Mrs. Baird’s Bakeries

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Mrs. Baird’s Bakeries

7301 South Freeway
Fort, Worth, Texas 76134
U.S.A.
(817) 293-6230
Fax: (817) 615-3090
Web site: http://www.mrsbairds.com

Wholly-Owned Subsidiary of Grupo Industrial Bimbo S.A. de C.V.
Founded: 1908
Employees: 3,400
Sales: $307 million (1997)
NAIC: 311812 Commercial Bakeries

For more than 90 years Texans have enjoyed the products of Mrs. Baird’s Bakeries, a company that offers several varieties of bread and bread products, including hot dog and hamburger buns, rolls, bagels, and tortillas. The company produces baked sweet goods for breakfast as well as for desert. Old-fashioned baking methods are still employed: dough is allowed to rise naturally and long rolls of bread dough are hand-twisted into loaves of bread. Mrs. Baird’s Bakeries prides itself on “Quality, Freshness, and Service.” Established in 1908, Mrs. Baird’s was family-owned and -operated until Grupo Industrial Bimbo, a large Mexican baking company, acquired the company in 1998.

A Modest Start

Mrs. Ninnie Baird began her bakery out of necessity in 1908 when her husband’s poor health prevented him from working on a regular basis. She already had a reputation among her Fort Worth, Texas, neighbors as an excellent baker, so it did not take long for Ninnie Baird to establish a business. She started baking bread at home in her wood-fired stove in batches of four loaves and delivered the bread to her customers on foot. After her husband died in 1911 the business became more of a family affair. The four Baird sons—Dewey, Hoyt, Roland, and C.B.—helped Ninnie to bake and deliver the bread while her older daughters did the household chores and cared for younger siblings. The business expanded to include pies and cakes which were sold door-to-door in the neighborhood along with loaves of bread. As the area where the family sold their products grew the Baird boys began to make their deliveries on bicycle. Later, Baird’s daughter, Bess, obtained employment as a secretary to provide financial support for expansion of the family business.

In 1915 Mrs. Baird’s Bakery upgraded business operations to accommodate growing customer demand. The family purchased a commercial oven from an area hotel for $75.00—$25 in cash and $50 in bread and rolls. The baking equipment, which had a capacity to bake 40 loaves of bread in one batch, was moved to a small wooden building behind the family home. To deliver Mrs. Baird’s products farther and faster, the family’s horse (Ned) and buggy was turned into a sales wagon; 14 year-old Hoyt Baird became responsible for the daily delivery route a year later. By 1917 the family had acquired an automobile which they converted into a delivery vehicle. The family business was advertised on the doors of the car, encouraging people to, “Eat More Mrs. Baird’s Bread.” Also, Baird developed a weekly credit system for her regular customers as well as a system of exchange. Under the system, a customer could purchase 24 tickets at a cost of one dollar and exchange each ticket for a one-pound loaf of bread as needed.

Baird’s efforts to expand her customer base propelled the company into wholesale operations. One of three wholesale accounts she secured at this time, Sandegard’s Grocery, prospered and opened 14 additional stores. Mrs. Baird’s Bakery also prospered as the company’s products were distributed to all new Sandegard Grocery stores. In 1918, the family decided to change from a primarily retail business to a strictly wholesale business. An $8,800 investment in a larger baking facility included a new gas-fired oven capable of baking 400 loaves of bread at one time. A second truck was purchased to accommodate the growing number of sales routes which then covered the city of Fort Worth. Over the next decade, business demanded that the facility be expanded nine times. By 1928, the company would open a second bakery in Dallas.

Mid-Century: Fluctuation and Growth

The following decades provided a number of challenges for Mrs. Baird’s Bakeries. Business declined sharply during the Great Depression, requiring salary cutbacks for all employees, though everyone was provided with bread. By 1938 business had rebounded and two more baking plants were opened. A new facility in Fort Worth was used for baking bread, while the older facility continued to be used for baking sweet goods only. The other new facility was located in Houston. The company acquired four new ovens to be divided between the two new bakeries. The facilities also featured plate glass windows which allowed passers-by to view the bakers’ handicraft.

