How This CEO Is Restoring An Iconic NYC Brand To Its Former Glory

0:10Hello friends, I'm Ray Latif and you're listening to the number one podcast for anyone building a business in food or beverage, Taste Radio. In this episode, we sit down with Jay Russian, the CEO of H &H Bagels, the iconic New York-based brand that fell on hard times, but has been revitalized under his leadership. H &H Bagels is a New York City institution. Jay Russian wants to make it an American staple. Founded in 1972, H &H has long been admired as the place to get a quintessential New York City bagel. For decades, locals and tourists would line up at H &H's storefronts to get their hands on fresh, chewy bagels that have been immortalized on popular television shows, Seinfeld, and Sex and the City.

1:00But in 2012, after 40 years in business, H &H was on the brink of vanishing. Its original owners, accused of mismanagement and violating labor laws, had filed for bankruptcy in 2011. Three years later, Jay, a former Wall Street executive, acquired H &H's name and assets, including the last remaining location on the Upper East Side of Manhattan. Jay's vision was to restore H &H to its former prominence by opening a slew of new locations in New York and introducing a franchise model that would bring the brand to cities across the U.S. H &H now operates a thriving online business, as well as seven stores in New York and one in Boca Raton.

1:41The company also has nearly two dozen new locations in planning. In the following interview, Jay talks about how a thoughtful strategy helped H &H regain its relevance, how he navigated some of the most challenging aspects of its turnaround, and how the company is attempting to align its storied history with modern culture and trends.

2:04hey folks it's ray with taste radio right now i'm honored to be sitting down with jay russian the ceo of h &h bagels jay great to see you good to see you thanks for having me on yeah are you in new york right now we are one of your colleagues told me that you're in the flat iron district which is a very nice part of the city nice part to visit and we actually have a shared history h &h and BevNet in that we hold live events in New York City once a year. And lately they've been at the Metropolitan Pavilion. But in the past, we've held a few at Metropolitan West. Now, I believe you know what Metropolitan West represents for H &H Bagels.

2:46Yeah, no doubt. That was the old factory. That was the old factory on the west side of Manhattan, where I'm sure it was a nice place to live because every morning you'd wake up and smell very fresh bagels. You got it. Yeah. Yeah. Where are you making bagels these days? Now our facility is over in Woodside, Queens. In Queens. How involved are you in the manufacturing part of this? Are you, are you out there once a week, a couple of times a week, or are you strictly? Depends on the, on the week. Usually I'm out there, you know, three, four or five times a month, but it might be three, four times in a week and then I won't be back in a couple of weeks.

3:22So it just depends on the flow and what we're working on and what they need me for. I feel like I'd want to be there all the time, especially if I were the CEO of the company, always getting fresh bagels off the line. Nothing beats any baked good product straight out of the oven. And that's perfect. I eat a bagel every day for lunch. I'm more of a bagel lunch guy. Obviously, a lot of people prefer bagels at breakfast, but we do a lot more lunch than we used to. When I acquired the company 11 years ago, we were probably 80 % breakfast, 20 % lunch. And now we're closer to 50-50 or at least 55-45 breakfast lunch.

4:02So a lot of that has with the demand of the egg sandwich and that evolution. You're talking about the bacon, egg, and cheese egg sandwich? Yeah. When I took over this company, H &H did not make egg sandwiches. Why not? I don't know why. No one ever decided to do it. But, you know, once I joined, we did it in the first year. Almost burnt the building down, but we got done. That's all another thing. I mean, isn't that a New York staple, the Beck, so to speak, bacon, egg, and cheese? Absolutely. Yeah, no doubt. But, you know, old school bagel joints. It was just bagel spreads. I think they left the bacon, egg, and cheese to bodegas and whatnot.

