Nordahl Brue: My Biggest Mistake
Founder and CEO of Bruegger's Bagel Bakeries, based in Burlington, Vt.
My partner, Mike Dressell, and I started Bruegger's Bagels in 1983. Our plan was to grow six-by-six-by-six: adding six stores in six separate markets in six years. It took us a little bit longer than anticipated, but we got there.
By the early 1990s we were growing rapidly. There started to be a rising tide of interest in the bagel business. By 1994 investment bankers were calling. We kept hearing that Boston Chicken was changing the way food service companies grew. It had one of the hottest initial public offerings ever done. The bankers said that if we didn't expand rapidly, we'd be left behind. There was a big race to become the Starbucks of the bagel market.
When many very bright people tell you the same thing -- namely, that it's riskier in your market to grow slowly than it is to grow fast -- you think, "Maybe I should listen."
We brought in outside managers and started an ambitious franchising program. In 1996 we sold out to a public company. We watched the stock we took in the sale drop about 95% in value. Ultimately, we incurred enormous debt to buy the company back less than two years later. We were lucky to get a second chance. We had gone off our game plan. We had started to play other people's games. We'd seen the market changing and altered our plan rather than sticking with what we knew worked.
I'm not saying that you never change or make adjustments. But you've got to stay true to your core beliefs. You can't take a bagel company and say, "Oh, E-commerce is hot. Let's do Brueggers.com." Fast growth rates are appropriate in software, where your product can be replicated infinitely and distributed electronically. We slice bagels and make sandwiches. That doesn't happen in multiples of 10,000. It happens one order at a time. --From an interview with Ilan Mochari