Cole's Quality Foods, Inc.

38 Commerce Avenue Southwest, Suite 400
Grand Rapids, Michigan 49503-4252
U.S.A.
Telephone: (616) 975-0081
Fax: (616) 975-0267
Web site: https://www.coles.com

Private Company
Incorporated:
1943
Employees: 200
Sales: $65 million (2017 est.)
NAICS: 311812 Commercial Bakeries

Cole's Quality Foods, Inc., based in Grand Rapids, Michigan, is one of the leading manufacturers of breads, breadsticks, garlic toast, and cheese toast in the United States. The company's products, including garlic bread, pretzel sticks with pub-style cheese, and Texas toast, are distributed to grocery stores, convenience stores, and warehouse clubs throughout the United States. The company also produces some items for private-label and foodservice accounts. CEO W. Scott Devon Jr. owns a controlling interest in the firm.

BEGINNINGS

The roots of Cole's Quality Foods date to 1943, when L. Carroll Cole purchased the Cruikshank Bakery in Muskegon, Michigan. Shortly after assuming control, Cole recruited his brother to open a bakery outlet inside a downtown department store. When World War II ended in 1945, government-imposed sugar rationing ceased, and the bakery was able to expand its offerings to include doughnuts, cakes, and cookies. Cole's business grew steadily over the next two decades, and he opened additional retail outlets and recruited new grocery store accounts.

By the 1970s the firm was selling more than 100 different varieties of fresh baked goods through its own stores and in 70 Michigan supermarkets. In 1972 the company hired Wes Devon Sr. to serve as vice president of marketing. To help the firm stand out from its competition, Devon suggested that it create a frozen version of Italian garlic bread. Cole's bakers came up with a one-pound loaf that could be thawed for several hours and then baked to serve hot from the oven. When the firm's retail outlets and several grocery stores around Michigan began to stock the product, it caught on with the public and orders for it increased.

At this time large supermarkets had begun to build in-house bakeries, which took customers away from independent ones, causing many independents to fold. Cole's frozen garlic bread, a product that no other firm was making, helped to keep it afloat, and in 1978 the company took the gamble of dropping its other products to concentrate on this one item. The firm's Muskegon baking plant was reconfigured to boost production of the bread, and over the next year the company's remaining retail outlets were closed. Devon, who had for several years been buying out the Cole family, was now the sole owner of the firm.

COMPANY PERSPECTIVES

Ever since Cole's invented the first frozen garlic bread back in 1972, this family-owned bakery has been creating tasty and innovative products.

CONTINUATION OF GROWTH

The early 1980s saw distribution expand to much of the midwestern and southeastern United States. The company's sales tripled between 1984 and 1989. Subsequently, Cole's frozen garlic bread became the third bestselling frozen bread product in the United States, behind Sara Lee croissants and Lender's bagels.

In 1989 Cole's introduced its first new product offerings in more than a decade. The Home Style bread line consisted of garlic, onion, oregano, cheese garlic, and wheat and honey varieties. After test-marketing the breads in cities such as New York and Chicago, where sales exceeded initial expectations, the line was rolled out throughout the company's sales territory. During 1989 Cole's also spent $5 million to add an 800,000-cubic-foot computerized freezer (the largest at the time in the Midwest) and 20,000 cubic feet of dry storage to its Muskegon plant. The firm was now also considering making baked goods for foodservice customers such as restaurants and hospitals.

During the early 1990s several competitors began marketing their own frozen garlic bread. Cole's responded by making changes to its packaging and introducing new items such as frozen breadsticks. New garlic bread varieties such as Multi-grain, Zesty Italiano, and Romano Cheese were also created.

In 1994 the company introduced several types of low-fat, low-cholesterol frozen Focaccia Italian Pan Breads, which could be heated in 10 minutes after being thawed. The round, pizzalike breads were distributed to Cole's customers in the Midwest, Southeast, and mid-Atlantic states. During this period, the firm was seeing sales growth of as much as 25 percent per year as more Americans discovered its products.

In 1995 Devon Sr.'s son W. Scott Devon Jr. (known as Scott), was made president of the firm. Devon Jr. hired several other new executives after taking the job. Although Devon Sr. continued to hold the posts of CEO and chairman, his health was declining as he entered the early stages of Alzheimer's disease.