4:40But it's our number one seller now. Really? Interesting. Really? Absolutely. Yeah. Your interest in bagels in particular came from where? Because you said you bought the company 11 years ago. Yeah. And I'm sure you saw potential in a company that had a need for a bit of a turnaround. Sure. But bagels and food in general, it can be a tough business. There's a lot of moving parts there. But I spent 20 years in finance, and it was time for me to move on. and I'd always thought and dreamed of owning a small business one day. I've been a lifelong foodie, so food was an interest to me. I was being a very cyclical part of the finance world, so I was looking for something that I thought might be less cyclical and a higher volume, lower price kind of food business, not full-service restaurant, which, as we all know, is higher risk, and typically they'll last one, three to five years.

5:37and just my background my skill set i was better suited for a turnaround situation than a startup situation so i saw a great product a great brand that was really kind of just meandering around at best floundering at worst and it was kind of in need of a turnaround so you know fortunately for me i i had heard through the grapevine that the uh previous owners were looking to sell and, uh, and that's what got it started. So I threw myself in there and, uh, learned a lot in the fast amount of time for sure. What was the biggest or most surprising lesson that you learned at that time? You know, anytime you buy a business, there's going to be some surprises.

6:24So, you know, walking in day one, I guess, you know, I didn't realize that the infrastructure wasn't as poor of a condition as it was. It turned out that the first 18 months I had to replace or repair every single piece of equipment in that facility. For years and years and years, I had an old printer. And I would joke that that was the only thing I actually acquired in that acquisition besides the brand name. Because everything else had been replaced or repaired. So that was a big effort. I couldn't even think about growing the first two years when I needed to repair what was already there. So I guess that was the big surprise.

7:05And then secondly, I would say, you know, look, there were no financial or operational systems in place to kind of bring it to the 21st century. So, you know, we spent a considerable lot of, you know, capital and time upgrading that across the board to kind of build a foundation for future growth. The name and IP, as you noted, still very valuable. For sure. But I think 10 years in between where H &H is right now and when you bought the company, it felt like there was a lot of time lost, perhaps. And maybe there was a chance that people would forget about the history and everything that H &H represented.

7:52Was there any worry that from when you bought the company till now that you wouldn't be able to recover or resurrect the brand from where it was? I mean, look, we started growing in 2016, two years into my tenure. We opened a second unit on the West side. That same year, we signed license agreements at the airports for H &Hs at LaGuardia and JFK. We launched a global wholesale business. So we're building the brand over the last decade and doing a lot, a lot, a lot of work behind the scenes to get to where we are today. But certainly on day one of the acquisition, yeah, you are a little concerned that you're down to one operating restaurant and a local wholesale business.

8:39And, you know, is the brand still have legs? Do people still care about this brand? And, you know, it turns out they care very much about the brand. When I think about a turnaround project, I think about it in a span of years. How long is this going to take? Sure. What was your expectation for how long the turnaround would take? Maybe not quite this long.

9:05Yeah, look, I mean, the bagel business is more complicated than I would have thought in 2014. How about that? You know, we had a lot to learn. We made a lot of mistakes. You know, my view, you know, my personal view about mistakes is that's the only way to really learn and to evolve. And as long as you don't repeat them, typically they're positive or can be positive. So we've learned a lot of lessons. We made a lot of mistakes and, you know, we're better for it as we sit today in 2024. Bagels in general, we both talked about how delicious they are. They become more versatile against an American's diet, American's lifestyles.

9:43There was a time, I think, and probably around the time that you had purchased the company where, you know, carbs were a four letter word, you know, keto was really starting to gain momentum. How do you weather trends? How do you weather, you know, ups and downs and how people consider ingredients and foods in general? Sure. I mean, look, we focus on the highest quality ingredients across the board. So, you know, to your point, the trends come and go, but if you're putting out a great product and a great quality, I think that's, you know, timeless. So we use the highest quality flour on the market with the highest protein.

