A taste of old Cape Cod - Cape Cod Potato Chip Co

Nation's Business, Feb, 1990 by Glen Macnow

A Taste Of Old Cape Cod

Over the years, Steve Bernard's business has grown by word of mouth: People put his potato chips in their mouth, then they go out and spread the word.

"We've never done any advertising, any promotion, any marketing studies," says Bernard, the president and founder of the Cape Cod Potato Chip Co. of Hyannis, Mass. "All of our money we've poured back into the quality of the product."

And what a product it is. In a $3.6-billion-a-year industry dominated by thin, mass-produced chips, Bernard built a fast-growing business by cooking up thick-cut, crunchy chips like people once made in their own kitchens.

The trick? A kettle-cooking method more evocative of the 1890s than of modern manufacturing. While the industry giants' automated commercial cookers each turn out 4,000 pounds of chips an hour, Cape Cod's 18 hand-operated cookers each produce just 120 pounds per hour. "It makes our labor costs astronomical," says Bernard, 40. "But there's a trade-off. We can produce a crispy chip that really tastes like a potato. And these days, there are people willing to pay for that quality."

Indeed, a growing number of quality minded consumers will pay handsomely for products such as handmade ice cream, bottled water, and gourmet pasta. And now, the Cape Cod chip - more expensive than most other chips but, to many potato-chip devotees, well worth the price. "The people buying us are the same people who buy Ben and Jerry's ice cream, Soho soft drinks, products like that," says Bernard. "But to be honest, we didn't start out with that audience in mind."

To be honest, Bernard and his wife, Lynn, didn't start out with much of a plan at all, beyond getting out of the auto-parts business. In 1980, they read a magazine story about potato chips and began experimenting at their kitchen stove. They spent a week at a small chip plant in Pennsylvania, studying the business. And on July 4, 1980, they opened a storefront potato-chip shop in Hyannis.

"My wife, brother, and I did it all back then," recalls Bernard. "I drove the truck to Rhode Island to pick up bags of potatoes, we cooked them ourselves, packaged them by hand, sold them ourselves. We would work 16-hour days."

And customers - including tourists - came to the store. Within a few years, word of the chips had spread around New England and down the East Coast. "I would get calls from grocers talking about clients who had tasted these marvelous chips while on vacation here," says Bernard. "The time came for wider distribution."

The company moved twice and is now headquartered in a sprawling factory; its tours are among the Cape's hottest tourist attractions.

Two shifts a day turn out close to 80,000 of the 7-ounce bags of chips in three varieties - regular, no-salt, and dill and sour cream. The chips are priced at $1.49 a bag.

In 1985, Bernard was approached by Eagle Snacks, a division of Anheuser-Busch. Although reluctant to sell his company, Bernard agreed to a takeover after gaining assurances that he would maintain control over day-to-day operations and product quality.

"Eagle helps us in distribution and marketing," Bernard says. "They've added three new plants [in California, North Carolina, and Tennessee], but they let us run things like we always have. The biggest difference to me is that I no longer have to work 100-hour weeks."

Today, Cape Cod Potato Chips has 200 employees. Its sales may be just a blip in the national market, but its growth has been phenomenal. The product can now be bought in 80 percent of the U.S. And it has spawned imitators.

Jane Wuerthner, spokeswoman for the Potato Chip Association, in Alexandria, Va., says that kettle-variety chips accounted for almost 7 percent of all the potato chips sold in the U.S. last year. While sales for the entire industry rose 5 percent, sales of the kettle chips rose 18 percent.

"Cape Cod chips are responsible for much of that trend," says Wuerthner. "I think people like that homemade, old-fashioned taste. They equate it with being less processed."

While he is proud of his accomplishments, Bernard admits that luck and timing have played a large role in his success. "Hey, this isn't rocket science here," he says. "Really, I think not having a background in food actually helped me. I came into this business without any preconceived ideas.

"When I started, people hadn't seen a hand cooker in this business for 50 years. They'd all say to me: `It's not done like this any more. You're crazy.' But because I didn't have those prejudices, I just tried things. A lot of them worked."

PHOTO : Steve Bernard tastes one of his Cape Cod Potato Chips, made by stirring the chips in cooking kettles evocative of the 1890s.

Glen Macnow covers the business of sports for the Philadelphia Inquirer.