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| Creative Occasions’ new line enables the company to make 5,000 cakes a shift. |
| Creative Occasions manufactures many types of cakes, including sheet, round and bar cakes. |
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| The first step on Creative Occasions' new cake icing line is the application of filling. |
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| Creative Occasions uses real butter, and fruit and mousse fillings in all of its cakes. The company also uses a high-ratio cake of 120% sugar to flour. |
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| Creative Occasions' new line features multiple icing stages that ice the tops and sides of round cakes. |
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| Creative Occasions' cake decorators create a variety of custom-decorated cakes. |
Phil Crow and Mark Erickson have two things in common: a wealth of baking industry experience and an entrepreneurial itch. This combination brought the two baking industry veterans together a little more than three years ago to launch Creative Occasions Inc., a high-volume cake bakery located in Nashville, Tenn.
Today, the bakery produces 5,000 cakes a shift, and distributes these cakes to in-store bakeries and foodser-vice channels throughout the United States. Crow serves as the bakery's president and Erickson handles the company's sales and marketing functions. To fill out its other senior management functions, Crow and Erickson recruited baking industry executives, all with an interest in leaving the comfort of their existing jobs for an entrepreneurial experience.
Crow recruited Erickson, and the bakery's other executives, with an enticing offer. "I actually asked Mark if he would be willing to make 25% of his current salary and travel 52 weeks out of the year," Crow says. Surprisingly, this strategy worked, and Creative Occasions was formed.
Creative history
Crow's business plan for Creative Occasions capitalized on a perceived gap in the in-store bakery market. "Generally, the cakes that are available in in-store bakeries are not of the highest quality," Crow says. "There are exceptions to that, but overall, we (Crow and Erickson) perceived a need to produce a high-quality cake."
Besides quality, Creative Occasions recognized another niche in the super-market cake business that was under-served: customization. "We saw a gap in the market, and we saw a niche for not only putting quality back in, but also being able to customize products to specific end users," Crow says.
Crow developed a 72-page business plan based on these niches and started raising money for the startup with Erickson's help. To the surprise of both executives, the first round of financing only took 60 days. This initial fundraising gave them the capital to purchase a facility and stock it with equipment.
The company developed a freight model that said the bakery needed to be located in the Kentucky/Tennessee area. The company selected a 65,000-sq.-ft. building in Nashville because the city is within 650 miles of 50% of the U.S. population, Erickson says. The facility also has 12,000 sq. ft. of freezer space, a necessity to ship frozen cakes nationwide.
The company signed the lease for the building in August 2001, and set off for the 2001 International Baking Industry Exposition in Las Vegas to purchase equipment. The show proved successful for Creative Occasions, and the company bought many pieces of equipment, including a Tonelli mixer and a Fedco strip icer.
Flexibility vs. automation
Creative Occasions' business plan calls for mass producing customized cakes. This requirement forced the company to walk a fine line between automation and manual labor when it designed its production system.
"When we initiated the plan, it was very batch oriented because we knew we were going to run specific products for specific end users," Crow says. "We did not want to go with a completely automated baking system because we knew we would be making various sizes, shapes and weights of products."
Instead of total automation, the company installed a production system that combined automation with manual labor. In the beginning, this system proved ideal. However, as Creative Occasions grew, the company upgraded parts of its line with automated systems.
Creative mix
Creative Occasions operates two 10-hour shifts four days a week. The company bakes its cakes at night and decorates them during the day. During peak times, the company makes 12,000 cakes a day.
The company's mixing department contains two mixers: a 200-liter Tonelli planetary mixer for cake batters and a 340-quart mixer for icing bases. The company mixes its icings in a two-stage process. The initial mix takes 20 minutes. After this mix, the butter creme icing is transported to the decorating room, which houses three 140-quart mixers. These mixers remix the butter creme icings for an additional seven to 10 minutes.
The company uses this two-stage process to create a smooth, light icing. "The second stage mix does not add air into the icing, and disperses the air from the first mix into fine cells," Clay Griffin, Creative Occasions' director of operations, says. "This gives you a much smoother icing."
Bake and ice
Creative Occasions uses a Fedco depositor to deposit cake batter into strap pans. The company bakes its cakes in two reel ovens that hold about 40 pans each, depending on the product size. The cakes bake anywhere from 20 minutes for small cakes to as long as an hour for carrot cakes, which can weigh as much as 1 lb. 11 ozs.
After baking, the company's cakes are transported to either the cooler, freezer or decorating line, depending on the type of cake. Creative Occasions' decorating room houses the company's latest capital investment: an automated cake decorating line that was purchased nine months ago.
The automated line uses a multi-stage process to decorate the company's line of round cakes. More importantly, the line is highly flexible, allowing the company to manufacture multiple cake types and sizes with a push of a button. "We can do 7s (inches), 8s, 9s, singles, single splits, doubles, double splits, triple and triple splits all on this line," Crow says. "We have many depositors on standby, and when we want to add more stages to the line, we just move them onto the line and plug them in."
This flexibility allows the company to customize as many as 50% of its cakes while still producing as many as 12,000 cakes a day. The Unifiller ACIS (automated cake icing system) has two conveyor lines that run parallel to each other. These lanes transport the necessary cake layers through the different stages of the decorating process.
At the line's first stage, a cardboard pad is placed on the line and receives a dollop of icing that acts as glue. This icing prevents the cake's bottom layer from moving during the decorating process.
Next, a layer of filling is automatically placed on the top of the cake's first layer. For production runs that require a chocolate filling with a white butter creme icing, the line's automatic icer places an icing "dam" on the cakes. This dam rings the outside of the cake and prevents the filling from bleeding out into the icing.
