Rolling in Dough

By MELINDA FULMER

July 31, 1997 12 AM PT

SPECIAL TO THE TIMES

ANAHEIM — While much of the food industry is churning out fat-free fare in doll-sized portions, Bridgford Foods Corp. is dishing up stick-to-your ribs comfort food like frozen bread dough, sausages and buttermilk biscuits.

But the hearty lineup has been a consistent seller, allowing the family-run company to survive and grow while other firms have been swept under or swallowed up by such food giants as Hormel Foods Corp. or ConAgra Inc.

“Our success is based on sticking to the business that we know,” says Chairman Allan L. Bridgford, 62. “It’s just being very basic and down-to-earth and working hard at the business every day.”

The business got especially tough last year, when wheat and pork prices, two of Bridgford’s main ingredients, jumped as much as 40%. Still, Bridgford did an effective job of damage control, raising prices and cutting costs to limit the decline in profits to 15%, much less than many competitors.

This year, the company, has bounced back, thanks largely to lower grain prices. Net income climbed 15% in the first six months to $2.7 million. For the year, the company expects annual sales to surpass the record $118-million mark set last year.

Bridgford sells about 450 products in more than 20,000 grocery and convenience stories nationwide. But its management style is reminiscent of a small family business. Allan Bridgford and President Robert Schulze, 62, an accountant who joined the company 33 years ago, read and answer all customer mail themselves, including the thank-you notes and comments customers regularly send about such Bridgford recipes as “Bunny Rolls” and “Cheesy Sausage Bites.”

They operate in spartan offices decked out with old wooden tables on a Formica tile floor. There are no secretaries--executives answer phones and make their own coffee and photocopies. At Allan Bridgford’s desk, photographs of 12 grandchildren are tacked up haphazardly over an electronic commodity terminal so he can look at his family “futures” while checking hog prices.

For years, in fact, Allan Bridgford and his brother, William, shared a 10-by-10-foot office with father Hugh Bridgford, who died in 1992. “It was just big enough so that if we took a swing at each other we wouldn’t hit anything,” William quips.

Allan finally took sole possession of the office last year after William moved to Dallas to oversee a recently expanded bakery plant.

The brothers have been involved in the family business as far back as the mid-1940s. Allan recalls going to work at the Anaheim plant with his father, sweeping the floors and filing papers for $1 a day.

The two brothers took their cues in the business from their father, a stern man who took a sack lunch to work almost every day and gave his fiancee a wedding ring with seven diamonds, each for a letter of the word “quality.”

The company traces its origins to a butcher shop that Hugh Bridgford opened in San Diego during the Depression. Over the years, he expanded until he was supplying cuts of meat to restaurants.

In 1944, Bridgford jumped into the fledgling frozen food industry, introducing frozen corned beef hash and baked beans. He decided the items tasted good even after they had sat in his freezer.

“He was a great idea man, a real innovator,” Allan Bridgford recalls.

The company’s real break in the frozen food business came almost 20 years later. A tired baker decided to put some dough in the freezer and bake it the next morning. When the experiment worked, the baker told management, which decided to market heat-and-serve breads.

Today, frozen bread dough is still one of Bridgford’s biggest sellers, both to grocery stores and restaurant chains. In fact, that warm brown bread served on a cutting board at your favorite steakhouse probably was supplied by Bridgford.

The company sells most of its items--frozen bread is an exception--to retailers through a network of 180 salespeople, who make sure Bridgford displays are well stocked and positioned prominently in stores. Experts say this is strategy has been crucial, as an increasing number of products vie for a limited amount of shelf space.

Bridgford’s advertising budget is relatively modest. The company advertises in Sunday newspaper food circulars. But executives attend more than 400 trade shows a year to pitch cinnamon rolls, tortilla dough balls and other items to restaurants.

In a nod to consumers’ growing appetite for convenience products, Bridgford has added such items as microwave hamburgers, sandwiches and beef jerky to its lineup.

In just five years, Bridgford has quietly become the No. 3 seller of meat snacks, behind Slim Jim maker Goodmark Foods and Oberto Sausage Co., said Bernard Pacyniak, editor of Snack & Bakery Foods, a Cleveland trade publication.

Sales of these Bridgford products in supermarkets alone increased 12.6% to $8.7 million last year.

“Given the two heavyweights, [(that performance] is very impressive,” Pacyniak said.

Some some food industry analysts say that Bridgford’s home-style fare could become more popular as baby boomers age.

Analysts say these consumers like to “assemble” freshly prepared dinners for their family--they just don’t want to cook meals from scratch. “What baby boomers want is not to become Julia Child but for people to think they are Julia Child,” said Phil Lempert, an author of several books on baby boomers and supermarkets.

Bridgford’s strides in the food industry have gone largely unnoticed by Wall Street. The stock is so thinly traded that no analyst covers it. The Bridgford family owns 67% of the 9.4 million outstanding shares, and much of the rest is owned in large blocks.

A St. Louis investment firm, Kennedy Capital Management, recently purchased 193,950 shares--a 2% stake in the company--from an estate. It was the largest single sale of Bridgford stock.

“We think it’s a decent value,” said Tim Hasara, portfolio manager for the investment firm. Bridgford met the firm’s cash flow criteria and, unlike some other closely held companies, officials were willing to talk in-depth about their plans, Hasara said.

“If things progress, I’ll buy more stock,” he said.

The stock, which has traded between $6.75 and $10.25 in the last year, closed Wednesday at $9.75 on the Nasdaq market.

If most Wall Street firms haven’t noticed Bridgford, the competition has. Its cautious management, debt-free balance sheet and well-placed real estate holdings--the company has plants in Anaheim, Chicago and Dallas--have made it an attractive buy.

“Over the last five years we’ve been approached by most of the major food companies,” Allan Bridgford said. Bridgford executives emphasize, however, that they would prefer to do the buying.

“We are always looking hard for companies that fit into our type of business,” Allan Bridgford said.

Now, a third generation of Bridgfords is being groomed to run the company. Three family members in their 30s and 40s have moved into key management positions as Allan and Bill Bridgford and Robert Schulze prepare to retire, probably within the next five years.

The chairman’s operating committee consists of William Bridgford Jr., president of Bridgford Foods of California; Allan Bridgford Jr., president of Bridgford Foods of Illinois; and nephew Bruce Bridgford, president of Bridgford Distributing. Treasurer Ray Lancy, who set up the company’s computer and accounting systems, is the only non-family committee member.

For now, however, the big corporate decisions still will be made by the three-member executive committee of Allan and William Bridgford and Schulze.

In the next few years, these leaders plan to steer the company into more convenience foods, increasing its selection of microwave items and ready-cooked meat products.

“If we are going to keep playing the game, me must produce foods that are high-quality and convenient,” Allan Bridgford said. “Products that are into the microwave and out of your mouth in one minute.”

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Bridgford Foods Corp. at a Glance

Headquarters: Anaheim

Chairman: Allan L. Bridgford

Employees: 650

Exchange: Nasdaq

Business: Frozen bread products, snack and convenience foods

52-week trading high: $10.25 on July 23

Sales (millions) 1997, 2nd qtr.: $30.6

Net incomes (millions) 1997 2nd qtr. $1.6

Taste for Convenience

Sales of frozen bread and bread dough, one of Bridgford’s major product lines, increased 17% in 1996, far more than any other frozen baked goods category. U.S. sales of frozen baked goods, in millions, and percent change from 1995:

Bread/bread dough

Sales: $140

Change: 17%

Doughnuts

Sales: $3

Change: 5%

Dessert cakes

Sales: $117

Change: 2%

Cheesecake

Sales: $64

Change: 1%