The next time you look at the white powdered donuts through the clear window in the box, pay a little homage to Martha Entenmann.

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Dave Young:
So you hit me with this topic while I’m hungry and thinking about something else. Anyway, Steve Semple’s a storyteller and marketing consultant. So am I, I’m one of Steve’s business partners. And this is the Empire Builders Podcast. And we’re talking about how they built this empire out of baked goods.

Stephen Semple:
When I came across this story, I really loved this. It’s a story about the popularizing of snack cakes, and it’s also a story of this really amazing female entrepreneur. It’s a hard name to pronounce, Entenmann’s.

Dave Young:
Yeah, there’s that N in there.

Stephen Semple:
This business was founded back in 1898, but we’re going to take up the story in 1950 when Martha, who’s also known as Miss Eve, took over the business. Because under her leadership, it transformed from this sleepy little regional bakery into this powerhouse today that has a hundred products and zillions of dollars of baked goods. And in fact, in 1978, the business was sold to Warner-Lambert for $233 million, which would be about a billion in today’s dollars. So they really became a powerhouse in the baked goods business.

Dave Young:
She had a nice exit.

Stephen Semple:
She sure did. But back to Martha or Miss Evie, she started in the business bookkeeper for the business and she fell in love with the boss. They got married and this brought her into the family business. But when he died, she’s faced with a choice, keep the business or sell it. And in fact, she gets a really great offer and it’s one where she would be well set up, but she decides to run the business. And remember, this is the 1950s when a woman running a business is really not the norm. It’s a pretty big deal that she decides, nope, she’s going to run the business.

Dave Young:
Good for her.

Stephen Semple:
Yeah. And it’s also a time of big change, especially in the food business. Just after World War II and the suburbs are growing, they’ve already doubled in size from the end of the war, and there’s this new way of shopping for food has emerged. The supermarket. Supermarket is a new idea that emerged after World War II, because before the emergence of the supermarket a person went to a baker and then the fish monger and then the butcher, et cetera. Now it’s all under one roof. And this is a new idea, and it’s growing. By 1950, 35% of all food sales are in grocery stores. And at this point there’s 14,000 across the country, but by the end of the decade it will be 70% of food sales. So in 10 years it just exploded.

Dave Young:
Right. We think, oh, there’s always been grocery stores. Not true, not true.

Stephen Semple:
Not true. They were a new idea. But boy, when they came along, they really took over quickly. It’s incredible when you look in a 10 year period of time, something going from 35% of sales in a category to 70%. That’s just explosive.

Dave Young:
And changes everything. Now, you’ve got to think about distribution and logistics and shelf life and shelf space and all of those things.

Stephen Semple:
In the background when she took over this business, all of those changes going on. And the other thing that’s changing is taste. In the early 1900s, sweet snacks were an indulgence of the rich. And by the mid-1950s sweet baked goods started to hit grocery store shelves as an idea. So Martha takes over this business in this time of huge change. And you have to remember when this business started, they were delivering bread by horse drawn carriages, big deal. And the business was also known for fresh baked bread. They did some cakes, but the business was known for baked bread. And this changing landscape made it really hard to compete, especially in the bread space. Grocery stores had their own in-house bakeries, plus there was lots of packaged breads hitting the shelves and bread’s becoming really, really competitive. And they were getting killed in that space.

Martha takes this big move and decides to shut down the breadline, which is over half of their sales, and focuses instead on pies and cakes. She said, the future is not in bread. We’re getting out of bread. And their history was bread. She decides to focus on baked treats in supermarkets. That’s where she decides to take the business. And this is a really bold move. Cakes at this time are not something people buy regularly. They’re associated with holidays and events. But she sees this trend changing. She sees it becoming a more regular part of the American diet. So what she does is she creates this nice white box with the company name on it, wrapped in string, something that looks special and elegant. She wants her baked goods to look like a gift. She hires delivery men to deliver to the supermarkets. And their job is also to ensure the product is well displayed and fresh. And also keep it displayed well. And if anything is stale or whatnot, they’re to bring it back.

And she releases this product to a hundred stores. So she launches this out to a hundred stores and it fails.

Dave Young:
Really?

Stephen Semple:
After a couple weeks there’s truckloads of unsold product coming back, but she also gets reports that the supermarket’s own bakeries are doing well. So she’s looking at it and she’s going, well, hold on a second. Grocery stores are growing. There’s lots of people going to the grocery store. The supermarket bakery is doing well. I know my product is great, yet it’s failed. So what the heck? Right? But what she noticed was at the time, grocery store baked goods were presented behind glass.

Dave Young:
Right.

Stephen Semple:
And she also noticed that the supermarket meat counter was now serving meat in clear plastic. And this allowed people to see that the meat is fresh and clean. Because if we remember at that time in the early 1950s, consumers still had a lot of mistrust for food. Remember turn of the century? There were a lot of really bad practices in the food space.

Dave Young:
So I may do a spoiler here, Steve. What I was thinking, because we’ve all seen these in the stores, and when you said they were boxed and wrapped up with nice string, I was thinking they were packaged the way I see them today. But if you put it in a box with a string around it, you can’t see it and you can’t even open it to see it. Is that where we’re headed? Did she invent the window in the box?

