Bad News, Baird’s

In 1995 Texas’ premier white-bread maker turned a profit and took in a lot of dough. So how did the company end up in bankruptcy court?

LATE IN APRIL ALLEN BAIRD was sitting in the utilitarian office in Fort Worth from which he oversees Mrs Baird’s bakeries planning his company’s Chapter 11 reorganization. “I can think of five hundred things I’d rather be doing,” he said tersely. Baird, who is 73 and has iron-gray hair, is the seventh member of his family to hold the title of chairman. His grandmother Ninnie founded Mrs Baird’s in 1908 to support her eight children, and for decades it has been synonymous with family values. It pained Baird to think of staining that clean-cut image. “I don’t think anything has ever gnawed at me more than this,” he said. “It’s the worst decision I’ve ever had to make. If someone had told me six months ago that we should do it, I’d have said no.”

Most companies file for bankruptcy because they have run out of cash, but that wasn’t the case here. During the fiscal year ending September 30, 1995, the company recorded sales of more than $263 million. What drove Mrs Baird’s to seek the protection of bankruptcy court, despite the stigma involved, was a catas-trophe even more scandalous than going broke. To the shock of Texans who grew up eating its squishy loaves and sticky fruit-filled pies, the company was convicted earlier this year of conspiring to fix the price of white bread. Mrs Baird’s would soon be ordered to pay a criminal fine, and it might even face civil penalties too: After the trial, a handful of plaintiffs (including grocery stores and school districts) argued that they had been hurt by the price-fixing and sued the bakery in state and federal civil courts. That’s why Allen Baird ducked into bankruptcy court—to temporarily freeze the pending litigation.

It was the sort of move you’d expect from a devious corporate raider, which is not how most people would think of one of Ninnie L. Baird’s grandsons. In a somber painting that hangs just inside the entrance of the Mrs Baird’s bakery in Fort Worth, Ninnie is wearing a white blouse and a dark velvet choker, and her gray curls are pulled back from her face. Farther inside is a life-size replica of the kitchen at 512 Hemphill, where Ninnie baked bread. “This is where it all began,” Allen said. The house is always described as Mrs Baird’s first bakery, which is true in the sense that it was the site of the company’s initial operations, although Ninnie had run other bakeries before.

Ninnie was born in Tennessee in 1869 and was reared by an aunt who taught her how to bake. Together with her husband, William Allen Baird, Ninnie ran a restaurant and bakery in Trenton and a small bakery in Covington. In 1901 William moved to Texas in search of a business opportunity and decided he wanted to introduce the first steam popcorn machine to Fort Worth. Ninnie followed with their four children and the machine, which was red with brass fittings and had a whistle on top. Eight months later, William bought a second machine; later still, he sold both of them and ran a series of restaurants as well as a bakery with Ninnie. In 1908 he fell sick, and Ninnie began selling bread she made at home to support their children—which by then numbered eight. After William died in 1911, she went into the bread business full swing.

Over the next eighty-plus years, the Bairds built or acquired twelve plants in Texas, put as many as 3,200 people on their payroll at one time, and grew their business into the largest independent baking operation in the United States. For a long time, many of the bakeries were run by a son or a grandson of Ninnie’s, in keeping with her belief that Texans trusted the company’s product because they trusted her family. Certainly Mrs Baird’s did things the old-fashioned way. Though other bread companies adopted the continuous-mixing process—whereby bread is induced to rise chemically, saving time and money—the Bairds continued to let their dough rise naturally with yeast. Mrs Baird’s also stuck to selling bread with antiquated commercials, typically starring a Baird family member recounting the legend of 512 Hemphill.

In 1992 the Bairds became the first family to be inducted into the Texas Business Hall of Fame. By then, of course, the company had accomplished something greater than financial success: It had become part of the cultural landscape. People drove past Mrs Baird’s bakeries and reveled in the smell of fresh bread; schoolchildren took tours of the plants on class trips. It was hospitable of the Bairds to let so many people traipse through their bakeries, and it was also astute. Back in 1955, a Bakers Weekly article about the tours noted, “They are proving to be the most effective low-cost advertising media for selling the plant to the community that money can buy.” Through the tours and the ads and years of providing fresh bread, the family in general and Ninnie in particular attained a near-saintly status in Texas. When Ninnie died in 1961, the Reverend James G. Harris proclaimed at her funeral that her business success was “in harmony with the moral universe.” The Texas Legislature passed a resolution honoring Ninnie that declared, “Mrs. Baird was a living example for mothers, wives, business executives, Christians, and people the world over.”

Yet even Ninnie’s wholesome image was no protection against the events of 1993. That year, agents working for the Antitrust Division of the United States Department of Justice began investigating whether Texas breadmakers had engaged in price-fixing. They sent subpoenas to the four major bakeries doing business in the state, including subsidiaries of Georgia-based Flowers Industries, the billion-dollar-a-year conglomerate that makes Sunbeam bread. Flowers had moved into the East Texas market in the early eighties after buying Ideal Baking, a small family-owned operation in Tyler, and had moved into West Texas in the early nineties after acquiring Mrs. Boehme’s, a family bakery in San Angelo. After Flowers cut a deal to cooperate with the government in exchange

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