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From The Business Journal: December 18, 1995

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 oven.

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. Lee

Prudent Advice

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 cafeterias.

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 frozen.

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 distributors.

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 expect."

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.

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