OPENING OF FRENCH BAKERY RESTAURANT

In December 1995 Cole's unveiled a new business venture in downtown Grand Rapids, Michigan, about a half hour from Muskegon. The Saint-Honoré French Bakery and Tea Room was a restaurant that served tea, coffee, and French pastries and breads, as well as offering educational programs such as cooking classes. It was open for breakfast, lunch, and dinner. Located on the first floor of a 1920s bank building, the interior was carefully designed to make use of original architectural features such as brass and mahogany trim, as well as the bank's vault. Executive pastry chef Jean Luc Saint and baker Françoise Sardi had been recruited from Paris, while a second artisan baker was brought in from Seattle. The restaurant was created in part to help Cole's test new products and to identify a wholesale market for others.

In 1996 the company moved Devon Jr.'s office and its executive sales offices to a new building in Grand Rapids. The firm's official headquarters and all other operations remained in Muskegon. In January 1997, just over a year after it had opened, the restaurant was closed. Business had not reached levels the company hoped for, and in the face of rising losses, it was shuttered. Despite this setback, the company had begun marketing a line of specialty breads under the Saint-Honoré name. Sales of the new products began in western Michigan, with plans to distribute them to other areas. The Saint-Honoré baking operation, originally located in Muskegon, later moved to the Detroit suburb of Livonia.

After introducing several varieties of frozen garlic toast in 1997, the following year saw the company's thick-sliced, frozen Texas toast line debut. The toast, which was modeled after a competitor's popular product, would go on to become a huge success. Unlike the firm's garlic bread, it could be baked in an oven without thawing and required minimal forethought or preparation time. With the success of Texas toast, the firm's staff expanded from 90 to 150.

By 2000 Cole's annual sales stood at $48 million. The company's business was split evenly between garlic bread and toast. With bread sales about to be eclipsed by the quicker-to-prepare toast, the firm began looking for ways to address the problem. In time, a solution was found: a new method of flash-freezing garlic bread so that it could be prepared in 10 minutes, with no pre-thawing required.

RECONFIGURATION OF PLANT

KEY DATES
1943:
L. Carroll Cole buys Cruikshank Bakery in Muskegon, Michigan.
1972:
The company introduces frozen garlic bread.
1979:
The last of the company's retail shops are closed to focus on garlic bread; Wes Devon Sr. buys out Cole. Distribution is expanded to the Midwest, East Coast, and South.
1995:
Devon Sr.'s son Scott is named president of the company.
1998:
Texas toast is introduced.
2006:
A commercial bakery is acquired in North Liberty, Iowa.
2018:
Cole's celebrates its 75th anniversary.

Customer response to the new garlic bread was positive and resulted in a sales increase. Consequently, the firm began to expand to new markets, including Phoenix, Arizona; Salt Lake City, Utah; and Buffalo, New York. Its strongest market, however, was Detroit, where some 6 million loaves of garlic bread were consumed each year. The firm had a loyal customer base, with a repeat purchase rate of 61 percent.

Cole's had seen annual sales increases for several years running, which were consistent with the growth in the frozen bread category. Total supermarket sales of frozen bread had risen from $50 million in 1996 to $200 million in 1999 and were approaching $400 million in 2002, according to industry analysts Information Resources, Inc. With this growth had also come the inevitable introduction of supermarket private-label lines, which accounted for about one-fifth of total sales. For 2002 Cole's had estimated sales of more than $51 million.

INTRODUCTION OF LOW-CARBOHYDRATE PRODUCTS

The low-carbohydrate diet craze early in the first decade of the 21st century cut into the sales of many bread products. Rather than viewing it as a threat, Cole's took up the challenge to create a new product line that could enhance overall revenues. In early 2004 the company introduced Ultra Garlic Bread, which had five grams of carbohydrates per one-ounce slice, less than half of the regular variety. The bread was made by substituting oat fiber and wheat gluten for refined white flour, with no added sugars and a pure butter spread on top. A 12-ounce loaf was priced between $2.59 and $3.29, slightly more than a one-pound loaf of the original variety. To produce it, Cole's hired 20 more employees and added a weekend shift at its plant. A few months later, a lowcarb Texas toast was introduced as well.

