Tackling the Issues
September 23, 2008 By Jane Ayer
A roundtable of bakers and industry suppliers chat about challenges, solutions and the value of what the trade does.
|From left to right: Jack Kuyer, Michelle Brisebois, Brian Hinton, Bakers Journal editor Jane Ayer, Bakers Journal publisher and group sales manager Martin McAnulty, Martin Barnett, Bakers Journal advertising manager Stephanie Jewell, Frank Safian, John Michaelides, Tracey Muzzolini, Ralf Tchenscher, Andrea Damon Gibson.|
At Bakery Showcase 2008 in May, we gathered a group of bakers, suppliers and consultants to discuss the most pressing issues of the day. The roundtable included: Jack Kuyer of Valley Bakery in B.C.; Michelle Brisebois, Bakers Journal’s marketing columnist; Brian Hinton, owner of Lakeview Bakery in Calgary; Martin Barnett of Malaspina University College in Nanaimo, B.C.; Dr. John Michaelides of the Guelph Food Technology Centre; Frank Safian, president of the Ontario Chapter of the Baking Association of Canada and longtime flour industry rep.; Tracey Muzzolini, owner of Christie’s Mayfair Bakery in Saskatoon; Ralf Tchenscher of Lesaffre Yeast, based in Vancouver; and Andrea Damon Gibson, owner of Fred’s Bread in Toronto.
In the first part of our coverage on the roundtable, Jack Kuyer left off by pointing out that European bakers can charge double what North American bakers can charge, suggesting perhaps the rise in commodity prices and other challenges might actually be an opportunity for bakers to finally be valued for what they’re worth here in North America.
Ralf Tchenscher: You were referring to Europe, Jack: pastry chefs are able to get $30 to $40 a cake. Well you have to look at what kind of training they have. For example, in Germany and Austria, you’re not allowed to open up a bakery, butcher or pastry shop without a masters degree or hiring someone who has a masters degree, so those people have higher skills. The good thing about North American is there are opportunities, you can open up any kind of business if you have a certain amount of money. In situations like we’re facing now, Europeans are facing as well – but they know how to manage it better than a lot of retail bakers here. Retail bakers are the most fragile part of our business and the ones who may close down because they don’t know how to manage their businesses.
Jane Ayer: Tracey, you grew up in a bakery and you now run your business with your brother. You’re in Saskatoon, have you had to raise prices?
Tracey Muzzolini: Well, we kind of adopted the wait-and-see attitude. I think what Ralf said about some retail bakeries is right. We’re so busy with just trying to keep products on the shelf. Definitely, when I get back from this trip, I’ll finally get around to actually raising prices.
Ayer: What kind of response do you expect from your customers?
Muzzolini: I think people are going to understand. We have a very loyal clientele and we’re really the only real artisan bakery in Saskatoon. There are a lot of bakeries around that are from my Dad’s era that’s what our bakery would have still been like if I hadn’t stepped in 10 years ago and started making artisan bread and pastries. So they’re hurting more than we are, I think, because we have a specialized market. I think the labour shortage is hard, too, for the small guy. If a guy comes to you and says he’s wants a raise, well you kind of have to give it to him, because where are you going to find more people? I train my bakers because it’s easier for me to train them in my philosophy, it’s easier to take the people that are passionate and say, ‘Well if you have the passion, I can give you the skills.’
Ayer: And generally have your employees been in some kind of baking program?
Muzzolini: No, just mine, on-the-job training. I’ve learned to set up systems that work and, from the education I’ve had and built on for the last decade, it’s worked out well. I’ve been able to go to France and Toronto and they’re back there taking care of everything.
Andrea Damon Gibson: What do you start your employees at?
Muzzolini: Ten dollars. And I don’t know how much longer we can get away with that. One of my bakers is probably making more money than I am. What can I do?
Ayer: Frank, I’d like to bring you into this. Frank Safian is our flour guy who has many years’ experience in the flour industry.
Frank Safian: I must let the room know that I’m in transition in my career, with recent changes with the company I work for. I do have a position with the Baking Association at the chapter level. I’ve been on the road for the better part of 16 years representing a yeast company and most recently a flour company that has made some changes. A lot of good things have been said. I think Brian and Jack did a really good job in touching on the world markets and those are the areas we really can’t touch. We have no control over those issues and I think that’s really important to this group and the people outside this room. What’s happening in the world is out of our control and that’s the bottom line.
