Bridgford Foods Corporation

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Bridgford Foods Corporation

1308 North Patt Street
P.O. Box 3773
Anaheim, California 92803
U.S.A.
(714) 526-5533
(800) 854-3265
Fax: (714) 526-4360
Web site: http://www.bridgford.com

Public Company
Incorporated: 1952
Employees: 640
Sales: $127.9 million (1997)
Stock Exchanges: NASDAQ
Ticker Symbol: BRID
SICs: 2013 Sausages & Other Prepared Meat Products; 2022 Natural, Processed & Imitation Cheese; 2045 Prepared Flour Mixes & Doughs; 5141 Groceries, General Line

Bridgford Foods Corporation manufactures and distributes frozen, refrigerated, and snack food products for both retail and food service establishments in the United States and Canada. Bridgford products include a variety of sliced luncheon meats and cheeses, wieners, bacon, dry and semidry sausages, frozen Micro-Ready sandwiches, biscuits, and bread and roll dough items. The company also purchases for resale a variety of jerky, cheeses, salads, party dips, Mexican foods, nuts, and other delicatessen-type food products. In all, Bridgford was manufacturing or distributing a line of about 450 food products in 1997. With the majority of its stock in the hands of the founding Bridgford family, the relatively small company competes effectively with such industry giants as ConAgra, Hormel, and Sara Lee. The company’s strategy, in the words of chairperson Allan Bridgford in a 1995 article in Barron’s, is to be “a niche marketer and find unusual products that fit in between [those of its] very big competitors.”

Origins During the Great Depression

The company traces its origins to 1932, when Hugh Bridgford, formerly an employee in a San Diego grocery store, started his own butcher shop with $65 he had saved from his paychecks. Success ensued at the small shop; over the years, Bridgford opened up several more such markets in the area and eventually established a wholesale meat business that sold Bridgford meats to local hotels and restaurants.

By 1944 Hugh Bridgford had also entered the frozen food distribution business, first offering frozen corned beef hash and baked beans, foods that he noticed retained their fresh taste even after they had set in his freezer for some time. Also that year, he moved the hub of his operations and management headquarters to a 50-year-old meatpacking plant he purchased in Anaheim, California. Bridgford’s various operations were organized as the Bridgford Foods Corporation in 1952.

Product Innovations in the 1960s

Bridgford Foods was the first to manufacture and market frozen bread dough, which it did in 1962. This reportedly came about one evening when a company baker, tired from the day’s work, opted to store some already-mixed dough in the freezer that night and to bake it the next day. The bread baked and tasted fine, and after adjusting the quantity of yeast so that the dough would still rise after being frozen for months, the company began marketing the heat-and-serve product, which would become its staple. In 1966 the company developed the Bridgford Demi-Loaf for the food service trade; it would later estimate in 1991 that two-thirds of the miniature bread loaves served in U.S. restaurants were made from Bridgford frozen dough.

Allan Bridgford later recalled that his father was “an innovative man and seemed to come up with ideas that people liked,” adding that his father was “always searching for new product development.” Not all of the ideas worked out: holiday hams, marketed covered with red-and-green candied cherries in the 1950s failed when the cherries fermented, causing the hams to spoil within their wrappers, and a pizza-making kit introduced in 1980 foundered on the impatience of consumers who would not wait for the dough to defrost. “For every 100 product ideas, we’ll try ten and maybe one will stick,” Hugh’s son H. William (“Bill”) Bridgford commented.

Hugh Brigford’s sons began working at the company part-time when they were boys; after college—both graduated from Stanford University with degrees in economics—they took full-time positions at Bridgford Foods, with Allan focusing his energies on sales and marketing and Bill overseeing production.

Beginning in 1964, Bridgford Foods’ sales would increase every year for the next two decades. Moreover, after 1965, when the cost of expanding to the East Coast by establishing a breadmaking plant in Secaucus, New Jersey, resulted in a $93,000 loss, the company would also make a profit each year. In 1966, Bridgford had sales of $8.4 million and net income of $163,367; for 1970, these figures were reported at $14.1 million and $195,267, respectively. Bridgford Foods offered a small portion of its stock to the public in 1968 at $8.75 a share.

