VICOM refocuses on its pies' brand equity

Anyone affiliated with the baking industry should recognize the name VICOM, but people rarely do. Over time, VICOM has come to recognize that its name doesn't match the brand equity associated with the award-winning pies it produces for Bakers Square and Village Inn restaurants, and other third-party customers. “With a growing proportion of business going to outside sales, we really thought we needed to look at our business differently,” says Tim Kanaly, president, VICOM. “We are now in the process of selecting a new name.” What that name will be remains to be seen. VICOM is the bakery division of American Blue Ribbon Holdings LLC, Denver, which also owns and operates Bakers Square and Village Inn restaurants.

At this year's National Pie Championships, sponsored by the American Pie Council (APC) and Crisco, VICOM won more awards than any other commercial bakery — 53 in total for Bakers Square pies; J. Horner's pies, its frozen pie line for outside sales; and pies made for third-party sales.

In spite of the accolades received at the National Pie Championships, the bakery has been through a tough few years. Its parent company found itself in financial straights a couple of years ago because of declining restaurant sales and high lease rates, and voluntarily filed for Chapter 11 bankruptcy. The company reorganized under American Blue Ribbon Holdings LLC, and re-emerged from bankruptcy seven months ago.

“Filing bankruptcy was a humbling experience,” Kanaly says. “As we come out on the backside, we see the positive things. Today, the company has a very clean balance sheet. We're managing cash flow day-to-day, and we're ahead of our projections.”

At 17.5 million pies produced this year, there is little doubt that VICOM is on solid ground.

No more humble pie

The company's history dates back to 1958, when the first Village Inn Pancake House opened. In the early '80s, Village Inn restaurants became publicly owned and changed its name to VICORP Restaurants Inc. VICORP acquired Poppin Fresh in 1983, and changed its name to Bakers Square. After the acquisition and the creation of Bakers Square restaurants, a decision was made to split out VICORP's commissaries. VICOM became the commissary that supported the restaurants, and only evolved into a full-scale manufacturer during the last seven years.

In 1990, the Bakers Square restaurant chain was voted best in its category and in 1994, Village Inn's sales peaked. “We were feeling like we were at the top of our game; key factors that made it all the more humbling to file Chapter 11 eighteen months ago,” Kanaly says.

“As a result of the restaurants' declining sales and increasing costs, we were not able to meet our financial obligations and had to file Chapter 11,” Kanaly adds. “We were able to clean up our balance sheet and close some restaurants that were under-performing and close restaurants that, over the years, had been pushed into very high lease rates. So, we walked away from lease obligations that were just not conducive to profitability.”

“We didn't hide behind it,” he says. Communication channels with customers and vendors were kept open, and every supplier was taken care of throughout bankruptcy.

“Going forward, we won't make the same mistakes,” says Steven Hawkes, bakery plant manager, Chaska, Minn.

“You have to be very focused on what you're doing,” Kanaly adds. “Bakers Square was about pie. We had to bring our focus back to that. For us at VICOM, we've literally changed our business model.”

The Bakers Square chain is now up by 6 to 7 percent year-to-date. “In today's restaurant arena, that's doing extremely well,” Kanaly says. VICOM's primary obligation is to support Bakers Square and Village Inn, with 33 percent of its pies produced for those restaurants. Still, 67 percent of its sales are for outside customers, not an insignificant number.

Quality, quality, quality

Although VICOM produces brownies, cobblers, cakes and other layered products, it considers pie its core competency. “Our pies are known for their layering. We think people eat with their eyes first,” says Leland Smith, director of sales. Susan Bond, director of R&D, describes a toffee pie made with Heath that has five different layers and requires 14 steps to produce. Every layer carries through in flavor and texture, Bond notes.

Crusts are made with trans fat-free vegetable shortening. Cream pie fillings are made with real butter, and are topped with 31 percent butterfat cream for VICOM's internal customers. Because of its long-standing tradition of quality, the bakery didn't waiver on its formulas, even when cream prices nearly tripled a couple of years ago.

Fruit pies are made with IQF fruit enrobed in sugars, spices, starches and fruit juices, and bake up as if homemade.

Bond and her R&D team are continually challenged with new product development. Since so many of the pies are layered, trendy flavors are often combined to produce one distinctive creation, such as coffee, chocolate, cinnamon and pecan. The next introduction of flavors may be a more complex or upscale version of a traditional flavor, Smith notes.

