‘The pretzel is 600 years old, but until now no one thought of scooping out the middle,” says Warren Wilson, wildly successful snack entrepreneur. He and his wife, Sara Wilson, are owners of Montgomery-based the Snack Factory, and the pair of them have created a snack sensation by zeroing in on the somewhat mealy middle of the pretzel. They removed it, elongated what was left, covered it in all sorts of sweet and savory coatings, and voila! — pretzel crisps were born.
The new snack comes in several sizes, at least two configurations, and a growing number of flavors, including Buffalo wing, honey mustard, and, brand new for the new year, chocolate. Pretzel crisps are on the shelves of 30,000 to 40,000 supermarkets, gourmet shops, and convenience stores. Locally they can be found in Olives, McCaffreys, Wegmans, ShopRite, and the Pennington Market, which holds a special place in the Wilsons’ affections. “They’ve been wonderful,” Sara says. “They’ve taken such an interest. Whenever we’re testing a new flavor, they put it out for us.”
While pretzel crisps are just starting their commercial life, the Wilsons have been coming up with new snacks for decades. Many have been successes, but with pretzel crisps they have their second blockbuster, and they intend to handle it differently than they did their first huge commercial hit — the New York Bagel Chip, a thin buttery nosh that also involved taking an old, old favorite and reinventing it.
“We were living in Ridgewood in the 1980s when New York bagel shops were just beginning to open,” Warren recalls. “They would slice up the old stale bagels and put them out for sale in plastic bags.” He and Sara thought that perhaps they could do a twist on the stale bagel. They experimented, and came up with what came to be known as New York Bagel Chips. They sold the product to Nabisco for something in 1992. Internet stories put the purchase price at $24 million, but, says Warren, “it was more like half that amount.”
But the Wilsons’ snack story did not begin with the bagel chip. Rather it had its roots in the Depression and in Warren’s grandmother’s recipe for funnel cake batter.
Warren’s father, 91-year-old Sidney Wilson, was a Chestnut Hill dentist until his retirement. His practice was lucrative, and Warren recalls a comfortable childhood. But Dr. Wilson grew up in poverty, and he never forgot it. “He had to work his way through dental school,” says his son. “No one in his family was educated. He came from nothing.” Dr. Wilson now spends his days scrutinizing the shelves of supermarkets, looking for Pretzel Crisps. When he fails to find them, he quickly calls his son, demanding to know why he has not yet placed his product in such-and-such a store.
Dr. Wilson could have easily sent his children, Warren and his brother, Glen, through college, but he didn’t. Instead he rolled his sleeves up, insisted that his sons do the same, and hit the streets with their grandmother’s funnel cake batter.
“I remember it now,” says Warren with a laugh. “It was 1969. My dad packed up all of us, took grandma’s recipe, and went to the Allentown Fair. It was a 10-day event over Labor Day.” Also manning the funnel cake fryers was Warren’s mother, Lori, a professional singer who had toured with Bob Hope, and who, according to her son, was Richard Rogers’ first choice for the lead in South Pacific. “We all made and sold funnel cakes,” says Warren. “We had a blast.”
For Warren, who was just starting his college career at Villanova at the time, the weekend was the beginning of his life’s work. He and his brother went on to sell the funnel cakes at street fairs all over the area. He used the proceeds to fund his college studies, which began with pre-med courses, but ended in a business degree when he realized that how much he enjoyed running his own company.
As his senior project, Warren drew up a plan for a restaurant that would feature funnel cakes, but that would supplement sales of the snack with breakfast items. He thought such a restaurant would do well in a mall, and contacted all of the Philadelphia-area and South Jersey malls that were opening at that time — the heyday of mall development. All had fully leased their restaurant spaces. He considered the Steel Pier in Atlantic City as a mall alternative, but rejected it as “too seasonal.”
“Then I heard about Paramus Park,” says Warren. The mall, just about to open, was to be the first “lifestyle” mall. It featured fountains, flower displays, light-filled atriums, colorful merchandise spilling out from storefronts — and, the very first mall food court. It turned out that Paramus Park had a choice spot left in its food court, “right at the top of the escalator,” says Warren.
