Faced with a shrinking local economy and a changing customer base, this family-owned bakery shifts strategies and focuses more on frozen specialty products for foodservice.
It would be natural for a company that's more than 100-years old to resist changing with the times, but Orlando Baking does not hold true to that philosophy. This bakery, founded 136 years ago by Giustino Orlando in Castel Di Sangro, Italy, celebrated its 100 year anniversary of baking in Cleveland in 2004. Although members of Orlando's fourth generation still hold executive positions, members of the fifth generation have joined its ranks at different levels throughout the organization and are “looking to go forward,” says John Anthony Orlando, executive vice president, operations.
While Orlando Baking's latest generation isn't the first to encounter change, it has probably seen and will inevitably work through some of the most significant challenges of its company's long history. Many of these changes have been induced by macro-economic factors affecting the bakery's target market. The local economy, the foodservice market and consumer buying behavior, among others, have impacted the company's own micro-economic business approach.
While once solely a fresh business for its region, the company eventually entered the par- and finished- baked frozen market. Today, almost 50 percent of its sales are in the frozen business. Its product mix has changed significantly, with its biggest growth potential in the frozen area for national foodservice accounts.
Photos by Lisa DeJong
Orlando Baking's current production facility, built in 1979, is the company's fourth location in its 104-year history in the Cleveland area. The city of Cleveland sold the company the land for $1 as part of a redevelopment zone. Although it had been in East Cleveland since its inception, Orlando considered moving to the suburbs, but the city wanted the bakery to remain within its borders and added further enticement with the redevelopment zone incentive.
With the company's longstanding presence in Cleveland, the city has seen its share of change, but only recently have these changes so dramatically impacted Orlando's business strategy. “We've always been big proponents of Cleveland,” says Daniel Holan, vice president, administration, one of 30 family members affiliated with the bakery that employs about 350 people.
“All of our family is from the area, which is a positive thing, but the local population has been dwindling, which has forced us to go outside our market. Our business, market and demographic customer base have changed. Even our competition has changed.”
Orlando Baking has two business channels — one is the fresh, daily delivery to local operators and the other frozen. Aside from the manufacturing plant, the company has warehouses in Columbus and Youngstown, Ohio. Four or five years ago, it shipped north to Michigan, west to Toledo and south to Dayton and Cincinnati. At that time, the company had more than 100 routes. Today, it has 65 routes. In the past year, the bakery eliminated its Pittsburgh route.
“There's still a population in those areas, but the cost to produce and get the products there, inherent labor costs and benefits, and other associated costs have forced us to reanalyze what we're doing,” Holan says. “We haven't totally pulled out of those markets, but instead found different distributors to handle our products. We were able to maintain 80 percent of the accounts that we had there.”
A local economic downturn means less manufacturing, a dwindling population and fewer people dining out. Those who do dine out are not necessarily dining at local independent restaurants, which were at one time Orlando's principal customer base for its fresh business, but are instead going to the chain restaurants. “So, the whole market has changed and the customer base has changed for us, too,” Holan says.
Even its competition has changed. Orlando Baking used to compete against regional bakeries. Now, more of its competition comes from major food distributors.
While such market shifts might seem ominous for Orlando Baking, they have actually opened new opportunities for the company. A variety of economic and market forces have affected how the bakery does business. The company has responded to these changes by reallocating its product mix to address a strategy of growth in other areas of the market that offer more potential.
About 75 percent of Orlando's business is supplying the foodservice market. “Restaurants started accepting more frozen products as chains started developing because they wanted a more consistent product,” John Anthony says. “A lot of times some of the frozen product is better than fresh because they're baking it off and they handle it directly. We were losing business in frozen, so that's really what pushed us to go there.”
Orlando will continue to pursue and build its fresh route business, but it sees the greatest growth potential in the frozen area for regional and national restaurant chains. In the old days, restaurants would buy from their local bakery. Even if the restaurant had locations throughout multiple states, it would source locally. Today, the competition is on a national level, notes Nick Orlando, Jr., vice president, sales. Competition may even go beyond U.S. borders if the dollar's value favors Canadian goods, making it cheaper for Canadian companies to export their products to the United States than it is for U.S. companies to ship their goods throughout the States.
The sales process also has changed. Salespeople no longer knock on a potential customer's door with fresh samples, expecting new business to start the next day. The process has become far more lengthy and complicated. A chain restaurant's local manager doesn't have the authority to accept new business that way. Approval has to come from the chain's buyer, who typically handles specific product categories, John Anthony notes.
“The trend now in foodservice is in consistency, not only in product, but in pricing,” Nick, Jr. adds. “It's easier for the purchaser of a restaurant chain to buy from one bakery than from 10 or 15 bakeries, and to get one price across the country. That's the growth in foodservice, so that's what we see in our business.”
Once a product is approved, the bakery has to operate through foodservice distributors, mapping out distribution points and a shipment schedule. “Trying to work out the logistics of shipping is a challenge,” says Chris Orlando, inventory reconciliation manager. “Restaurant chains might have locations all over the country. The more we build business, the easier it is to work those things out.”
When Orlando Baking built its current facility in 1979, its footprint was 65,000 sq. ft. The plant had two production rooms and a small shipping area with no freezer. Management bought a used bread make-up line when they first started, and while that line was running, they disassembled the line from the old plant and brought it to the new location. Both lines fed into one oven. Eventually, they added a third line and enlarged its distribution space because they couldn't ship from such a small area. The bakery added a freezer, although it only opened half of it initially because it couldn't fill the space. “We thought we'd never fill that freezer,” John Anthony says. “Now, in addition to using the entire freezer, we use a lot of outside cold storage.”
