Things are cooking for Middleby Corp.

By Jessica Shapard, Medill News Service

This article was originally printed in the "Business" section of the September 19, 2002 edition of the Daily Herald. Reprinted from the September 19, 2002 issue by permission of the Daily Herald and the Medill News Service.

Already the world's largest commercial and industrial cooking equipment manufacturer, Middleby Corp. is aggressively expanding abroad.

After recently opening operations in China and India, it now boasts 11 offices outside the United States, including three warehouses and two factories. About a third of the Elgin-based firm's 1,000 employees work in more than 100 countries.

"We're following our customers around the world," said Selim Bassoul, Middleby chief executive officer. "We serve our customers 24-7 around the world."

The maker of a wide range of equipment from pizza ovens to fryers, Middleby is expanding as U.S. restaurant chains expand.

Bassoul credits an explosion in the "American cooking experience" around the world. It goes beyond burger chains such as McDonald's and Burger King to include chains such as TGI Fridays, California Pizza Kitchen, Chili's and Morton's.

"There's no city that I go to that I don't see an American restaurant," he said.

The market potential is "huge," Bassoul said, and Middleby has been growing fast to keep pace in the $1 billion a year worldwide industry.

The company doubled in size in December with the purchase of Maytag Corp.'s Blodgett Holdings Inc. in a deal valued at $95 million.

With that purchase it added the Blodgett, Pitco Frialator and Magikitch'n brands to Middleby's growing list of products. The company's other main brands are Middleby Marshall, Southbend, Toastmaster and CTX.

The merger has proven successful, according to Middleby Chief Financial Officer Dave Baker.

"Blodgett was almost the same size as Middleby," he said. "We are all involved in the hot side of kitchen equipment. It was a nice fit."

The result has been a tripling of profits in the third quarter to $2.8 million, or 31 cents per diluted share. Sales ballooned nearly 150 percent, to $62.5 million.

Its stock price has responded, hovering around $9.00 a share, well above its 52-week low of $4.00 a share. Chairman William Whitman's family controls about 40 percent of Middleby.

How does Middleby do it?

"We are the No. 1 or 2 market leader in all of the hot food fields we compete in," Baker said. "We now have a relationship with almost every major chain."

Especially strong in the delivered-pizza business, Middleby has been the sole provider of ovens to Papa John's International Inc. for more than 15 years.

"I'd say that their quality is the best in the industry in our opinion," said Tim O'Hern, vice president of global development for Papa John's. "They help us to deliver the product faster and with greater capacity."

Carl Combs, director of purchasing for Domino's, calls Middleby a "key component in Domino's formula for success.

"Middleby ovens are used in the majority of Domino's stores worldwide. Their consistent performance, reliability and long-term durability make Middleby the benchmark of the industry."

Middleby's relationship with pizza dates back to 1980 when the company first introduced a large conveyor oven that cooked pizza in less than 30 minutes and "revolutionized the pizza industry and allowed for quick delivery," Baker said.

A Dallas company holds the patent rights to the technology that Middleby licensed and has since improved upon. Innovative thinking and technology has made Middleby the market leader that it is, Baker said.

"The pizza chains have come to rely on Middleby for research and development," Baker said.

Middleby, which began over a hundred years ago, came into its modern form when several of its brand names, CTX, Middleby and Marshall, joined together. Baker said it was then a "natural progression" for Middleby to "hook up with Blodgett."

While the company is quick to point out that the food service industry is notoriously seasonal with the second quarter usually the best, Middleby fared well despite a sluggish economy and lagging numbers from the restaurant industry.

"It's a challenging market for us right now," said Baker, citing competition from rivals Sweden-based AB Electrolux and Glenview-based Illinois Tool Works Inc.

"And we just need to make sure that we do the best job we can in identifying opportunities," he said.

Daily Herald Business Writer Mike Comerford contributed to this report.

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