Few names in the upscale cookie business are bigger than Famous Amos. Yet several gourmet cookie companies now do a lot more business than the company founded 10 years ago by Wally Amos, which is generally considered the pioneer in the field.
"For so long we've had this big name, and the company has never realized the financial potential that was there or expanded the way we should have," Amos acknowledged in a telephone interview last week from Hawaii, where he lives.
The San Fernando Valley-based company's new principal owner, an investor group that bought a majority interest from the Bass family of Fort Worth, is betting on that potential. By pumping in new capital, quadrupling ad spending to roughly $2 million, greatly expanding the number of Famous Amos retail stores and moving into new product lines, the investors hope to exploit Wally Amos' high visibility in the increasingly competitive high-end cookie business.
Since the first Famous Amos store opened on Sunset Boulevard in Hollywood on March 10, 1975, the gourmet cookie business has grown fatter and fatter. Precise figures are hard to come by, but Nation's Restaurant News, a trade journal, estimates that high-priced cookies generate $500 million a year in over-the-counter sales and at least that much through supermarkets.
Big or small, most upscale cookie makers claim to use natural ingredients, to emphasize freshness and to make the best cookies. These usually come in several varieties--including, of course, chocolate chip--and sell for about $5 a pound.
Famous Amos is up against some less-famous but bigger competitors, all privately held:
Original Great American Chocolate Chip Cookie Co. of Atlanta. Founded in 1977, it now has 278 stores, most of which are franchised, and generates $100 million in annual revenue.
Mrs. Field's Cookies of Park City, Utah. Started in Palo Alto in 1977 by Debbi Field, the company will disclose neither sales nor profits but already has about 295 company-owned stores, including 71 operating as the Famous Cookie Co.
David's Cookies of New York City. With 178 stores, most of them franchised, David's anticipates sales of close to $60 million for 1985, the company said. It was founded by David Liederman in 1979.
The Original Cookie Co. of Cleveland. Founded by current Famous Amos President Donald Sawyer in 1976, it has about 150 stores, all company owned. Sold by Sawyer in 1977, it says sales are in the tens of millions.
By contrast, privately held Famous Amos has about 70 retail outlets and sells about 80% of its cookies in supermarkets, considered a less-profitable option than direct retail. All but two of the Famous Amos outlets--the original in Hollywood and another in Santa Monica--are franchised.
Famous Amos said its annual sales exceed $10 million, far less than several big competitors. Yet everyone seems to know Famous Amos, and the company says the number of stores should grow by 100 within 12 months under the investor group led by New York garment executive Sidney Kimmel.
The investors, who include former Sen. John V. Tunney (D-Calif.), last week bought substantially more than 51% of the company's stock, all of it from the Bass family, Kimmel said. The Basses retain an investment in the company, Kimmel said, but no other details were disclosed.
The purchase price was not disclosed.
Major Expansion Planned
Kimmel and Tunney said they hope to push the company to dramatically faster growth. Kimmel said a major expansion is planned both to increase supermarket sales and the number of Famous Amos outlets.
There are plans for an East Coast bakery sometime in 1986 to augment the one bakery in Van Nuys, Kimmel said. Famous Amos corporate operations have been conducted out of several units of a Sherman Oaks apartment complex since a fire in June forced the company out of its headquarters in Calabasas. It plans to relocate to permanent offices in Van Nuys soon.
The investors said in a statement that they also hope to sell a "vastly broadened" line of products, such as Famous Amos candy bars, cakes and ice cream.
Under Sawyer, who Tunney said will be retained, Famous Amos has already signed an agreement with White Rock Corp. of Queens, N.Y., to market a Famous Amos chocolate soda starting this fall.
Famous Amos cookies should soon start appearing at airports, thanks to an agreement with the Sky Chiefs unit of American Airlines, which will franchise cookie stores.
According to Liederman, chairman of David's Cookies, the Kimmel group is acting in line with broader industry trends.
"Cookie companies and ice cream companies are evolving into specialty-food companies," Liederman said. "McDonald's proved to all of us that you cannot survive with just one product."
Less Than Half of Sales
For example, cookies now account for less than half of David's sales, Liederman said. The rest is a variety of foods, including ice cream and French bread pizza.
But Liederman said that Famous Amos will not find it easy to carry out its strategy because the business is highly competitive.
It wasn't always so. The modern gourmet cookie apparently started with Wally Amos in Southern California.
"Famous Amos was the first one to come out with a cookie he charged a lot of money for," Liederman said respectfully.
Amos was 39 back in 1975 when he opened his first store with $25,000, raised with help from friends such as singers Helen Reddy and the late Marvin Gaye. Gaye's estate still owns about 3% of Famous Amos and is trying to sell, said Jeffrey Glassman, a lawyer for the estate.
A native of Tallahassee, Fla., Amos had worked as a personal manager in show business, and he liked to bake chocolate chip cookies for his friends.
"I didn't start with the goal of being part of a chain," he said. "I just wanted to make a living and have fun doing it."
Better at Baking
Amos acknowledged that he is not nearly as good at running a big company as he is at baking cookies.
"My responsibility as I see it is keeping our visibility level very high," he said. "The thing that got us in trouble is when I tried to actually run the business. That's not what I want to do. I'm a promoter."
Amos sold his majority interest to the Bass brothers earlier this year. Now vice chairman, he owns what he describes as a "moderate" stake in the company.
Amos still appears on Famous Amos packages, and he doesn't go anywhere without cookies, which he distributes all over the place.
"Everything I do promotes Famous Amos," he said. "Even walking down the street."