Wars at mid-century presented a different set of challenges for the Baird family. World War II brought shortages in sugar and labor, and Mrs. Baird’s responded by scaling back its product line. The family decided to produce and sell only the basic baked goods: white and wheat breads, and hamburger and hot dog buns. By 1949 business had endured well enough to move the Dallas bakery to a new location and to open a new bakery in Abilene. Then the war in Korea created a shortage of labor. The problem was resolved by hiring people with hearing disabilities, who had been disqualified for service in the armed forces. Clayton Baird found that communication through sign language was beneficial in the noisy atmosphere of a large baking plant.

Baird continued to be involved in the family business while her children and grandchildren bore responsibility for daily business activities. As chairman of the board she kept tabs on the overall operations and was active in making the major decisions of the company, such as when and where to open a new plant. In the 1950s, as old age overcame Baird’s health, board meetings were often held in her home. Though in her 80s, Baird insisted on overseeing the expansion of the company’s distribution throughout the state of Texas. In 1959 and 1960 bakeries were acquired in Victoria, Lubbock, Waco, and Austin with the involvement of four grandsons, Bill, Vernon, Allen, and Clayton, who were learning all aspects of the family business at that time.

After Baird’s death at 92 years of age in 1961, the company continued to be a strictly family-owned and operated enterprise. Three of Baird’s sons, C.B., Dewey and Hoyt, continued to be involved in the company. In 1969 a third generation took the lead when Ninnie Baird’s grandson Vernon Baird became president and CEO, a position he held until 1978 when Allen Baird, another grandson, took charge. Capitalizing on its status as a long-time, family-owned and -operated bakery in Texas, television and print media advertisements featured members of the Baird family.

As the sales and distribution network expanded throughout the state of Texas, new technology and specialized facilities assisted day-to-day operations. In the 1960s Mrs. Baird’s was a pioneer among family-owned businesses in the use of computer and information technology including hand-held computers for in-store inventory at delivery. Also, the company purchased a pie plant in Abilene in 1969 and construction was completed on a cake plant in South Fort Worth in 1972. In 1976 a bread plant was acquired in San Antonio, the last densely populated area of Texas for the company to initiate production.

Technological Transformation in the 1980s

Daily production procedures were modernized with and through plant expansion. In 1985 the company built a new, 153,600 square-foot plant in Houston which was equipped with state-of-the-art technology, capable of baking 150 loaves of bread and 780 buns per minute. Though technology facilitated large-scale production, the Baird family continued to use old methods of preparation to preserve the quality of their bread. The bread dough was still allowed to rise naturally, rather than using technology, particularly chemicals, to speed the process. Bakers continued to twist the dough by hand. Two long pieces of dough were entwined into one loaf, which was left to rise again before it was sent to the oven for baking.

Technology at a new, 165,000-square-foot plant, built at company headquarters in 1992, included an automated dry handling system to accurately weigh ingredients, sift them and feed them into a mixer. This was a complicated process to automate, given that as many as 17 minor ingredients may be part of one recipe and each ingredient was assigned a separate feeder. A computer controls the six-hour operation, from weighing ingredients to packaging the bread, and each of the plant’s six mixers has a computer monitor which keeps operators informed of the status of each batch of bread dough.

