John Johnston was confident that remodeling his family bakery’s sales area and exterior storefront would boost sales by at least 20 percent. Indeed, his expectations were in line with results of Modern Baking retail bakery surveys, which have shown that store remodels on average generate 20 percent to 25 percent sales gains.
However, he and his siblings, who operate Johnston’s Bakery in Sheboygan, Wis., were bowled over when sales receipts revealed that revenue had risen by 40 percent immediately after the six months of construction concluded. That was summer 2005.
Since then, annual sales have doubled, Johnston says. The $400,000 investment is paying off.
The increase comes both from existing customers buying more and from new customers, he explains. “We set a stage with the remodel, and people have found it.”
Seeds for the remodel were planted in 1986, when John graduated from college with a business degree and took over business operations from his mother, Caroline. She and her husband, Joseph, who together had founded the bakery in 1950, raised eight children, seven of whom are still involved in the bakery.
A family operation
“I wanted to grow the retail business,” he recalls. The bakery had operated as a specialty wholesaler, supplying mostly fresh and frozen baked bread and the bakery’s signature Sheboygan-style hard rolls to supermarkets and foodservice accounts. In 1957, the couple moved operations to the current location, which had a storefront and opened an opportunity to introduce a retail shop.
Mr. Johnston died in 1970; Mrs. Johnston directed operations until 1986, yet remained actively involved until her death last year. Today, sons Michael, a graduate of the American Institute of Baking, and Joe, a 1976 graduate of Dunwoody, manage bakery production, with Michael overseeing bread and roll products and Joe handling cake, pastry and sweetgoods.
Daughter Judy Johnston Jarvis manages retail operations. She worked for Publix Supermarkets’ in-store bakery program for 13 years, where she was a bakery manager. In 1995, she returned with her family to be the retail manager for the bakery.
Mrs. Johnston had remodeled the storefront in the 1970s with a fresco surface and brick arches over the two windows and main entrance to emulate wood-burning ovens she had seen in Italy. But, the exterior motif had become dated
Inside, the fluorescent lighting was too bright, almost clinical. “We wanted more drama, a warm, boutique setting with cases lighted to jump out and show off product,” John says.
In late summer 2004, the local newspaper published a photo from 1892 of the exterior of a bakery located in Johnston’s building. “We had never seen a picture of the original building. That’s the look we wanted,” he says. The Johnstons hired a local architect, who, referencing the 1892 photo, expanded the store to include café seating and replicated the original façade to the smallest detail.
To simulate an 1890s interior, the brothers scoured the Internet for furnishings. Wood plank flooring came from reclaimed Wisconsin barns, Sheboygan taverns inspired the installation of a stamped tin ceiling from Florida, and an Indiana manufacturer supplied belt-driven ceiling fans.
Concurrently, they chose modern curved glass showcases, which are more effective at merchandising bakery foods than old-fashioned display units. Another modern touch is a coffee bar for preparing espresso-based beverages and brewed coffees, which the bakery had introduced two years earlier.
Coffee adds revenue
Sales of the bakery’s branded Bakers Brew coffee have contributed a large portion of the greater store revenue. “My advice to any retail baker is to put in fresh coffee,” John says. “It’s easy to do, and the margins are huge. It doesn’t have to be espresso, but it must be freshly ground. Plenty of coffee roasters are available to help with a program.”
The seating area, which accommodates 34 customers, features a fireplace and tables whose bases are antique sewing machine treadles. While enjoying pastries and beverages, customers may link notebook computers to the Internet via the store’s wi-fi network.
With the bakery’s location along a main street, parking was limited to a few spaces. The Johnstons purchased a vacant lot across the street, which added parking for 40 vehicles.
Organizationally, the retail store is one of three businesses for Johnston’s Bakery; the others are wholesale sales of fresh and frozen baked items, and a frozen dough plant, located about two miles from the retail store.
John describes them as comprising a three-legged stool. “This diversified approach has been the key to our success. My goal is to have any one of the businesses stand on its own,” he says. “Prior to remodeling the store, the retail business was good, but could not have stood on its own. Now it could.”
Sheboygan-style hard rolls, the bakery’s top-selling volume product, are available in four sizes, with 2-oz. rolls the most popular. Their importance to the bakery led them to have “Sheboygan-style hard rolls” trademarked.
Prepared from a lean dough, the baked rolls feature a soft, light texture and a thin, slightly crispy crust and withstand freezing well. The smaller rolls are popular as dinner rolls while customers use the larger versions with Sheboygan-style bratwurst and other German-style wursts, and for sandwiches.
To broaden the retail bakery’s attraction, the Johnstons introduced specialty items, including new varieties of dessert tortes to create 17 flavors, which filled out the store’s product mix to about 200 items daily. “They offer great eye appeal,” Judy says. “Having colorful displays, plus keeping cases full all day and changing product during the day, make our customers want to come back.”
