Business and Operations
Bakeries’ growth tactics
May 27, 2009 By Tuija Seipell
What drives growth in your bakery in these challenging economic times?
We e-mailed this question in an unofficial poll to bakeries across
Canada and the United States. The responses are fascinating and
inspiring, and full of ideas that others can implement as well.
What drives growth in your bakery in these challenging economic times? We e-mailed this question in an unofficial poll to bakeries across Canada and the United States. The responses are fascinating and inspiring, and full of ideas that others can implement as well.
|Thomas Haas Chocolates & Patisserie’s Chai Bark gourmet chocolate snack.
These bakeries are prime examples of the inventiveness, tenacity, market-awareness, creativity and optimism that characterise a bakery that will not only survive, but also thrive.
Richard Crossman is the corporate bakery manager for Artisano Bakery Café, which operates three cafes in Ontario – in Burlington, Oakville and Etobicoke.
“We have seen improvements in our bottom line through careful negotiating of prices from our suppliers, by expanding our product line, and offering specials,” he reported.
Artisano has also begun pushing catering with local businesses, and offering special-occasion cakes to customers who book functions. Plans include introducing a new line of breads geared toward the health-conscious consumer, and looking at bringing some of the pastry production back in-house.
“We started as a bread bakery with sweet goods mostly purchased from outside suppliers – made to our specs – and we are slowly bringing those back into our own operation, thereby improving our profit margins,” Crossman says.
Effad Sedky, the owner of Vancouver Croissant, a Burnaby, B.C.-based wholesaler of certified organic and non-organic croissants, is also calling for the type of price-level co-operation Crossman has negotiated.
“In crises, good people join hands to weather the storm,” Sedky responds via e-mail. “The key is helping each other. If the sellers reduce their prices, helping the cash-strapped buyers, we all survive and may even grow.”
Brian Hinton is president of Calgary’s Lakeview Bakery. His family has owned the organic and special dietary needs bakery for two decades. Lakeview employs 18 people and has sales of more than $1 million. Hinton provides his recipe for growth, focusing on two themes:
- Smaller is better
- Downsize the 6-package to four. Although the customer will pay GST, the sticker price will appear smaller.
- Provide bite-size morsels in a pot (with lid) that fits a car’s cup holder – great for snacking in the car.
- Go green
- Promote local = trusted and small eco footprint.
- Get rid of plastic. Back to the future: The French package products in a wax proof bag, something we used 50 years ago. “Green” can mean going back 50 years, when some things were green but we didn’t see them as so.
Thomas Haas of Thomas Haas Chocolates & Patisserie in North Vancouver reports that while his chocolate sales to high-end hotel wholesale accounts have dropped significantly, the retail operation is thriving with consistent annual growth of 20 per cent over the past four years, including last year to-date. Haas suspects that the reasons for this include good control of customer service and quality, plus the fact that, although Haas product is high-end, consumers consider it an affordable luxury treat. Encouraged by the retail success, Haas will open a second retail store this summer in Vancouver on Broadway, next door to his old boss from New York City, Daniel Boulud, who is opening his DB Bistro Moderne in July.
At Vancouver’s Pane e Formaggio, owner David Nonni’s tactics focus on “not compromising but working harder and smarter.” His list:
- Consistency of product, honest product (Nonni uses the term “honest” in the sense of no frills)
- Using only good/natural ingredients (such as butter, not margarine “to save money”)
- Innovation – offering seasonal-type products to increase bottom line substantially
- Working closely with vendors
- Doing demos
- Branding of product/product recognition
Vera Kobalia of European Breads Bakery in Vancouver describes what is working for her business.
“Even in difficult economic times, B.C. customers care about their health,” she writes. “Our organic, natural and traditionally made products have not suffered. The trend is to buy less, but not poorer quality.”
According to Kobalia, it is important to connect to the customer by “offering value and promotions that people really care about. We did a promotion in April where 10 cents from each loaf was donated to Earth Day Canada. It was very well received by our customers. Green initiatives, sustainable options are definitely on their minds. Also, we have noticed that many customers are driving to our store to purchase their breads, due to lower prices. In general people are going to the source, they want to see the operation, talk to the bakers, and save money by buying directly from us.”