“Many of our customers look to us because of our Bakers Square restaurants and what they've tasted,” notes Mary Pint, director of human resources and APC board member. “Bakers Square has a different pie feature every month, so we get a lot of opportunity to test-market new pie varieties to see how well they do. Those that test well can end up on the base menu or as a featured pie. Hawaiian Strawberry is a good example of creating excitement for a once-a-year featured pie. For Mother's Day, if we don't have Hawaiian Strawberry, customers will bang the doors down,” Pint adds.

Bond also is working on combining the indulgent with some healthful aspects. Apple pie made with a multi-grain crust is one example. Smaller, portion-control sizes and use of high antioxidant fruits are other examples. R&D also converted all formulas to remove non-naturally occuringtrans-fats.

“We went through 45 to 50 shortenings in a 3 ½-year period of time to try and find a trans fat-free shortening that would not change the quality of our pie,” Kanaly says. “It was a lot of work for a lot of years to try and find one that gave the crust its flakiness and worked on our equipment.”

Mixing the old and the new

The bakery division includes a 65,000-sq.-ft. facility, with a separate 10,000-sq.-ft. ingredient warehouse in Chaska, Minn.; and a 58,000-sq.-ft. facility and a separate 10,000-sq.-ft. ingredient warehouse in Chicago. VICOM's Chaska bakery is a full-scale manufacturing plant; Chicago's bakery is still considered more of a commissary.

In the Chaska facility, a batching area is equipped with steam-jacketed kettles that heat up starches and fillings for products, such as coconut cream filling, and cools the slurry rapidly. High-shear mixers produce fillings, such as French Silk.

In the dough room, vintage Artofex triple-action mixers from the 1930s mix dough in 750-lb. bowls. Newer dough-making technology exists; however, VICOM believes the Artofex mixers produce high quality, flaky crusts the newer mixers can't duplicate. The secret to good dough is the temperature of the ingredients, Hawkes notes. Flour is added to the mixer with cubes of shortening. Big mixer arms stroke through the mix as they fold shortening into the flour. After a set number of strokes, salt and water are added. Dough is dumped into a tote following another set number of mix strokes.

Fruit fillings are blended in a ribbon mixer. The fruit mixture is never cooked until the pie is baked, Hawkes notes. Fruit blends, such as apple and cranberry, are hand weighed and manually added to crusts to avoid fruit breakage.

Pie filling, such as lemon or coconut, is deposited into crusts and then conveyed through a 40°F chiller for 45 minutes, then brought to the volumetric depositor, where meringue is applied to the top of the pie. Meringue is sealed to the crust by hand and peaks are formed manually. Pies then pass through a 20-ft., 850°F oven, enter a -35°F spiral freezer for 45 min.; and are conveyed to packaging.

Chaska's entire bakery is built around a packaging system that is three lanes wide. Six pie lines convey product to the packaging lines, and can be used in any combination, based on production scheduling.

Further upstream are three Colborne pie lines, one of which was made in the 1940s. The newer line was purchased in 2007. The technology used to make a quality pie hasn't changed much since 1940, Kanaly notes. Crusts pass through a series of three rollers to sheet the dough, rather than placed in a pan and pressed, which destroys the flakiness, Hawkes notes.

Pies are baked in a brand new, 55 ft., C.H. Babbco impingement tunnel oven. Capway Systems loaders and off-loaders sequence the ingress and egress of pies. Timing is very important to the pie's quality. Bond traveled to the Boston area to test the oven, prior to committing to its purchase. “If you just increase the oven temperature five degrees and increase the speed of the oven belt by a minute, then you have a whole new pie. It just presents endless possibilities,” Bond says. “It was a once-in-a-lifetime opportunity for me to work on a project like this. Now you see pies coming out of there just like little soldiers all lined up.”

Because of the intricacy, quality and attention to detail, pies run at about 35 per minute versus 100 per minute produced at a larger, higher volume manufacturer. “The slower speed allows us to make something special,” Hawkes says.

Since quality is VICOM's primary focus, it places great emphasis on quality assurance. An ERP system is used for planning, batching and traceability. Visual specs are used to compare line samples to a gold standard. Pies are pulled at regular intervals and checked against various criteria, including aroma, flavor and texture. In addition, the bakery is pursuing SQF Level-2 certification. “We feel it supports our vision, values and culture, and reinforces our dedication to quality,” Kanaly notes.