By this time, Cole's garlic bread and toast could be found in close to 60 percent of the grocery stores in the United States. In June 2004 Cole's named a new president. John Sommavilla, age 45, had nearly 20 years in the grocery business, most recently as an executive vice president at Spartan Stores Inc. Devon Jr. retained the positions of CEO and board chairman.

After more than 60 years in business, Cole's had grown into one of the leading manufacturers of frozen garlic bread and toast in the United States. Having originated the product category, the firm continued to lead with innovations such as its new flash-frozen and low-carb varieties.

ACQUISITION OF IOWA FACILITY

Another major development occurred in 2006 when, in a deal with Cybus Capital Management, the company acquired a 35,465-square-foot commercial bakery in North Liberty, Iowa, that formerly was occupied by Rudi's Bakery. The acquisition was prompted by strong demand for Cole's newer mozzarella-filled cheese sticks product. Cole's spent $14 million to upgrade the plant, which commenced operations in 2007.

By 2011 Devon Jr. owned 75 percent of Cole's stock, with the balance held by his sister Kim Devon. The company's success had enabled Devon Jr. to pursue other interests, including the development of a 10,000-square-foot luxury store in Beverly Hills, California, Devon Works, LLC, which sold high-end watches costing $15,000 and denim apparel priced at $200 to $320. By this time the company leader also had established a sports car business called Devon Motorworks and was involved in other interests including a polo team, real estate, and restaurants.

SOPHISTICATED OPERATIONS

By 2013 Cole's operations were becoming increasingly sophisticated. By this time the company was using a special cryogenic spiral freezer and freezing system at its North Liberty plant. Additionally, Cole's installed a flour chilling system from Linde that made it possible to control the temperature of flour flowing into mixers within 1 degree Fahrenheit of the set point, via a carbon dioxide injection system. That year, the company promoted new garlic breadsticks and toast selections at NASCAR races and National Collegiate Athletic Association football games in a 45-foot recreational vehicle as part of the Cole's Tasty Tailgate Tour, which also included stops at National Hockey League and National Football League games.

Innovative product introductions continued toward the end of the decade when Cole's rolled out its Middles offering in 2017. The heat-and-serve product included bagel, pretzel, and Italian bread middles with cheesy fillings. Varieties included selections such as Plain Bread stuffed with Mac and Cheese, 5 Cheese, and Plain Cream Cheese, as well as Pretzel Bread stuffed with Beer Cheese, French Toast Bagel stuffed with Sweet Cream Cheese, and Everything Bagel stuffed with Plain Cream Cheese.

According to Market Share Reporter, Cole's was the third-leading frozen baked bread/roll/biscuit maker in 2017, with a market share of 6.56 percent. The company ranked behind Pepperidge Farm, Inc. (9.5%), and leader T. Marzetti Company (42.86%). Cole's celebrated 75 years of operations in 2018. Moving forward, it appeared that Cole's would remain a leading player in the food industry for the foreseeable future.

Frank Uhle
Updated, Paul R. Greenland

PRINCIPAL COMPETITORS

General Mills, Inc.; The Hillshire Brands Company; Joseph Campione, Inc.; Lancaster Colony Corporation; Pepperidge Farm, Inc.; T. Marzetti Company.

FURTHER READING

Boissoneau, Ross, “Muskegon Bakery Expands Product Mix—to Two.” Grand Rapids Business Journal, January 30, 1989.

“Cole's Quality Foods Launches Stuffed Bread Snack Called Middles.” Entertainment Close-Up, September 24, 2017.

DeWitte, Dave. “Cole's Workers Vote to Unionize.” Cedar Rapids (LA) Gazette, February 21, 2009.

Nichols, Mike. “Cole's Quality Foods Rolls Out National Garlic Bread Tour.” Grand Rapids Business Journal, August 30, 2013.

Shellenbarger, Pat. “Scott Devon's World: It's Bigger Than a Bread Box; Frozen Food Success Drives Passions.” Crain's Detroit Business, May 9, 2011, 18.