Steady Growth in the 1970s

In 1970, Hugh Bridgford remained chairman of the company he had founded, while Bill Bradford served as president and Allan Bridgford was vice-president. Besides the main Anaheim plant and the Secaucus facility, the company maintained a meat wholesaling facility in San Diego during this time and leased a plant in Dallas for breadmaking.

By this time, Bridgford Foods was manufacturing and distributing wholesale processed meats and other delicatessen foods packaged for consumer convenience, manufacturing and selling fresh, frozen, and smoked wholesale meats, and manufacturing and selling frozen bread-dough products. The company’s products were being sold through about 4,000 retail outlets in California and Arizona—largely convenience stores, delicatessens, and independent markets—serviced by Bridgford’s own delivery sales force, and also through about another 15,000 retail outlets in California and elsewhere, serviced by distribution through food brokers, cooperatives, chain-store warehouses, independent food distributors, and other sources.

Packaged luncheon meats, bacon, wieners, smoked pork products, cheese, and other delicatessen foods had accounted for 68 percent of Bridgford Foods’ sales in the late 1960s, while bread, dough, and related products constituted 18 percent and fresh meat and other products the remaining 14 percent. In the following years, however, bread dough and related products gained steadily in importance, accounting for 42 percent of Bridgford’s sales in 1974, compared to 47 percent for delicatessen-type food and 11 percent for fresh meat and other products.

Bridgford Foods grew considerably in the 1970s. In 1972 it purchased the Dallas plant it had been leasing, and in 1975 it purchased a plant in Chicago for meat processing, with heavy emphasis on dry and semidry sausage. During this decade the company also leased warehouse and/or office space in Oakland, California; Phoenix and Tucson, Arizona; and Beaumont and San Antonio, Texas. Although the Beaumont and San Antonio leases lapsed in 1979 and 1984, respectively, a warehouse in Modesto, California, was leased out in 1985, and a second Dallas breadmaking plant was opened that year.

Ups and Downs in the 1980s

Net sales continued to grow year by year through the decade, increasing from $14.1 million in fiscal 1971 to $40.7 million in fiscal 1980. In the latter year the company’s products were being sold through about 7,000 convenience-store retail outlets in California, Arizona, Texas, Nevada, and New Mexico, and also throughout the country to about another 20,000 retail outlets and 12,000 restaurants and institutions.

For the first time in two decades, sales slipped slightly at Bridgford in 1985, due only to the fact that the previous year had been a 53-week fiscal year. The upward march resumed the following year, however, and Bridgford Foods was also able to eliminate its modest long-term debt at that time. The company exceeded net income of $1 million for the first time in 1987, earning $1.6 million on net sales of $56.5 million. Analysts began to take note of the small company, and in 1987 Bridgford Foods took second place in a Forbes list of the best stocks of the year, with an impressive 221-percent return to investors. Between 1985 and 1990 the stock price, adjusted for splits, appreciated more than tenfold.

At 78 years of age, Hugh Bridgford was still active in the company in 1987, running the Chicago production plant, while Bill and Allan Bridgford presided over headquarters, working out of a shared, modest, linoleum-floored “executive suite” in a corner of the Anaheim plant, an area permanently chilled by the meatpacking operations, prompting the brothers to don heavy work jackets over their Oxford shirts while in their office. The unpretentious Bridgfords—“low-cost operators and penny pinchers,” in the words of one stock analyst—did not even keep a secretary. The family atmosphere was augmented by the fact that many of the company’s work force of 450, which included more than a dozen other family members, had been working for Bridgford for decades.

Company Perspectives:

Uniqueness, high quality and consistency of products are the main objectives of Bridgford Foods Corporation.

