CHESAPEAKE BAGEL SETS FIRST RADIO AD CAMPAIGN

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Chesapeake Bagel Bakery, under new ownership, is trying to stand apart in the troubled bagel restaurant business.

The 160-unit chain, acquired earlier this year by AFC Enterprises, is set to air its first radio advertising in the first quarter of 1998.

"We want to reposition it to the consumer, invigorate it with new products and give the brand a more appealing consumer identity," said Bob Eck, VP-marketing.

A test of TV advertising is expected to follow in the second quarter. Williams Whittle Associates, Alexandria, Va., is the agency.

NEW LOGO

The repositioning, which includes a new logo, comes at a time when the still-young bagel restaurant business is having severe growing pains. Chesapeake ranks No. 5 in unit count in the segment, which includes local players.

Late last month, Manhattan Bagel Co. filed for Chapter 11 bankruptcy protection. The stock price of market leader Einstein/Noah Bagel Corp., operator of Einstein Bros. Bagels, with some 546 units, hovered near a 52-week low at about $7 per share.

"The bagel segment is still a good segment," said Allan Hickok, a restaurant analyst with Piper Jaffray, Minneapolis. "There have been a number of well-documented problems at bagel chains because a lot of companies thought they could all get big quick."

Mr. Hickok said the others' problems give Chesapeake a chance to stand out.

"AFC is a company that is very aggressive and they will be able to put some muscle behind that brand," he said.

Chesapeake's new logo, with the slogan "Fresh baked all day," looks like a bagel with a notch cut out to form a "C" for Chesapeake. It replaces an image of a bagel mounted on a Roman column framed by stalks of wheat.

The chain, located in 32 states and Washington, D.C., has an advertising budget of $1.7 million. Last year, total sales were approximately $78 million.

FRESH MADE ON SITE

Mr. Eck said the point of difference for his chain is that the bagels are made daily from scratch on site. Other chains typically have central production facilities that provide already prepared dough to the units.

To build sales at the units, where the average purchase is in the high $3 range, the chain is about to launch new lunch sandwiches. It is looking to team up with a branded coffee supplier to increase coffee sales.

"Coffee is an interesting opportunity for us," said Mr. Eck.

Customers now frequently buy their coffee at a unit of Starbucks Coffee Co., and carry it into a Chesapeake unit to have along with their bagel, he said. "We want to provide a more convenient solution to that problem."

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