COMPANY: Zapp’s Potato Chips
WHAT THEY DO: Make kettle-cooked potato chips
REVENUE: $25 million to $50 million
NEXT GOAL: Introduce club store sales and improve internal operations
The “aha” moment
A sale of the Little Chippery in Gramercy had been discussed internally for years. After founder Ron Zappe died in June 2010, President Rod Olson started sifting through e-mails that Zappe had exchanged five years earlier with interested buyers. Olson, who began his career in sales at the company’s outset in 1985, considered bids from public companies and a private equity firm before agreeing to sell to Hanover, Pa.-based Utz Quality Foods in January. Olson says Utz’s undisclosed offer best suited Zappe’s wishes for the future of the business.
Above all other sale considerations, Zappe wanted assurance that his grandchildren and great-grandchildren would be able to enjoy Zapp’s distinctly flavored, kettle-cooked potato chips. Zappe also sought expanded distribution, brand quality retention and security for about 200 employees at factories in Gramercy, California and Pennsylvania. Zappe and Olson met with Utz representatives and other interested buyers in early 2010, while Zappe was receiving chemotherapy treatments for throat cancer. Olson says Utz emerged early on as the bidder with a business culture and management philosophy most similar to Zapp’s, with its 90-year history as an independent, family-owned business.
Hitting the market
Zapp’s sale to Utz is expected to close later this month. Sales and distribution routes should begin to increase exponentially thereafter, Olson says, with one of the first new outlets for Zapp’s being club stores such as Costco and Sam’s. Zapp’s already is designing its first 24-ounce bag—its largest bag currently is 11 ounces—and has purchased a larger packaging machine. Zapp’s factories are wrapping up multimillion-dollar upgrades to seasoning and inspection technology to ensure greater quality, and additional hiring is expected as sales increase. The 80,000-square-foot Gramercy factory could undergo a 30,000-square-foot expansion in about five years.
“Ron had told me, ‘Rod, when I sell this business, it will be the saddest day of my life.’ He loved this business. He loved getting up every day and coming here. The greatest tribute we can pay him is finding a buyer that continues the Zapp’s brand, continues with his concern for quality and taste, and builds the brand even larger. … I think Ron would be very pleased.”