Leveraging Local Intelligence
Five Best Hometown Businesses
Business: Ateeco Inc.
Place: Shenandoah, Pa., population 6,000
Owners: The brothers Twardzik
Key to success: Building on local ethnic roots to compete with food giants
When Tim Twardzik tells you that a Volkswagen Beetle viewed from the side looks a lot like a pierogi, it becomes crystal clear that the guy has a one-track mind. And that's good for his company, Ateeco Inc., and good for his hometown of Shenandoah, Pa. At Ateeco 350 employees turn out 8.5 million Mrs. T's pierogies a week. For the uninitiated: pierogies, a staple in every self-respecting Polish household, are like dumplings -- semicircles of dough filled with potatoes, cheese, sauerkraut, and onions -- or, less traditionally, roasted garlic or jalapeños.
Twardzik and his brother Tom bought Ateeco from their dad, Ted Sr., nine years ago and have since grown the company from $10 million in sales to $49 million today. They've done so by going after an avid ethnic market that the giants -- Nestlé, Kraft, and ConAgra Foods -- have largely left unserved. At the same time, they've resisted offers from potential acquirers. "We get a letter every week," says Tim.
Ted Twardzik Sr. started Ateeco in 1952, replicating his mother's pierogi recipe on her kitchen table until the mess became so unbearable that his mother demanded that he set up shop elsewhere. Shenandoah's Eastern European immigrants were grateful consumers, but Ted Sr. grew the company by downplaying its ethnic roots and instead appealing to "mothers with fussy kids," who found in the pierogi a child-friendly food. By the late 1980s, Ateeco had become Shenandoah's largest and most paternalistic employer.
But in 1989, Ted Sr. wanted to retire -- and he wasn't sure that his sons were ready to run Ateeco. So he put the company up for sale, hoping that a buyer would groom his successors better than he could. Within a year, the company had a signed letter of intent. But the third meeting, held in New York City with the acquirer, was an eye-opener. The suitor, once so effusive, suddenly showed its true colors. The company's day-care center and gym were liabilities, said the lawyers, implying that they would have to go. Moreover, the Twardziks came to believe that the buyer would relocate Ateeco. On the way home, the two brothers appealed to their father. Recalls Tim, "We said to him, 'In three months, we're going to be fired and the plant will probably be moved. Would you give us a chance to run it?" Conceding to his sons' argument that Ateeco owed a debt to the community and should remain there, Ted Sr. sold the company to Tim and Tom in 1992. Ted Jr. joined the company last year.
Since 1992 the brothers have taken Mrs. T's into grocers from coast to coast, says Tim -- into markets that the Twardziks have captured one at a time by emphasizing their Polish roots as much as their father had downplayed them. "You're competing with companies that have a bigger pot of money," says Tim. "You need to be more creative and fill little niches." To win freezer space, the Twardziks bombard grocery stores with market research that proves the pierogies' profitability. To overcome the second hurdle -- pierogi ignorance -- they follow up with in-store demonstrations and samplings at more than 230 events annually.
It's all in the name of consumer education. "We not only have to drive our brand," says Tim. "We have to drive the entire category." So far, Ateeco appears to virtually own the category -- a true David among the frozen-food Goliaths.
"You're competing with companies that have a bigger pot of money. You need to be more creative," says Tim Twardzik.
But although the Twardziks now have a national presence, they've remained firmly focused on Shenandoah. Last year Ateeco saved Shenandoah at least $7 million by giving back to the district the school building the company had bought 20 years before. The school district is now planning to renovate the old school.
But being the company in a company town isn't always one big happy polka party. Some people had their hearts set on a new $7-million school building. And when Ateeco opened a second plant, in East Greenville, Pa., five years ago, there were rumors that the family planned to close down the Shenandoah plant and put townspeople out of work. Now there's worry that Ateeco's plans to automate will trigger job layoffs. The Twardziks try to reassure, but they know well enough that you can never please everyone. They'll simply do what all hometown companies must do: remain true to their strategy and to their community and hope the scales remain tipped in their favor. It seems to be working so far. "The Twardziks have big hearts," says Mayor John Thomas. "If it weren't for them, where would our community be right now?"
Five Best Hometown Businesses
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DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.