Udi Bar-on on granola, gluten-free and the celebratory funeral to bury the Udi's brand

Andrew Chapman

Udi Bar-on

Yesterday, in part one of my conversation with Udi Bar-on, founder of Udi's, he recalled his midlife crisis, his Christmas miracle and the rapid growth of his empire. Today, in part two of our interview, Bar-on talks about the gluten-free business that made him a millionaire and the celebratory funeral that will retire the Udi's name

The girl and the granola:
The bakery was struggling, and we were always looking to add new products, so we started a granola business in partnership with Yasmin. She tasted the granola that we'd been using from a company in Seattle and insisted that her granola - nuts, oats, honey and canola oil - was way, way better, and when we ate it, we were like, "Oh, my God." We knew that it was something that we could bake and sell - and it had the benefit of not having shelf-life restrictions. We sold the granola to local Costco retailers, and it was the first Udi's product to be packaged for national distribution. The granola business took on a life of its own, and it was a key moment for our company.

See also: Exclusive: Udi Bar-on on selling his brand for $125 million and how you can win the name game

Boy meets girl:
In 2004, Etai and I opened Udi's Cafe in the same building as the catering company and bakery, and we hired John Broening as our first chef. That's where John and Yasmin met, and now they're married and have gone on to have their own successful collaborations. That same year, we also opened Udi's in Stapleton, and both locations continue to thrive. Robin, my daughter, had been working in New York at Mario Batali's Casa Mono, and when she returned to Denver, she took over as head chef of both Udi's.

Supply and demand:
The bakery was too small and business was getting too big, so while the cafe is still in its original north Denver location, we moved the bakery to Louisville, and we now have 30,000 square feet of space.

Opportunity knocks:
When we moved the bakery to Louisville, we obviously had some empty space at the original location, so we needed to figure out what to do with it, and that's when Chadwick White, the former baker of Il Fornaio Wholesale Bakery, approached us with some gluten-free bread, muffin, cookie and pizza recipes that he'd developed. His products were really special, and when Etai went to a gluten-free food show in Denver, people started to cry because they were so moved by the fact that they could eat bread again. We were completely unprepared for that kind of emotion, and we realized that we had something here that was really important - something that was revolutionary.

Gluten-free goes gangbusters:
We opened the gluten-free bakery in the span of just a few days, and King Soopers was our first customer. They couldn't keep the bread on the shelves - and the sales never slowed down. We were filling a huge void in the marketplace and creating a trend in the United States, and we owned 50 percent of all gluten-free bakery sales nationwide. Whole Foods started to carry it, followed by Trader Joe's, Sprouts, Kroger, Walmart, Vitamin Cottage, Wegmans and Safeway. We became cash-rich.

Becoming millionaires:
I remember King Soopers faxing us a sales report from its Colorado stores, and when we looked at the numbers, they were way beyond our imagination. The numbers were so high that we were convinced they were wrong, but we found out that the bread was selling out every single day. In July of 2012, we sold the gluten-free business to Smart Balance, which then changed its name to Boulder Brands, for $125 million. At the time of the sale, we had our breads in more than 20,000 stores across North America.

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