The bagel category treads a narrow path between today’s two food trends of nutrition and indulgence while never quite fitting into either.

While many categories of the baking industry can survive consumers’ current obsession with health and others can hide safely behind their indulgence, bagels find themselves trapped in the middle.

As the team from Always Bagels in Lebanon, PA, put it, a bagel is a bagel, which means carbs and calories. Even whole grain, fiber-packed attempts at added nutrition carry a calorie count that scares off consumers today. While items such as cake and cookies can enjoy their treat status, and loaf bread can benefit from whole grains, bagels still must contend with their rotund size and everyday breakfast positioning.

“Cake is a treat item,” explained Joe Latouf, executive vice-president, Harlan Bakeries, Indianapolis. “It’s indulgent. People are going to have dessert on the weekend or maybe once or twice a week, but to have something in the morning, every morning, people are more cautious.”

This precarious position has the bagel field staring down flat sales, and bagel bakers looking for new ways to jump start sales momentum. According to data from IRI, a market research firm based in Chicago, for the 52-week period ending Jan. 26, the entire bagel category only grew 2% in dollar sales and 2.8% in unit sales, with private label seeing the biggest boost at 9.1% growth in dollar sales. Shrinking the bagel’s size to reduce calorie and carb counts, cleaning up ingredient labels and reenergizing old channels with new promotions and creative uses for these rolls all provide opportunities to bring new life to the breakfast product.

Addressing nutrition concerns

The main drain on bagel sales today is the health trend sweeping the entire food industry as the bagel is packed with carbs and calories, two words consumers shy away from these days.

To combat this image and quiet consumers’ fears, bakers have succumbed to pressure to shrink the bagel. Where a traditional New York-style bagel originally weighed in at 5 oz, most current bagels now weigh 4 oz. Other bakers have taken the shrink solution even further by creating bagel thins and mini bagels.

Always Bagels’ junior bagel, a 2-oz product, has found success meeting the demands of school cafeterias. While school lunch programs struggle to meet new whole grain content requirements and the picky tastes of students, Always Bagels offers a bagel half the size of normal bagels. Outside of schools, these smaller varieties also meet consumers’ growing need for grab-and-go breakfast and snack options.

While shrinking the massive product’s size may address issues of carbs and calories, it doesn’t address consumers’ concerns over ingredients and nutritional value.

Harlan offers consumers a high fiber, low carb bagel that appeals to those who are cautious about what they eat. “Our Carb Check Bagel is a unique item that has developed a passionate following around the country,” Mr. Latouf said.

Clean-label, GMO-free, gluten-free and sprouted grains all have wiggled their way into the bagel category as opportunities disguised as challenges. While formulators continue the fight to develop a tasty gluten-free bagel, sprouted grains are providing a halo of health to the wheat-dense product in a wheat-hostile world. Panera Bread Co., St. Louis, introduced sprouted grain bread products, including bagels, to its menu, making it one of the first restaurant chains to do so, according to Tom Gumpel, the company’s head baker.

“Sprouted grains are a good source of fiber and rich in taste,” Mr. Gumpel said. “This is another nutritious whole grain that Panera is making accessible to its customers in popular bagel form. It’s an incredible step ­forward for our bakeries.”

Aside from sprouted grains, Harlan Bakeries found that clean label is something its customers continue to inquire about, but this approach continues to challenge formulators because of very short shelf life. “Shelf life is either earned through preservatives or very expensive formulations with natural preservatives,” Mr. Latouf said. While he expects the industry will eventually move to a clean-label reality, consumers will have to step up and actually be willing to pay for it.

Drawing in consumers

Supermarket shoppers have many options for buying bagels — the commercial aisle, in-store bakery, freezer cases. Currently, however, bagel sales seem to be converging in only the commercial bagel aisle. While in-store bakeries were once an outlet for premium bagels, shoppers are seeking these breakfast breads in the center of supermarkets.

According to Mr. Latouf, Harlan Bakeries has seen its in-store bakery business shrink and freezer case bagel volumes fall while all those sales migrate to the bread aisle. According to IRI data, Pinnacle Foods Group, Parsippany, NJ, saw sales of its brand Lender’s, the leader in frozen bagels, fall 14% in the 52 weeks ending Jan. 26. The second-largest frozen bagel brand, Ray’s New York Bagels, experienced a 12% drop, and dollar sales for the overall frozen bagel category were down 6%.

In a category scrambling to find its footing, bakers can gain a foothold by getting back to basics in the in-store bakery and promoting quality and value instead of trying for the health angle.

“There can be some growth in the in-store bakery in those chains that are willing to take a step back and look again at baking fresh,” Mr. Latouf said. Some retailers, for example, continue to see success with bagels in its in-store bakery while so many others flounder — a success Mr. Latouf directly attributes to the fact that employees bake those bagels fresh. Most in-store bakeries today use thaw-and-sell products that may be the easiest to get on the shelf but not the easiest to sell.

