Software tracking boosts La Bonbonniere’s profits
It may be entrepreneurial know-how that tells La Bonbonniere Bake Shoppes’ owner Brian Pansari how to sell products at his four central New Jersey locations. But it is inexpensive computer software that tells him how and when to buy ingredients for maximum profitability.
About 10 years ago, La Bonbonniere launched a proprietary software system designed to simplify the job of managing the bakeries’ biggest expense areas–inventory and waste. Although the software was developed to take on a complex, multi-faceted job, getting it up and running was not a massive undertaking, Pansari says.
Based on recent conversations with software experts, he estimates that a similar program could be developed today for a cost of $5,000 to $7,000. While his software was designed by the tech-savvy former owner, Pansari suggests that other bakery owners check the classified ads posted on Craigslist or other job-focused forums to find someone with the skills to create a proprietary program to suit their specific needs.
La Bonbonniere’s software serves a number of purposes, including helping Pansari control expenses on raw materials and making sure the amount of inventory is sufficient to meet monthly production requirements. It also allows him to track the levels of waste for any item during any given time period.
The software saves his bakery anywhere from one-half to one percent on cost of goods, which translates into savings of at least $15,000 per year. At the end of each month, he conducts a physical inventory count, then, to make sure he is getting the best possible deals on the ingredients he needs, he requests prices from three different suppliers.
“Sometimes one distributor will have bought a large quantity of a particular ingredient–sugar, for instance–when commodity prices were low, so that supplier can give me the best price for that month, even if the price of that ingredient in the marketplace has significantly increased,” he says. “I don’t pit suppliers against one another and I don’t try to nickel and dime them, but our system does keep them competitive.”
At the beginning of each month, the computer software factors together the updated ingredient prices from the three suppliers and the bakeries’ current ingredient needs, making up or down adjustments for limited-time, promotional items that may be on the schedule. The program then automatically generates an order printout based on these factors for Pansari to review and fax to the distributors offering the best prices that month.
La Bonbonniere also is a founding member of RPIA, a retail bakery trade organization that enables operators all over the country to benefit from discount and rebate deals offered by partner suppliers of raw ingredients. To stock up on ingredients when prices are particularly favorable and, at the same time, decrease the need for multiple deliveries, Pansari installed a loading dock with a lift system at his main bakery in Edison, N.J.
Middleman pricing leads to success at Oakmont Bakery
Marc Serrao works hard to be number one when it comes to product quality. But when it comes to pricing, he prefers to be the middleman.
“Supermarkets tend to price their products on the lower end, our independent retail bakery competitors on the higher end; we try to stay somewhere in between,” says Serrao, owner of the bakery located in Oakmont, Pa., about 15 miles northeast of Pittsburgh.
Sheet cakes are usually priced between $80 and $100 at most retail bakeries. At Oakmont, the same cake will cost customers about $72.
Clearly, Serrao believes that taking the fast nickel over the slow dime is the best policy for his bakery. He can afford to price his products a little lower than his boutique competitors because of high volume and repeat business.
“Besides, I consider pricing to be an important part of my advertising,” he says. “With the economy as it is right now, people are comparing prices to make sure they’re getting the most for their money. They’re looking for the best value.”
Wildly fluctuating ingredient costs sometimes make it difficult for Serrao to keep prices for certain items within his set parameters. But he emphasizes that he does not cut corners to keep the bakery’s prices attractive.
“The bottom line is if we can’t price something competitively and still maintain our exceptional quality standards, we just don’t make it,” he says.
During the past 15 years, Serrao also has been automating certain production processes, such as bagel-making and cookie dough and batter depositing, to make them faster and more efficient. Because most of the equipment does not require bakers to run it, they can focus on mixing and other more technical tasks. The automation also has significantly cut overtime labor costs.
But he insists that he will not sacrifice the integrity of any product to suit the capabilities of a machine. A few years ago, he purchased a cake icing machine, but had to return it because it required some major changes in his icing formula. “Any piece of equipment we add has to be able to work with our formulas as they are,” Serrao says.
When Serrao switched from frozen to scratch artisan breads, he saw it as pretty much an even swap from product cost to labor cost. What he did not foresee was the substantial boost in volume that would result from the move.
Prior to switching to house-made dough, the bakery sold between 15 and 20 Italian loaves per day. Now that number has jumped to between 60 and 75. Sales of pepperoni rolls, which are made from the same dough, jumped from 20 to 24 per day to 100.
“Once customers taste the difference between our breads and those they can buy at the supermarket, most won’t switch back,” he says. “Sometimes it pays to go back to the old-fashioned ways of doing things when the reward is customer loyalty.”