D.F. Stauffer Biscuit Company - Company Profile, Information, Business Description, History, Background Information on D.F. Stauffer Biscuit Company



360 South Belmont Street
York
Pennsylvania
17405-1426
U.S.A.

Company Perspectives

Each day, thanks to sixteen oven lines, the Stauffer Biscuit Company produces more than 250 tons of animal crackers, cookies and snack crackers in every imaginable form. Today you'll find Stauffer cookies and Animal Crackers all over the United States and beyond.

History of D.F. Stauffer Biscuit Company

A subsidiary of Japanese pharmaceutical and confection company Meiji Seika Kaisha, Ltd., D.F. Stauffer Biscuit Company is a York, Pennsylvania, baker of value-priced sandwich cookies, sugar wafers, and other cookies, including ginger snaps, lemon snaps, oatmeal, chocolate chip, shortbread, snickerdoodles, and iced cookies. The company also offers cracker items such as oyster crackers; "whales" in a variety of flavors; Cheddarfetti, a cheese snack in a variety of shapes; Chicken Snack crackers; and cracker crumbs for cooking and toppings. Stauffer's signature product, however, is animal crackers, which come in 13 shapes and are made from the same recipe the company has been using for well more than 100 years--albeit the equipment used to make the crackers has been modernized a number of times. Animal crackers are less sweet and also healthier than their cookie counterparts, containing half the fat, one third the sodium, and 15 percent fewer calories. Stauffer's animal crackers are available in graham, chocolate, cinnamon, and iced versions. Stauffer also does contract baking, primarily at its new Santa Ana, California, plant. In addition, Stauffer operates its main plant in York, another plant located in Cuba, New York, and maintains an outlet store in York.

19th-Century Roots

The company was established by David F. Stauffer, the son of a Mennonite minister. Rather than follow in his father's footsteps, he initially worked as a millwright and was involved in the construction of a number of flour mills before deciding to try his hand as a baker. In 1871 he came across a small bakery operating out of the back of a house in downtown York, the site of a present-day McDonald's restaurant. It had been in business since 1858 and its founder, one Jacob Weiser, was looking to sell. Stauffer bought the business, put down his millwright tools, tied on an apron, and began producing 750 pounds a day of unseasoned water crackers, biscuits, and pretzels. When baking for the day was done, he sold his wares out of the shop and was known to make door-to-door deliveries in a wheelbarrow. Around the start of the 20th century, Stauffer was looking to expand his product line and began experimenting with animal cracker recipes until he found one he liked. It would prove to have enduring appeal, as animal crackers become the cornerstone of the company's success.

In the beginning, Stauffer and his family lived in an apartment above the bakery, but as the business grew over the years, the bakery expanded around the original site, and the Stauffer clan moved out. It was very much a family enterprise, involving Stauffer's four sons. When he died in 1921, his eldest son, Calvin, took charge. By this point a third generation also was involved in the business. A year earlier David E. Stauffer, Sr., born in 1901 to Calvin and his wife, joined the company after graduating and serving an apprenticeship at S. Morgan Smith Co. He always expected to join the family business. Often as a child he accompanied his father to work on Saturday, the bakery's pay day when workers making more than $5 were handed paper money and those making less were given silver dollars. On one of those occasions his grandfather presented him with a silver dollar. "Oh boy," Stauffer recalled on the eve of his 100th birthday in an interview with the York Daily Record, "I thought I was a millionaire."

When David Stauffer, Sr., went to work at the bakery, he was trained on how the hearth ovens, reel ovens, and other baking equipment worked, but being the owner's grandson (and later the son of the owner) did not ensure that the old hands at the bakery were forthcoming in sharing their secrets with him. "The foremen would walk around with their recipe books in their hip pockets," he told Snack Food & Wholesale Bakery, in November 2000. "They would seldom give information out to anyone. It was their job security, their power over management." David Stauffer found another way to gain access to formulas, however. He began attending industry conferences where he could network with other independent bakers and pick up recipes and learn about new technologies. As a result, the company in the 1920s began to add new lines of chocolate, creamy, and marshmallow confections that helped Stauffer to better compete and survive, unlike other regional bakeries that fell by the wayside as national concerns like National Biscuit Company drove them out of business.

Crossroads: 1960

In 1954 Cecil Stauffer died and David Stauffer, Sr., became president. By 1960 the company reached a crossroads. The bakery had grown to be five stories high, but its downtown location made further expansion impossible. In order to keep the family business viable, one that could be passed to the next generation, the company had to make a move to a new location. It was not an easy plan to execute, however. Just a regional business with sales of less than $2 million, Stauffer had a difficult time arranging for the $250,000 loan it needed. When the money was secured, a new manufacturing and headquarters was built at a new site, where future expansion was possible. When the new 64,000-square-foot facility opened with a 115-foot cookie oven and a 75-foot pretzel oven, it seemed that further expansion might not be necessary or was at least a distant dream. In time Stauffer ran out of room. In 1970, 25,000 square feet of space was added, followed by another 10,000 feet in 1977, and a 78,000-square-foot warehouse addition in 1995. The operation totaled 244,000 square feet, situated on 17 acres of land.



