Bagels Hit the Big Time : An Old Standard Is Becoming America’s Newest Food Craze

When you think of Sara Lee, you probably think of poundcake. And when you think of Burger King, you probably think of hamburgers.

But at the mention of those two names, there’s one thing you almost certainly don’t think of: fresh bagels.

Think again.

Sara Lee, perhaps best known for its frozen desserts, is about to begin trucking fresh bagels--baked and shipped the same day--to major grocery stores throughout California. And when Burger King wants to boost sales in a slow market, it often introduces bagel sandwiches as a temporary promotion. Sara Lee and Burger King are just two of a growing number of companies cashing in on one of the fastest-growing food categories in the nation: fresh bagels.

There is big money to be bagged in bagelmania. Industry executives conservatively estimate that total bagel sales exceeded $500 million last year. And fresh bagel sales are growing at a 30%-plus annual pace, reports the research firm Information Resources. The average American will eat nearly one pound more of bagels in 1993 than was consumed five years ago, according to the U.S. Department of Commerce.

“This kind of growth can’t keep up forever,” said Ron Wirtz, a researcher at the American Institute of Baking in Manhattan, Kan. “I don’t know when, but there’s going to be a bagel shakeout.”

Not any time soon, however, say top executives who are reaping huge financial rewards from the bagel craze.

So certain are Sara Lee executives that they can profit from the bagel boom that they acquired one of the area’s biggest bagel makers last year, Los Angeles-based International Baking Co. Beginning in January, Sara Lee will bake fresh bagels in Los Angeles and ship them statewide. If the test works in California, Sara Lee may expand it nationwide.

Other familiar names are also embracing fresh bagels. Lender’s, which has sold frozen bagels for years, has test-marketed fresh bagels in a dozen East Coast states. The company is expected to soon announce plans to begin rolling out fresh bagels nationwide.

Even the maker of Wonder Bread, Continental Baking, has test-marketed fresh bagels.

Bagels were once regarded as an ethnic food to be consumed only with cream cheese and lox. But now a broad range of American consumers are discovering bagels.

“They’re now eating bagels in Omaha,” said Ed Haft, vice president at International Baking Co. “Ten years ago, people in Omaha thought bagels were un-iced doughnuts.”

Shrewd marketers are even peddling bagels as fast food--to be stuffed with just about anything.

For about five years, various Burger Kings nationally have offered “Bagel Sandwiches” stuffed with eggs and sausage. The bagel promotions--which are especially popular among senior citizens--have proven so popular in West Palm Beach, Fla., that they are now a permanent menu item there, said Maurice Gomez, Burger King’s manager of field marketing.

One Burlington, Va.-based operation, Bruegger’s Bagel Bakery, has emerged as the nation’s largest fresh bagel chain. It has 90 eateries in nine states with plans to double that number by the end of next year--including planned locations in Los Angeles and San Diego.

“Bagels look to us to be the next pizza or hamburger at the retail level,” said Steven Finn, president of Bruegger’s. “There is a health halo surrounding bagels. Mothers like bagels because they’re considered guilt-free food for the kids.”

Despite the bagel boom, fewer than one in four Americans have ever tried a bagel, according to one industry estimate. And there is a nagging problem with fresh bagels: They get stale faster than you can say cream cheese.

“The best thing in the world is a fresh bagel,” said Ray Lahvic, editor emeritus of Bakery Production & Marketing, a trade magazine. “But the worst thing in the world is a day-old bagel.”

Not to worry. One person’s day-old bagel is another person’s bagel chips. And bags of bagel chips--usually made from rock-hard bagels--are seeing a sales spurt.

Then there’s the issue of bagel credibility. To purists, a bagel that looks like a bagel--but tastes like white bread--is an embarrassment. A “real” bagel should give your jaws a good workout and have a distinctive flavor.

Some of the newcomers to the world of fresh bagels are criticized for adding preservatives to lengthen shelf life. Most fresh bagel bakeries give bagels their special shapes--and tastes--by boiling them in water before baking them in costly hearth ovens. And while newcomer Sara Lee will boil its fresh bagels in water, it won’t use stone ovens and it will add preservatives.

“If Sara Lee thinks we’re going to roll over, well, they’re in for a surprise,” said Steve Ustin, president of Western Bagel Baking Corp., the West Coast’s largest bagel bakery, which will post about $16 million in sales this year.

Western makes and sells about 3 million bagels per week, which are sometimes sold under the Western name but more often sold in the bulk bins at several grocery chains, including Vons and Ralph’s.

But Michael Goldstein, vice president of Goldstein’s Bagel Bakery in Pasadena, doesn’t believe in bulk bins. He scornfully refers to grocery store bagels as “institutional bagels.”

Goldstein sells almost every bagel in his bakery the day it’s made. That’s about 5,000 bagels a day.

His best-selling bagel is cinnamon raisin, but his personal favorite is “The Works”--a bagel with garlic, onion, rye, poppy seeds and sesame seeds.

Goldstein’s is about to open an Arcadia store, and demand for its bagel products--including “Bagel Dogs” and “Pizza Bagel”--is so high that Goldstein is talking with a fast-food chain about using his name--and recipes.

In the ‘90s, said Goldstein, “bagels have become the new doughnut to bring to the office.”

Briefly . . .

The Los Angeles office of Ogilvy & Mather Worldwide has picked up the estimated $10-million ad account for the Honolulu-based Hawaii Visitors Bureau. . . . Century City-based Klein Advertising has picked up the ad accounts for two consumer packaged good products: Hansen’s Juices Inc. of Azusa and PetPro Products of Los Angeles. . . . Los Angeles-based Asatsu/BBDO has picked up the estimated $2-million ad business for Yoshinoya Restaurants, an Asian cuisine fast-food chain. . . . Flagstar Cos., whose Denny’s Inc. restaurant chain has been accused of racial discrimination, has hired a minority advertising agency, Chicago-based Glover Co., to handle ethnic marketing. Advertising Age has named Bert C. Roberts Jr., chairman of MCI, “Adman of the Year” for 1993.

Hot Bagels

Per capita bagel consumption in the United States, in pounds:

1993: projected: 3.56 pounds

Source: Commerce Department