Viewpoint – Time for a change at Tasty Baking?

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    So far, Charles Pizzi has gotten a pass from the current troubles at Krimpet specialist Tasty Baking Co.

    The former President of  Greater Philadelphia Chamber of Commerce came to the company without experience in a tough industry. That initially led to a drop in the stock price of  Tasty.  He did come with a lot of connections and perhaps  a dream of keeping the company in the city.

    In the early going, Pizzi cleaned some of cobwebs out of the company, shaking up marketing and  other areas.

    He also faced up to the issue of the company’s ancient Philadelphia bakery  with an ambitious plan to build a new state-of-the-art facility. The efficiencies from the new bakery would move the company into a new era.

    The problem was that the estimated savings weren’t realized.  Add in  the company’s debt load, rising commodity prices,  tough times for grocers that are closing stores and enduring  bankruptcy proceedings and you have a formula that leads into a cash crunch.

    Pizzi and crew were able to tap into a reservoir of good will that surrounds Tasty  and  secure $6.5 million in interim financing. That buys the company time to  decide whether it can restructure debt, resolve dor sell the company.

    While criticism of Pizzi  is hard to find,  it is worth wondering whether he was leading with his heart and not his head when it came to that new bakery. Granted something had to be done, but would an expansion of  the  company’s Oxford, Pa. bakery or building a plant in a lower cost environment have been a better idea?   And in the current economy, it is a better idea to pay down debt and slash costs than roll the e dice on the latest equipment.

    As someone known to indulge in the guilty pleasure of  munching a Tastykake from time to time, I wish the company well, but  we’re in an unforgiving environment. It is  worth wondering if turning over the company to  a hard-nosed veteran of the industry with an ability to slash costs and refinance debt is the best option. The other possibility is selling a Delaware Valley institution. Pizzi  does  not fit into either  scenerio. – Doug Rainey

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