After the filling and dam have been deposited, an employee places the second cake layer on top of the first layer. At the last stage, an automatic depositor ices the top and sides of the cake.
This automated line enables the company to increase capacity while reducing labor costs. "We used to be able to make 2,800 round cakes, and it took us 25 people to make it happen," Crow says. "With the new line, we can move 5,000 cakes a shift, and we're doing it with less than 20 people."
For sheet cake production, the company moves the round cake decorating line out of the way and wheels in a Fedco strip icer line.
Besides traditional cakes, the company produces 7-oz. convenience store cakes on a small production line that processes 6,000 cakes a day. The line contains an automatic icer that lays an icing pattern on each cake. These products are baked in ovenable trays.
Cake decorating
Creative Occasions differentiates its products with customized decorations. Unfortunately, this area of production is hard, if not impossible, to automate. As a result, the company stations a series of decorators along a conveyor line to customize each cake.
When Creative Occasions started producing cakes, it hired several former in-store bakery cake decorators to handle its cake decoration. After a short time on the line, Crow realized that these decorators were accustomed to producing 10 to 15 cakes a day, a far cry from the company's output of 5,000 cakes a shift. Plus, these decorators were conditioned to complete an entire cake, and did not adjust well to the assembly line nature of the company's production system.
As a result, the company switched gears and employed non-decorators, then trained them to become decorators. These employees quickly picked up decorating, and were conditioned to work on a decorating assembly line.
The company arms these decorators with a combination of Unifiller Deco-Mates and piping bags. The Deco-Mates provide Creative Occasions' employees with an ergonomically-correct decorating tool that assists with cake borders and decorated cake tops.
Pushing quality
Creative Occasions production system allows the company to stick to its business plan of providing the in-store bakery market with quality, customized cakes. The company ensures its cakes are perched atop the quality chain by using upscale ingredients in its cake formulas.
According to Erickson, the key to producing high-quality cakes is formulating with real butter, using real fruit or mousse fillings in every cake and creating a high-ratio cake (120% sugar to flour). "The combination of these three things creates an eating experience that is different from two layers of cake and some icing on it," Erickson says.
However, this intense focus on quality creates obstacles. When commodity prices skyrocketed last year, Creative Occasions, and bakeries throughout the country, paid exorbitant prices for ingredients such as eggs, oils, packaging and butter. Despite these cost pressures, Erickson stressed that the company will never use less expensive ingredients to reduce its costs.
"We've had customers ask us if we could make our cakes a little cheaper," Erickson says. "We tell them that we will make the cakes smaller for them, but we will not sway by adding lesser ingredients."
Creative Occasions' focus on quality also creates minor barriers of entry into supermarket in-store bakeries. The company's sheet cakes retail from $16.99 to $18.99, which is significantly higher than the price of most in-store bakeries' cakes.
This high price point places Erickson in a constant struggle with in-store buyers to convince them that quality sells. "Time and time again we hear about the challenges of supermarkets, but there is a hesitancy to change," Erickson says. "There seems to be a fear of changing from the status quo."
Erickson says that in-store bakeries are used to buying a $5 cake and marking it up to $10. "But, we're asking them to buy an $8 or $9 cake and mark it up to $17 or $18," Erickson
says. "They (in-store buyers) agree that our price/value relationship is very good, but their issue is how to convince consumers to spend $18 on a cake instead of $8."
Status quo pertains not only to the price of a cake, but also to the gross margin an in-store bakery expects to receive from selling a cake. Crow explains that many in-store bakeries demand a 50% to 55% gross margin on the cakes they buy because this is the same return they get when they make a cake in-house. "However, when dealing with retail ready items where the manufacturer has put all the labor, ingredients and packaging into the product, gross margin targets of 50% to 55% are distorted. Instead in-store operators should judge these items on the net profit return or the contribution factors. The gross margin should not be expected to be 50%," Crow says. "The in-store segment needs to re-assess how they measure success in the changing environment of the peripheral department of bakery."
Staying focused
Despite these barriers, Creative Occasions is experiencing burgeoning growth and acceptance in the marketplace. This growth results from the company's unique cakes. This does not always mean coming up with original, revolutionary new product ideas. Instead, the company takes "existing ideas and raises the quality bar through ingredients," Crow says. "We look throughout the country for interesting products that are popular in a particular region. Then, we introduce that product to a broader market."
For example, the company launched the Great American Wave Cake in response to a popular cake in the Michigan marketplace. The original "bumpy" cake contains "waves" of chocolate on its top, which gives the cake an upscale taste and appearance. The company brought this cake to its research and development lab and charged Griffin with making the cake better.
"Clay took the idea from the original cake and turned it into a moist chocolate cake with a Belgian chocolate filling, and chocolate butter creme waves enrobed with chocolate truffle," Erickson says. The Great American Wave Cake contains five chocolate notes.
Creative Occasions' ability to raise the bar on quality has attracted customers in the foodservice market. This new line of business, combined with its existing in-store bakery business, has created a need for more production capacity. The company is in the process of expanding its production capabilities by adding another decorating line, which will enable the company to simultaneously operate its round and sheet cake lines.
The company has come a long way in a little more than three years by staying true to its business plan despite commodity and supermarket pressures.
"We (Crow and Erickson) were told by other entrepreneurs not to veer from the business plan," Crow says. "Certainly, we have expanded on the concept in the last couple of years, but we stuck to the original premise of taking the quality of retail bakery cakes to the in-store segment and our strong belief that quality sells."
Company Profile Creative Occasions Inc.Headquarters: Nashville, Tenn. |