Bad Case Of Indigestion Hits Bagel Stock Investors Consumers Make Snacks Popular, But Shares Toasted
Go ahead and buy them, load them up with artery-clogging cream cheese, and eat them.
But indulge in the stocks of the companies that make bagels, and you put your financial health at risk.
It hasn’t been easy to lose money in the stock market over the past year, but investors in publicly held bagel companies have managed to blow it in one of history’s most outof-control bull markets.
While the Dow Jones Industrial Average soared 44 percent in the last 12 months, Manhattan Bagel dropped 48 percent. Einstein/Noah has fallen from $21 to $11. And Quality Dining Inc., owner of Bruegger’s Bagel Bakery, has lost 85 percent amid news that Quality would dump Bruegger’s at a loss.
Such precipitous plunges in the wake of overzealous buying by investors frequently prompts market spectators to start making those “buying opportunity” noises. In the case of the apparently unappetizing bagel group, though, it’s tough to drum up any enthusiasm.
“You know what I think? I think it’s over,” says Roger Lipton of Lipton Financial, an investment banking firm that specializes in restaurant franchising. “It’s an easy-entry business - a piece of bread with a hole in it. We’re not talking about a cure for AIDS.”
“It’s a very easy product to put into a retail outlet,” adds Dennis Lombardi of Technomic Inc., a market research firm for the food industry. With monster chains like Dunkin’ Donuts adding bagels to their menus, don’t be looking for robust expansion at the competition, he says.
Bosses and mouthpieces of bosses at the bagel dynasties, of course, don’t quite see it that way. Bagels, it appears, have been misunderstood by the culinary simpletons who restrict themselves to bagels’ narrow, traditional appeal.
When a craze is on, investors are known to gobble up all sorts of things that are bad for them. Be careful what you’re munching on.