Although many of the top 50 foodservice bakeries remained largely unchanged in terms of sales and unit rankings from 2011 to 2012, beneath the surface the industry is undergoing a sea change amid changing consumer habits and an ever-shrinking globe.
Consumers worldwide want good quality products at a fair price, prepared fresh throughout the day, according to a recent global survey of 6,400 consumers’ attitudes about bakery, patisserie and chocolate by Puratos and Insights Consulting. They demand authentic experiences when they interact with “brands,” whether that means opening a box of cookies or smelling and touching a freshly baked baguette. Operators and manufacturers are tasked with delivering this feeling of authenticity through a whole brand experience.
“Consumers want higher quality but they want to pay less,” says Matt Crumpton, vice president of marketing for Puratos. “How do we get around that paradox? By offering a sense of holistic quality. They start reading the story behind the product and getting emotionally engaged in the product or bakery as a whole, and that rationale of paying less goes out the window. That’s a very strong point. I’ve tested that strong emotional engagement outside of food, but it’s not the same with products like laundry detergent.”
Along with this concept, also known as storyselling, comes the power of these brand experiences to transcend continents. That said, in addition to featuring the 2012 Top 50 Foodservice Bakeries list, the Modern Baking editors saw fit to pinpoint some of the most notable up and comers in foodservice bakery who foster strong brand experiences. Click on the image at left to view the Top 50 Foodservice Bakeries table.
Among the list of bakeries to watch in the United States are two internationally based companies: Sydney, Australia-based Pie Face and Korean SPC Group’s Paris Baguette. The other foodservice bakeries on the radar include Magnolia Bakery, Sprinkles Cupcakes and Crumbs Bake Shop–three chains that hit it big with the surging cupcake movement and are now looking to grow through such avenues as international franchising, expanded product lines and increased focus on beverages. Also making the list (and new to the Top 50 this year) is Bay Bread Group’s La Boulange Bakery, which is on the cusp of nationwide expansion after its acquisition by Starbucks this summer.
International concepts bet on U.S. success
Nearly every culture has some sort of filled pastry in its culinary repertoire. For Australians, it’s the savory meat pie–handheld pies made from puff or pie pastry that are filled with beef or pork and sometimes vegetables. Wayne Homschek, founder of the popular Sydney, Australia-based Pie Face foodservice bakery chain, thinks he can turn on American palates to this Aussie favorite.
Pie Face made its U.S. debut in the spring of 2012 in New York City, with a 24-hour shop in Time Square specializing in handheld savory and sweet pies that also appeal to the late-night crowd. A second location opened in Murray Hill this fall, a few months after Steve Wynn, chairman and CEO of Wynn Resorts Ltd. in Las Vegas acquired 43 percent of shares in Pie Face USA’s common stock for $15 million.
Supplied by a central commissary in Brooklyn, N.Y., the stores feature savory pies including chunky steak, Thai chicken curry and BBQ pulled pork in 7.7-oz. and 3.8-oz. sizes. A face baked into the crust of each pie denotes the flavor. The menu also features sweet pies, pastries, sandwiches, wraps, soups and coffee. Although Homschek anticipates an uptick in coffee sales in the U.S. compared to Australia, the savory pies are expected to be the main draw, with 45 percent of sales.
In addition to the uniqueness of the concept and branding and the quality of the food, Homschek says the product appeals to American palates. “Americans love comfort food, like chunky steak and chicken mushroom. All these flavors hit center of the mark for American tastes, like pot pie in a gourmet, portable way,” he says. “It’s kind of adventurous but not really because all the flavors are very well known. And people have reacted extremely well to it.”
The chain plans to have 10 locations in Manhattan by June 2013, with more than one per month slated to open after that. “We tend to think big,” Homschek laughs. “It’s a pretty aggressive plan but New York itself is aggressive. We learned that the hard way.”
Paris Baguette has exported the powerful brand experience of a Parisian baguette with overwhelming success in Asia–the chain has 2,900 stores in Korea and another 50 in China. While the bakery carries classic French items, such as croissants, feuilletee chocolate (chocolately puff pastry twists), and, of course, baguettes, the standout products are those featuring Korean twists, such as redbean donuts, sesame tapioca bread, green tea-infused cakes and sweet potato puff pastry filled with ginger potato paste.
The chain currently has 24 U.S. locations throughout California, New York, New Jersey and Pennsylvania. Several more are slated to open in the coming months as parent SPC Group, a leader in Korea’s foodservice franchise and bread bakery markets, looks to grow its presence in the United States.
