Print

Email story

Comment

Email editor

Boston bagels go to N.Y. through Florida

New York retailers thought it was funny that a Boston guy wanted to sell them bagels. Then they became a hit.

By MARK ALBRIGHT
Published March 2, 2006

[Times photos: Cherie Diez]

Ray's Bagels are sold frozen in 3,000 supermarkets in 21 states.

	Ray Leonard decided that New York water made the best bagels, so he set up shop there. "I do have the best New York bagel," he says.

Ray Leonard learned the hard way that the road to selling bagels in New York City winds through Florida.

He knew hard-boiled New Yorkers are convinced there's something about their tap water that gives bagels a distinctive taste and texture. So he locked up his Boston plant and started making his frozen bagels in the Bronx. The city's supermarket executives were unimpressed.

"They treated us like a joke, like garbage," said Leonard, 45, president of Ray's Bagels, which had been a modest seller in New England supermarkets.

"They basically said "why would a New Yorker buy bagels from some Bostonian?' "

This month Leonard gets the last laugh. After cracking the Florida market in 750 Publix Super Markets two years ago, Ray's Bagels was enough of a hit to spread to frozen food cases in 21 states. This month Ray's debuts in four of the big supermarket chains serving New York.

Leonard isn't that surprised or breaking into a chorus of "if you can make it here, you can make it anywhere" about Florida.

After all, he and business partner Amy Tormey started from scratch six years ago with the goal of giving his hometown Boston a decent bagel. They've been only a modest success in Bean Town despite recently moving ahead of industry rival Lenders Bagels there.

In the process, however, the Ray's product line breathed new life into frozen bagels, an item that's been in an extended sales slump long enough that some food brokers considered it destined for extinction. Fresh bagels sold in baked goods departments today generate about 10 times the business as the frozen ones.

"One of the first things I did when I got here from New England was check to be sure we carry Ray's Bagels," said Steve Smith, marketing director for Sweetbay Supermarket.

Still, they don't exactly fly off the shelves. A typical supermarket sells 30 packages a week.

Leonard determined there was only one efficient way to bring New York-water-made bagels to the rest of the country. He par-bakes them to 95 percent completion in the Bronx, then recommends buyers give them a five- to seven-minute finish in the oven.

Rival frozen and restaurant bagels come fully baked, then are reheated for eating. The difference, Leonard says, is his emerge from the heat with a hard, crunchy exterior and a warm chewy interior.

The selection is limited by grocery freezer economics. Grocers only want the top five selling types: plain, sesame seed, onion, cinnamon/raisin and "everything." Whole wheat is a distant ninth, so it's out of the running for production. Leonard is pressing stores to test Ray's Bialy - a cross between a bagel and an English muffin that packs fewer calories and carbs and comes with a dent in the middle for a schmear of cream cheese.

The tiny start-up achieved annual wholesale sales of about $3.5-million in 2005, which translated to 16-million bagels. Ray's is sold in most Florida supermarkets.

With such a sales history, the New York grocers started calling him.

The road to success was pretty rocky "because we knew nothing about what we were doing. We didn't even realize we stepped into a food category that was in horrible decline," Leonard said.

Earlier in life, Leonard had a falling out with his father, Stan Adelstein, a top executive at the popular Bob's Discount Furniture chain in New England. He had been working in his father's furniture business since age 15. He wanted to prove his business smarts to himself, even changing his name to Leonard to be free of working in his father's shadow.

Leonard built a 65-truck office product delivery service that he sold for $1.7-million, then starting running short of money after "playing golf for two years."

The business plan for Ray's Bagels was trial and lots of errors. Ray's has only two employees because everything is done by contract.

After securing deals with supermarkets in New England, Leonard managed to get into Publix without having to pay the fees supermarkets usually demand for shelf space.

But sales were stagnant. So Ray's aired a $600,000 TV campaign in which Leonard said there were three ways to success: marry the boss' daughter, inherit a lot of money or have the best product.

"I'm already married and I have no money," he said in a thick Boston accent. "But I do have the best New York bagel."

Sales perked up. How could such a small company with no debt mount such an ad campaign?

Leonard's father, whose furniture chain had a TV production facility, provided the air time in return for a 30 percent stake of Ray's Bagels.

"We've made up and work well together now," Leonard said. "I got over the ego thing when I sold the delivery business."

Mark Albright can be reached at albright@sptimes.com or 727 893-8252.

[Last modified March 2, 2006, 01:32:18]