Mrs. Baird’s was the first baking company in the United States to implement an automatic trough storage-and-retrieval system for bread dough as computerization and robotics streamlined the ‘sponge-and-dough process.’ With elements of artificial intelligence integrated into the system, one-ton troughs automatically transferred dough mixtures by shuttle along a guided rail system. A ‘sponge’ of yeast, yeast food, flour, and water was blended in a mixer and moved to the temperature and humidity controlled fermentation room. A computer monitored the three-and-a-half to four-hour fermentation process and automatically transferred one of the 32 sponge troughs from a compartment in the fermentation room to a mixing bowl on one of the plant’s production lines. While the trough was shuttled along the rail system, bars punched the 1,000 pound sponge to allow gas to escape. The trough emptied the sponge into a mixing bowl, where flour, sugar, dry milk, and other ingredients were added to complete the bread dough mixture. The trough then returned to an empty compartment in the storage rack. When the bread dough was ready, one of four dough troughs transferred the dough to a divider where the dough was cut into smaller pieces for kneading. As the troughs shuttled to different areas of the bakery, infrared scanners identified obstacles on the rail line as much as six feet away and stopped the trough automatically if necessary.

Implementation of the storage-and-retrieval system allowed Mrs. Baird’s to become more flexible in production output, which was aligned with sales demand. The four story high “open-rack” set-up in the fermentation room allowed different varieties of bread to be prepared at one time. Rather than a “first-in, first out” system of production, robotics enabled “just-in-time” production, to bring fresher products to grocery store shelves with less waste. Technology also created uniformity in the quality of the company’s products. The new $21 million facility went into full production for more than 150 varieties of bread and cake products in June 1992.

With expanded production capacity, Mrs. Baird’s was ready to expand distribution as well. In January 1994 then company Chairman Allen Baird announced that Mrs. Baird’s had entered into a joint venture agreement with Grupo Industrial Bimbo (GIB), the largest bakery in Mexico with more than 11,000 delivery routes, over 350,000 accounts served on a daily basis, and 350 distribution centers, including plants in Guatemala, Chile, Venezuela, and El Salvador. The new company, named QFS Foods, widened the distribution of baked goods for the two companies and provided a wider variety along the distribution routes as well. Increased capital resources as well as a broader product line would facilitate distribution on a national level. Business at QFS Foods was conducted as Mrs. Baird’s Bakeries, using Mrs. Baird’s brand name and marketing team. Allen Baird was named chairman of the new company.

Upheaval and Renewal: 1995-97

In January 1995, the U. S. Justice Department began an investigation of four baking companies operating in Texas, including Mrs. Baird’s Bakeries, for fixing the price of white bread. A competitor of Mrs. Baird’s sought immunity in exchange for cooperation with federal investigators. Georgia-based Flowers Industries, Inc. admitted that executives at both companies had exchanged information about whether they intended to increase the price of bread. Mrs. Baird’s contended that the practice was not illegal since companies often gathered information on their competitors’ activities. The prosecution disputed the argument, saying that exchanging ‘price letters’ meant for grocers was a cunning manner in which the two companies might fix the price of bread.

The prosecution argued that Mrs. Baird’s had sought to fix the price of a loaf of white bread at over 76 cents in the years 1977 to 1993. A memorandum sent by Vernon Baird in April 1990 implicated the company on charges of price-fixing and bid-rigging. The memorandum ordered employees not to discuss pricing or any factors which affected pricing with competitors. A five-year stature of limitations on price-fixing would have prevented conviction, but a company executive testified that he had no memory of the memorandum and he never changed from his “old-fashioned” methods.

In February 1996 a jury acquitted Mrs. Baird’s of three charges of price-fixing and bid-rigging, acquitted then-president Carroll Baird, but convicted the company on one charge of price-fixing in small towns in eastern Texas. A few months after the conviction Mrs. Baird’s was given five years probation, fined the maximum $10 million, and ordered to perform 2,500 hours of community service. Company executives continued to deny its practices were illegal but agreed to halt a federal appeal in exchange for amnesty. Mrs. Baird’s also agreed to assist in future investigations of anti-competitive activities.

