Manhattan Bagel A-B

Babson Professor Len Green, Case Director

Beth G. Silver and Sheryl Overlan, Case Writers

Arthur M. Blank Center for Entrepreneurship

© Babson College, 2001. Revised October 2002.

Abstract

A successful entrepreneur, Jack Grumet, who specializes in establishing and then selling food franchises, enters the bagel business by buying a one-third interest in an on-going concern operated by two brothers. The company quickly expands through franchising and in two years has 146 stores. The bagel industry is growing rapidly across the United States and it appears the entrepreneur has a major success worth millions. The company goes public on the NASDAQ and uses the proceeds to expand and to acquire competitors. Jack has an opportunity to harvest his share of the business as the company's shares hit an all-time high in 1996. His advisors urge him to cash in chips but seeing no indication that the company or the industry is going to slow down, he decides to hold on to his interests. Soon thereafter the business is hit hard by charges of financial irregularities; the stock plummets and eventually the company goes into bankruptcy…leaving Jack with virtually nothing to show for his efforts.

Location of the company: New Jersey

Years spanned by the case: 1991-2001

Industry segment: Food

Stage of the company: Growth

Age of the entrepreneurs: 50's

Key Words: Franchise, family business, IPO, bankruptcy, acquisitions, harvesting

DVD

There is no DVD available for this case.

Teaching Notes

A six page case teaching package, written by Len Green, is available for this case. The teaching package includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into a course.