The mall ownership was demanding that its tenants sign 10-year leases, and put down lots of money upfront. “It was a huge gamble,” Warren says. His father was demanding, but also generous. He put up the money, and Warren, still a student at Villanova, opened Pennsylvania Dutch Treat in Paramus Park in 1974. “It was a hit,” he says. Soon thereafter he opened another restaurant in Landover, Maryland. With his brother as a partner, he ran both locations, and the two of them worked street fairs on weekends.
Sara, meanwhile, was working part time right next door to the Paramus Park store while studying nutrition at Centenary College. “I loved the mall,” she says, “so I took a job scooping ice cream at Baskin Robbins just for fun.” Her boss hounded Warren, insisting that he court Sara. The two did date once or twice, but there were no sparks — not then.
“We were just playing roles,” says Sara. “We weren’t revealing who we really were.” But they kept bumping into one another at street fairs Warren was working. Eventually they did begin to date seriously. The relationship got its start, says Sara, when they opened up to each other about how much they loved business.
A wedding was still a few years in the future, but the two, who will celebrate their 27th anniversary this spring, began to weave a business collaboration into their courtship.
Sara was working for an ad agency and she got into the habit of stopping by after work to cook up new business schemes at Warren’s Paramus Park restaurant. “We had a little office upstairs,” says Sara. “You got to it by climbing a ladder. When we needed to use a copier or a fax, we used the mall management office, trading them funnel cakes.”
Using plans hatched in the ceiling over the Paramus Park funnel cake restaurant, they expanded beyond mall food courts and street fairs and began courting theme parks.
“When we went to Great Adventure, the executives were dubious,” says Sara. The answer to Wilsons’ request for a food kiosk was a resounding no. “So we gave them a challenge,” says Sara. “We said ‘let us set up a tent.’” Given permission to do so during one Oktoberfest weekend, the Wilsons attracted so many people — “200 lined up at a time,” Warren recalls — that it was impossible to keep up with demand. Great Adventure quickly changed its mind, and the Wilsons’ funnel cake kiosk opened in the amusement park soon thereafter.
The Wilsons then took on other theme parks, arriving for sales presentations at management offices “with a hot plate and oil in a suitcase,” says Sara. With a foot in the door, they would heat up the oil and pour in the batter as fast as they could. “We’d hope that the aroma would get down the halls before they could throw us out,” she says. If only they could hang in long enough so that the funnel cakes’ olfactory draw could reach the secretaries’ cubicles, they usually got the go ahead to open yet another of their kiosks.
In 1983 they bought out Warren’s parents’ interest in the funnel cake company, leaving the Paramus Park store for Glen Wilson, and running the rest of the business themselves. The next year they moved to their Tamarack Circle office condo. “It was brand new then,” says Warren. There are now 12 employees in the offices, which include a large upstairs loft, a conference room, lots of space for samples, and big next-door offices for Warren and Sara. “We say all the time that we should rip the wall between the offices down,” says Sara. “We’re in and out of each other’s office all day long.”
At just about that time, the bagel chip idea began to gain momentum. They had already tried gourmet croutons. Sara recalls that their product was larger than most, “the first big crouton.” Sold in the produce aisle, the croutons were not a huge hit. “In a lot of things, we’ve been ahead of our time,” she says.
Undaunted, the pair kept experimenting. “We were always fooling around with something,” says Sara. “We’re lucky we did the bagel chip. Who knows what will be the next big thing?”
The manufacture of the croutons had been outsourced, and the Wilsons planned to do the same with the bagel chips. “We went to the largest companies,” says Warren. “They all loved the idea, but no one would do it.” The problem, he explains, is that manufacturing the chips is a two-step process. Bagels have to be baked, left out to get stale, and then turned into something else, specifically a thin buttery snack coated with flavor — poppy seeds, sesame seeds, garlic, or cinnamon. Food manufacturers were not set up to do that, so the Wilsons had to outfit and run their own factories.
