Since 2002, La Brea Bakery has supplied a line of breads to Schlotzsky's Deli restaurants.
The success of the par-baked bread category has supplied the baking industry with a steady flow of work. This increased usage of par-baked products has caused the category to grow in terms of customers using par-baked products and bakeries supplying these easy-to-use breads. These dynamics have led to a cluttered marketplace, with many bakers vying for a small amount of shelf space or exposure. To survive in this growing category, bakeries must examine the par-baked category and look at all potential avenues and outlets to rack up sales.
The par-baked bread category received its first jolt of business by supermarket in-store bakeries, which were finding it difficult to find skilled labor to create and bake artisan breads. This lack of skilled labor at the in-store bakery level created a gold mine for bakeries with a freezer and the ability to produce upscale breads, such as ciabatta and baguettes.
As the category grows, additional avenues are opening up for par-baked manufacturers to capitalize on. These avenues include foodservice, retail and convenience stores.
The growth of par-baked breads in the foodservice sector is attributable to many factors. Similar to in-store baking, one main reason foodservice operators are using par-baked products is to eliminate shrink. "From a financial standpoint, par-baked is more profitable for foodservice operators because there is less waste," John Yamin, La Brea Bakery's chief executive officer, says. "Operators don't have to wait for the DSD (direct-store-delivery) to drop off what there estimated need is, and then only have half of those customers show up." La Brea Bakery operates bakeries on both coasts and about 40% of its business is in the foodservice sector.
"To be able to react to your bread needs without shrink you need some preparation on premise, and par-baked gives you that capability."
- Richard Lan, Canada Bread's president and CEO
Richard Lan, Canada Bread's president and chief executive officer, agrees with Yamin. "To be able to react to your bread needs without shrink you need some preparation on premise, and par-baked gives you that capability." Canada Bread sells par-baked breads to various outlets, including foodservice, which accounts for about one-third of the company's business.
Par-baked breads also allow foodservice operators to capitalize on emerging trends in restaurants. According to Yamin, foodservice represents a huge opportunity because all restaurants, from fast food to white tablecloth, are embracing artisan breads and rolls. The sandwich trend in quick-service restaurants presents a particularly strong opportunity for par-baked bread manufacturers. For example, La Brea Bakery supplies Schlotzsky's Deli with a line of breads for its sandwiches.
In most bakery food categories, a company knows its competitors and customers. This luxury is not afforded in the foodservice category.
The widespread penetration and success of par-baked breads has cluttered the marketplace with hundreds of bakers competing for the same account. Multi-bakery companies such as Canada Bread often compete for accounts against small, specialty wholesale bakers that are content with supplying par-baked bread to restaurants and foodservice outlets in a five-mile radius of their bakery. For the most part, many bakeries are competing for sales against companies they are unaware of.
This perplexing situation is mirrored in par-baked customers. Although par-baked manufacturers can identify supermarket in-store bakeries to sell to, how does a bakery designate the hundreds of thousands of potential restaurant or foodservice outlets? Plus, there is a wide variety of foodservice outlets, from quick serve to white table cloth, and defining a sales strategy for each type is essential.
La Brea Bakery, which manufactures upscale artisan breads, mainly sells its products to white table cloth restaurants. However, the company is beginning to pursue national chain accounts. According to Yamin, the key to picking up national accounts is "understanding how to access them and how we can play a role in their future."
Accessing foodservice outlets can be made easier by using distributors and brokers. Canada Bread uses distributors to penetrate foodservice outlets throughout America. "The distributor business allows us to get up and down the street to every mom and pop," Lan says.
La Brea Bakery uses distributors to penetrate the foodservice market, but also uses a broker to penetrate even further into the foodservice sector. The bakery recently formed a relationship with Sugar Foods Corp., Sun valley, Calif., to sell and market La Brea Bakery's line of par-baked products to the foodservice industry. "The relationship is that they operate as a broker for us," Yamin says. "As we use brokers in the retail arena, we use brokers in foodservice."
By partnering with Sugar Foods, La Brea Bakery can reach a wider variety of foodservice outlets without investing heavily into its sales force. "There are only 1,800 supermarkets, but there are 350,000 foodservice outlets, so in order to service those, I'd have to have a sales force much larger than I could afford," Yamin says. "And, that's the rationale for working with a company like Sugar Foods."
Besides foodservice outlets, par-baked manufacturers also can capitalize on other par-baked distribution channels. Both Canada Bread and La Brea Bakery sell products in the retail frozen case at supermarkets. La Brea Bakery's line of home-baked products consists of rolls, baguettes and ciabatta, and can be found at various supermarkets, including Harris Teeter and SuperTarget.
Canada Bread expanded its par-baked opportunities by supplying a variety of convenience stores. "Convenience stores are a big opportunity and a lot of people are doing it now," Lan says. "All of these convenience store chains want fresh bakery cabinets, so they all need par-baked breads, bagels and rolls."
The opportunities are limitless for par-baked bread suppliers. With the in-store bakery and foodservice markets firmly entrenched in the par-baked system, bakers can now capitalize on alternative markets to increase par-bake exposure and sales.