The bagel pops up as toast of the town Success story: After discovering bagels, an Iowan named Nordahl Brue is on the way to becoming the nation's biggest retailer of them.

January 19, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

In 1683, so the legend goes, a Jewish baker in Vienna invented the bagel to honor the king of Poland.

In 1983, three centuries later, Nordahl L. Brue, an Iowa lawyer of Norwegian descent, opened his first Bruegger's Bagel Bakery on his way to becoming the biggest bagel retailer in the United States today.

It has been an unlikely journey for Mr. Brue, a 51-year-old &L Midwesterner who didn't begin eating bagels until he reached his early 20s. Now, his privately held company is gobbling up the industry, operating 255 shops in 25 states, serving more than 3 million bagels a week with an estimated $145 million in sales last year.

"We're a 13-year overnight success," the chairman and co-founder of Vermont-based Bruegger's Corp. said on a recent jaunt through Baltimore.

The bagel boom has come to Maryland, where Bruegger's has opened five stores in three months, giving the chain 14 statewide, including Towson, Timonium, Columbia and Annapolis.

A fifth Baltimore-area store is expected to open downtown in the spring -- another piece in a five-year plan to bring as many as 120 to the Baltimore-Washington region.

long-er is the bagel -- that round thing with a hole in the middle -- an obscure counterpart to the doughnut.

"Bagel sales will top $1 billion annually in 1996," said Judy Rabinowitz, a research analyst with First Montauk Securities in New Jersey.

"This has become a billion-dollar industry."

There's more to the surge than flour, yeast, barley, malt, water and salt.

"Americans are becoming more health-conscious, and bagels represent a good healthy alternative to traditional fast-food restaurants," Ms. Rabinowitz said. "They're also inexpensive and come in a variety. They've become a main staple in the American diet."

Mr. Brue isn't the only entrepreneur who's figured that out. Manhattan Bagel Co. of New Jersey has established more than 100 franchises and close to 100 more are in the pipeline. Seattle-based Starbucks Corp., the coffee retail phenomenon, also has gotten into the bagel business. And, locally, the Paterakis family, owners of the H&S Bakery, has launched the Crispy Bagel Co., selling bagels to supermarkets in Baltimore and the Southeast.

"It's gone well beyond the ethnic marketplace into the general marketplace," said Barry Ansel, Crispy Bagel's president.

"Bagels continue to grow handsomely."

Business is budding because of customers like Karen DeGraziano, a Columbia resident who makes a pilgrimage to the nearby Bruegger's at least twice a week.

"My son, Pete, he's a bagel fanatic," she said.

Mr. Brue is counting on people like that, suggesting that a public stock offering in Bruegger's is in the offing.

For the moment, Mr. Brue and his partner, builder Michael Dressell, hold a controlling interest in the company. Franchisees also own a piece of the business, opening at least 10 stores in a designated area over five years, agreeing to buy $35,000 per store in preferred stock with $150,000 paid up front and the rest covered in annual installments over four years.

The formula seems to be working.

"We have spent 13 years at getting the product, the delivery system and the organization right, all to the end that the customer has a good experience," Mr. Brue said. "Food is a very simple proposition. If they're happier than when they came in, they'll be back."

It was a proposition that originated in the early 1970s in Iowa, where Mr. Brue was born and raised. When he found bagels in the freezer of his local supermarket, the profundity of it struck him.

"The assimilation is complete," Mr. Brue said. "Bagels in Iowa."

Other ingredients cultivated the bagel idea: People were gaining an awareness of healthy foods, mom and pop shops were beginning to sell bagel sandwiches in the Northeast, and, in 1979, Mr. Brue served as an attorney representing a Pizza Hut franchisee and learned what it took to run a food operation.

Hence, Bruegger's.

Borrowing money, Mr. Brue and his partner raised little more than $25,000, hired a bagel maker from New York City and, after 2 1/2 years, settled on a bagel recipe and the site of their first store in 1983: Troy, near Albany, the capital of New York.

It seemed like a natural choice: It was a market where consumers were already familiar with bagels but not inundated with them.

But that same year, Bruegger's opened in Iowa, precisely because people didn't know what the round thing was. The thinking was, if the bagel can play in Iowa, it can play anywhere.

And it did.

Now Mr. Brue, a bagel buff only since he left Iowa in 1967, eats them almost every day.

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