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

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Udi Bar-on Udi's

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.

The name game: Not fully understanding how desperate the gluten-free community was for high-quality gluten-free products, we had branded both the gluten-free and traditional products under the Udi's umbrella, and because the popularity of the gluten-free products had spread like wildfire, the Udi's name became synonymous with superior gluten-free products. That's when we all sat down and made the decision that the Udi's name would follow the business that was the most financially lucrative. When the gluten-free and granola businesses began to explode on a national level, we knew that they would have the most equity, and if we sold the Udi's name, along with the products and recipes, we'd get the biggest return. But one of the stipulations of the sale was that we would agree to undergo a complete rebranding, including the renaming of the company, by July 2014. The gluten-free business was created as a means to reinvest and grow our original business, and we always knew that the greatest value of the gluten-free products was in the name.

You name it: Instead of us coming up with a new name, we want it to come from the local community and our customers. We want to hear from people who have a stake in all of this, and we thought that by giving the community the opportunity to give us a new name, it would be a good way to get the message out that we're not going away; we're just changing the name and celebrating twenty amazing years of success. We're going to have a party at each restaurant whenever we take an Udi's sign down, and then during the last week in June, we'll say our final goodbye with a New Orleans-style funeral at our Stapleton store, at which time we'll retire and bury the Udi's brand.

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