In 1996, the company added a new addition that included three ovens and five make-up lines, which doubled its capacity. Every line has its own spiral cooler. At that time, it also added a garlic room, which was originally set up to be an ingredient storage area, John Anthony notes. The bakery only made one type of garlic bread then. Its goal was to make the area all stainless steel and washdown. Today, the bakery melts and blends its own butter, and has three lines making numerous types of garlic bread, Texas toast, rolls and sticks, with four different ways to pack it.
The bakery completed its most recent expansion in August 2007. The facility is now 200,000 sq. ft., more than three times its original size. Ed Fraschetti, president of Perfect Score Co., Bedford, Ohio, served as project manager for the expansion.
Part of the expansion included a new Mecatherm make-up line for sub rolls and baguettes, proofer and three-deck tunnel oven that has as much baking capacity as a conventional tunnel oven, but a smaller footprint. The oven, which can bake both hearth and pan breads, also has a bottom bake booster that duplicates baking on stone, John Anthony notes. The bakery also added a Rheon line for ciabatta production. The Mecatherm make-up line and the Rheon line feed into the same proofer and oven, so only one line can run at a time.
“We were one of the leaders in ciabatta bread at one time. We originally produced it by hand, then bought one of the first automated ciabatta lines back in the '80s,” John Anthony says. “It was the only line that could make ciabatta bread at the time. It worked well, but other manufacturers developed better lines for ciabatta, which is why we started falling behind. We bought this Rheon line to recapture some of the sales that we lost through the years. The line has been a great improvement, with its efficiencies, accuracy of piece size and minimal waste.”
Orlando's signature ciabatta is placed in a retarding room for 18 hr. to 24 hr., and then moved to the production floor to rest for 1 hr. before it is deposited and formed on the line. Throughput for the new line is about 108,000 pieces per hr.
The plant is now equipped not only to handle more volume with improved efficiencies, but a wider variety of products. “We do a lot of custom work,” Nick, Jr. says. “That's one of our niches. If a prospective client asks whether we make a particular product and we don't, we see what we can do to create it. We do a lot of niche items for restaurants and retail and work with in-store bakeries and deli departments.”
Efficiency is key, especially because of the company's product mix between its fresh and frozen business. Packaging is one area in need of improvement in comparison to the throughput capabilities on the production side. The company is considering robotics for the packaging area as a viable solution to improving efficiencies, Chris notes.
Nick Orlando, Sr., brother of co-C.E.O.s John C. and Sonny Orlando, passed away in January. The bakery developed a product called “Pane Nicola,” in honor of Nick, who took over the bakery in the 1970s and really instituted growth of the company, John Anthony notes.
Quality standards are held to the highest level among all family members, regardless of their educational training and background. John C. Orlando, Jr., is an attorney by education who prefers to spend most of his time in production, running the operation. “That's what I grew up doing because my father was always in charge of production, so whenever I worked here, I was always in the plant. It is kind of a natural occurrence to follow that path,” says John C., Jr., who also serves as the company's general counsel when needed.
“Hopefully, we don't have any work for him. The more he's in the plant, the better we're doing,” John Anthony adds, with a touch of humor. “It helps to have him on board for contracts, equipment installations and other legal needs. He has already been a benefit to us and will be even more so in the long run.”
For the future, the company's goals are to maintain and improve quality, while gaining as much efficiency as possible. “The idea is to provide our customers with the best value,” Nick, Jr. says. “It's been a proud history, a hard-working history. We won't take no for an answer. We keep going and plan on being around for another hundred years.”
With its growing family, Orlando Baking has no choice but to increase sales, Holan adds.
Ownership: Orlando family owned and operated
Web site: www.orlandobaking.com
Management: John C. Orlando, Sr., co-C.E.O.; Sonny Orlando, co-C.E.O.; John Anthony Orlando, executive vice president, operations; Chris Brindle, vice president, finance and accounting; Daniel Holan, vice president, administration; Nick Orlando, Jr., vice president, sales; Steve Johnson, maintenance director; Dale Palumbo, HR director; Brett Ferlin, IT director; Chris Pozwick and Mike Reese, production managers; Patty Geiser, production coordinator; Rich Burke, maintenance manager; Ron Zendarski, quality assurance manager; Anthony Delisio, sanitation manager; Chris Orlando, inventory reconciliation manager; John C. Orlando, Jr., Esq., general counsel/plant operations; Angela Sierko, payroll manager; Irene Boers, benefit manger and Lue Esther Cunningham, customer service manager.
Product line: Primarily hearth breads and rolls, totaling more than 250 specialty products including Italian, French, rye and wheat breads; an extensive variety of subs, hoagies, kaisers, hamburger buns, dinner rolls and Orlando's signature ciabatta bread. In addition to its hearth baked breads and rolls, its frozen line includes bruschetta made from mini ciabattas topped with cheese, garlic and various herb blends; and garlic breads, Texas toast, sticks and loaves in a variety of flavors and sizes.
Marketing territory: Fresh business — Cleveland and vicinity; Frozen business — nationwide
Plant size: 200,000 sq. ft.
Production lines: Eight make-up lines and six ovens
Sales: About $50 million
Distribution: Leased, Orlando trucks used for fresh routes, local distribution
Number of employees: About 350