The roundtable included: (top row) Tom Gumpel, director of research and development, Panera Bread Co., St. Louis; Kristen Repa, owner, Dessert Works, Norwood, Mass.; Simon Stevenson, pastry chef/bake shop/Hampden DC manager, University of Massachusetts, Amherst; Joe Piantedosi Jr., owner, and (bottom row) Lino Dischino, production manager, Piantedosi Baking Co., Malden, Mass.; Karen Trilevsky, founder/C.E.O., and Frankie Whitman, vice president, marketing, FullBloom Baking Co., Newark, Calif.

Compared to other years in recent history, 2008 was one of the most challenging for bakery businesses in every sector of the industry. Unprecedented ingredient costs and skyrocketing gasoline prices combined with a downturn in the economy left many bakery operators scratching their heads, wondering how to cope. Most raised prices, some cut staff and a few incorporated cheaper ingredient alternatives in their product lines. All were forced to make some difficult business decisions this year. And, while gas and ingredient prices have eased, the state of the economy in 2009 does not hold much promise.

On the surface, the situation looks dire, but fortunately for the baking industry, people always need to eat, and some parts of the industry even benefit from the down economy. Most importantly, the industry is filled with leaders who are always moving, thinking and capitalizing on new opportunities. On behalf of Bay State Milling Co., Modern Baking and Baking Management magazines brought together some of these leaders from different segments of the baking industry to talk about the year and share their thoughts on future innovation and where the industry is headed.

Moderated by Heather Henstock, group editorial director, the roundtable included the following participants: Tom Gumpel, director of research and development, Panera Bread Co., St. Louis; Kristen Repa, owner, Dessert Works, Norwood, Mass.; Simon Stevenson, pastry chef/bake shop/Hampden DC manager, University of Massachusetts, Amherst; Joe Piantedosi Jr., owner, and Lino Dischino, production manager, Piantedosi Baking Co., Malden, Mass.; Karen Trilevsky, founder/C.E.O., and Frankie Whitman, vice president, marketing, FullBloom Baking Co., Newark, Calif.

Modern Baking: Today we're going to get into new opportunities in the baking industry, but I want to start first with the challenges you are facing. In your business, what is your biggest challenge to profitability?

Joe Piantedosi: Rising costs. Ingredients, mainly flour. Fuel costs, labor costs, insurance, utilities and trying to make a profit. We're feeling squeezed now more than ever. And just selling bread, we're charging more when flour goes up to justify the price increases, but how much can you charge for bread? Also, we supply restaurants where bread is not a total necessity, or at least can be cut back.

Kristen Repa: Absolutely. We of course are also dealing with flour costs, but dairy, eggs and other ingredients are also following this upward trend. For me, finding qualified bakery labor is a big issue as well. In a small businesses like mine, we're looking for trained employees, somebody with some experience, personality and talent. So, along with our flour prices doubling, my labor costs have practically doubled in the last year, too, to stay competitive producing high-quality products.

Karen Trilevsky: At the same time labor costs are rising in this economy, customers are looking for increased value. They're [wholesale accounts] are asking us how we can get the cost out of it. Transportation is a rising cost, packaging, all of it is. On every front we're getting hit with increased costs and the customer is looking for decreased cost.

Tom Gumpel: I look at fuel as obviously a huge piece for us. This is a company that has 19 fresh dough facilities. All they have in them are mixers and people moulding. It's a huge operation of 50,000 sq. ft. times 19 factories. So, when you see a Panera truck go by, there's bread fermenting on that truck, and we have to get to the stores. Do that math times $5 a gallon for gas. You can't just pass that on to the customer.

Fuel is always an issue, but because we are a café, the biggest thing is transactions. Transactions at the register and the number of people walking through the front door. You may be getting fewer people coming to the door, and they're making trade offs.

Their menu mix changes. Instead of that extra latte or a baguette to take home with their sandwich, now they're getting a cup of free water.

MB: Clearly this has been a challenging year for all sectors of the baking industry, but let's think forward. Where do you see opportunities for innovation in your business?

Simon Stevenson: At U Mass, we've gone the route of trying to integrate more fresh fruit into our products. We're looking at using more whole grains, particularly in products that aren't traditionally thought of as whole grain, such as cookies or brownies. And, we're definitely serving smaller portions. Smaller portions have been huge for us and have really gone over a lot better than I thought they would.