It’s easy to forget that there was life before smartphones, email and text messaging, when business owners saved all their receipts and communication was limited to the post office and public switched telephone networks. But the tech-savvy spenders of Generation Y and beyond are more accustomed to the instant gratification of digital communication networks and the world wide web.
The “cool” factor
Many bakery owners are adapting to today’s digital world by incorporating technology into both the front and back of the house. For Beth Fahey, co-owner with her sister Becky Fahey of Creative Cakes, Tinley Park, Ill., that meant upgrading the customer experience when choosing a wedding or special occasion cake.
The bakery replaced its print cake catalogs with five iPads equipped with photo galleries that contain the bakery’s most current cake designs along with pricing information. Customers can browse designs, search for specific themes or categories and even email photos of their favorite cakes to friends or family members. The app is linked to Creative Cake’s Flickr account, enabling staff to update the iPad gallery within seconds.
“I think it’s a great tool that when you compare it against the cost of printing a catalog over and over, plus the upkeep of getting your pictures up,” Fahey says. “The second we upload something to Flickr, it’s in our store on our iPad. We can have a cake on Flickr before the customer even picks it up.”
Many of the bakery’s sales employees are in their teens and 20s, so they are already well-versed in smartphones and tablets and can be totally trained on the iPads by the end of their first day. Additionally, their intuitive knowledge of the technology improves interactivity with the customers as they can teach them how to use the app.
“Not everybody is onboard or familiar with how to use the photo gallery app,” Fahey says. “So our sales staff has to interact with them and show them how it works. It doesn’t matter how much we stress smiling and eye contact, it’s different when you get down to working through something with someone. You have a relationship with them almost right away.”
Not only are sales figures up since Creative Cakes installed the iPads about a year ago, but the bakery has tapped into that elusive “cool” factor, which has created buzz in the community. “At first, I was concerned we would alienate people,” Fahey says. “But it’s so funny how everybody knows how to use an iPad now. People come right up and start pinching and swiping.”
Fahey is toying with the idea of forgoing her existing point of sale software for iPad cash registers, especially since she sees the industry ultimately going in that direction. But for the time being, the biggest benefit of her current POS system is it allows for consistent pricing and reporting, which is essential for a bakery whose business is built on customized cakes.
“The biggest and best feature is that you’re consistently reporting. If you program it correctly, you significantly reduce your margin for error,” she says. “Everything we do is so customized, cakes especially, so you don’t want employees guessing prices for different things.”
The order form for cakes looks like the physical cross section of a cake, so the employee can see the order of layers, fillings and extras like fruit. “So you never lose money on things you might forget to charge for,” Fahey says.
Moreover, the system tracks inventory, stores formulas and, most importantly, acts as a giant database for all of Creative Cakes’ customers. “I have over 10,000 emails, which is like gold,” she says. “Every time a customer places an order we ask for an email. It also helps improve our service. If a customer calls and says, ‘What cake did I have last year?’ I can find it in a minute, they can order it again and I can duplicate their ticket.” But it’s not without frequent updates, Fahey quickly adds. And it helps to be adept at computers.
For the tech-savvy startup
Another downside to such a robust POS system is the price, says Florian Radke, co-owner with his wife Shannon of Cinnaholic, a vegan cinnamon roll bakery in Berkeley, Calif. When they opened the bakery in 2010, the Radkes opted for two $600 iPads equipped with a mobile payment app instead of costly cash registers and POS systems. A credit card reader snaps into the headphone jack of the iPad (it also works on Androids and iPhones). Together with a simple app, it enables the Radkes to swipe customers’ credit cards for a single, 2.75 percent per-transaction fee–as opposed to traditional credit card arrangements, which typically entail setup costs, minimums, monthly fees, or variable percentages.
“I was shocked to see all the fees that came with the traditional credit card arrangement,” Radke says. “What I love about the app is it has one fee and that’s it. It was really easy for us to do calculations for our startup business plan. We knew, based on a percentage of credit card sales, what would go into fees.”
Shannon Teague, who co-owns Cake, Hope and Love Bakery with Connie McFarren in Beavercreek, Ohio, ran her online cupcake and cake business using only electronic payments for four years before opening a bricks and mortar store last year.
“When we switched to the retail location, iPad was the most inexpensive POS system to use. And besides not wanting to use a clunky cash register, we didn’t like the processor,” Teague says. Because the bakery was launched online and is still heavily involved in social media, an iPad cash register fit better with the overall feel of the shop, she notes. The app also allows Teague to customize as many as 200 buttons for each cupcake she sells, making it easy to ring them up. It also connects to back-office software that tracks sales and manages bookkeeping.
“We’ve taken a picture of each cupcake and made a button for it,” Teague says. “You can alphabetize them or go by the pictures. So when we pull reports on the end of the month, it’s easy to just pull up that cupcake we sold. I can also look at fills per transaction and what hours are busiest on my phone. I don’t even have to be in the office.”
“That’s the only thing we don’t have to train employees on,” Radke notes. “It’s a super intuitive app. You just click a button and ring people up.”
Putting innovation first
It helps to have an advantage when it comes to technology. Charles and Candace Nelson, cofounders of Sprinkles Cupcakes, Beverly Hills, Calif., both worked in the technology field before they opened Sprinkles in 2004. “My wife and I worked a lot with tech companies before, so we really came at this industry wanting to combine the newest technology with baking,” says Charles Nelson, who also is president of Sprinkles. The company recently made headlines after installing a 24-hour automated cupcake machine in front of its flagship store (pictured, right).
The $100,000 machine operates with an iPhone-like interface, and a robotic arm does most of the work. Customers select a cupcake from about a dozen flavors (plus a sugar-free version for dogs) on the touch screen, swipe their credit card and watch the robotic arm select their individually boxed cupcake on a video screen before it’s dispensed 30 seconds later. The owners wanted a machine that could handle one cupcake at a time without damaging it, Nelson adds. The ATM fits 595 cupcakes and typically sells about 1,000 a day. Aside from staff baking the additional cupcakes and stocking the machine up to three times daily, the ATM is largely self-sufficient.
“We had customers coming at 4 a.m. yanking on the door, setting the alarm off because they wanted a cupcake,” Nelson says. “We’d be right inside making cupcakes and wishing we could sell them to those people. We pay rent 24 hours a day–why shouldn’t we be open 24 hours? It gives us the opportunity to sell in environment where it wouldn’t be economical to have a full-fledged store or to be open during those hours.”
The ATM has wide appeal across Sprinkles’ customer base, attracting locals and tourists, young and old patrons alike. Nelson notes that it has been especially popular among the younger, tech-savvy generation. “We have lines at the ATM during the day filled with people fascinated by the technology. After we close at 9 p.m., it skews to teens and college students. Young people especially are embracing new technology. They don’t feel the same need to interact the way other generations do.”
Given the popularity of the ATMs, Sprinkles will install them in five more locations around the U.S. by the end of the year. Nelson says innovation has helped set the bakery apart. “We were the first cupcake-only bakery, the first to have a cupcake truck. We have an iPhone app with a few hundred thousand downloads. And now we’re the first to do the cupcake ATM. We continue to try to innovate and be leaders in our industry. Plus, it increases customer satisfaction. Customers are more satisfied if we are open for 24 hours.”
He adds that marketing is much easier for a business that focuses on innovation, since it generates buzz.
“You always have to have a new story to tell, a reason to bring customers in. It gets people excited again about your product, he says. “You have to adjust with the times.”