Derby-Pie fights hard for sweet taste of success 
BY JUDITH BERZOF 
The Courier-Journal, 1989

The name Derby-Pie was an instant winner when it was pulled from a hat at the Melrose Inn in Prospect where it was created more than 35 years ago by members of the Kern family.
       
In 1969 the family business registered the name with the U.S. Patent and Trademark Office. Since then Kern's Kitchens Inc. has spent more than $100,000 to protect the name of the chocolate and nut pie.
       
The pie was invented by Walter and Leaudra Kern and their son, George, who managed the restaurant at the inn, after many taste-testing sessions. George later opened his own restaurant in Virginia, but the Kerns remained loyal to Derby-Pie, eventually baking it at their small brick home across from Oxmoor Center. All three are now dead.
       
In 1973 the Kerns' grandson, Alan Rupp, 35, then a business major at Western Kentucky University, stepped in to take over the business and help his aging grandparents. They had just 14 customers, but they included some of the city's oldest and most well-known restaurants.
       
"When we were married in 1979, we baked six pies at a time. It was unreal," recalls Alan Rupp's wife, Shelia, 34. Now, 80 are baked at once in a rotary pan oven.
       
Since he became president in 1979, Rupp has spearheaded the company's growth through aggressive marketing, expanded distribution and the move to a modern production facility in the Bluegrass Corporate Center in 1983.
       
In 1973 company revenue was less than $10,000 for about 5,000 pies.
       
"We had a banner year in 1977 with $28,000 in sales, and sales have increased every year since," said Rupp.
       
By 1979 revenue hit $43,000; in 1984 it exceeded $200,000. Rupp projects revenue will approach $500,000 by July 31, the end of the firm's fiscal year.
       
Over the last 10 years, annual revenue has often taken erratic jumps of 20 percent, 50 percent and even 90 percent. Growth is at a more stable pace of 10 percent to 15 percent, and Rupp anticipates future increases of 10 percent to 20  percent annually. A privately held company, Kern's does not disclose profits; however, profits are invested in the business.
       
About 30,000 pounds of Nestle's Chocolate Chips, 30,000 pounds of Mariani walnuts and a couple hundred eggs a year go into the 100,000 Derby-Pies and the tarts that are made annually.
       
A Derby-Pie brand cheesecake, also a longtime family recipe, is also produced, accounting for 10 percent of sales.
       
The tarts were a smashing success when 1,000 were served hot with a bourbon-laced whipped cream at the Breeders' Cup races at Churchill Downs on a chilly day last fall.
       
Rupp expects several thousand tarts will probably be sold when they debut in the infield on Derby Day. The dining room at the track will probably go through 1,000 to 2,000 Derby-Pies during Derby Week.
       
One third of the bakery's business is done in April, May and June, but summer is also busy filling orders from the state park dining rooms. Normally, 1,000 pies are baked a week, but in the six weeks surrounding Derby, production can climb to 2,500 and once hit 3,500 a week. Last minute Derby Week orders aren't encouraged.
       
"If they don't have pies by Friday before Derby, they have a hard time finding us. We take Saturday off and enjoy the Derby," said Rupp.
       
One of the company's biggest challenges was baking a 12-foot pie for the opening of the Kentucky Derby Museum during Derby Week 1985. The pie was baked in specially designed, 55-pound wedge-shaped pans costing $300 each. Rupp is so committed to serving the pie warm that he persuaded a friend to crawl under the horseshoe-shaped stage and bring a piece of warm pie from the kitchen that Rupp served to then-Gov. Martha Layne Collins.
       
The Rupps feel personal contact is vital to their business. Each Friday one of the Rupps or Karen Perry, office manager, personally call 120 customers to take orders and check on product quality and service.
       
With the end of Derby season fast approaching, Shelia Rupp says she is looking forward to taking the summer off, returning at busy times when the company needs her.
       
It hasn't always been that way. Shelia Rupp has gone directly from the bakery to the hospital for the birth of each of their three children, Matthew, 6; Jonathan, almost 3; and Rebecca, 15 months.
       
At one point, the Rupps did all the baking, but now it is handled by Jerry Vuker, production manager, who is assisted several times a month by Debby Vifquain of Campbellsville, Shelia Rupp's sister.
       
The increased production is spreading the territory where Derby-Pie is found--as far south as Atlanta and as far north as Chicago.
       
But as the business grows, the Rupps have to be more diligent than ever in protecting their product's name.
       
They constantly look for violations of the Derby-Pie trademark, suing or threatening to sue cooks or cookbook publishers who call their recipes a Derby pie. People often taste the real Derby-Pie when in Louisville for the Derby, then go home, create an imitation and label it Derby pie.
       
Kern's Kitchen has received out-of-court settlements three times in the last 10 years in trademark-infringement cases involving Derby-Pie, including one recently from Bon Appetit Publishing Corp., and its sister company, Knapp Press. The suit began in 1984 over a published cook book recipe. Several years of legal skirmishing followed, with Kern's Kitchens losing the battle at one point in 1987 when a judge ruled that Derby pie had become a generic term, like such former trade names as aspirin.
       
The case was appealed and the matter has since been settled out of court in favor of Kern's. Much of the settlement, which has not been disclosed, went to legal fees, although the Rupps hope to buy a new truck with the rest.
       
Other successful settlements for Kern's came in 1977 over liquor company recipe pamphlets and in 1982 over a cookbook recipe. The trademark is owned by Mary Kern Rupp, Rupp's mother, who lives in North Carolina. Kern's will renew it for another 20-year period sometime this year, a process that their attorney, Don Cox, said is routine.
       
Several cases are pending, including one against Sweet Street Desserts of Reading, Pa., a company that manufactures a chocolate nut pie that it had called Derby pie, and another against Connecticut Public Broadcasting, WKPC-15 and Kanter Production Co. for calling a recipe demonstrated on the air in a holiday cooking show Derby pie.
       
"We tried to stop them from sending the show to their affiliate stations, but they wouldn't. It would have been great if they had stopped. We do not like to sue," said Shelia Rupp.
       
The Rupps, who believe they must protect their trademark to legally keep it, hope to one day pass the company down to their children - the fourth generation of bakers in the family.
       
Rupp said, "My grandmother told the story of someone who wanted the recipe and gave her a blank check to fill out. She gave it back. If we looked, we'd probably get something, but I don't particularly want to think about working for someone else."