“We had three plants with 200 employees,” says Warren. They were making 100,000 bagels a day in their East Brunswick, Northeast Philadelphia, and Peru, Illinois plants. “It kept getting more complex,” he says. “The product was an amazing hit. We had trouble keeping up with demand. We had to take out a huge, multi-million dollar loan from PNC.”
Hit products are good, but they can create problems. “We brought in a partner to run the factories,” says Warren. There came a time when the partner wanted to cash out, but he didn’t. Sara doesn’t want to say too much about what went on when that occurred. Tactfully, she explains the partner’s position: “The more you have invested, the more you have to lose,” she says. “The pendulum swing is greater. There was competition.” Timing is important, she says. You never know when a hot product will cool, or when another company will come up with something similar that catches the public’s eye. “It was okay,” she says. “It was time to cash in.”
Straining to contain himself, Warren indicates that he doesn’t completely agree. “We didn’t like letting go,” he says. “The company was so valuable. Two big companies were courting us. But I didn’t want to sell.”
But the Wilsons did accept Nabisco’s offer. It was the end of their involvement with the New York Style Bagel Chip, which continues to remain popular, but it was far from the end of their business. They were still running the funnel cake company, and it had more tentacles than ever.
Warren had invented a machine that created pre-made funnel cakes — no need for on-site hot oil. The easily reheated sweet snacks were a nice complement to the funnel cake kiosks at fairs and amusement parks and the funnel cake batter sold in supermarkets — in specially-designed containers also invented by Warren. The funnel cake company was not sold until 1995, when it was purchased by Pennsauken-based J & J Snack Foods, a publicly traded company whose best known product is probably the Superpretzel, the large, soft pretzel sold frozen in grocery stores.
In the early 1990s the Wilsons jumped on the fat-free bandwagon with a line of no-fat snacks, and promptly fell off. It was around the time that Nabisco was pushing SnackWell cookies. But nobody’s fat-free snacks had legs. It turns out that consumers may have wanted to go fat free, but not at the price of good taste. “Nabisco started putting the fat back in,” comments Warren. The Wilsons dropped the fat-free products altogether. “We got out of that quick — with a hole in our wallet,” he says.
A more profitable enterprise involved buying licenses from professional sports teams and then putting their logos on large plastic bottles filled with popcorn or candy. The novelties were typically sold in big discount stores like CostCo. The Wilsons did well with the NFL, whose fans tend to be loyal no matter how badly their teams are doing. NASCAR products sold well, too.
But the Wilsons had some problems with major league baseball. When teams made the play-offs fair weather fans came out of the woodwork, making it hard to keep up with demand. And when popular teams flagged, their fans faded, leaving inventory unsold.
The Wilsons also licensed rights to movie characters, and even to beer brands and no-longer-living icons. They have largely phased out that business. “Keeping up with all of the licenses was just too much,” says Warren. They have kept just two, perennial winners both: Elvis and Coors beer.
Now the Wilsons have another huge hit on their hands. Pretzel Crisps are everywhere. There is a large pretzel crisp designed for dipping or for topping with cheese. There are smaller crisps for on-the-go snacking. There are all-natural crisps for the health conscious, and then there are what the Wilsons call “full flavored” crisps for those who are just looking for a jolt of good taste. The latter tend to be sold in convenience stores. “People are there buying cigarets and beer,” says Warren. “They don’t care about all-natural.”
When Pretzel Crisps are sold in supermarkets, like the New York Bagel Chips before them, they are sold only in the delicatessen section. This is a prized niche, and one that is difficult to penetrate. “Mark-ups are much higher in the deli,” says Warren. “It’s 50 or 60 percent.” This is in marked contrast to the razor thin margins in most other supermarket departments. Warren explains that there is a lot of waste in the deli, what with all of those meat ends and past-prime prepared salads having to be tossed every day. Any other items sold there must be able to make up the difference.
Warren says that the Pretzel Crisps sell for about $2.99 in the deli, but would fetch only about $2.25 in the chip aisle. In the deli setting the snack is marketed as a high end accompaniment for cheese or spreads — the perfect snack to put out at a party.