In 1964 David Stauffer, Sr.'s, cousin Neil P. Stauffer assumed the presidency. He held the position until his retirement in 1981 and David E. Stauffer, Jr., took over. Before this transition, Neil Stauffer and his daughter, Susan Stauffer, decided they were interested in selling their half of the business, valued around $3 million, and he lined up several major corporations interested in buying the company. David Stauffer, Sr., and David Stauffer, Jr., an executive vice-president, wanted to keep the business in the family and convinced Neil Stauffer to agree to a preliminary sales agreement. It would expire before they could arrange the necessary financing, and as a result the terms of the sale were changed to include a provision that called for Neil Stauffer to receive a percentage of any amount exceeding $3 million should the business be sold within the next ten years. In this way, the David Stauffers would be prevented from putting the company on the block in the near term and potentially achieve a windfall that did not benefit the other family members. Thus, in June 1981, the David Stauffers paid their cousins $1.5 million, as well as $50,000 to Neil Stauffer for his services that year, to acquire 100 percent control of D.F. Stauffer Biscuit Company.

Neil Stauffer moved to Florida to pursue other interests while the family bakery in Pennsylvania came under control of David Stauffer, Jr. He took over a company that was still very much a regional business, but he was interested in expanding Stauffer's geographic reach. Because the York plant was not operating at capacity, he looked to pursue contract baking. In 1985 an opportunity arose to forge a joint venture with Meiji Seika, which had been working with the Pennsylvania Department of Commerce to line up a baking concern interested in being acquired or in working in a joint effort to produce specialty breadsticks. The two companies agreed to work together, an arrangement that allowed Stauffer to fill out the bakery's capacity. For the next five years Stauffer produced the breadsticks, but its sales force struggled to grow sales. In 1990 the arrangement was terminated, but Meiji Seika was comfortable with its working relationship with Stauffer and offered to buy control of the company while allowing the Stauffer family to continue to run the business.

The Meiji Seika offer was a tempting one, as David Stauffer, Jr., explained to Snack Food & Wholesale Bakery: "It became clear to us that, as a strictly family company, we were fairly limited as to what we could do. The industry was becoming much more capital intensive, particularly as relates to the rising costs associated with automation and technology. We felt that Meiji Seika would be able to assist us with the technological advances in the industry." In addition, David Stauffer was interested in expanding the company's cracker business, which he believed offered more growth potential than cookies, but lacked the funds to beef up cracker production. Later he would also testify in court in litigation related to the sale that the company had experienced some "financial reversals" in addition to being undercapitalized.

Meiji Seika Acquiring Control: 1990

In January 1990 Meiji Seika bought a 51 percent controlling interest in Stauffer for $2.3 million and gained a seven-year option to acquire the remaining stake for $2.2 million, an amount subject to change, pending the determination of a fair market value of the company at the time of purchase. In addition, David Stauffer, Jr., received a four-year employment contract to serve as chief operating officer. Five months later Neil Stauffer sued his cousins, maintaining that because the sale took place between the eighth and ninth years of his sales agreement with the David Stauffers, he was entitled to 20 percent of the deal's value over $3 million. He contended that the structure of the Meiji Seika transaction, which fell below the $3 million threshold until his ten-year provision had expired, was "a subterfuge to get around my original intent of sharing in the future sale of the business." In December 1992 the matter went to trial at the York County Common Pleas Court where David Stauffer, Jr., maintained that the terms of the sale to the Japanese company were purely coincidental, and a board member also testified that he was involved in the negotiations with Meiji Seika and had not even been aware of the provisions in the 1981 agreement. The jury took just 30 minutes to decide that Neil Stauffer was entitled to $224,058, an amount that included interest over the three years it took to settle the matter.

With the family conflict finally resolved, Stauffer began a period of strong growth, as sales tripled over the course of the next two years, leading to the major expansion of the warehouse. The company was especially successful in accommodating the new warehouse clubs as well as other retail outlets in addition to supermarkets, including mass merchandisers, discount stores, dollar stores, and drugstore chains. Although owned by Meiji Seika, it remained a family business in many respects. David Stauffer, Jr.'s, sons served in top executive posts while his wife was on the board of directors and ran the outlet store at the warehouse and at a York location. However, the backing of the Japanese parent corporation was key to the company's expansion in the second half of the 1990s. In 1997 Stauffer acquired Fleetwood Snacks and its manufacturing plant in Blandon, Pennsylvania. The following year it bought Farnsworth Cookie, adding a production plant in Cuba, New York. Stauffer closed the decade with an even more significant acquisition, buying Laguna Cookie and Dessert Co. and its Tustin, California, manufacturing facility. Stauffer was able to gain a presence on the West Coast while broadening its product line, adding Laguna's gourmet mini-cookie line and fruit bars. In addition, Laguna enjoyed strong club business, bolstering that segment for Stauffer, had a contract business producing private-label items, and provided Stauffer with entry into the competitive in-store bakery channel. Stauffer elected to keep the Laguna brand--changed from Laguna Cookie to Laguna Bakery--and apply it to the more upscale, in-store baked goods.

At the start of the new century, Stauffer was generating annual sales of about $125 million. The company was especially optimistic about the potential of the Laguna operation and invested $20 million in building a new 217,000-square-foot plant in Santa Ana, California, which opened in the summer of 2001 to replace the 50,000-square-foot plant in Tustin. The new facility took on the production of animal crackers, which remained Stauffer's top-selling product, and added a line the company had not offered since the early 1980s: sandwich crème cookies. It was an item especially popular with Hispanic consumers, and Laguna's location was ideal for serving this market.

In March 2005 David Stauffer, Sr., died at the age of 103. Shortly thereafter, Meiji Seika announced that no Stauffers would be employed there by the end of the month, thus bringing to an end the 134-year involvement of five generations of the Stauffer family in the operation of the business founded by David F. Stauffer. In April 2006 the company closed its Blandon, Pennsylvania plant.

Principal Competitors

Kellogg Snacks Division; Kraft Foods North America, Inc.; Parmalat Finanziaria S.p.A.

Chronology

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