Sometimes adding more locations to a famous hole-in-the-wall spot isn’t the best idea. Steve Abrams, owner of Magnolia Bakery, describes the push-pull.

Question: What is the best deal that Magnolia ever turned down?

Steven Abrams:  Well we get approached about everything almost.  I think there is a place for that.  I'm not sure the timing is right.  I think that we have a wonderful brand with an enormous amount of brand equity and that's something you need to spend wisely.  It's very easy when every day you open your e-mail and there is five get-rich-quick schemes coming at you and some of them are appropriate.  I think that it's very easy to lose that iconic nature by exploiting it and I think when going -- this might not -- this pertains to this but it's something that you'll get in a minute.  I took Magnolia from the hole in the wall on Bleecker Street -- and said, "How are we going to roll this brand out?"  You can't go build hole in the walls if you want to have it ultimately a sale, an equity sale or go public, no one is buying into a concept that that's deconstructed.

We had to take the elements of Magnolia and what makes it famous and what makes it important and what makes it resonate with people and move it to the next level.  What we found and one of the things we were very careful about, when brands have an iconic status there is a shared perception of ownership by the public and it's very easy to lose that trust because people think -- really think – they have a position in it.  It would be like fighting with your sibling and getting into one of those crazy fights where no one talks at the holiday dinners anymore.  We don't want to be in that position.  We were very, very careful to deconstruct what we thought were the elements that made Magnolia, Magnolia and take it to the next level.

That same trust and iconic nature and ownership, still exists.  It's actually growing.  It's very easy to exploit that.  I can take that trust and sell other products.  I can take that trust and go into a grocery store, but I think that's diluting the brand equity at this point.  I think that we need to be a stronger brand.  I think we are very clear of who we are, but we need to strengthen that in the perception of who we are and what we stand for in the marketplace.  I think there will be opportunities to exploit that without the bad connotation of that work, whether that's through a certain amount of organic merchandise growth where we're going to expand the t-shirt line, add hats, mugs.  Obviously there are ways we can come into your home, if we want, through your kitchen with some product, and we can certainly put product in grocery stores.  The problem, on some level though, is a large part of our cache and an enormous amount of who we are is small batches made fresh daily.

We use an old fashioned cake recipe that doesn't use oil.  We are constantly working on the problem that's with that which is bread products and cakes dry very fast in the air.  If you put stabilizers in them and oils and other tricks, you can keep them, with two or three day shelf-life, moist.  We don't have that luxury because we are skewing to a specific time, date, and recipe.  Unless we wanted to compromise that, you can't take that product and put it in to a grocery store because eight hours later the products' already using its shelf-life.  We are donating it to the homeless shelter around the street -- across the street -- so you're not getting that, but in a grocery store, how do you do that.

Taking our most iconic product, we can't do that one.  But what we are working on, there are ways to flash freeze and to ship.  Maybe there will be ways down the road to flash freeze and keep them frozen, but of course we've got to make sure the taste is the same.  We are working on that now.  We are waiting -- the jury's out.  We think that so far our taste test[s] have showed us that we can get 98 percent of the way there and the other two percent is only the people that make it need [it] daily and work with it. It's very encouraging, but there are other products that, over time, we might want to do that with.  A natural for us would be a Magnolia Bakery cupcake mix and there are other people that have shops throughout the country that are doing that.  We could easily do that and that is something that might come on to our radar shortly.

We could do something like cookies that might have a little bit longer shelf-life and the banana pudding that we were talking about earlier could probably get two to three days out of that and that would have to be maybe a gourmet store or whole foods where they would not keep an extra day and they understand that type of product and we could do that.  None of those things are in the discussion internally.  We don't get many of those requests externally and we have a very focused agenda right now and quite honestly it's overwhelming enough as it is.

Recorded on October 23, 2009