The Fall of Tastykake

With the sale of the 100-year-old Philadelphia brand to a Georgia company, serious questions arise about Tasty Baking’s demise, from installing politically connected Charlie Pizzi as CEO to taxpayers shelling out $32 million to build a new factory in the Navy Yard. In the end, Tasty’s long rise and recent fall are the story of how this city works — or more accurately, too often doesn’t
Executives who worked at Tasty Baking say Watts was positioning the company to be sold. He put short-term sales and cost-cutting ahead of long-term investment — moves designed to make the company more attractive to would-be buyers. Even then, a sale would arguably have been the best option for shareholders. The fact is, regional bakeries like Tastykake are a dying breed: Most have already merged with other companies or been bought by larger conglomerates.
But Tasty Baking’s Philadelphia-centric board wanted to keep the company independent. In that context, the selection of Pizzi makes a little more sense.
“We felt that Charlie Pizzi, with his background as head of the Chamber of Commerce, had the connections and the vision to keep Tasty Baking in Philadelphia,” says Philip Baur Jr., son of the Tastykake co-founder and a member of the board that hired Pizzi. Charlie from the block would never move such an iconic company outside the city. He wouldn’t sell it either, unless absolutely forced to.
From the outside, it’s hard to find fault with most of Pizzi’s big management decisions. He cleaned house in the executive ranks, forcing out a lot of old thinking, like the conviction that Tastykake didn’t need to advertise locally. He poured money into marketing and technology, which had been badly neglected under Watts. He experimented with new products. Tasty now sells more than 100 products under its brand name, from brownies to energy bars to chocolate-covered pretzels. And he upgraded both management and the board with experienced food-manufacturing expertise.
His signature accomplishment, of course, was cutting the deal that moved Tastykake out of the Nicetown plant and into the Navy Yard. Consider what was involved: Pizzi secured $90 million in private funding for a company with declining market share and a fusty image. He pried loose another $32 million in low-interest loans from the city and state to buy new baking equipment and fund the move. He convinced Liberty Property Trust to build the factory and lease it to him, thus lowering the amount of cash Tastykake needed to borrow to get the new bakery up and running.
“I couldn’t believe the deals he pulled,” says Nick DiBenedictis. “Only someone who’s been inside the system could have gotten it done.”
And there is perhaps nobody with better connections to the system than Pizzi. When he needed Liberty Property Trust to build the factory, he called on his friend Bill Hankowsky, the LPT head. When he needed public funding, he turned to his old colleagues at PIDC, whose board is chaired by D’Alessio and includes Marrazzo and representatives from the Chamber of Commerce. And when Pizzi phoned Citizens Bank — where Judee von Seldeneck was on the board — looking for cash to fund the move, it wasn’t some guy named Carl Watts that nobody had ever heard of on the line, but the chairman of the Federal Reserve Bank of Philadelphia.
But Pizzi’s ability to move the company on the public’s dime and stave off a sale for a few years only heightens the questions: Were those the right things to do?