Bridgford Foods’ products were being sold in more than 20,000 stores and stocked by more than 15,000 restaurants and institutions by 1988. In addition, the number of convenience stores carrying Bridgford products reached 10,300 in 25 states. These products consisted mainly of traditional snack foods such as pepperoni and salami sticks that were based on recipes going back hundreds of years. Accordingly, although supermarkets carried the Bridgford line, these products seemed to be doing best in convenience stores, delicatessens, and liquor stores, where profit margins were wider and Bridgford did not face as much competition from giant companies such as Pillsbury, ConAgra, and Oscar Meyer. One California store owner commented, “They’re not a company for this day and age, but maybe that’s why they do so well.”

But Bridgford Foods was not conceding the supermarket trade to its big rivals, either. The sales staff made things easier for their retail customers by putting price tags on Bridgford products at the plant, stocking the supermarket shelves itself, and reimbursing the stores for unsold items. “We do everything but sweep the floor,” Allan Bridgford told a reporter. Although the sales force of 110 was expensive to retain, “nothing replaces the personal touch,” he added. As a promotional tool, Bridgford also sent out to its distributors full-color calendars every year featuring frozen bread-dough recipes such as those for “Incredible Pizza Layer Loaf” and “Hand-Wiches.” By contrast, the larger food companies generally were selling their products through food brokers whose distributors simply dropped the goods on the store loading dock.

Bridgford Foods introduced microwave-ready hamburgers, cheeseburgers, roast beef and ham-and-cheese sandwiches, and chili dogs in 1988. Forbes, in an informal taste test in 1990, rated “the Bridgford flame-broiled cheeseburger by far the tastiest” in the microwave sandwich market. By now the number of company products had risen to more than 100.

Forging Ahead in the 1990s

Sales volume reached $84.3 million in 1990, and net income rose to $3.9 million. Bridgford Foods had no long-term debt and, in 1991, about $4 million in cash. As a result of its enviable position, the company was rated one of ’ The Best 200 Small Companies in America” by Forbes during 1990-93. Between 1992 and 1996 the company averaged an annual 13-percent return on assets.

Bridgford Foods opened a frozen-foods plant in Statesville, North Carolina, in 1996 and modernized its Chicago and Dallas facilities. It closed its Secaucus plant in 1995. The company continued to have no long-term debt and owned valuable parcels of land in Chicago, Dallas, and Anaheim. Bridgford Foods had issued a dividend in every year since 1966 except for 1983 and 1986.

Nevertheless, in March 1997 Bridgford Foods’ thinly traded stock was being quoted at only about $8 a share, compared to a high of $24 in 1992. One problem was price hikes of as much as 40 percent in 1996 for the company’s main ingredients, wheat and pork. This led to a decline in profits of 15 percent in 1996 in spite of record sales of $118.3 million. The following year net income rose 19 percent, to $6.6 million on sales of $127.9 million.

Hugh Bridgford died in 1992. In 1996 Bill, who had retired from day-to-day operations but retained a seat as chairman of the executive committee, moved to Dallas to oversee the recently expanded bakery plant there, leaving Allan Bridgford, the company’s chairperson, in sole possession of the Anaheim office. A third generation of Bridgfords was also moving up the corporate ladder, with William Bridgford, Jr., Allan Bridgford, Jr., and Bruce Bridgford in charge of subsidiaries and a total of eight members of the Bridgford family in management positions. Major decisions were still being made by the three-member executive committee, consisting of the two senior Bridgfords and Robert E. Schulze, the company’s president.

In 1997 Bridgford Foods was selling about 450 items through some 180 salespeople to 25,200 retail food stores in 49 states and Canada. It was also selling Bridgford products, through wholesalers, cooperatives, and distributors, to about 18,000 retail outlets and 19,000 restaurants and institutions. Moreover, the company was advertising its products in Sunday newspaper food circulars and sending executives to more than 400 trade shows a year. Products manufactured or processed by the company represented 82 percent of sales, with items manufactured or processed by third parties for distribution accounting for the remaining 18 percent. Frozen-food products accounted for 44 percent of sales and refrigerated and snack-food products for 56 percent. Bridgford Foods maintained plants in Anaheim, Chicago, Dallas, and Statesville, North Carolina. About two-thirds of the company’s stock was held by Bridgford family members.