More than 20 years ago, Jamie Parham of Little Rock was going through a divorce and needed cash.
So she fired up her oven and started baking and selling her grandmother's cheese straws, those gourmet pastries about the size of a pinkie with a bold cheddar cheese flavor.
The items took off with the help of Parham's daughter, Melanie Fox, who is the "M" in J&M Foods Inc. of Little Rock.
Over the years, sales climbed and now top $2 million annually, although Greg Parham, Jamie's son and director of sales and marketing for J&M, wouldn't be more specific.
Although Fox and Jamie Parham don't handle the day-to-day business anymore, J&M is still in the hands of the family with Greg Parham and his brother-in-law, Scott Thibault, running the operation.
To keep up with the growth, in October 2006 J&M Foods for the first time bought its own plant. J&M moved into a 35,000-SF warehouse on 21 acres in east Little Rock at 9100 Frazer Pike Road, which it bought for $925,000 in the fall of 2007.
J&M now is looking to keep the ovens baking year-round. In the third and fourth quarters, three shifts a day are required to keep up with seasonal demand for the cheese straws. But during the first half of the year, one shift is enough.
While J&M has a variety of flavors of cheese straws, that gourmet food segment can grow only so much, Greg Parham said. Over the years, J&M has added cookies and wine-and-cheese biscuits to the menu of items sold.
"We kind of transformed from being a cheese straw company into a full bakery," Parham said last week from his office.
And J&M still is looking for growth. Greg Parham said he wants to expand the company by adding a line of crackers or by acquiring another bakery.
J&M also is baking private-label brands for grocery stores, catalog companies and mass retailers. Parham wouldn't say what percentage of J&M's business is tied to private-label accounts.
"We consciously decided to take less of a margin and sell to the masses, but the bulk of what we do is gourmet specialty retail," Parham said.
The cheese straw sector is a niche market, said Michael Keighley, editorial director of The Gourmet Retailer, a trade publication. Only about three or four manufacturers make cheese straws, and sales of the item aren't tracked, he said.
"J&M is a terrific company," Keighley said. "The retailers who buy from them tell me they're always quick to return calls. They're doing everything they can in terms of customer services. I'm very high on them and the company."
J&M's cheese straws have taken home national awards. In 2004, J&M won the "Chef's Best" gold medal for cheese straws from the American Culinary Institute in San Francisco.
Before she did it professionally, Jamie Parham baked cheese straws and handed them out to family and friends as holiday gifts. Then a friend mentioned that Terry's Finer Foods Inc. in Little Rock was selling cheese straws.
"I thought, 'Well, it's one thing I know how to do,'" she said.
Parham and her older daughter, Melanie, became partners and started selling cheese straws in central Arkansas in 1987.
"We had expectations, but we did not have great expectations," said Fox, who was elected to the Little Rock School Board in 2006. "Since it was on the side, we were happy with between $30,000 and $50,000 in sales the first year."
Fox said going into business with her mother wasn't a problem.
"She took care of certain things and I took care of certain things," Fox said. "It went well. We had the same goal: sales."
After sales took off in Little Rock, Parham branched out into Pine Bluff, Hot Springs, El Dorado and Fayetteville. But both Parham and Fox held onto their day jobs.
Greg Parham said his mother was skeptical that the business would be a hit. But in the late 1980s, Jamie Parham noticed the cheese straws were a hot seller.
"People were reordering frequently," she said. And she took calls from people who had received the cheese straws as gifts and wanted to know where they could buy them.
Jamie Parham was friendly with Brent Bumpers and Sam DeWitt, the founders of Brent & Sam's Cookies. Bumpers and DeWitt encouraged J&M to join the National Association for the Specialty Food Trade, which it did. J&M attended the association's annual trade show in the early 1990s and collected orders from around the country.
Meanwhile, sales were growing in Arkansas.
"It started snowballing and snowballing to the point where we couldn't keep up with it at the side," Fox said.
Fox left her job in Dillard's corporate office and went to work full time making cheese straws.
Jamie Parham said the cheese straws were a hit because fewer women had time to make their own.
"In order to make these, you have to use a cookie press," she said. "It was very labor intensive, and nobody wanted to stay in there and squeeze this dough out." She said she never skimped on ingredients either.
By 1994, J&M had two lines of gourmet snacks, cheese straws and cheese biscuits.
In the mid-1990s, Fox started a family and couldn't devote as much time to J&M. So her sister, Janis Thibault, who had helped in the early days of the company, jumped in.
Janis' husband, Scott, also became involved in the production of the lines of cheese straws, but they needed help, Greg Parham said.
Greg Parham had been involved in sales and was tired of being away from home on business travel. So he quit his sales job and invested in J&M.
Growth of J&M continued under Greg and the Thibaults as more flavors were introduced, including Swiss, jalapeno, blue and asiago. But adding more cheese straw flavors can take the company only so far.
"We don't want to be the Baskin Robbins of cheese straws," Greg Parham said. "We can't just keep coming out with different flavors."
He said if J&M introduced another line of cheese straws, it would take sales away from the others.
And selling cheese straws outside the South is difficult. "The cheese straw is a Southern product," he said. "You get west of Dallas, people don't know what they are."
And even people who know what cheese straws are don't eat them every day. The typical customer is an older woman who serves the cheese straws to guests.
"We own this market," he said. "So our challenge is to find a more everyday product, a more consumable product that we can make from the machinery that we've got."
In the last six years, J&M began introducing more treats, including key lime and lemon powdered cookies as well as chardonnay and cabernet wine biscuits. But the real ticket to growth may be the private-label products.
Private Label Boom
"We're seeing the private label sector grow bigger and better than the gourmet retail side," Greg Parham said.
During 2007, private-label items sold in supermarkets, drugstore chains and mass merchandisers raked in $74.2 billion worth of sales, up 7.9 percent from the same period a year ago, according to the Private Label Manufacturers Association of New York. Sales for brand name items increased 4.2 percent to $399.3 billion for the year ending Dec. 29.
And 41 percent of shoppers say they are frequent buyers of store brands, according to a 2006 report by PLMA. That's up from 36 percent in 2001 and only 12 percent in 1991.
Dane Twining, a spokesman for the PLMA, said stores have turned to private labels in an attempt to attract more customers to their stores with exclusive products.
Parham declined to say for which stores J&M is supplying private-label products because he fears he would lose customers if they discovered they could buy the same product at a retailer or in a catalog for less than they pay for the J&M label.
J&M's standard 6-ounce box of cheese straws retails for $5.99 to $6.49.
In the last three years, J&M also has seen sales in foreign markets climb.
Parham said the European market is a small percentage of J&M's business, but it could see some growth in the United Kingdom.
"The product is somewhat European in its roots anyway," he said.
Another way to expand is to buy another manufacturer that fits into the cheese straw segment, Parham said.
But J&M's first goal is coming up with another recipe to bring to market.
J&M wants to "make something that we can sell to the customers we already have that know and like us," Parham said. "We are developing new products as we speak."