More bad local candy news.
"The owner of Quality Candy Shoppes and Buddy Squirrel has filed for Chapter 11 bankruptcy, but the future of the 13-store St. Francis-based chain could not immediately be determined." This may or may not affect the future of 'Fairy Food' candy availability. Quality Candy is one of the main suppliers of the local treat.
3/16/2010 Update:Court documents show the company owes $2.9 million in secured debt to Harris Bank. Another $83,166 is owed to holders of priority claims, and $418,621 to unsecured creditors. The company listed assets of $4.4 million, including its headquarters at 1801 E. Bolivar Ave. valued at $1.7 million.
Gile said the store on N. Water St. in the Third Ward, which closed after less than a year, was not the precipitating factor in the bankruptcy.
"We had high hopes, and it didn't meet our expectations," Gile said.
According to Quality's Web site, the company was started in 1916 by Joseph and Lottie Helminiak on W. Mitchell St. The business grew, and moved to a larger kitchen on S. 5th St. in 1952, and again to a larger facility at 1801 E. Bolivar Ave. in St. Francis in 1985.
Quality Candy bought the Buddy Squirrel nut roasting and popcorn business in the 1960s. The two divisions operated at separate locations until 1985.
A creditors' meeting is set for March 10.
4/16/2010 Update:Quality Candy bought the Buddy Squirrel nut roasting and popcorn business in the 1960s. The two divisions operated at separate locations until 1985.
"When you hear people talk about it, it's one of those businesses here in Milwaukee that the parents and the grandparents are familiar with it, and it kind of links you all together," said Steve Smith, manager at Mayfair Mall in Wauwatosa. Multiple generations have a fondness for the products or good memories of an experience at Quality Candy, he said.
Goodman would not specify the reason for the bankruptcy. He said the business was profitable.
The bankruptcy comes at a time when candy sales are rising across the country, according to a report on the Web site of the National Confectioners Association. Chocolate sales were up 3.7% in 2009, while all confections gained 4.6%. An Easter survey from the National Retail Association showed consumers planned to spend more for candy this year than last year, but less than in 2007 and 2008.
In an earlier interview, Gile said the decision to file for bankruptcy was painful.
The company runs 11 stores at malls in southeastern Wisconsin and also sells candy at wholesale. A new store in the Third Ward was closed at the time of the bankruptcy filing.
The retail sales represent the largest part of Quality's business, with the revenue skewed heavily from the Christmas holiday season through Mother's Day. The wholesale business balances the seasonality with revenue in the remainder of the year, Goodman said.
Quality had more than 100 employees at the start of the year, but it has fewer now after a few key employees left for better positions elsewhere after the bankruptcy filing, Goodman said.
If the sale process is approved by the court, bids would be due by May 7 and an auction would be held for qualified bidders on May 10.
Court documents show the company owes $2.9 million in secured debt to Harris Bank. Another $83,166 is owed to holders of priority claims, and $418,621 to unsecured creditors.
Quality Candy Products Include:Milk Fairy Food
Pecan carmel tads
Butter almond toffee
Double dipped milk chocolate cordials
Cheddar Cheezzy cheese corn
Jumbo cashews
Update: May 27th 2010A Federal Bankruptcy judge in Milwaukee has approved the sale of the assets of Quality Candy/Buddy Squirrel to a corporation headed by Richard Koenings, a local attorney who is chief executive officer at Grede Foundries.
In an order filed Wednesday, the court set a closing date of June 4, but the sale could close sooner if both parties agree. Quality Candy filed for bankruptcy in January.
According to the court document, the buyer, Quality Squirrel Acquisition, is not obligated to take over the leases at retail stores operated by Quality Candy. Koenings has said the new company plans to operate the business, but has not provided specifics on plans for individual store locations.
Grede is in the final stages of its own bankruptcy in Federal Court in Madison. Grede's assets were sold, and Koenings heads the original company that will be dissolved when the bankruptcy proceeding is finished.
Update : June 2010 The owners of Buddy Squirrel LLC plan to focus on improving efficiency, expanding sales and streamlining the brand after buying the assets for the historic chocolate and nut company this month.
Richard Koenings, former chairman of Grede Foundries Inc., and local venture capitalist Trevor D’Souza led a group that bought the assets of Quality Candy Shoppes/Buddy Squirrel of Wisconsin Inc. for $2.2 million in a deal finalized June 4.
The 94-year-old St. Francis company filed for Chapter 11 bankruptcy protection Jan. 15, citing liabilities of $3.4 million and assets of $4.4 million.
The new owners wasted little time in making a major change, closing five retail stores in metropolitan Milwaukee, Racine and Madison and consolidating the separate Buddy Squirrel and Quality Candy stores at Mayfair Mall, Wauwatosa.
The remaining stores at Mayfair; Southridge Mall, Greendale; Brookfield Square; and Bayshore Town Center, Glendale; and the St. Francis factory represent 80 percent of the company’s retail revenue, Koenings said. The closings allow the owners to focus on their most profitable stores, while determining the company’s next steps.
First up is eliminating the brand confusion. After Quality Candy bought Buddy Squirrel in the 1960s, it maintained separate Quality Candy and Buddy Squirrel stores, even after the businesses merged in 1999. From now on, all of the stores will be known as Buddy Squirrel, with Quality Candy and Premier Nuts as its two product lines, Koenings said.
The owners believe they can take quick steps to improve efficiency, Koenings said. For example, the company doesn’t currently have a data system tracking what is sold at what prices at the retail stores, limiting its ability to plan production, maintain proper inventory levels and improve profit margin.
“That line of communication, if you will, is our immediate target,” Koenings said. “We need to know what we’re selling.”
The owners also want to expand wholesale revenue. About 40 percent of Buddy Squirrel’s nearly $10 million annual revenue comes from direct or brokered sales to other stores. Companies such as Macy’s Inc., Swiss Colony and Figi’s Gifts sell its products under the Buddy Squirrel name or their own labels, Koenings said.
But the company’s facility has capacity to more than double production, and Koenings and D’Souza plan to target major retailers to sell their product.
The investors picked a perfect time for aggressive expansion, said Dmitry Kopylovsky, a chocolate industry analyst with IBISWorld, Los Angeles. Many high-end chocolate sellers went out of business during the recession as consumers cut back on discretionary spending. The ones who survived are well positioned to grow as the economy recovers, he said.
“With income levels slowly beginning to recover, albeit very slowly at the moment, I think you will begin to see more people coming back to the premium chocolate,” Kopylovsky said.
