” Van Gundy told the Business Journal, apologizing that Lindemann was traveling and unavailable to be interviewed. “But that’s the best thing about knowing someone so well when you go into business. I trust his judgment and his integrity,” he says. “Honestly, we could do a lot more than half a million, and we will be looking at opening stores in the west end of the San Fernando Valley as well as Thousand Oaks and elsewhere if that happens.”

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