VICOM created its Go-Green initiative several years ago. Today, 80 percent of the bakery's pies are delivered without inner cartons.

Within the past year, the company leased a 45,000-sq.-ft. freezer in Chicago, which cut out tremendous storage cost. The combined cost savings have been passed to many of VICOM's customers in the form of lower prices.

Customer-driven focus

Part of VICOM's changing business model reflects changes in retailers branding concept. The whole private label business has become the real focus for most retailers today. And retailers are looking for quality as they focus more on their own store brands.

“Retailers have come to realize that the real brand equity is really the name on the store, not a brand on the shelf,”Kanaly says. “And that's really what has driven a lot of the retailers' direction. They finally realized they're the ones that have the brand up front.”

“As retailers act more like branded manufacturers; they come to us to let us know what they're looking for in their customer base,” Smith says. And as retailers shop one another's stores and compare products, more business is driven VICOM's way. “We think this is helping to drive our growth,” Smith adds.

Moving forward

During reorganization, Hazem Ouf was brought in as a restructing officer and ultimately took over as C.E.O. “He has been very supportive of both restaurant and bakery concepts,” Kanaly says. “Immediately upon exiting bankruptcy, he went to the board and said ‘now we need an oven and its going to cost us $1.2 million.’ It was very refreshing to see the support for us as a division.”

Ouf has been influential in his view on the importance of having a vision, values and culture-driven organization. When the bakery's managers now convene to make decisions that affect the bakery, they will not move forward unless the outcome meets with their principles — for example, their commitment to quality.

One marketing idea Ouf brought in is Pie Rush Wednesdays. Any customer who comes to Bakers Square or Village Inn on a Wednesday gets a free piece of pie. Bakers Square has seen as high as 80 percent increase in customer counts on Wednesday. “It has been very good for us because it reinforces our core competency in the restaurant divisions, and it gets pie in people's mouths,” Kanaly says.

Pie Rush Wednesday goes beyond driving customers into the restaurant. It has brought in a younger generation and introduced them to pie, Smith says.

“You started to wonder whether pies were relevant anymore, but what Pie Rush Wednesdays have told us is that pies are relevant. When you start rolling out European Truffle and Caramel Pecan Silk Supreme, those aren't flavors mom and dad grew up with.”

As VICOM continues to build excitement in the pie category, it will certainly make a name for itself, as it continues to focus on the quality and distinctiveness of its award-winning pies.

“Our business focus has changed,” Kanaly says. “We still believe strongly in our restaurant concepts. They've been great learning tools for us. But we now know we have a life out there in the rest of the pie world, and we can compete. Our experience goes well beyond our restaurant concepts.”

American Blue Ribbon Holdings LLC, bakery division, VICOM

About ABRH: Owner and operator of Village Inn and Bakers Square restaurants; VICOM, ABRH's bakery division, produces pies for Village Inn; Bakers Square; J. Horner's, its frozen pie line for outside sales; and other third party sales.

Headquarters: Denver, CO

Web site: www.abrholdings.com

Management: Hazem Ouf, president & C.E.O., American Blue Ribbon Holdings LLC; Tim Kanaly, president, VICOM; Mary Pint, director of HR; Steven Hawkes, plant manager, Chaska, Minn.; Randy Stone, plant manager, Oak Forest, Ill.; Susan Bond, director of R&D; Leland Smith; director of sales; Jeremy Rosin, director of QA; Scott Chavkin, director of marketing; Joe Fryberger, divisional controller; and David Brooks, director of purchasing

Product lines: Award-winning pies include pecan; pumpkin; French Silk; Fruitabulous blueberry, triple berry and country apple; banana cream, chocolate cream and coconut cream; black cherry; chocolate peanut butter cup; French apple cream cheese; Caramel Pecan Silk Supreme; and many others

Plant size: Chaska, 65,000 sq. ft.; Oak Forest (Chicago), 58,000 sq. ft. — each with a 10,000-sq.-ft. warehouse

Production lines: Chaska, Minn. plant built around 3-lane packaging system with three Colborne lines upstream

Sales volume: About 18 to 20 million pies per year

To view a photo gallery of VICOM, go to baking-management.com