The price-fixing conviction prompted civil suits against Mrs. Baird’s totaling $100 million. The class action suits were filed by companies and public agencies said to have been damaged by Mrs. Baird’s business practices. In response, Mrs. Baird’s filed for bankruptcy protection under Chapter XI of the U.S. Bankruptcy Code in March 1996; the petition claimed assets of $95 million and liabilities of $14 million. The strategy worked for Mrs. Baird’s, which settled the lawsuits for $18 million. Mrs. Baird’s settled with the State of Texas for $600,000. The deal freed the company from previous and related claims, and did not involve an admission of guilt.

Federal antitrust investigations prompted the company to reorganize. For the first time in the company’s history, the position of president and CEO was filled by someone who was not a member of the Baird family. In May 1995 Carroll Baird, grandson of Ninnie Baird, was replaced as the head of Mrs. Baird’s Bakeries by Larry Wheeler from the Pillsbury Company. The company then restructured into three regional divisions, North Texas, South Texas, and Houston. The Board of Directors, formerly composed of 19 members of the Baird family, was reconfigured to 16 members including three elected members from outside the family.

New leadership also reflected a shift in focus from relying on the company’s tradition of a low-key sales and service strategy in daily customer relations to a consumer and marketing orientation. Equipment upgrades improved output while a new pricing formula increased profits and improved cash flow. Mrs. Baird’s successfully introduced chocolate donuts, tortillas, and bagels into its product line. The company’s entry into the trendy $10 million Texas market for bagels was timely, and Mrs. Baird’s tortillas quickly became the second most popular brand in Texas.

Building on the success of its new products in 1996, Mrs. Baird’s sought new ways to market its products. In March 1997 the company introduced its “Fresh Ideas” campaign to reach a more health conscious public by showing how Mrs. Baird’s products were suited to a healthy lifestyle. Press packets sent to Texas food and lifestyle editors included monthly articles and healthy recipes. The company also introduced a 98 percent fat-free, “Dark ’N Grainy” bread.

Appealing to a younger audience, Mrs. Baird’s became the official bread of the North Texas Soccer Association (NTSA). The company also teamed up with the Reebok athletic shoe and sportswear manufacturer to support the organization of some 8,000 teenagers through joint store/celebrity promotions. The two companies offered NTSA teams an opportunity to win shoes, uniforms, soccer balls, and league fees in the “Kick, Score, Win” contest by collecting proof-of-purchase seals from Reebok and Mrs. Baird’s products.

Mrs. Baird’s expanded production and distribution in the 1990s. At a cost of $8 million, the San Antonio plant was enlarged 21,000 square-feet to accommodate another production line. With $5 million invested in baking equipment, the level of production doubled from 60 to 120 loaves per minute and from 300 to 600 buns per minute. New distribution routes served states bordering Texas, parts of Oklahoma, New Mexico, and Louisiana. In July 1997 a distribution agreement with CPC Baking Business of Bay Shore, New York, accepted Mrs. Baird’s as the exclusive distributor of CPC products in Mrs. Baird’s product service area.

At the End of a Century

After 90 years as a family owned and operated business, the Baird family made the arduous decision that its status needed to change. In 1997 executives at Mrs. Baird’s Bakeries explored the possibility of taking the company public with a stock offering in order to increase liquid assets. Instead they ended up inviting Grupo Industrial Bimbo to purchase the company. In March 1998 GIB agreed to the acquisition, and an agreement was signed the following May. GIB, a publicly traded company founded in 1965 in Mexico City, was Mexico’s largest baker and food company. In July 1998 GIB appointed Juan Muldoon, former head of its Chile operations, as president of Mrs. Baird’s. Baird family members maintained high level positions within the company and remained on the board of directors. GIB then moved its U.S. headquarters from Carrollton, Texas, to Mrs. Baird’s headquarters in Fort Worth and placed Mrs. Baird’s under its U.S. division, Bimbo Bakeries USA.

Under GIB, national expansion of Mrs. Baird’s continued. The company expanded into the Oklahoma market with 11 new delivery routes in September 1998. Television and radio promotions coincided with entry into that market. The company planned an ambitious strategy for national expansion as well as expansion of its product line for 1999.