Bagel chain shuts down one of its stores (4922)

Filed under: Uncategorized | Tags:

Bruegger’s Corp., the franchiser and operator of Bruegger’s Bagel Co., pulled out of the Colorado Springs market on March 14, abruptly shutting down its two stores at 7640 N. Academy Blvd. and 132 N. Tejon St.

Nordahl Brue, chairman and chief executive officer of the Burlington, Vt.-based company said, “when stores are closed, it’s because of business or strategic reasons to focus on certain markets.”

He said Bruegger’s wants to focus its efforts on the Denver market. However, within the last six months to a year, three of the six bagel stores in Denver closed. Brue responded that the company was focusing on its “areas of strength.”

“What I can tell you is that there was a decision that it was not economical to continue operating in Colorado Springs, and that was a conscious decision,” he said.

Restaurants and Institutions magazine reported in July 1996 that bagel sales reached $3 billion and were growing more than 20 percent annually. But in 1998 R&I reported that Wall Street had seen stocks for leading bagel chains “plunge as much as 80 percent,” and that none of the leading bagel chains made money in 1997, most taking hits to earnings.

Brue said his company’s recent closure was purely a matter of financial survival.

“Our competitor, Einstein (Bros. Bagels), is operating under the protection of the bankruptcy courts now,” said Brue. “And one of our other competitors, Manhattan Bagels, has been through a bankruptcy, and so we’re the only bagel chain that operates on more than a local basis that has not been through (bankruptcy).”

When asked if Bruegger’s decision was made in order to avoid bankruptcy, Brue replied, “Right. It was necessary to close the stores in Colorado Springs.”

The company was founded in 1983 by Brue and Michael Dressell, president and chief concept officer, who later sold the company to Quality Dining Inc. in 1997.

Under the Mishawaka, Ind.-based Quality Dining, Bruegger’s was the nation’s biggest bagel chain, operating 470 stores.

Quality Dining merged with Bruegger’s Corp. for $176 million in stock, according to Brue, in the spring of 1996. After 11 months, Quality Dining sold Bruegger’s Corp. back to Brue and Dressell for $59 million in October 1997. When Bruegger’s re-acquired its business it had 426 stores, which focused on the Midwest, Northeast and Carolina areas.

In 1998, the bagel company left the Chicago market. In 2000 the company had 300 stores in 19 states. Brue said the company now has 275 stores, including the recent exit from the Springs market. The company declined to provide information about profits or losses.

A Wall Street Journal article from June 1, 1998, said Bruegger’s had gone from superstar to “one of the most disastrous acquisitions in American business,” in less than two years after Dining Corp acquired it.

“Bagels became very popular in the mid-’90s and there was very rapid expansion, and perhaps an over-expansion of bagel concepts. So people have been cutting back to get to an appropriate level of the numbers of stores,” Brue said. “We’re making the changes we need to make.”