Bagel War




Staff Reporter

It’s 8:30 a.m. at Noah’s New York Bagels in Brentwood the busiest of the chain’s L.A. area shops and business isn’t exactly booming.

“We used to have a line out the door everyday,” said store manager Anne Blumenstein. “People would come from all over the city, from Orange County, from all over the Valley. But now there are like 20 Noah’s in L.A. they can go to. My own worst competition are our own stores.”

So, just how many bagels can one city eat?

Analysts say that the fight to win over the tastes of L.A. bagel consumers is becoming extremely competitive and a shake-out is inevitable, allowing only the strong to survive.

“You’ve got a lot of big players making it out to California their strategy is to dominate the market,” said Steve Steinhauser, head of Deloitte & Touche’s restaurant industry group.

Steinhauser cites Brueggers Corp., Einstein/Noah Bagel Corp. (Noah’s parent company) and Manhattan Bagel Co. as three of the major bagel companies making their move into L.A.

“There are still a lot of players with enough clout to continue operating on their own, but we may see them merged into larger entities or fall by the wayside,” said Steinhauser.

One long-time L.A. area bagel institution, I & Joy Bagels, has already been gobbled up by a national chain. Eatontown, N.J.-based Manhattan Bagel purchased I & Joy which had been in business for 30 years in July 1995 and is currently renovating all the I & Joy shops.

Van Nuys-based Western Bagel Baking Corp., whose original owners celebrated the company’s 50th anniversary last month, claims to be holding strong. The company currently has nine stores in L.A. County and plans to open three more in 1997.

Jim Schultz, Western’s vice president, said that the new arrivals heighten appreciation for Western Bagel’s product. “Many of the larger chains use frozen dough or manufacture out of a commissary,” said Schultz, noting that Western’s bagels are fresh-baked.

Regardless, the large bagel chains, all of which are based outside of California, are racing to mark their territory. They believe there’s room for growth in L.A. and they’re putting their money behind their claims.

Each of the bigger chains is planning to significantly increase their presence in the L.A. market in 1997.

South Bend, Indiana-based Brueggers, with three stores in L.A. County, has a dozen units under construction in the area. Manhattan Bagel has 20 stores in the area and is looking to add at least 10 more over the next year. And Colorado-based Noah’s plans to more than double its L.A. presence in 1997, adding another 25 stores to its current 21.

Mitchell Pinheiro, an analyst with Janney Montgomery Scott, Inc., compares the bagel market with about 5,000 shops nationwide to the pizza market which currently supports about 60,000 pizza places.

“Like the pizza market, two or three players will dominate, but they won’t put the little guy on the corner out of business,” he said. “It will, however, be difficult for a small chain of bagel stores to fight it out.”

Merrill Shindler, co-editor of the Zagat Survey, refuses to give bagels that much credit.

“Every few years, we have our morning starch of the moment. It used to be croissants and croissant shops popped up everywhere and then went out of business. Then it was muffins. Now it’s bagels,” said Shindler.

Shindler predicts the bagel market will be shrinking soon.

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