In the service cases, Judy works to keep the display captivating by grouping products that have contrasting colors and shapes. “Products with similar colors or textures get lost when merchandised together. Each needs to stand out.”
The Johnstons have embraced self-service merchandising to appeal to time-constrained customers. Demand items, including cookies and coffeecakes, are good for grab-and-go sales, she says. The bakery merchandises them packed in clear plastic clam shells on displays created from old wood shoe racks.
Judy instructs each sales person on how the displays must appear, including the products’ characteristics. “The sales people understand that the products must be what they would buy and to remove any that don’t measure up,” she says. In addition, sales personnel learn products’ ingredients from written descriptions readily available near the cases.
Suggestive selling optimizes sales
To ensure sales personnel can perform suggestive selling effectively, she “looks for sales people who are upbeat, positive, and who leave their troubles at the door. They understand that customers come first, no matter what happens.”
John notes that the store remodel was pursued not only to boost retail sales but also to help support the wholesale business. “Potential wholesale customers want to see who Johnston’s Bakery is,” he says. “If we had a so-so store, it wouldn’t present the best impression. But, the store gives an image of a well-established, old-fashioned bakery.”
The bakers produce fresh donuts and sweetgoods, and fresh and frozen baked rolls, buns and bread for some 50 foodservice and foodservice distributor accounts located in Wisconsin, northern Illinois, Upper Michigan and northeastern Iowa.
Johnston’s is able to balance the needs of its retail and wholesale customers in part because the retail store is not open Sundays, John observes. “My mother said that if we couldn’t make it on six days a week, we shouldn’t be trying.”
The bakery does not deliver frozen baked product to wholesale accounts. (It does supply fresh items within 50 miles west and north of Sheboygan.) Customers either pick up their orders, or distributors handle shipments. “We’re upfront with our wholesale customers about this, so they understand,” he says.
The frozen dough plant further reduces demands on bakery production by having inventories from which to pull product as needed. These steps, John says, help to ensure top quality and effective service for both retail and wholesale customers.
He adds that he is very optimistic about the wholesale business, especially sales of frozen baked Sheboygan-style hard rolls. “Response to the rolls has been tremendous. The volume is much more than we had expected,” John says. “That’s in part due to affiliating with a national foodservice distributor, which has expanded our reach into restaurants.”
Wholesale products also are sold in the retail store. Many bakery items, however, such as decorated cakes and tortes, are offered only for retail.
Still, some items, introduced at retail, have made their way into wholesale, such as multigrain bread. “If enough accounts want the product and we can work it into our schedule, we will sell it wholesale. But, we won’t do it if there’s a chance that it would hurt quality,” John explains.
Bakery production occurs six days a week, and the crews prepare most lines each day to fill the needs of retail and wholesale customers. Michael’s crew starts bread and roll production at 3 a.m. with ingredients scaled the previous day.
Alternating use of the automated bread and roll lines keeps production by five bakers running smoothly, Michael says. The crew processes an average of four 350-lb. doughs an hour, alternating hard roll dough and white bread dough.
“The objective is to keep the automated roll and bread lines running with minimal down time,” Michael says. Hard roll doughs require 30 minutes processing, while the bakers prepare white bread doughs in 15 minutes.
Cake and icing production begins at 1:30 a.m., followed at 3 a.m. by cookies, sweetgoods and donuts. Joe, too, seeks opportunities to improve efficiency. For example, when one of the wholesale accounts requested a standing order for a large number of brownies, the bakery needed a machine to produce brownies in volume. Rather than invest in new machine for one product, he hired a machine shop to create a head for the bakery’s 16-in. wire-cut cookie machine to deposit brownie dough. The fabricated head requires using nut bits, rather than larger particulates and handles about 140 lbs. of batter in less than five minutes.
Four rack ovens handle all baking needs, including test baking product from the frozen dough plant. Most bread and roll baking concludes about 7:30 a.m., when cake, cookies and sweetgoods are baked. Production concludes at about 2 p.m.
Michael also conducts research and development for the frozen dough plant, which makes all bun and roll products. The bakery currently produces frozen bread dough, but within six months the plant will take over production.
Once the frozen bread dough production is moved over to the plant, the Johnstons will begin renovation of the three buildings adjacent to the retail bakery, which they purchased two years ago. The structures include two Victorian-style homes divided by a cinder block storefront, all leading to the block’s corner. The exterior of each will be remodeled in the 1890s style of the bakery.
To provide more production space, the Johnstons will move their business offices into the building next door, a home. The cinder block building will provide space for a new automated roll line with an automatic panner. Space in the corner building will be leased to small businesses.
“Each business, as well as our retail store, will benefit by having the others nearby,” John says. “The idea is to bring a buzz to our neighborhood.”
He notes that the road to the bakery’s success has been a challenge for everyone. “We’ve succeeded because of our hard-core work ethic and because we’re willing to invest in the business,” John says. “We’re always buying machines to improve efficiency. Now, with remodeling the store and the other buildings, we’re working on improving our neighborhood to help ensure our future."