Friday, September 19, 2014
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Tastykake: What went wrong

Tastykake's historian traces the iconic snacks' decline to the 1980s

Tastykake: What went wrong

Corporate historian Joel Gardner of Cherry Hill wrote Tasty Baking Co.’s 75-year history for then-Tasty President Nelson Harris in 1989. The handsome volume, packed with photos, wasn’t available in stores, and it’s now an Internet collector’s item. Gardner points out that Tasty's problems pre-dated CEO Charles Pizzi, who agreed to sell the cash-strapped company to Georgia-based Flowers Foods last week. Says Gardner:

"In the ‘50s, Tasty became Philadelphia's signature snack food.” But in the 1970s it hit a wall: “Commodity prices rose drastically,” and attempts to expand, for example by purchasing a Southern frozen-cobbler business, drained capital.

CEO Paul “Kaiser was forced out, and Nelson Harris became president.  Harris managed to put together a team that rebuilt the bottom line.  He arranged for the drivers to work as independents rather than employees.  He pushed the geographic boundaries as far as he could, though Tasty has never succeeded attracting customers beyond the Philly diaspora. 

“Every attempt to enter the California market was disastrous.  Most markets have their own snack tastes, from Hostess to Moon Pies, and Kandy Kakes meant nothing in those.

“Harris rewarded Carl Watts, the head of the sales force who had engineered the change in the drivers' status, by effectively naming him his successor… The stock began its decline…  When I talked to Kaiser, he said he presumed the company was trying to lose value in the hopes of finding a buyer.  A few potential suitors passed.  Tasty kept announcing plans to expand its markets, and it kept failing to penetrate them.

"Charles Pizzi, with no experience in the food business, appears to have been brought in to sell the company... With public loans, he abandoned Allegheny West, long favored by Tasty's beneficence, for the Navy Yard and a new facility, one that might be attractive to suitors."

(Though if all Tasty wanted back when it hired Pizzi was to sell the works, it could have sold to Flowers, at several times the final price, instead of hiring Pizzi, as my colleague Harold Brubaker has noted.)

"Flowers succeeded because it diversified." Now it's getting Tasty's new bakery "dirt-cheap.  Will it use it to maintain the Tasty line, or will it slowly eliminate products in favor of its own?...  The employees (face) cost-cutting and realignment... There won't be a 100-year history.  Tasty's done.”

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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