The team at Always Bagels agreed that in-store bakeries should continue to cycle-bake fresh in their bakeries and added that promoting superior quality can bring people in and keep them coming back. If the bakery promotes its bagels as a quality product and the consumer tastes and recognizes the quality, they’ll buy it again and again. For Always Bagels, quality means a New York-style bagel with a lot of shine, chewiness and moisture — all attributes earned through the bakery’s process.

To ensure its bagels see success in the in-store bakery, Always Bagels works with its customers to help them promote and bake its bagels properly to draw in shoppers and keep them there. Those customers who see the most success, the most growth, the team said, are those that support the category with promotion and deliver what consumers want: great quality at a good value. Those who don’t promote and don’t address those consumer desires are the same ones who continue to see flat and declining sales.

Creating new uses

As a way to give the category a kick, bakers also continue to look for other uses for bagels. “We are constantly working on new and creative varieties as well as suggestive uses for bagels,” said Greg Linzer, sales and marketing manager, Western Bagel, Van Nuys, CA. He suggested that the bagel can serve as a creative alternative to regular bread products in such meals as pizza, sandwiches or for French toast.

This creativity can often be found in quick service and fast casual restaurants and bagel shops. At the end of 2013, Bruegger’s Enterprises, St. Paul, MN, announced plans to open 100 of its Bruegger’s Bagels bakeries by 2015, and at the beginning of this year, Einstein Noah Restaurant Group, Lakewood, CO, reported opening a record 61 restaurants in 2013, with 75 to 85 more in 2014.

Such expansions are evidence of some growth, but Mr. Latouf attributes that growth not necessarily to the bagel but to the totality of what the restaurants offer consumers. “It’s about the whole store so to speak,” Mr. Latouf said. “The guys that are doing a good job at innovation, offering good coffee and a broader selection of products seem to be doing better, and the guys with limited offerings don’t do as well,” he said.

These chains’ success relies on offering a whole package: a pleasing variety of food, coffee and atmosphere. “People especially like the places where you can get good quality food quickly but don’t necessarily want to rush out the door,” Mr. Linzer said. “People love to enjoy a breakfast bagel sandwich, gourmet fresh-brewed coffee and browse away on their iPad.”

When it comes to finding success selling bagels in these outlets, companies hit the mark when they offer the right kind of products built around the bagels: low-calorie sandwiches carried on health-conscious bagels or bagel thins. Panera Bread uses its new Sprouted Grain Bagel Flat as the carrier for the Egg White, Avocado and Spinach Breakfast Power Sandwich. Bakeries will also sell the bagel flat separately. Early this year, Einstein Noah Restaurant Group launched its Thintastic Bagels, which contain 35% fewer calories than conventional bagels, on its Smart Choices menu.

New varieties and flavors of bagels can also gain consumer attention, particularly limited time offers. The team at Always Bagels took inspiration from the muffin category. When muffins suffered from persistent flat sales, new flavors and sizes gave the category a boost. While Always Bagels’ specialty flavors make up a small part of its overall volume, eye-catching flavors can reignite interest in this lagging category.

Harlan Bakeries found success in incorporating the ever-popular fall flavor of pumpkin, and Original Bagel, West Caldwell, NJ, took its winning Asiago bagel as a cue to develop another cheesy variety, Cheddar. Garrett Levenbrook, vice-president of finance for Original Bagel, described the new Cheddar cheese bagel as having an eye-catching appearance and cheesy richness.

Whether through smaller products, nutritious and high-quality ingredients or creative positioning, bagel producers continue to search for ways they can adapt to today’s health-conscious consumer population and find balance between demand for nutrition and the safety of indulgence.

Gluten-free brings challenge, opportunity

No argument about it, the current health trend with the biggest impact on the baking industry is gluten-free. “Gluten-free and low-carb trends always have a negative effect on bagel sales and bread in general,” said Greg Linzer, sales and marketing manager, Western Bagel.

While the weight-loss side of the gluten-free trend may be a passing fancy, the millions of people diagnosed with celiac disease or a legitimate gluten allergy point to a trend with staying power. While bakers have successfully produced gluten-free sandwich bread and are now expanding those gluten-free offerings to include more variety, some categories continue to puzzle formulators as how to remove gluten and maintain taste.

Joe Latouf, executive vice-president, Harlan Bakeries, sees the challenge of a good-tasting gluten-free bagel as an opportunity. “As probably the single largest bagel manufacturer in the country, we feel a responsibility to our customers,” he said of the gluten-free need. “The [gluten-free bagels] out there today don’t taste very good. We’re working on that. We don’t have a product to show anyone yet, but we should have one soon. At this point, it’s an issue that seems to resonate with the American consumer.”