We also heard from several bakeries in the U.S. Lori Karmel, originally from Toronto, operates We Take The Cake gourmet cake boutique in Fort Lauderdale, Fla. She describes her company as being in the celebration business as she e-mailed her thoughts on success.
|Alvarado St. Bakery bread (above); A selection of artisan breads at Pane e Formaggio in Vancouver (below).|
“We have different segments of the market such as custom-designed cakes, custom cupcakes, wedding cakes (direct or through hotels), gourmet bundt cakes, on-line sales and wholesale to local restaurants, and local Whole Foods Market. We are a special-occasion business and people tend to continue to spend for a special occasion. Marketing with charities and public relations also helps to keep our name out there.”
Chrysta Wilson, founder and owner of Kiss My Bundt Bakery in Los Angeles, says her bakery is in the experience and comfort business.
“I opened about a month after the bottom fell out of the economy. Still, I see my customer base growing – albeit slowly. On one hand, people are seeking basic comforts (i.e. baked goods). On the other, baked goods are an inexpensive ‘splurge,’” she says via e-mail.
“What’s helping my bakery grow is connecting my personal story to my product, and then creating an experience in my shop where people get a few minutes of comfort. They aren’t just buying a cake. They’re buying the experience of someone greeting them, asking them how they are, offering them a free sample of cake, and really providing a welcoming space.
“I’m taking the approach of trying to create a community bakery – a bakery that is a resident in a community. This is setting me apart from larger, more resourced bakeries. Customer service and experience and my product are the areas where I can compete.”
Michael Girkout, president of Alvarado St. Bakery, based in Sonoma County, Calif., is looking at the bakery business from the vantage point of a 29-year-old, employee-owned company that has seen 35 straight quarters of growth, boasts US$24 million in sales, and has U.S.-wide distribution and 120 employees.
Alvarado St. Bakery is the nation’s oldest and largest co-operatively owned, certified-organic bakery.
All employees are shareholders, says Girkout, with every dime of profit going back to every employee equally, every quarter. Entry-level employees make around US$50,000 and turnover is virtually non-existent.
Instead of starting with sacks of flour, Alvarado St. Bakery starts by soaking raw whole-wheat seeds until they sprout, resulting in a flourless bread that even those with wheat sensitivity can eat. Their most popular bread is the “California Style Complete Protein Bread,” made with sprouted wheat and sprouted lentils.
Girkout’s list of success factors:
- Whole grains: Ever since the USDA revamped the “food pyramid,” there has been tremendous growth in products made with whole grains. In fact, the pyramid has been changed to include white flour/refined flours to be in the same category as sugar (use in moderation.)
- 100 per cent whole grains: Even better (not all products that make the “whole grain” claim are 100 per cent whole grain). All of our breads are made with 100 per cent whole sprouted grains.
- Low calorie: Our Essential Flaxseed bread has only 50 calories per slice (very low for bread). All the ‘bigs’ are introducing “100 calorie” packs of anything from cereals, chips, and Oreos to carrots and nutritional bars. Consumers are still counting calories and using that as a determining factor in making purchasing decisions.
- Low fat: Still a hot category in breads. All of our products are made without any fat or oil added.
- No salt: A growing market segment. People with high blood pressure or on a sodium-restricted diet are looking for sodium-free or low-sodium products. Our No-Salt Multi Grain bread contains no added salt.
- Low glycemic: Becoming more and more in demand as consumers are educating themselves on the Glycemic Index and looking to avoid highly processed foods. Human testing is required to determine GI of food products. Our Diabetic Lifestyles bread underwent testing that verified a very low glycemic index.
- Organic: Hotter than ever. There isn’t a retailer in the country not looking at organic products. Now a household word … organic products are available in every department from produce, dairy, bakery, and even meat and fish. We’ve been certified organic long before it was cool.
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