Despite continued protests by the foodie community, cupcakes remain a steadfast consumer favorite, paving the way for numerous cupcake bakeries to find success on a national level. While some have made their name through familiar, comforting flavors, others are pushing the envelope by trying new technology, product lines and locations.
Ever since two characters met for a Magnolia Bakery cupcake on an episode of “Sex and the City,” the nostalgic, full-service bakery that launched on a quiet street in New York’s West Village has become a veritable tourist destination. The 16-year-old chain now has eight locations worldwide (including Los Angeles, Chicago and Dubai) and last year launched an online store that ships product nationwide. Magnolia plans to franchise internationally to Kuwait, Lebanon, Japan and Russia within the next year.
Sara Gramling, vice president of public relations, notes that much of the product line will be the same in the international locations, with a few additions. “From time to time, we may introduce new flavors. For example, in Dubai we offered a special orange date cupcake for Ramadan. The response from our Dubai patrons was so overwhelmingly positive that we now offer it at all of our locations,” she says.
For Sprinkles Cupcakes, innovation has been the key differentiator for the chain, which has grown to 10 locations across the United States since it launched in 2005. In March, Sprinkles launched a 24-hour automated cupcake machine in front of its flagship store in Beverly Hills, Calif. The machine operates with an iPhone-like interface. 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 cupcake on a video screen before it’s dispensed 30 seconds later. The ATM fits 595 cupcakes and typically sells about 1,000 a day. The vault is restocked up to three times per day.
“I’m a believer that automated retailing and foodservice is on the rise significantly,” president and cofounder Charles Nelson says. “And this will only accelerate in the years ahead. It gives you the opportunity to sell in an environment where it wouldn’t be economical to have a full-fledged store or be open during those hours.”
Given the popularity of the ATMs, Sprinkles will continue to open them around the country. The format also could allow the company to expand without opening additional brick-and-mortar locations, saving millions in build-out and operations costs. But the chain isn’t stopping there, launching its first premium ice cream shop, Sprinkles Ice Cream, in May next to the flagship store. The shop offers 12 flavors of slow churned ice cream, including Rocky Road, salty caramel, red velvet and vanilla bean. The menu also features ice cream sandwiches, cupcake sundaes, shakes and red velvet waffle cones.
Crumbs Bake Shop, with 55 locations and counting, has made quick work of expansion since it opened in 2003. The chain has been slowly expanding its menu to include cookies, cakes, muffins and coffee beverages.
Earlier this year, citing intentions to focus more on beverage sales, Crumbs inked a deal with Starbucks to pour the chain’s branded coffees, teas and espresso drinks at all 55 locations, starting with the New York stores this fall. “We believe that the availability of Starbucks drinks in our stores will greatly enhance the Crumbs experience for our customers and significantly increase our beverage business,” Julian R. Geiger, president and CEO of Crumbs Bake Shop, said in a press release. “As our beverage business increases, we also expect to see an increase in the demand for our baked goods.”
La Boulange’s big break
Long challenged to establish a reliable pastry program, Starbucks upped the ante this summer with the purchase San Francisco artisan bakery Bay Bread and its 20-unit La Boulange brand for $100 million. La Boulange is known for scratch baked croissants, pastries, breads and cookies.
Upon completion of the deal, La Boulange founder Pascal Rigo will be named senior vice president and general manager of La Boulange at Starbucks, charged with creating food products for Starbucks stores.
Starbucks ultimately hopes to boost its food sales in supermarket aisles, not just at Starbucks retail stores. La Boulange products also are sold in several upscale restaurants, hotels and specialty grocers in the Bay Area. Starbucks also has separate plans to grow La Boulange into a nationwide chain.
But it will still be a few months before La Boulange starts appearing in the pastry case at Starbucks locations, as the chain has to upgrade some existing facilities and broaden its distribution capacity in multiple markets. Some West Coast locations could see the baked products by early next year.
Big or small, what the up and comers have in common is strong branding. In order to leverage that further, Puratos’ Crumpton says they need to demonstrate the authenticity not just of their products but of their company as a whole through consistency across point of sale, menu boards and how they communicate with consumers. “This is all preexisting information. A lot of companies are missing the trick to finding this commonplace information,” he says. “It’s not just about product quality anymore. They’re missing the untapped potential that the consumer is willing to pay extra for.”