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?
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  • Diane

    Anyone who cannot distinguish between Tastykakes and Devil Dogs, Zebra Cakes and Twinkies probably should not write about them.

  • Ellen

    Ex-Philly girl misses TastyKake’s and is not beneath begging her relatives to bring boxes when they come to California to visit. Though not as memorable as they once were (can you say preservatives?) I still jones for them and Habersett’s Scrapple and Taylor’s Pork Roll. Now we’ll see another Philadelphia institution lost and a relocation to a baking company (in Georgia?) that will likely turn the Krimpets into a Twinkie (gag!) or worse develop a grits Krimpet. I shudder to think of it.
    However, if the new baking company can manage to crank out a decent TastyKake please ensure distribution to southern California Ralph’s or Albertson’s stores please!!!

  • Stephen

    one has to look far and wide to find a few examples nationaly where taxpayer support of businesses in competitive markets has succeed. All it does is postpone the tough business decisions to the the point where it is no longer possible to save the business, its jobs and its tax revenues. Tastey subsidies are like deserts, a sweet taste that is soon gone and the debilitating flab remains.

  • Stephen

    one has to look far and wide to find a few examples nationaly where taxpayer support of businesses in competitive markets has succeed. All it does is postpone the tough business decisions to the the point where it is no longer possible to save the business, its jobs and its tax revenues. Tastey subsidies are like deserts, a sweet taste that is soon gone and the debilitating flab remains.

  • DAV

    I think the writer stated the obvious fact: “Charlie had no experience with running this type of company”. But someone who may have done it better is Vincent Melchiorre who was a Marketing Exec. for Tastykake and is now with Bimbo.

  • suzanne

    Tastykake sold out to an out of town company who doesn’t know Philly tastes,customs,traditions,or expectations.The product will probably shrink in size,rise in price and be made with corn sirop instead of sugar.Will be known as TastelessKakes or worse.

  • Robert

    When I moved from my home in Maryland to Georgia in 1985, the thing I missed most after family and friends were Tastykakes. Thanks to Flowers Bakery I now enjoy Tastykakes whenever I want. I close my eyes, take a bite, and for a moment I’m home again. Flowers did more than preserve jobs, and for that I’m a grateful customer.