A Van Nuys-based bagel-maker is looking to go where no bagel-maker has ever gone before. Western Bagel Baking Corp. already exports about 2 percent of the 7 million bagels it produces each week to Japan and Australia; and now the company is looking to introduce its bagels to Taiwan, Mexico, the Philippines, the Netherlands and other foreign lands where bagels are essentially unknown. While foreign customers accounted for only about $800,000 of Western Bagel’s $40 million in sales for the fiscal year ended Feb. 28, the company is hoping to increase that amount. “(Exporting) is a small part of our business but we see it as a growth area,” said Lance Parrish, the company’s sales director. “We see a lot of potential for bagels in other countries.” Japan actually does some of its own bagel-making, but the country isn’t producing enough bagels to satisfy demand, so the Japanese turned to Western. Osaka-based foods distributor Hokushin PLC., Western’s first foreign customer, began importing bagels in December 1996 and now buys a container of 102,240 about every three weeks. The company sells the bagels for about $2 apiece in supermarkets and at shopping mall concession stands operated by a Hokushin subsidiary. Western Bagel also sells to Nippon Flour Mills in Osaka. All told, the company sells about 180,000 bagels to Japan each month. In Australia, Western Bagel sells to a single customer, Coles/Meyer Corp., a 527-store supermarket chain that is now buying about 250,000 bagels a month, said Parrish. The bagels are shipped frozen via ocean freight, taking 18 days to reach Japan and 29 days to reach Australia. Western is currently negotiating with a food distributor in the Netherlands to expand into that country, where American-style supermarkets are replacing the smaller, neighborhood markets that carry fresh meats, vegetables and breads. The company is also negotiating with a food distributor in Mexico where, Parrish said, the preference is for fruit bagels like blueberry and banana nut. Some other markets will be harder to crack. “Our biggest challenge is to get the consumer to know what a bagel is and how to use it,” Parrish said of other markets that the company is exploring, such as Argentina. To enter these markets, Western is working on deals under which the company would help pay for in-store booths to demonstrate how bagels can be prepared and let consumers sample them while shopping. Company co-founder Dave Ustin, whose father was also a bagel-baker, established Western Bagel in downtown Los Angeles in 1947. And back then, Ustin faced problems similar to those being faced by the company today in foreign markets, said his son, Steven Ustin, who is now Western Bagel’s president and chief executive. “For awhile, he (my father) gave away more bagels than he sold, just to get people familiar with what they are,” said Ustin, whose father died last year. Western Bagel moved to its current location in Van Nuys in 1958 and the Ustin family bought out Ustin’s original partner in 1972. Western Bagel has two factories that can together produce some 60,000 bagels an hour. About 55 percent of Western’s bagels are sold at its 13 outlet stores (all of which are in the San Fernando Valley except for one in Tustin) or at L.A.-area restaurants. The rest are frozen and shipped to customers throughout the country and overseas. Ustin said the company has enjoyed double-digit sales growth in each of the past five years. Ustin personally supervises the location scouting for each new outlet, and plans to open two or three new stores a year in the Los Angeles and Orange County areas. “Not having a lot of capital has limited our expansion, but that’s probably a good thing,” Ustin said. “Some of the bigger companies have expanded real fast and found themselves in trouble.” Ustin’s 21-year-old son and 22-year-old daughter are now full-time employees of Western Bagel the family’s fourth generation to enter the business. “I could go public or sell the company now and live happily ever after with the money, but I like the challenge of being the family company that does well against the big guys,” Ustin said.
