From The Business Journal: December
Betsy Lee and son, Scott, were
sitting in their kitchen one day 13 years ago, baking cookies and
contemplating the future. Ms. Lee told her son she had grown tired of
her job as a financial analyst for Hewlett-Packard Co. and was looking
for a new career.
As usual, both mother and son could hardly keep from consuming a good
portion of the chocolate chip cookie dough before getting it into the
Ms. Lee still credits her then 12 year old son with conceiving the idea
that has become a thriving business. "He told me, 'You make really
good cookie dough, Mom, so why don't you make cookies?' " said Ms.
Today, Ms. Lee is president of Dough-to-Go, Inc., a commercial producer
of cookie dough, baked cookies, brownies and scones sold to distributors
and consumed by thousands of customers in hotels, restaurants and
In the past two years, the Santa Clara based company's revenues have
shot up 146 percent, from $1.1 million in 1992 to $2.7 million in 1994.
it ranked as the 38th fastest-growing private company in Silicon Valley,
based on revenues, according to a fall survey by The Business Journal.
Ms. Lee's success formula is simple: "We just make a quality
product and sell it at a reasonable price." She further explained
that Dough-to-Go fills a niche not unlike a surrogate mother.
"There are so many families where the women and men both work.
Nobody has time to make cookies from scratch, she said. "We make
the kind of product you would make if you had the time."
Dough-to-Go rolls out about 150 tons of dough monthly from its
headquarters in a small industrial park. The company's 48 workers make
18 varieties of cookie dough and cookies, using the special dough.
Flavors range from traditional chocolate chip and oatmeal raisin to the
more unusual orange almond and apricot nut. Workers also produce seven
varieties of scones and two types of brownies.
Most the Dough-to-Go's cookies are sold in dough form and shipped frozen
to its 25 customers - all food distributors. The company also ships
freshly baked cookies. Most of its scones and brownies are also shipped
Consumers never really know if they are consuming Dough-to-Go products.
For example, Dough-to-Go cookies are sold as a generic item at several
hundred McDonald's restaurants throughout Northern California. Dough-to-Go's
distributors sell its munchables to hotels, cafeterias and restaurants
under their own label.
Ms. Lee launched Dough-to-Go in 1983 at age 37 with $10,000 in personal
savings and a lot of verve. Mother and son rented a kitchen in Hobee's
Restaurant in Palo Alto and worked nightly until dawn making chocolate
chip dough. Afternoons were devoted to marketing the product to grocery
stores and other retailers.
The company struggled.
Within the first year, Ms. Lee found her product getting pushed off
grocery shelves by big name dough makers such as Nestle and Pillsbury.
"I almost lost my shirt," said Ms. Lee, who just turned 50.
"We didn't have the marketing dollars to compete."
The company subsequently abandoned its retail campaign to focus on the
food service industry.
In 1984, Dough-to-Go received $100,000 from two of Ms. Lee's friends and
moved to an industrial park in Mountain View. Six years later, the
company moved to Santa Clara when its revenues reached $1 million and it
needed more space.
Dough-to-Go's success is a fair indication that baking is big business.
The top 00 baking companies in the United States reported sales of
nearly $26 billion last year, according to the American Institute of
Bakers, and industry research group in Manhattan, Kan. The AIB said
there are several hundred small commercial bakers such as Dough-to-Go
operating in the United States.
Because of the intense competition, AIB spokesman Ron Wirz was surprised
by Dough-to-Go's rapid success. "They must be filling a niche that
was never filled, or they are doing an exceptionally good job with
it," he said.
Ms. Lee confirmed the baking business is fiercely competitive. "If
I go into a cafeteria and I see cookies made by somebody else, I'm going
to try to get that business," said Ms. Lee. " And I'm sure my
competitors are trying to do the same thing to me"
One of dough-to-Go's biggest competitors is Otis Supunkmeyer I. The San
Leandro company achieved revenues of $200 million last year, most of
which came from cookies sales worldwide. Otis Spunkmeyer spokeswoman
Kacy Rawlins echoed claims that the cookie business has become
increasingly competitive in the past few years. There's a lot more
competition from smaller companies and larger ones like Pillsbury,"
said Ms. Rawlings.
Helping it compete, Dough-to-Go has built a loyal following among it's
One of the company's biggest customers is Rykoff-Sexton Inc. The Lisle,
Ill. based firm is the third largest food service distributor in the
United States, reporting sales of $1.6 billion last year. Rykoff
executives said they sell Dough-to-Go's cookies to customers who want a
"gourmet cookie." Kevin Brady, Rykoff's product line manager,
said a quality cookie depends on ingredients and production.
Dough-to-Go sells a high end line of cookie made with butter and a less
expensive line produced with margarine. All of the comany's dough is
mixed in 60 quart mixers, a small quantity for an industry in which
1,400 quart mixers are common.
"It's a lot easier to watch your quality control when you make it
in small quantities," said Mr. Brady. "You tend to lose your
consistency with large quantities and then it becomes a quality issue.
Betsy gives us a quality product that our customers have come to
McDonalds, of Northern
California, with offices in San Jose and Sacramento, is another big
Dough-to-Go customer. Barry Edwards, purchasing division manager for the
giant fast food chain, said Dough-to-Go beats competitors by supplying
special, limited edition cookies for Halloween and Christmas and such
events as the opening of the movie "Jurassic Park."
Dough-to-Go has grown considerably in the past 12 years. So has Ms.
Lee's son, Scott Joiner. He has continued to work part time at
Dough-to-Go while attending school. Now 25, he will graduate this month
with a business degree from San Jose State University. Once a dough
connoisseur, Mr. Joiner admitted his appetite for cookies and cookie
dough has diminished considerably since his mother launched her company.
"I'll have a chocolate chip cookie once in a while, but that's
about it," he said.
DTG ™, Dough-to-Go ™, and Jane Dough's ™ are all