Bakery in the New Pioneer co-op, Coralville, Iowa, has been growing by leaps and bounds. The pastry department has seen a 230 percent increase in the last five years and bread sales, a more mature department for the bakery, has grown 20 percent in the same period–during a sluggish economy in an area that was hit with horrible flooding two years ago.
“With all of that, we’ve maintained positive growth through every single quarter,” says Craig Albright, food production coordinator. “It’s about the quality of what we have and our creativity.”
The bakery’s two locations sell on average three cookies to every area resident every year, or about 70,000 cookies a year. Bakery accounts for almost 7 percent of the stores’ sales.
Even with the economy, Albright keeps close watch on his margins. Product prices account for labor, ingredients and packaging costs. New Pioneer is in the process of placing a fixed cost per product to account for packaging rather than figuring a percentage.
Albright has noticed that buying patterns have changed and the bakery tries to keep several products, such as individual cookies and bars, at about a dollar each. He also is trying to develop new products that hit the $10 to $20 range. “People aren’t as interested in spending $30 for a cake, but they’ll go for the 6-in. cake for $20,” he says. “We’re seeing much better movement on products that are $10 to $20.”
With the rise in ingredients costs, New Pioneer did have to raise prices slightly this year, and with a switch to self-serve cakes, which meant adding in packaging costs, cake prices increased for the first time in six years. The larger cakes with higher price points did take a hit, but with the introduction of a larger variety of smaller cakes, that has been mitigated. Chocolate cakes as well as recently introduced pudding cakes continue to sell very well.
“The newer, innovative products get people excited,” Albright says. “We pare down to our true core products and add in some new products. Our customers are extremely receptive to new products.”
New Pioneer developed an in-house reporting program that ties in with the POS system. “We’re pretty aggressive about our data. We can look at an item’s history over a five- or 10-year period. We can really see what the movement has been on a particular item,” Albright says.
The POS system supplies the program with all sales data, and Albright can look at a certain period of time, a particular product or a department to know what he needs to produce in the upcoming days. “We’re dialed in pretty well, and this historical data has been a vital forecasting tool,” he says. “My standard practice is to pull up last year’s upcoming month data and look over it to calculate this year.”
In tough times it can be tempting to leave products out longer, but that practice can kill a bakery quickly, Albright says. “Remaining committed to really fresh product is key.”
The slow-to-improve economy isn’t slowing Sweet Endings’ growth. The cake and bite-size treat wholesaler based in West Palm Beach, Fla., is adding accounts and increasing its geographical reach by the day.
“Honest to goodness, we’ve never been turned down by a distributor once we’ve presented the product to them,” says Judy Leibovit, the company’s founder and president.
The rapid growth has necessitated a new position–vice president of sales and marketing, which was filled by Sandy Revera Hiddemen. Having recently worked in sales for another bakery manufacturer, Revera Hiddemen had established relationships with distributors, brokers and customers. She hit the ground running and continues to draw in new customers while Mike Levine, production manager, keeps the shop running smoothly and efficiently. The company’s growth potential is only limited by its size.
“We continue to grow, it’s just a matter of bringing in new employees. I work until 8 p.m. some nights–but that’s the way it is when you grow like this,” Leibovit says. “Together, we have a vision.”
Flexibility plays a key role in that vision. Leibovit and Revera Hiddemen are willing to do just about anything that a customer needs. Restaurants and other foodservice outlets are all looking to increase their ticket sales, and Leibovit and Revera Hiddemen aim to give them the tools they need.
“Customers look to us as cake manufacturers to bring them ideas,” Revera Hiddemen says. “Our brokers have many principals, so they aren’t as intimately involved in the product as we are. We bring solutions to the table; they make a secondary or third call to the consumer, and we deliver the product.”
Leibovit also attributes the business’ continued profitability to smart buying and pricing strategies. Three years ago, when faced with maintaining quality during a volatile commodities market, Leibovit started thinking about procurement strategies.
First, she working more closely with her ingredient suppliers to receive direct rebates on the bakery’s ingredients. She now buys a lot of the ingredients direct, which helps the bottom line.
Also, as demand and throughput have grown, the company has been forced to buy in more volume, reeling in more savings. In order to continue to buy in volume, Leibovit is building 10,000-sq.-ft. of freezer space at another location. As a result of these efforts, the company has maintained steady and increasing profits without passing costs along to customers.
“We haven’t had a price increase in more than two years,” Leibovit says. Buying in quantity helped the company maintain prices, and now it is going after new customers with a two-layer line. It may lose a little margin, but that’s made up in volume.
Sales were up tremendously last year and are up again so far this year. And when Leibovit explains to customers the margin potential of five-layer cakes–that they can make $100 profit on each–they’re hooked. This is a formula for steady repeat business, the cornerstone of any profitable bakery.