10:22So our bagels have, you know, anywhere from 13 to 14 grams of protein per bagel. that's 40 to 100 % higher than your average store-bought bagel. And that's a direct reflection of the quality of the flour. We crack fresh eggs in our stores to make your egg sandwiches. We slice fresh avocados for sandwiches. It's all a reflection of general trends of having higher quality food rather than carbs, no carbs, fat, no fat, sugar, no sugar. I think there are a lot of people who are a little bit older who are familiar with H &H. Sure. For one reason or another, either because they visited New York or they lived there, or certainly from the exposure the brand has received in Hollywood on TV shows and whatnot.

11:07Obviously, Seinfeld is a big reason why a lot of people know the name H &H. Sure. I think about your franchise business because you do have company-owned stores, you have franchise stores, you have your direct-to-consumer business. Where's the biggest upside? Definitely in the franchise. You know, we've already sold 50 units to date. All of the major cities in Florida have already sold those territories except for Miami. Our next opening is in Santa Monica. We think Los Angeles is going to be an amazing market for the brand. Obviously, there's tons and tons of New York connections and transplants in LA, but we think it's going to be very successful nationwide.

11:44How do you maintain the integrity of the brand and the quality that you expect and the quality that your customers expect when you are franchising to other business partners? Sure. We're a little bit different than other franchisors. We're, I think, a lot more hands-on, and we offer a lot more access and advice to our franchisees. We have nationwide distribution already in place with major distributors. We approve all the products that are going through the system, which nine times out of 10 are the exact same products that are in New York. And then, of course, our bagels are supplied nationwide to these networks.

12:22And so you're getting the same bagel ever in the country. That's really good to hear. And I think the product is one thing. I think the experience is another. Yeah. When you walk into an H &H in New York City, I think it feels a certain way. Can you extend that experience? Can you extend that feeling to Santa Monica, to Boca Raton? Absolutely. I think we're building a culture across the brand that will feel similar no matter which city of the country you're in. And, you know, we've modernized the entire actual store environment. So, you know, each store is going to have a very, very specific design and feel and, you know, music playing and light and bright and modern and digital menu boards.

13:11And it's a very, very different bagel experience than what people are used to. Most bagel stores in the category haven't changed much in the last 30 or 40 years. And we've really dramatically changed that experience. How so? What are some examples? So we reduced the menu count from when I took over in 2014 by about 70%. We really are focused on bagels and bagel sandwiches. That's what we do best. If somebody wants a great salad, I'd rather them go to Sweetgreen. If someone wants a great burger, have at it at Shake Shack. But if you're looking for an amazing bagel experience, we want people to come to H &H.

13:50So I think that's a big driver of what we try to accomplish over the last 10 years. I mean, I think that's really interesting. And the specificity of your focus is impressive because I think people seem to want options when they go out. And yes, there are people who would go into an H and I can imagine and say, hey, you know, I'd love to have a salad today instead of a bagel. But when you are thinking about innovating and going beyond where your menu currently exists, how do you extend that menu? Yeah, I mean, we have seasonal spreads that we introduce every few months. We have new egg sandwiches and LTOs with partners to come up with new sandwiches.

14:34like you mentioned before, the lox flight, where we worked with Acme to come up with, you know, three new smoked salmon flavors. You know, that's what you should expect from us going forward. How is your perspective on the business evolved over time? Are you looking at the future as customer focused? Is it ingredient focused? Is it experience focused? How is your focus or Or how is your perspective on how to continue growing? How has that changed over time? I mean, I think all of those are interrelated, right? By being customer focused, you want to make sure that they're having the best experience.

15:13You want to make sure they have the best products. Part of driving the better products is better ingredients. And we're always, you know, every day trying to evolve and be a better company, a better brand, a better experience for customers. And I don't expect that ever to end. And from a marketing perspective, there are, again, a lot of people who associate H &H with a Seinfeld or a Sex and the City or whatnot. You know, certainly that's not something that will carry over for the next decade. Maybe it will. I'm not sure. But how are you thinking about the marketing strategy and communicating to modern consumers in a way that doesn't include all those references?

