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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Bagel Stores Combine To Go National Three Regional Chains Operate 24-Store Nucleus Of New Venture

Cindy Krischer Goodman Knight-Ridder Newspapers

As he did with videos and chicken, Scott Beck sees dollar signs in bagels.

That’s why the former Blockbuster Video president and Boston Chicken founder has teamed up with South Florida bagelmeister John Offerdahl to form a new national gourmet bagel business.

In a deal intended to fill the country with bagel stores, Boston Chicken is tossing in $20 million to launch a new company called Progressive Bagel Concepts. That new company, flush with another $20 million from a private placement, has a head start in the bagel business because it is formed from the combination of three strong regional bagel retailers: Offerdahl’s Bagel Gourmet in Fort Lauderdale, Brackman Brothers of Salt Lake City and Bagel & Bagel in Kansas City.

Although Blockbuster Chairman H. Wayne Huizenga showed interest in investing in Offerdahl’s five months ago, he is not part of this deal. Kyle Craig, Boston Chicken’s chief concept officer, said that when his company moved forward, Huizenga backed away. “It is total happenstance that we were both looking at the same time,” Craig said. “We were surprised to find out they were looking, but a lot of restaurant companies are looking at that segment because bagels are a very profitable business.”

Craig said the 24 restaurants in the three chains that make up the new Progressive Bagel Concepts have sales of more than $1 million each annually, including Offerdahl’s. Between the three chains, seven more bagel stores are under construction and plans are to open 100 more stores in the next year. For now, the Florida stores will keep the Offerdahl’s name.

The concept of forming a national bagel retailer grew out of Boston Chicken’s desire to expand its menu. It stores are now called Boston Market and offer sandwiches and other foods. Craig, who will head Progressive Bagel Concepts, said the chicken chain thought it might be interested in offering breakfast. It looked at more than 100 bagel stores around the country, most of them mom-and-pop stores.

“We discarded the idea of offering breakfast in our Boston Market stores because we felt adding to our dinner and lunch menu doesn’t require the investment that adding breakfast does.” Craig said. “However, we became intrigued by the opportunities we saw in the retail bagel business - its strong consumer appeal and its strong economics.”

At the same time, Offerdahl said he wanted to open more stores.

“We think we got something good going but we were limited by our resources,” he said. “This is a great opportunity to maintain a competitive edge in this market and blend into something that can be competitive nationally.”

Offerdahl, who already operates seven South Florida bagel shops, said he is about to open his first two Dade County, Fla., stores, one in Aventura and the other on South Beach.

Others also are aware of the potential of the bagel business. Earlier this month, Starbucks Coffee Co. made an $11 million investment in Noah’s New York Bagels, a San Francisco Bay Area chain. Starbucks spokeswoman Cheri Libby-Strahan said the coffee chain saw opportunity in the bagel business because it is in the early stages of growth.