Burnsville fights to keep a signature candy firm

Abdallah Candies has made its high-end confections in Burnsville for the past half century. But as it looks to double its space, it's not clear whether the chocolatier, which thrived during the recession, will stay in town or be lured elsewhere.

One location or another, "We're definitely needing to move," CEO Steven Hegedus said.

He confirmed Abdallah is looking at multiple sites for the 120,000 square feet it needs but declined to comment on specifics while negotiations are occurring.

"We're happy with what we've seen," he said. "We now have the luxury of looking around and making sure we have exactly what we want."

The timing is more clear. "Right around after the holidays is when the decision will be made," Hegedus said, on whether the three- to four-month move will take place in the spring of 2015 or of 2016, and where.

Abdallah has become a signature business for Burnsville. Mayor Elizabeth Kautz has said that when she goes on official trips to other cities, she brings a selection of what she calls the "best chocolate in the world."

"I am incredibly proud of the company and its products and the fact it is Burnsville," she said.

But with the city "virtually built out," said Kautz, the only options for expanding in Burnsville are in existing buildings that might be less appealing. She mentioned a site at Hwy. 42 and Newton Avenue that "does have some challenges, because there's a slope on the hill," but said it can be made to work.

"That's a decision Steve has to make," she said. "We will continue to work with Abdallah to find a property that meets their needs, but I know their criteria are so … defined. If there's no flexibility, these are things that are not within my control."

Off to Savage?

The company is known to have seriously considered a site in neighboring Savage. The city tweeted in September that a candymaker it didn't name was eyeing it. But in October the city's administrator notified his council members that protected wetlands issues caused the firm — named this time — to cancel a contract to buy.

To keep Abdallah in Burnsville, Kautz and the city's head of economic development, Skip Nienhaus, have promised a tax-increment finance district to offset some of the costs Abdallah would incur to move buildings, as the city did in 1998 when the company moved locations.

Since January, Nienhaus said, the city has held several meetings each with Abdallah and its broker, EFH Realty Advisors of Burnsville, as well as a couple of meetings with the economic development nonprofit, Greater MSP.

Unfortunately, Kautz said, Burnsville is hamstrung by the economic development tools a city can use, and "At the end of the day, we don't own land. The land belongs to a lot of different people. If we don't have that product where they can build what they need, that's out of our control."

Nienhaus, who said the company continues to consider a site in Burnsville, said Abdallah may be eligible for a job-creation grant from the state. The city and the company last met earlier this fall, he said.

But Burnsville's biggest asset may be its shared history with the company, which grew up together. Abdallah may now be an international company, Kautz said, "but it is also a business that grew and developed here in Burnsville for over 50 years. It has a legacy in this community."

"I have a very good relationship with Steve Hegedus and his parents," she said. "We stand ready to continue working with him as he looks around."

Big growth

Right now, the only thing that's clear is Abdallah's need for space.

In addition to moving from 65,000 square feet to 120,000 at a new site, Hegedus said the company requires 40,000 more square feet available for further expansion if needed. In contrast, before it moved to its current site in 1998, Abdallah was operating out of another Burnsville location with 20,000 square feet.

Fifteen years later, national expansion and growth in demand has fueled another growth spurt for what began in 1909 as a small candy and ice cream shop at Hennepin Avenue and Lake Street in south Minneapolis.

The company has found success with high-end grocers, such as Lunds and Kowalskis in the Twin Cities, which carry specialty products to distinguish themselves from bigger stores.

"That is our target," said Hegedus — and looking nationwide, "There's more than enough demand."

That demand, spurred on by consumers' willingness to indulge in small luxuries, helped premium candymakers like Abdallah grow despite the recession and its aftereffects.

A 2012 market research report by Packaged Facts found that sales of chocolate candy are rising at more than 6 percent a year and total more than $20 billion annually. Abdallah's share of that bounty is $15 million a year, mostly made through wholesale business to 7,000 shops across the country.

Graison Hensley Chapman is a Twin Cities freelance journalist.