The sweet taste of revival

"The phone has been ringing off the hook with ideas, so there are things on the horizon, such as a potential partner for Felix and Norton cookie-dough ice cream next summer," he said.

The Montreal Gazette
December 18, 2010

The sweet taste of revival
After Monsieur Felix & Mr. Norton's expansion in the '90s ledto bankruptcy, the company has gone back to basics to stage a comeback
Megan Martin

Michael.jpg

Monsieur Felix & Mr. Norton president Michael Eskenazi, with his wife Gina, said the mobile bakery they use to promote their cookies has been a big factor in the company's resurgence in the past few years. Photograph by: PIERRE OBENDRAUF, The Gazette

After over 25 years in business and more than its share of ups and downs, Monsieur Felix & Mr. Norton is roaring back into the cookie business.

After the company faded into the background for several years, its president, Michael Eskenazi, decided it was time to put his cookies back on the map.

"I kept hearing: 'Hey, what happened to your cookies?' " said Eskenazi, who co-founded the company with his wife, Gina. "So I knew that people still believed in our brand and our product, and so did I, despite the turmoil of previous years."

The company grew very quickly after opening in 1985 with one store on Queen Mary Rd. Over the next five years, another eight locations were opened. Monsieur Felix & Mr. Norton then began franchising its stores.

By 1996, there were 45 locations in Quebec and Ontario, which included about 10 stores in shopping malls.

"Having stores in malls was a new concept for the company and this is where the story starts to go sour," Eskenazi said. "The landlords in these major malls insisted that our company sign the head lease and then sublet the store to our franchisees so that we would be the guarantor."

But the franchises were independent businesses with their own financing, so when one failed the lender would seize its assets, leaving Eskenazi with the lease to an empty store.

"Some stores were doing very well, but some were costing a lot in terms of rent and with the financial obligations we had to the closed stores as the guarantor, we began losing money," Eskenazi said.

After various attempts to find financing, Eskenazi and his wife realized in 1998 that they had no choice but to put Monsieur Felix & Mr. Norton into bankruptcy.

"That was a really sad moment for us," he said.

A Canadian company called Sweet Factory then made a deal with the trustee to purchase the former cookie giant out of bankruptcy. They wanted to sell the cookies in their stores, using the Monsieur Felix & Mr. Norton logo and recipes.

"The logo and recipes weren't part of the bankruptcy; I still personally owned them through a holding company," Eskenazi said. "So Sweet Factory and my company entered into an agreement to allow them to use the name and dough."

The financial impact of putting his company into bankruptcy left Eskenazi with some stress, and so in 1999 he turned his attention to his second venture, the Ultimate Cookie Company.

Eskenazi started Ultimate back in 1991 to sell private label cookies and cookie dough to restaurants, hotels and food supply stores.

"I had a number of opportunities to grow Ultimate, but I needed some financing," he said. "I found a company in Toronto called Tasty Selections that had a big plant with a lot of extra capacity, so we decided to merge our businesses."

But just before the deal went through, Ultimate was bought by International Menu Solutions, a publicly traded company.

"They gave me an offer that was too good to be true," Eskenazi said.

"And it turns out, it was."

In 2000, the markets crashed after the tech bubble burst, and financing largely dried up. International Menu Solutions declared bankruptcy in 2001, and all the shares Eskenazi owned that were to be held in trust for three years evaporated.

"They clearly had a plan in place, though, because operations never ceased on Ultimate Cookie Company," Eskenazi said. "I lost my job and my connection to Ultimate and the value of my assets; I came very close to losing my home."

But he still owned the cookie recipes and the Monsieur Felix & Mr. Norton trademark.

"So I set up an agreement with a local producer, and we started supplying the cookies to the remaining Felix and Norton franchises and the Sweet Factory stores," Eskenazi said.

The owner of Sweet Factory, Jean-Guy LeBlanc, then hired Eskenazi as a consultant, and they worked on a business plan to launch Monsieur Felix & Mr. Norton internationally.

But just days before they launched, LeBlanc was killed in a car accident.

"After almost losing my home and the events of 9/11, Jean-Guy's death was strike three for 2001," Eskenazi said. "I took it slowly after that -spent more time with my family, got involved with my kids' school and just reevaluated my life."

The business plan with LeBlanc dissolved after his death, and Monsieur Felix & Mr. Norton continued to decline.