Ayer: Andrea brought up the fact that flour is a commodity and food is now considered an investment, so how much has that come into play in terms of pricing?
Safian: That’s a tough question and I’m by no means a flour expert, although I’ve been on the road for many years selling it and working with marketing departments and understanding the components of the price of a bag of flour. There are a number of components that go into it and I think that people just assume that a bag of flour is just that, it’s a bag of flour, but by no means is it just that. I’m looking at John Michaelides here, because John is in the research side and I’ve worked with him for many years and I think there’s a misconception to the true value of a bag of flour and the real cost associated with it. I’m encouraged to hear Jack and Brian say that they’ve had to raise their prices because I think that’s the real crux of the issue. Let’s not worry about what’s happening in the global market, because that’s something that we cannot control. We cannot control how much rain flows in the growing regions of North America or in the southern hemisphere.
I think bakers have been beaten up for far too long, and I think the baking industry has been beaten up pretty severely. I think bakers need to step up and imagine their businesses better. I think they could be better businesspeople. To turn the lights on and turn the equipment on just isn’t good enough anymore. In my travels on the road, whether it be large bakeries, wholesale bakeries, or in-store bakeries, they really don’t know their bowl cost. I use this form here, it’s a bowl costing formulation and I discuss this with bakers. I ask them if they know their bowl cost and they say, “Well, no, we’ve never really done a bowl cost.” And I say, “You’ve never sat down and looked at all the ingredients for all products you make and maybe match your recipe card with the bowl costs?” Move that bowl cost around as your ingredients move. And once you’ve done that, understand what you’re making on it. The price and costs of these ingredients are going to have to be passed on to the consumer and I think that’s the biggest fear the baker has. You get into price wars and there have been price wars in all categories. Fuel companies, they don’t have price wars – they just put the price up collectively.
Ayer: And consumers pay it, we all pay it.
Safian: Exactly. Now, I’ve jotted down a number of items here that are everyday business activities. It’s understanding your business and managing your business.
Ayer: Can you go through them quickly, Frank?
Safian: You really have to know what you’re making every day and you have to decide whether you’re making enough of something to justify the cost of making it. It’s OK to run out of products and tell customers you don’t make something anymore. Make what you do well and make a lot of it and get your customers on your products. We do it in big companies – we stop making the items that just don’t sell. I think bakers need to get back to scratch baking. You may see your costs improve a bit. I’m not going to say it’s the best way to do it, but it might help. Mixes are expensive, there are concentrates and bases out there, and I’m not trying to be a salesperson here, but there are ways to improve your bowl costs.
If you’re a larger bakery, a wholesale |bakery, get back to purchasing direct if you can. I know we’re going to anger distributors here, but if you can buy direct, buy direct.
Take ownership of the cost of your products. Don’t just have a salesperson come in and tell you, here’s what I’m going to charge you. Negotiate a bit more.
For the larger baker, hire a broker, they serve a function and a purpose. They represent maybe four or five companies and they do a very good job selling, there’s a small percentage they’ll cost you, but they’ll get your product out there. Brokers do work.
Damon Gibson: They also carry big, thick books. And your six products can get lost in those books.
Safian: OK, then find a broker who doesn’t have 15 principals, maybe he has four principals and maybe focuses on the category. Maybe there’s a bakery focus in their sales and they have good salespeople, get to know their salespeople. SKU rationalization is a tough decision, but at the end of the day, make the products that deliver the best profits for you.
Damon Gibson: As long as you figure out a way to replace that. All those little things add up and to just cut them out, you need to have a plan for how you’re going to replace that and those dollars.
Michelle Brisebois: In the wine industry, we run out of wine a lot. It’s VQA wines and 2005 was a horrendous year with a short crop. There are a hundred stores that I do marketing for and we had to come up with a plan to work with our front-line staff to tell people, “Oh, you can’t get your Riesling anymore, try this.” And we actually had a 10 per cent increase that year.
Safian: I had the benefit of organizing a
dinner program with the president of the Wine Council of Ontario and find out what they’re doing better at marketing and merchandising and we got an eye opener. I was taken aback at how much federal support the wine industry received. And the reason they got this money, it was a grant, a large grant, to protect Ontario wineries. My question is, where is there some federal money to support the baking industry? It’s a pretty powerful industry and I eat three meals a day and I eat bread products for most of those meals, where is the money coming to support our industry. Our industry needs some help. v
Read more coverage on the roundtable in the October issue of Bakers Journal
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