Bantam Bagels acquired for $34m: ‘We have an innovation pipeline that crosses well beyond the breakfast section’
Annuals sales of the company’s frozen breakfast products, which now includes line extensions of frozen mini stuffed pancakes (launched last year) and recently released frozen egg bites, have reached $20m.
“We started seeking out a partner that could advise and provide us assistance in infrastructure and manufacturing and help us grow smartly,” co-founder Elyse Oleksak told
The company sold to T. Marzetti Company, the wholly-owned subsidiary of Lancaster Colony Corporation, for $34m late last week.
Oleksak stressed that Bantam Bagels will remain fully autonomous in terms of preserving its brand identity and product formulations.
“This acquisition isn’t a traditional acquisition in the sense that we’re being swallowed up where you forego your secret recipe and personality,” she said. “It’s more, everything that makes us special and unique and authentic will remain.”
A new way to eat a bagel
Founded by husband-and-wife team Nick and Elyse Oleksak in 2013, Bantam Bagels began as a small bagel shop in New York City’s West Village making mini stuffed bagels, but more importantly: a new way to eat a bagel with cream cheese or other schmears, which can be a calorie bomb.
“I think people were just dying for a new way to eat a bagel because how many people don’t want to eat a whole bagel?” Oleksak said.
“Now we can take something that’s iconic and classic and still delicious, but make it accessible and easy to eat and not a Saturday morning guilt.”
After gaining a fan base in New York City, QVC requested an order of 30,000 bagels to sell on live TV. It was a mad dash to complete the request with its three-person baking team pulling all-day shifts and finding enough freezer space to store the bagels, but the small team made its deadline. Within five minutes its bagels had sold out on the shopping channel.
“That’s when we really saw that there is a demand and this thing has legs,” Oleksak said.
After appearing on the ABC reality television show, Shark Tank, where the pair struck a $275,000 investment in exchange for a 25% stake in the company, Bantam Bagels launched into Starbucks cafes nationwide.
Taking over the frozen breakfast category
The company’s initial vision was to open up Bantam Bagel bakeries across the US, but realized to maintain its brand authenticity it needed to preserve its New York City roots by keeping its production local.
“It turns out that a bagel is only as authentic as its origin,” Oleksak shared. “We flash freeze and deliver everything frozen so consumers can have that New York experience without having to compromise.”
According to Oleksak, Bantam Bagels has exploded into retail in the frozen foods section and is seeking to transform the frozen breakfast set at retail.
"I think our customers led us there," Oleksak said.
Consumer interest in frozen foods is growing: sales of frozen breakfast items grew 24% between 2012 and 2017 with smaller handheld food items leading current and future growth, according to Nielsen data.
A 2017 survey by Acosta based on Nielsen shopper data revealed that each generational demographic has reported buying more frozen food, including 43% of millennials; 27% of GenXers; 19% of baby boomers; and 19% of consumer from the silent generation. More than three-quarters (81%) of millennials said they turn to the frozen foods category for convenient breakfast options for kids.
“It’s our goal to solidify a new experience in frozen breakfast and make sure there is a destination in breakfast. Right now we’re focused on bridging the breakfast section with our egg bites.”
Working with T. Marzetti, Bantam Bagels has plans to move beyond frozen breakfast and into new categories, added Oleksak.
“We have an innovation pipeline that crosses well beyond the breakfast section. Everything that we do in the future will focus on being mini, accessible, and feel good versions of something you would normally call a Saturday morning – or Saturday night – treat."
Lancaster Colony’s acquisition of Bantam Bagels will disrupt its portfolio of frozen bread products, which currently includes New York Bakery and Sister Schubert’s brands, helping it enter the growing frozen breakfast category, according to Lancaster Colony CEO Dave Ciesinski.
“Bantam Bagels is a fast-emerging company that provides us with an entry into the large and growing frozen breakfast category. Their established relationship with Starbucks in the foodservice channel is another positive that positions Bantam Bagels for future expansion,” Ciesinski said.