Stephen Semple:
That’s exactly what she did. They were the first company to do the plastic little window in the box so you could see the product in the box. She was the first to do this in the baked good industry. She invented this idea.

Dave Young:
That had to have changed things overnight.

Stephen Semple:
It totally did. When the new package comes out, it is an instant success. They blow the doors off to the stage where that’s how everybody does it today. Right?

Dave Young:
Oh, sure.

Stephen Semple:
This set off a packaging revolution. Everyone adopted this idea.

Dave Young:
So a couple of things that did. One is to use the phrase transparency. It was a little obvious, but sure.

Stephen Semple:
Yes, yes. The transparent little window is quite transparent.

Dave Young:
Be we often talk about removing friction from a purchase. So yeah, the in-store bakeries got all the baked goods, but they’re behind glass. You can see them. It’s transparent. You can see them. But you got to get a helper over to pick something out of the window and package it up for you. This you can just, there it is. Sitting on the shelf. It’s got its little window. You go, well that looks good. Throw it in the cart. Off you go.

Stephen Semple:
And everyone else had illustrations of what was in the box. But again, there was this heavy distrust at the time. So instead of an illustration of what’s inside, here’s a picture of this delicious looking cake. And you could look in and go, wow, that looks really good. And to your point, I don’t have to wait for somebody, I got to pick it up and go.

Dave Young:
And all those illustrations, they always look like, oh, this is what it would look like if it was in Norman Rockwell’s house.

Stephen Semple:
Right. Yeah, exactly. So Martha invents this idea of packaging things that way and it explodes, it takes off. But she has one more innovation up her sleeve, because at this time they’re still doing a whole cake. That’s what they’re selling. And in 1963, they decide to enter the snack cake area. And the first products they introduce is a dark frosted donut, which they still make today, and soft baked chocolate chip cookies. And again, sales skyrocket. They bring this out and it is just a massive hit because it’s a smaller size. You can snack on it, you can have it as a little treat. And they open a new factory in Florida because she wants to go national and it’s a huge factory, 500,000 square feet of factory floor. They can make three million cakes a week. It’s the largest of its time. And again, it’s massive. And 15 years later, along comes Warner-Lambert who offers her what would today be a billion dollars in 1978 to buy out the business.

Dave Young:
I’ll tell you what though, if you’ve ever spent any time in Miami you know that that’s a smart move for a business that was established and grew its reputation in New York City, Brooklyn, in those areas. Because that’s where all of those people go to retire. So you’ve got your huge New York audience in Miami.

Stephen Semple:
I didn’t put two and two together. This is why you’re so brilliant, Dave. You’ve had success in New York, the move you should do is to Florida. Yeah, absolutely right.

Dave Young:
I see that you sit in New York and you go, where are my customers going? I know they got old. They said they were going to retire. Now they’re gone. Like, oh, they’re in Miami. Oh, well, let’s just go down there.

Stephen Semple:
They’re in Miami. Absolutely. Absolutely. She saw this trend changing. She saw the explosion in grocery stores. She saw the competition in bread and went, we need to pivot to this opportunity. She saw the taste changing to a sweeter diet. She saw all of these things. So kudo number one is she saw those changes and went, okay, we need to pivot to that. And then when it didn’t work, instead of trying to keep pushing the same thing, she stepped back and went, okay, where is this working? Oh, the in-house bakeries are working. Well, what’s different about what they’re doing? But the other part was looking to the meat counter. What is happening in the meat counter? How can I bring that idea to my product? Because what is the core element of it? The core element of it is they see the product. How can I now make it so that the customer can see the product? And created this innovative packaging idea that is such an amazingly good idea, everyone does it now.

Dave Young:
Oh yeah. In all kinds of ways. We want to see what’s in it. Can you imagine going to a meat counter, the meat display fridge or freezer, and everything’s in white butcher paper with string tight around it? And you’re like, oh, I don’t know which steaks to get.

Stephen Semple:
Yeah.

Dave Young:
Or which roast to buy. Nah, it just wouldn’t work. It’s just not the same.

Stephen Semple:
It seems so obvious to us that that’s the way food should be presented, but yet no one had done it up to that point. It’s one of these incredible right in front of you. It’s right there in front of you, which would be easy to dismiss. Well, it’s such an obvious idea, but it’s an obvious idea that no one else saw that changed her business, made her unbelievably wealthy, changed the industry, and good on her. I came across this story and I went, wow. I was just really impressed with her. And the moxie to do it because here you are, you’re a woman running a business in the 1950s. I am sure when she presented these ideas like, we’re getting out of bread and we’re going this way, there was a lot of resistance to that. And she had to have a lot of confidence in herself. She was swimming against a lot of resistance and really swimming hard upstream on that. So I really admire what she did and what she accomplished. An amazing, amazing entrepreneur.

Dave Young:
I don’t know the story after she retired, but in my mind, I’m going to believe that she had a happy and lengthy retirement in Florida.

Stephen Semple:
I’m sure she probably did. She certainly had the money. Certainly had the money at that point.

Dave Young:
All right. What a cool story. Thanks for sharing it, Stephen.

Stephen Semple:
Thanks David.

Dave Young:
Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app and leave us a big fat juicy five-star rating and review. And if you have any questions about this or any other podcast episode, email to questions@theempirebuilderspodcast.com.

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