Spread Bagelry, seeking to grow, gets a schmear of private equity
MVP Capital Partners, a private-equity firm based in Radnor, said it was investing in founder Larry Rosenblum and his wife, Gigi Arnuti.
Spread Bagelry, which brought Montreal-style bagels to Philadelphia in 2011 with a shop near Rittenhouse Square, is preparing for a national rollout.
MVP Capital Partners, a private-equity firm based in Radnor, said it had signed on as an investor with founder Larry Rosenblum and his wife, Gigi Arnuti. Both parties declined to disclose the terms but said plans included eight to 12 new company-owned locations, the hiring of a management team, and the creation of an online storefront. Rosenblum will remain president and chief executive, MVP vice president Robert Brown III said.
Besides the shop that opened in May 2011 on 20th Street near Spruce, there's a larger Spread location with a bar at 36th and Chestnut Streets in University City that opened in September 2016. Both stores were self-funded.
New stores could include kiosks and would be modeled on the smaller 20th Street location, which has a counter and limited seating. The partnership with MVP will not be apparent to customers, aside from subtle interior changes, Rosenblum and Brown said.
"If this place feels like a chain, we've failed," Brown said.
Hand-rolled Montreal bagels, as opposed to the puffier New York-style bagels, have a sweetness mixed with a pleasant char and crunchiness, as they are boiled in honey water and baked in wood-fired ovens in small batches. Traditionally, Montreal bagels are smaller than Spread's and have a larger hole. Spread's bagels adapted a slightly more pneumatic visage shortly after opening, a nod to customer reaction. Spread's hand-built oven at 20th Street is 6 feet by 7 feet and weighs two tons.
Rosenblum, who describes himself as a serial entrepreneur, saw what appeared to be a gaping hole in the market when he and then-partner Mark Cosgrove leased a storefront across from Twenty Manning Grill in 2010. The men had heard of Montreal-style bagels and made a brief pilgrimage to scope out the bakeries.
"I wanted to do for Montreal bagels what Auntie Anne's did for pretzels," said Rosenblum, who grew up in Northeast Philadelphia eating bagels from the long-gone Brooklyn Bagels shop on Bustleton Avenue, near the Orleans movies and Abe's Appetizers. "You make it fresh, you make it in front of people," he said. "It's different. It's not a manufactured product."
For nearly a year during construction on 20th Street, a sign teased "Montreal-style bagels." The debate between bagel styles began to rage, so when Spread opened, neighbors had been primed to the idea.
"Over all these years, I can't tell you all the times people would come in and say, 'I wish you were in my town,'" said Rosenblum. Meanwhile, "I saw imitators popping up … and I got a little frustrated. I wanted it to be me."
Brown's interest in Spread began as a customer, where his standing morning order is a bacon, egg, and extra-cheese on an everything bagel and a coffee.
A mutual friend introduced the men late last year and they began talking.
"I obviously know the product very well," Brown said. "Moreover, we're interested in products that have a timeless and enduring appeal."
The local coffee company Saxbys and the drive-through grocer Swiss Farms are in MVP's portfolio.
Spread fits because "from our perspective, he's shown that he can build a business and have it endure," Brown said of Rosenblum. "More importantly, he's shown that he can replicate it."
The investment follows a recent settlement that Spread reached with the Labor Department, which contended that the shop owed money to dozens of workers over unpaid overtime. Rosenblum and Arnuti agreed to repay $40,000.
"It was no big drama," Rosenblum said. "We fixed it."