Tasty Baking CEO tries to revive beloved brand

Tastykake management vows to compete on quality as it tries to revive brand.
PHILADELPHIA (AP) -- When truck driver William "Jody" Donley shops for groceries, he steers toward his favorite brand in the snack aisle: Tastykake.
"I eat them every day. Sometimes twice a day. I have one for my lunch, and I also have a coffee cake with my coffee," Donley, 51, a Philadelphia native who lives in Sewell, N.J., said recently.
If more people were like Donley -- who stuffs Tastykakes into his wife's and children's bags before they head out -- Tastykake executives might not be sweating the quarterly earnings report due out Thursday.
But years of stodgy management, sparse advertising and steep competition caught up with the locally beloved snack-cake maker last year when the Tasty Baking Co. lost $4.3 million on $255 million in sales.
To turn the tide, new Chief Executive Officer Charles Pizzi is banking on a trusted formula: Food is love. Especially if it's slathered in butter and chocolate.
"Growing up, there was that special moment of when you opened up your lunchbox and there was your Tastykake," Pizzi said, recalling his own blue-collar Philadelphia childhood.
"This is what your parent gave you every day, so you feel loved," he said. "That's part of the challenge for us, to link those people with their children, who over the last 10 years we've missed."
Prior management, in place for decades, largely ignored advertising in favor of profit-draining discounts, such as two-for-$1 promotions. The company even took its trademark sign down from Veterans Stadium.
New plan
Pizzi vows to compete on quality, not price, and plans to spend $2 million a year advertising new and improved products. In June, Tastykake launched a new line of plumped-up pies with 20 percent more fruit.
The company also is retreating from its push toward national sales, which proved unprofitable, and focusing on the six mid-Atlantic states that produce more than 70 percent of its revenues.
"Charlie has done a very good job, in his short tenure, at changing the attitude, improving the quality of management, ... re-energizing the sales force, and all that is good. But the proof will be a year from now," said analyst Mitch Pinheiro of Janney Montgomery Scott in Philadelphia.
Tasty Baking stock, which traded near $20 a share in mid-2001, slid to $7.20 in February before rebounding somewhat. The stock was hovering around $11 in the past month.
Pizzi, 52, the longtime Greater Philadelphia Chamber of Commerce president and a former city commerce director, took the helm in October despite concerns from analysts about his lack of food-industry experience.
He admits plugging that hole by raiding nearby Campbell Soup of several bright, young executives, including marketing chief Vincent Melchiorre. He also brought James E. Ksansnak, a former finance chief at food-service giant Aramark, onto the board.
The company has two bakeries, its aging, flagship plant in Northeast Philadelphia and a smaller operation in southern Chester County. The Philadelphia plant produces the so-called "icon products" -- Butterscotch Krimpets, Peanut Butter Kandykakes, Chocolate Cupcakes.
So far this year, the company staved off a spring unionization vote and turned a small first-quarter profit of $482,000 on $61 million in revenues.
And the Tastykake billboard is back up at the Vet.
Donley, the 51-year-old truck driver, dismisses all talk of competition.
"I'm from Philadelphia," he said. "I'm not going to eat Hostess."