| Panelists |
Gary Gardner, president, B.H. Gardner Co., a bakery distributor based in Indianapolis. The independent bakery distributor has been serving the baking industry since 1924.
Bob Frank, owner, Bagel Alley, a bagel bakery and café in Nashua, N.H. Frank has been in the bagel business since 1988 and the restaurant/foodservice business since 1957. He also operates a training program for people looking to open bagel bakeries.
As Modern Baking celebrates its 20th volume year, editors asked baking industry leaders to reflect on changing trends in retail baking during the years and, more importantly, how bakery operators can continue successful businesses into the future. Representatives with broad experience in the industry shared their thoughts on emerging trends.
What has changed the most in your retail or in-store baking business?
Frank: Even though the dollar signs have changed drastically, running business on percentages remains the same.
Walsh: We have three guys from the same high school class that have worked with us for 47 to 50 years. People don’t do that anymore.
Mihu: There is less risk taking today in in-store bakeries because today’s environment doesn’t allow it. We were probably more creative 20 years ago because I don’t think the bakery was under scrutiny to contribute like it is today. Having a bakery today is no point of differentiation because everybody’s got them. We’re being held more accountable. Any innovation we add better have a return on investment, it better drive sales.
Walsh: Years ago, when you wanted baked goods, you went to a retail bakery. Now you can find baked goods when you stop for gas. Naturally there is a difference in quality, but the availability has proliferated.
Mihu: Retailers are diversifying their businesses. They’re getting into sandwiches, greeting cards and other auxilary products.
What is the key to longevity in business?
Brown: Keep a high standard of quality and protect the service to your customer. It’s not just about baking great products. It’s about providing an environment where customers feel comfortable purchasing your products.
Frank: You have to have the intestinal fortitude to bite the bullet and raise prices, but don’t skimp on the things that make you popular.
Walsh: What’s challenging in the retail baking industry is that we’re in production and we’re a retailer. It is hard to combine and have the skills to excel in both of those.
Gardner: Quality product is paramount, and you have to adapt to emerging trends. Customers can get bored.
Mihu: You have to combine the passion for baking with business sense. As an in-store bakery, we already have the convenience factor and a high traffic count. You have to decide whether you want to compete on price or on quality. It should reflect your banner.
What consumer trends are effecting your business today?
Brown: Trans fats. People are becoming more aware of them and asking questions about it.
Gardner: Generations are getting older, and the younger generations don’t eat the same way as the older generations. Bakeries need to keep up with that.
Mihu: We’re an industry that’s still fighting negative publicity. Allergens, trans-fats, labeling. The trend is that we’re having fewer people that come into our stores to buy bakery goods. It’s almost like we’re getting a whole generation that says, “Hey, I don’t buy bakery goods.” That’s an industry issue. We have a bit of a hang over from all the negative publicity.
Walsh: Consumers used to frequent the bakery more often. We had a very strong breakfast business years ago. From 7 a.m. to 8 a.m., we were really busy. Now, afternoon is the busy time and we’re busier when customers are on their way home.
Gardner: I’m also seeing a trend away from “big” and more towards specialty. Especially with some of the supermarkets, the smaller specialty grocers, butchers and bakers seem to be making a come back.
Mihu: I’m glad to see fad diets go. But it shows you how diets can be devastating. When a fad diet takes root. There’s nothing we can do to change that.
What are the biggest challenges to bakery profitability?
Walsh: Most retailers don’t have enough room for time saving equipment. For me, space gives you greater opportunities for growth.
Brown: People seem afraid to raise their prices. A gas station moves around prices with its costs. It’s not the perfect model, but bakeries need to be willing to adjust their prices with their costs.
Gardner: For new operators, the location of their bakery is very important. We’ve seen a few bakeries start up, and we knew it wasn’t going to work simply because they were on the wrong side of the street.
Walsh: Keeping labor percentage (as a percentage of sales) at a level that attracts quality help and keeps your bottom line in the black.
Mihu: The biggest thing is to try stay on the leading edge and not the bleeding edge of consumer trends. Know when to jump in. Rule number one is: taste is king. We’ve gone through fat-free, low-carb...the latest and greatest fad diets. No matter what, products still have to taste good.
Frank: You have to keep your employees happy. I’ve trained every employee to do every job in the bakery. I first did this as a cost savings. In case someone didn’t show up for work, others could fill in. The extra thing that has happened is that it has made all my employees love their job much more.
Mihu: If you have a one-store operation, you can do almost anything. Across 100 stores, it’s a different story. You can’t execute every idea.
What do you see for the future of our industy?
Walsh: As an industry, the demand for quality baked goods will always be there. Opportunities will always develop. You have to focus on what you do best as long as you reach a profit that offers potential for the future.
Gardner: I think in the next 20 years people will be more concerned with diet and nutrition. There will be changes in who’s going to be buying bakery products, but the basic business is not going to change that much.
Walsh: Relationships with other retail bakery owners are very valuable. Active members of local associations are generally more profitable and have a better name recognition.
Mihu: Keep close to how consumers speak with their dollars. But, we also hurt ourselves when we chase every little trend and compromise the quality of our goods.
Gardner: A lot of retail bakeries seem to need more help merchandising their products. The old saying, “walk in the back door, leave from the back door” still seems to hold true for some.
Walsh: A lot of people go into the business for people and product reasons, which are very important reasons. But, I think their background in the financial picture comes up short. When I took over the bakery with my wife, I really didn’t have a clue at all about formula costing, such as labor percentages, cost of goods, overhead percentages, etc.
Frank: They (bakeries and restaurants) are the last place an untrained person can get into business and be extremely successful by his own bootstraps. By his own willingness to work. This is still a place where the little guy in this country can make it. There aren’t too many places like that anymore.
Walsh: There may be no debate on who’s the best in town or who’s the best in the neighborhood. Some times it just comes down to convenience, unfortunately. You have to be easy to do business with.
Frank: There’s still a place for an individual in this business. I still see a trend that the small businesses are being bought up by big conglomerates. But, the little bakeries and restuarants still are going to survive. The little guy is still able to make it.