15:55Yeah, I mean, look, we love that pop culture history and that connection to those amazing shows. Obviously, you know, Seinfeld will probably continue to be one of the top streamed shows for the rest of my lifetime, I would imagine, well beyond that. But, you know, we've never sat on our laurels and relied on that history. I mean, you know, we just rebranded early this year with the branding you have in front of you, on your website. We're very active on our social media. We do a lot of PR. We do a lot of marketing tie-ups with brands like Acme. We just did a tie-up with a pet supply company, Wild Ones, and that was a fun event.

16:37And offering pet owners a puppy-licious, or no, no, puppy seed bale, sorry. It's a constant evolution. And constantly being out there, having LTOs, like I mentioned, the seasonal spreads. I mean, that's, you know, marketing is just constantly staying fresh. Coming up with new ideas, you know, getting consumers excited about the brand, about an event, about an LTO. Quick break. If this episode has you thinking about what's next in food and beverage, explore BevNet and Nosh Insider, our subscription platform with deeper insights from the BevNet team. Visit tasteradio.com slash insider to learn more.

17:15You referenced the rebrand, or at least the brand refresh, and it looks, there's a nostalgic feel to it. I mean, if you weren't familiar with the old H &H brand and logo, you would think nothing's really changed because it looks older. But also, you know, I mean, what is vintage is current and modern today. It seems like there's been a convergence of, you know, what is old and what is new. But it's kind of risky to do so when there are people who know the brand and love the brand and love literally everything about it. they're saying, oh, well, they changed it. So I expect the bagels to change.

17:54I mean, so you got to, I'm sure, walk on eggshells to make sure that you get it right. There were some tense meetings to get to that logo right there. I'm sure, I'm sure. So, you know, what went into it? What were the key aspects? What were the, you know, what were the most important aspects of the new look, the revised look? I mean, I think the number one driver of this refresh was flexibility for the brand. You know, I have no marketing and branding experience. So, you know, once we hired a director of marketing and they came on, we realized or I realized from him that, you know, there was basically zero flexibility in our old logo.

18:36We had no wordmark. We had no ability to, you know, maneuver around in the digital world, in the physical world and kind of, you know, easily manipulate which world you're in and be flexible. So that was really probably the number one driver of why we did it now. We're about to go on this large nationwide, if not global expansion, and we needed that flexibility for signage, as simple as exterior signage in front of a location in Boca Raton or Santa Monica, California, or to have a partnership with Acme Smoked Fish or Wild Ones. We just, you have to have this, you know, very flexible logo in order to kind of pull those events off in a seamless fashion.

19:20So that was the driver. Took about, you know, six or nine months of working with a marketing agency and our internal teams to get to that line of event and sitting in front of you. How much did consumer input factor into the final look? None, actually, to be honest. Yeah. Why is that? There was enough people involved. Diminishing returns, the more people you're involved in something like that, to be honest. Jay, you referenced national expansion, even potential global expansion. When do you feel like you have permission and the ability to make those kinds of leaps in your business? because once you decide to veer away from your home base, you are taking more risks.

20:13You are taking more responsibility, certainly more resources to get your product out there. But when do you feel like the brand has permission to travel and you feel comfortable with it doing so? Yeah. I mean, the good thing about our history as a company is we have been, you know, sending our bagels around the 50 states for a decade plus. We actually have been exporting our bagels to foreign countries for, you know, seven, eight years. So I think, you know, that gave us comfort that the demand was there, that the brand recognition was there. It also gave us comfort that we as a company understood logistics, understood what it took to get, you know, large containers of bagels shipped around the country or the world, or, you know, a dozen bagels sent to Idaho for someone that, you know, wanted to gift a dozen bagels of H &H to their friend or family.

21:12So when you get comfortable with that kind of flexibility and that ability to maneuver, you know, logistics, then all of a sudden, you know, opening a location in Boca, opening a location in Santa Monica doesn't seem, you know, that huge of a deal. So in terms of the next stage of expansion and your brick and mortar locations, where are you looking at right now? Where are the ideal locations for an H &H? Well, I've got another half dozen projects in the works. So after Boca and Santa Monica, we're going to have Washington, D.C., West Palm Beach, Knoxville, Tennessee, Chicago, Jacksonville, Tampa.