"In late 2006, the sales of cookies at Sweet Factory had fallen to below the minimum in the contract we had, so I served them a notice that they no longer had exclusive rights to use the name Felix and Norton," Eskenazi said. "I knew I had to do something outrageous to make the company successful again."

"So I thought, why don't I find a way to bring the cookies to people, instead of having people come to the cookies; like a mobile bakery," Eskenazi said.

On Craigslist, he found a used truck in Portland, Ore., that was perfect for what he needed.

"So after having it inspected I flew down to Portland, bought the truck and spent the next six days driving it home thinking, 'What the hell have I done?'" Eskenazi said. "It was sort of an 'If I build it, will they come?' question."

He had the truck gutted and converted it to a propane-consuming eco-friendly mobile bakery complete with ovens, freezers and everything needed to bake fresh cookies all day.

"This kind of novelty in the face of potential failure is what allowed Felix and Norton to make a comeback," said franchising expert Robert Brumer of Robert Brumer Global Franchise Group Inc. "The Eskanazis were aware of what they needed to do and took the necessary steps together with their strong commitment to repair what had gone wrong and make it work again; that's clearly illustrated by the innovative idea they were able to capitalize on."

In the summer of 2008, the mobile bakery hit the road and become a fixture at community events in Hampstead and surrounding areas.

"The following year, we were able to get a contract to set up every Saturday in the Old Port at the clock tower pier where the crowd gathers to watch the fireworks, it was extremely successful," Eskenazi said.

The Old Port was so pleased, this summer they brought the mobile bakery back every weekend and for other major events and festivals.

Felix and Norton was slowly starting to regain its lost ground and Eskenazi now believed he could sell the products in grocery stores and take the company to the next level.

"I started to make some inroads and began working with branding specialist Jimmy Berthelet and his company called Stand Montreal," Eskenazi said. "He poured his heart and soul into the business and helped us to develop a rebranding strategy to position us for a relaunch."

In the spring of 2010, Eskenazi found a manufacturer in St. Jean called Nutrifrance.

"They had everything that I needed to step up production," he said.

"Nutrifrance also had excellent connections at IGA grocery stores, and they introduced me to a buyer at IGA in the bakery department who happened to be a big Felix and Norton fan."

It wasn't long before a deal was struck.

"IGA fell in love with our presentation and agreed to sell our products in every one of the three chains they operate, about 350 stores," Eskenazi said. "As of the beginning of November, our cookies are now available in all of the stores, and we've been on tour with the mobile bakery at all locations to promote the launch; we've had an amazing reaction from Felix and Norton fans, and we're off to a terrific start in terms of sales."

The Eskanazis' perseverance and determination appears to have prevailed, Brumer said.

"They have created a new marketing method for their well-known product and have been validated by one of the major retail food store giants," Brumer said.

Monsieur Felix & Mr. Norton was relaunched without the help of financial backers.

"I've spent a total of approximately $150,000 for the new brand image and the mobile bakery, mostly from cashing our RRSPs and other savings, refinancing our home to extend our line of credit, and getting some help from family members," Eskenazi said. "So with this level of personal investment, obviously we're thrilled the relaunch is doing well thus far."

For the next several weeks, Eskenazi and his wife will be touring IGA locations, talking with customers and giving free samples of cookies.

"We're really excited, it's great to meet customers in the stores, and people are always so surprised to meet the founders of the company, but that's how we've always been: hands-on," he said.

Hands-on is a bit of an understatement when you consider that Eskenazi and his wife have always run the company themselves -they have no employees.

With the successful relaunch of the company, Eskenazi says people can expect more exciting news from Felix and Norton in the near future.

"The phone has been ringing off the hook with ideas, so there are things on the horizon, such as a potential partner for Felix and Norton cookie-dough ice cream next summer," he said.

As for the mobile bakery, Eskenazi and his wife will be continuing their contract with the Old Port and will carry on being involved in local community events as well.

"There are very few successful business people who have not failed, at some point in their careers, to later go on and reinvent themselves and rebuild their success; it is a highly commendable characteristic," Brumer said.

"We owe so much to the fans of our cookies. People really love our products, and that has kept us going throughout the whole 25 years," he said.

As for the cookies themselves, they haven't changed at all in the past quarter-century. They're still made using all natural ingredients, including the highest quality Belgian chocolates.

"It's actually amazing after everything the company has been through, the cookies have been the constant," Eskenazi said.

"We've always believed in our product, and we're so happy that people do too."

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