But the Pretzel Crisps are also sold in larger bags, at a smaller mark-up, in discount stores. Sales for the most part are made by outside salespeople.Sara says that the company has not had a particularly hard time winning shelf space for the Pretzel Crisps. She guesses that this is because her company has already established a track record. “I think it would be more difficult for a newcomer,” she says.
The Wilsons outsource the manufacture of their snack to a factory in Milwaukee that keeps its 200-foot-long ovens busy turning them out. Bags are stockpiled and sent out to stores as demand indicates. So far the factory has been able to keep up, but an expansion and the addition of more ovens is planned for the spring.
The Wilsons have just started mass market advertising for the new snack. They have taken out full-page ads in several magazines, including Oprah, Country Living, and Martha Stewart Living. The response surprised them.
“We invited people to join the Pretzel Crisps fan club and directed them to the website for a coupon,” says Sara. After the first ad appeared, she and her husband returned from lunch to find their normally unflappable receptionist barely coping.
“We have a policy of returning every E-mail,” says Sara. “When we walked in, she said ‘You have 3,000 E-mails.’ We thought it must have been a mistake.” But soon there were 3,500, and then 4,000. A great many of them were from early devotees gushing about the new snack. Sara holds a pile of laudatory print-outs that is easily eight inches high. Some even include poems. It was all very nice, but still, there were the replies to manage. “We had to hire a company to send out answers, thanking everyone for writing,” says Warren.
Despite the fact that the Snack Factory’s latest creation is a hit, the Wilsons continue to work on the next thing — well, on many next things. “This is just a launching pad, a plateau,” says Sara. Having started and sold two companies, neither has the slightest thought of slowing down. “What would we do? Play golf?” says Warren, registering equal measures of horror and incredulity.
The two talk about new business ideas every day. Their whole life — and that of their family — centers around work. Sara, like Warren, is from an entrepreneurial family. Her father owned a plastics extrusion business in North Jersey, and her mother worked in the business when she was not busy tending to her five children. Sara was encouraged to work in the business from a young age. “I did piece work at home,” she says. Still, her parents did not make their company the focal point of dinner time conversation. But Warren and Sara do.
The couple have two children, Brielle, a 16-year-old who attends the Pennington School, and Warren Jr., a senior at PDS who is hoping to attend Villanova, his father’s alma mater. The children have attended trade shows and visited The Snack Factory’s manufacturing facilities. Every night — every single night, she emphasizes — Sara cooks a dinner “from scratch” and the four members of the family sit down to eat, and to talk about the business. The kids are both taste testers and trend spotters, and Brielle helps out with package design.
The Wilsons, who live in the Princeton area, and don’t want to be more specific about their address than that, also have a house in Mantaloking and enjoy traveling, most recently to the Dominican Republic. It’s too early to say whether the children will join their parents in the business, but Sara and Warren indicate that they would be pleased if they do.
While Brielle and Warren Jr. have been raised in a work-centric family, times are different than they were when their parents were growing up. Will they be expected to pay for their college educations? Warren and Sara look at each other, smile, and then shrug. “We’re about to talk about that,” says Sara.
It appears that there is at least a chance that the Pretzel Crisps brand will still be in the family when the younger Wilsons are old enough to play a significant role in the Snack Factory.
“There is no exit strategy,” says Warren of the company’s newest product. He wasn’t happy to part with New York Bagel Chips, which has become a fierce competitor for space on deli shelves, and he seems inclined to hang onto Pretzel Crisps. It’s early days yet, and he and his wife could change their minds, but this time there will be no one forcing their hands. “We have no partner in this one,” says Warren.
He and his wife have done what no one thought of doing in the preceding six centuries. They have flattened the pretzel, and they intend to sit on it.
Snack Factory, Box 3562, Princeton 08543-3562. Warren Wilson, president. 609-683-5400; fax, 609-683-9595. Home page: www.snackfactory.com, www.pretzelcrisps.com