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McKee Foods continued to rely on brand recognition and customer loyalty to generate sales, rather than national advertising campaigns and a national sales force dedicated to drumming up orders and garnering shelf space in grocery and convenience stores. Sales rose from $525 million in 1991 to approximately $825 million in 1997. Although sales were up only a modest 0.7 percent in 1998, to $831 million, the company still dominated the snack cake market segment.
We take pride in working together to provide great-tasting snack foods of outstanding value to delight customers throughout all of North America.
Family-owned and operated, McKee Foods Corporation is the David to such Goliaths as Nabisco Brands, Lance, and Interstate Bakeries. McKee Foods’ threat to these and other food giants is the niche of snack cakes, the driving force behind the company’s persistent growth in sales in the 1980s and 1990s. This growth was all the more remarkable in view of the company’s comparatively low profile, lack of a full-scale national sales force, and cautious approach to expansion. The secret to McKee’s success was its Little Debbie snack cake line, which dominated the market for snack cakes in the United States in the second half of the century, frequently with a greater than 50 percent market share. By comparison, McKee’s closest competitor, Ralston-Purina’s Continental Baking, generally posted less than a 20 percent market share. Nutty Bars, Figaroos, Oatmeal Creme Pies, Caravellas, Golden Cremes, Devil Cremes, Swiss Rolls–some 66 varieties in all graced the Little Debbie snack cake line in 1999. McKee Foods also marketed granola bars, granola cereals, and other bakery products under the Sunbelt label.
The recession in the early 1990s provided fuel for the company’s growth. With their lower prices, Little Debbie and Sunbelt brands attracted new consumers looking to shave expenses. To keep up with the company’s steady growth, McKee Foods opened two new bakeries, one in Gentry, Arkansas, and the other in Stuarts Draft, Virginia. In keeping with the company’s conservative approach to expansion, the new plants provided just enough capacity to keep up with existing demand. McKee produced baked goods only to fill orders. By 1999 the bakery in Gentry was employing 1,265 people, and the one in Stuarts Draft employed 925 people.
Introduction of Little Debbies in 1960
Principal Subsidiaries: Sovex Natural Foods.
In 1935 the couple moved the business to a new location and began making soft cookies and cakes. A year later they handed the business to Ruth’s father, Symon D. King, and returned to North Carolina to launch a new bakery. Located in Charlotte and named Jack’s Cookie Company like its predecessor, the business was highly successful. In 1946, O.D., who “always had a gift for innovation and automation,” built a new, state-of-the-art plant. During this period he also invented a soft oatmeal creme pie, “the company’s oldest continuous product,” according to Milling and Baking News.
The McKees sold their Charlotte business in the early 1950s and considered retiring. They decided instead to return to Chattanooga to manage the original Jack’s, now called King’s Bakery and owned by Ruth’s brother, Cecil King. In 1954 O.D. and Ruth purchased the company stock, and the foundation for the McKee Baking Company was born. As he had previously, O.D. served as salesman, inventor, and production manager while Ruth operated as purchaser, personnel manager, and office manager. In 1957, when they outgrew the Chattanooga bakery, the operation moved to nearby Collegedale. It was at this location that the company established its headquarters and grew into a major private corporation. The original Collegedale plant was expanded more than a dozen times before a sister plant was added. In 1982 the McKee family launched a third plant in Gentry, Arkansas; a fourth followed eight years later in Stuarts Draft, Virginia. By this time Ruth had passed away and O.D. had transferred management to his sons, Ellsworth and Jack, while retaining his chairmanship.
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While working for Jack’s Brooks took on several new lines for distribution, contrary to his agreement with Jack’s, if the testimony of Barton is accepted.
“We are sorry that situations of this nature have to arise, but we have no hesitancy in doing that which in our judgment is best for the company, its distributors, representatives and customers. You will be contacted as soon as possible by an official representative of this company. It is our sincere desire to serve you in an efficient manner with quality products of which you can be proud. Your business is greatly appreciated and we will do everything in our power to continue to be worthy of it.
The case proceeded on the claim of libel and was submitted to the jury at the close of all the evidence on the issue of actual damages, the right to punitive damages being refused. The jury found for the plaintiff on this cause of action in the sum of $17,500, and both parties have appealed.
“This is to notify you that effective September 1, 1953, Mr. A. A. Brooks and his organization are no longer the sales representatives of Jack’s Cookie Company, Charlotte, N. C.
However, the jury should be instructed first to consider whether Brooks kept the promises which he made. This issue involves in the first place a determination of the disputed question whether Brooks promised, when he assumed the agency, not to take on any new lines additional to Jack’s, and if they find that he made this promise, and violated it, they should be instructed to find a verdict for the defendant.
Dissatisfaction arose in certain particulars. Brooks did not keep any record of his sales or of his employees, and he did not make it clear to them that they were his employees and not Jack’s, and in some instances the salesmen called on Jack’s for services which Brooks should have given. Barton was obliged to call a meeting of salesmen in Charlotte in order to instruct the salesmen on this point. Barton instructed Brooks to open an office in Columbia as headquarters for Brooks’ operations and in January Brooks rented an office and engaged a secretary, but it was not opened until July and then it proved to be the headquarters of an employment agency operated by his wife and his secretary. Brooks hired and fired a large number of salesmen during the period and he had only two salesmen at work in September, 1953.
Before SOPER and DOBIE, Circuit Judges, and BRYAN, District Judge.
Entering upon his duties on or about January 1, 1952, Brooks visited jobbers to whom he was already selling other merchandise and divided the territory amongst them giving them exclusive areas for the sale of Jack’s cookies upon their agreement that they would not handle competing goods. He had one salesman working for him at the time, but employed additional men to assist him in the work, and paid them four-fifths of his commissions. His efforts were successful and sales were greatly increased in the territory assigned him, so that by September, 1953 the gross sales had risen from approximately $1500 to approximately $50,000 per month, and his net return amounted to $1,000 per month for a number of months in 1953. Upon his advice Jack’s increased the minimum purchase by the distributors from $50 to $200, and he selected new distributors in certain localities in place of old ones appointed by Jack’s who had proved unsatisfactory. In April, 1953, after he found the line profitable, he asked for a written contract which he had previously refused to sign, but the company declined.
It was agreed that Brooks was to set up a sales organization for the sale of Jack’s product by wholesale distributors in Virginia and West Virginia, and also in the Carolinas, with the exception of certain cities in the latter states. He agreed to produce a reasonable amount of business and to pay his own expenses and he was to receive as compensation a commission of five per cent on gross sales after a deduction of five per cent for freight charges. He was to have the position so long as he did a good job, but he was free to stop work for Jack’s at any time. There is no dispute that these terms formed part of the contract, but as to another element the testimony was in conflict. On behalf of Jack’s it was testified that Brooks was not to take on any additional lines of merchandise; but Brooks denied that he made any such agreement.
Jack's Cookie Company, Appellant and Cross-appellee, v. A. A. Brooks, Appellee and Cross-appellant, 227 F.2d 935 (4th Cir. 1955) case opinion from the US Court of Appeals for the Fourth Circuit