Sadler’s BBQ Brand Going National Via PE Firms
Dallas Business Journal - by Chad Eric Watt, Staff writer

November 6, 2009

DALLAS, TX -- A pair of Dallas-area private equity firms has begun selling Texas barbecue to grocery shoppers coast to coast.

Two years after purchasing a majority stake in East Texas barbecue seller Sadler’s Smokehouse, Brazos Private Equity Partners and Wholesome Holdings LLC have got Sadler’s brisket, ribs and smoked pork loins on store shelves from Florida to California.

Sadler’s products are now sold in more than 7,200 retail locations nationwide, up from about 2,000 stores two years ago.

“The (Sadler’s) brand name has the potential to be accepted across the United States,” said Terry O’Brien, CEO of Sadler’s and Frisco-based Wholesome Holdings LLC.

Barbecue is a notoriously regional food, but O’Brien said Sadler’s products can appeal to palates in places where beef brisket doesn’t resemble the local variety of ’cue, adding that high-quality smoked meat such as what Sadler’s produces will have a universal appeal.

“The fundamental foundation of great barbecue is great smoked meat,” he said.

One big smokehouse

That starts with a 220,000-square-foot smokehouse in the East Texas town of Henderson, not far from the original Sadler’s Smokehouse in Lufkin.

Prior to its acquisition, Sadler’s was a family owned barbecue business, with grocery store distribution across five states. The Sadler family remains a part owner of the business.

Since acquiring Sadler’s in 2007, Wholesome Holdings has invested $2.5 million expanding and upgrading the capabilities of Sadler’s Henderson smokehouse.

Rather than expand Sadler’s production work to other locations, Wholesome has added capacity and technology to increase the meat’s shelf-life.

All the meat from Sadler’s starts at the Henderson smokehouse with 16 hours in what is essentially a giant pit smoker. The company keeps split hickory, mesquite and pecan wood to fuel that fire on two acres of land across from the pit, O’Brien said.

In addition to expanding Sadler’s production in Henderson, the company also has invested in a high-pressure pasteurization process that extends the shelf-life of its smoked meats.

But even expanding capacity and extending shelf life are only the first steps toward taking a regional brand national.

The pit, wood pile and packaging process are set to be featured on the Food Network in early 2010, as part of the channel’s “Unwrapped” series on how food products are made.

That’s part of Sadler’s effort to reach retail buyers beyond the traditional stomping grounds of brisket barbecue.

“There’s a whole science to going from regional to national,” O’Brien said. “It’s easier said than done.”

To that end, Sadler’s is investing heavily in its marketing effort, starting with in-store demonstrations and tastings.

“If we get the product in people’s mouths, we’re three-quarters of the way there,” he said.

A growing niche

Pre-cooked meats and nearly ready refrigerated meals such as heat-and-eat brisket are a growing segment of the food business, said Ed Fox, a marketing professor at Southern Methodist University’s Cox School of Business. While Americans are eating out less and staying home more, we’re not cooking home food from scratch.

“We as a nation have gone pretty far toward prepared and semiprepared (foods),” Fox said. “People are cooking less.”