21:54Those are all scheduled to open in the first half of next year. We've got a lot more territories in discussion. So, you know, right now we're focused on the top, you know, 50 or so metro markets in the United States. We get a lot of inquiries globally. We don't think we're quite ready for the global market yet, but, you know, we're going to get there for sure. I'm curious why Boston isn't currently on the list. I'm being from Boston. I'd love to have an agency. We're very interested in Boston. We're working. Okay. No, don't worry. I mean, you know, we were crazy Red Sox fans here. Yes. but like, I don't think being a New York brand is going to bother us too, too much.

22:30No, no. I actually went to high school and graduated high school up in Boston area. So I'm very familiar. Okay, great. We're working on it. Okay, great. Good to hear. You know, Jay, I just have one more question. I'm particularly interested in how you as a leader of a brand with quite a bit of history, think about modernity and aligning modernity with history. You know, certainly the brand refresh is one thing. Certainly, you know, modernizing your cafes is one way to do it. But, you know, for younger consumers, how much does the interest and the eating habits of younger consumers factor into how you think about the future of H &H?

23:11Oh, that's a good question. I would say we do try to stay connected with those food interests of the younger generation. We've got some young people on our team here. And, you know, obviously it's a big conversation internally. And the way we can test that is through the LTOs and partnerships. Obviously, you know, some of the big trends are hot sauce and spicy foods. So, you know, we are constantly testing those type of LTO opportunities and, you know, whatever's working. Some of them work well with bagels and what we have. And some are just outside of our category. And, you know, we're not going to be able to kind of play in that sandbox.

23:52But we're always going to be testing new products and new ideas. Yeah. Well, younger consumers seem to be or they have a pretty good nose for authenticity. Sure. And there are so many influencers, quote unquote, influencers out there and so many celebrity partners. And sometimes they these collaborations work. Sometimes they just don't. They fall flat on their face. No doubt. Yeah. I mean, how do you assess the opportunity for a partnership with an influencer or a celebrity partner? I think we take each one individually and kind of weigh that out and see if it makes sense for the brand. To your point, I think that's why we focus on the quality ingredients.

24:33We still use the same recipe we've used for over 50 years. We still use the time-tested New York water bagel method process of making the bagels. In our facility in Queens, we've got a line of 50-gallon or 500-gallon kettles of boiling water that we're still fully submerging our bagels. Every single bagel globally is still in a big cauldron of boiling water. Those are the tenets and the connections of the history that will never change at H &H. Glad to hear that. And I would love to visit that factory sometime and see those 500-gallon kettles because that would be something to see, I'm sure. And it's going back to my first question of how often you're at the facility.

25:18Sometimes I think being the CEO or founder of a company, the reason you got into it in the first place was the passion for the food, the passion for whatever you're making. And Jay, what you guys are making at H &H is pretty darn fantastic. Thank you so much for taking the time. I really appreciate it and excited to see where the brand goes from here. All right, Ray. Appreciate your time. Thank you. All right, take care. You too.

25:43That brings us to the end of this episode of Taste Radio. Thank you so much for listening. Taste Radio is a production of BevNet.com Incorporated. Our audio engineer for Taste Radio is Joe Cratchy. Our technical director is Joshua Pratt and our video editor is Ryan Galang. our social marketing manager is Amanda Smirlinski and our designer is Amanda Huang just a reminder if you like what you hear on Taste Radio please share the podcast with friends and colleagues and of course we would love it if you could review us on the Apple Podcasts app or your listening platform of choice check us out on Instagram our handle is BevNetTasteRadio as always for questions comments ideas for future podcasts please send us an email to ask at tasteradio.com on behalf of the entire taste radio team thank you for listening and we'll talk to you next time