FRITO-LAY HISTORY: The Frito Company

Charles Elmer Doolin, manager of the Highland Park Confectionery in San Antonio, purchased a corn chip recipe, a handheld potato ricer and 19 retail accounts from a corn chip manufacturer in 1932 for $100, which he borrowed from his mother. Doolin established a new corn chip business, The Frito Company, in his mother's kitchen. Doolin, his mother and brother produced the corn chips, named Fritos, and had a production capacity of approximately 10 pounds per day. Doolin distributed the Fritos in 5 bags. Daily sales totaled $8 to $10 and profits averaged about $2 per day. In 1933, the production of Fritos increased from 10 pounds to nearly 100 pounds due to the development of a "hammer" press. By the end of the year, production lines were operating in Houston and Dallas. The Frito Company headquarters also moved to Dallas to capitalize on the city's central location and better availability of raw materials. In 1937, The Frito Company opened its Research and Development lab and introduced new products including Fritos Peanut Butter Sandwiches and Fritos Peanuts to supplement Fritos and Fritatos Potato Chips, which had been introduced in 1935. In 1941, the company opened its Western Division in Los Angeles with two sales routes, which would become the prototype for The Frito Company's distribution system. In 1945, The Frito Sales Company was established to separate sales from production activities and meet the demands of an expanding population. Expansion by the Frito National Company continued with the issue of six franchises in 1945. In 1950, Fritos were sold in all 48 states. The Frito Company issued its first public stock offering in 1954. At the time of Doolin's death in 1959, The Frito Company produced over forty products, had plants in eighteen cities, employed over 3,000 people and had sales in 1958 in excess of $50 million. By 1962, Fritos would be sold in 48 countries.

H.W. Lay & Company

The invention of the potato chip is often credited to George Crum in the late 19th century. In the 1920s salesman Herman Lay sold the chips in the Southern U.S out of his car. In 1932 Lay began a potato chip business in Nashville, Tennessee. Lay was hired as a salesman for the Barrett Food Products Company, an Atlanta, Georgia manufacturer of Gardner's Potato

Chips, and eventually took over Barrett's Nashville warehouse as a distributor. Lay hired his first salesman in 1934, and three years later had 25 employees and a larger manufacturing facility where he produced popcorn and peanut butter sandwich crackers. A representative of the Barrett Food Company contacted Lay in 1938, offering to sell Barrett's plants in Atlanta and Memphis for $60,000. Lay borrowed $30,000 from a bank and persuaded the Barrett Company to take the difference in preferred stock. Lay moved his headquarters to Atlanta and formed H.W. Lay & Company in 1939. Lay later purchased the Barrett manufacturing plant in Jacksonville, Florida, and additional plants in Jackson, Mississippi, Louisville, Kentucky and Greensboro, North Carolina. Lay retained the Gardner trademark of Barrett Food Products until 1944, when the product name was changed to Lay's Potato Chips. Lay expanded further in the 1950s with the purchase of The Richmond Potato Chip Company and the Capitol Frito Corporation. By 1956, with more than 1,000 employees, plants in eight cities and branches or warehouses in thirteen others, H.W. Lay & Company was the largest manufacturer of potato chips and snack foods in the United States.

Frito-Lay, Inc. and PepsiCo, Inc.

In 1945, the Frito Company granted the H.W. Lay & Company an exclusive franchise to manufacture and distribute Fritos in the Southeast. The two companies worked towards national distribution and developed a close business affiliation. In September 1961, The Frito Company and H.W. Lay & Company merged to become Frito-Lay, Inc. In February 1965, the Board of Directors for Frito-lay, Inc. and Pepsi-Cola announced a plan for the merger of the two companies. On June 8, 1965, the merger of Frito-Lay and PepsiCola Company was approved by shareholders of both companies, and a new company called PepsiCo, Inc. was formed. At the time of the merger, Frito-Lay owned 46 manufacturing plants nationwide and had more than 150 distribution centers across the United States. Today, PepsiCo is organized into four divisions: Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International and Quaker Foods North America. Although products sold in North America under the Frito-Lay brand name are also sold internationally, international sales are reported by the PepsiCo International division.