By maintaining fresh baking and frying donuts on site, this independent supermarket bakery chose a different path than its competition. The result–increased bakery sales and strong customer loyalty.
Ten years ago, Forest Hills Foods, Grand Rapids, Mich., was among several of the nation's better-managed independent in-store bakery operations located in the western half of lower Michigan. Committed to on-premise production, the stores' owners invested capital in equipment, ingredients and employees to ensure that customers could buy the fresh, high-quality bakery foods they wanted.
Consider donuts. Michigan is good donut country. Woe to the in-store operator back then that failed to fry and finish long Johns, Bismarcks and apple fritters, as well as cake donuts. It may as well have shut down.
Fast-forward to the present. Michigan consumers still like fresh donuts. But, Forest Hills stands alone in metropolitan Grand Rapids as the sole in-store operator frying donuts. In fact, the single-store operator is one of the few independent supermarkets still in business in western Michigan.
Regional chains have gobbled up most independents in the region, and in doing so, most have ditched their donut fryers and forsaken broad-spectrum fresh-from-the-oven production. In Grand Rapids, their loss has proven to be Forest Hills' gain.
Not only have Forest Hills' donut sales held up, but they continue to grow, as does total bakery volume, no mean feat given the depressed state of Michigan's economy. Further, bakery customer counts are mounting, and average per customer in-store purchases are increasing.
Forest Hills' bakery is not doing business much differently than it did 10 years ago, according to Jeff VandenBerge, president and third-generation owner. “Not everybody can say that,” he says. “We've seen a general decline in what supermarkets in our area are offering consumers. And, we've been pretty successful in what we've done during the last 10 years.
“Of course, we continue to try to make improvements. But, our people can point with pride to the fact that we still do things to the same high standards as in the past. We haven't cheapened what we offer.”
The supermarket's roots were in the meat department. VandenBerge's father added deli and bakery during a store remodel in the mid 1970s, when the nationwide surge to install bakeries began in earnest. As with other supermarkets, Forest Hills subsequently added seafood, floral, pharmacy and other departments.
“We look at our business as a whole rather than as different pieces,” VandenBerge observes, “that is, what our store offers our customers, not merely what, for example, bakery, deli or meat offers. Each is important to the total package.”
Each day the bakery offers about 250 different products from its list of some 400 items. Donuts, bread and roll items, and upscale dessert and custom-decorated cakes each comprise more than one-third of total bakery sales with cookies, brownies, sweet dough items, Danish, and puff and other pastries accounting for the remainder.
Donuts are the number-one selling product. Jason Bajema, bakery director, does not hesitate when asked why: “No other supermarket in Grand Rapids is frying donuts, and we have made sure we provide the best possible quality. Continuing to fry donuts is important to maintain our bakery's standards for high quality product.”
Three bakers handle all baking and frying duties with staggered shifts, beginning at 8 p.m. and concluding at 6 a.m. During the day, three full-time cake decorators finish custom-decorated and all-occasion decorated cakes. A fourth decorator is responsible for dessert cakes and tortes.
Fresh baking has enabled the bakery to offer products that competing in-stores cannot touch, either because they have backed away from on-premise production or manufacturers do not make the items, Bajema says.
Scratch-made cookies provide great opportunities to separate the Forest Hills bakery from other in-stores, he continues. For example, an island cookie display includes four varieties of 2-oz. oval-shaped cookies, measuring 3 ins. by 2 ins. Varieties include fruit bar, honey walnut, ice box and pecan finger, the best-selling flavor. A six-count pack retails for $2.29.
“I cannot believe how popular our scratch-made cookies are,” Bajema says. “One guy comes in every day to buy three packages. We offer high quality cookies that other bakeries don't sell.”
Having scratch production capability also enables the bakery to offer uncommon items, further distinguishing it from competitors' in-stores. One example is salt rising bread, which the bakers prepare daily for a small, yet loyal, cadre of older customers.
Each evening, a baker prepares a salt rising yeast starter, using commercial salt rising yeast, for the next evening's production. After fermenting 24 hours, the starter releases the breath-taking pungent, yeasty aroma associated with traditional scratch salt rising starters. Yet, baking purges the aroma, yielding a tasty white bread, which customers frequently toast.
The bread is available in Grand Rapids only at Forest Hills Foods. “We didn't have it for two months this summer because the yeast manufacturer was having short-term financial difficulties,” Bajema recalls. “Our customers really voiced their displeasure.”
Bakers also use frozen dough to help the bakery promote itself as a destination location for bakery consumers. For example, they get much mileage from frozen sweet dough, including using it to prepare cinnamon rolls.
“Not all manufacturers sell frozen sweet dough cinnamon rolls,” Bajema says. “Using this dough allows us to offer specialty varieties, such as apple cranberry for Thanksgiving and Christmas.”
In addition, the bakery's older customers prefer its sweet dough coffee-cakes to Danish varieties. “They really look for them for the weekends,” he says. “Over the years, they know they can count on us for them.”
Forest Hills does not offer signature in-store products, defined as unique, one-of-a-kind items. Rather, the bakers do their best to make high quality products with eye and flavor appeal that generate repeat sales.
This is most evident when viewing the bakery's 12-ft. low-volume refrigerated service case, which displays colorful, taste-tempting dessert cakes, tarts, cheesecakes, bars and other desserts in whole and smaller portions.
Examples of 12 varieties of dessert cakes include top-selling Chocolate Fantasy (three chocolate cake rounds filled and iced with fudge icing), 14 Karat (two rounds of carrot cake, filled and iced with chocolate and cream cheese icing), Raspberry Torte (three white cake rounds, filled with raspberries and whipped cream, and iced with whipped cream) and Black and White Torte (two chocolate rounds and one white round, filled with chocolate pudding and whipped cream, iced with whipped cream and topped with fudge icing).
Each week the bakery sells 40 to 50 dessert and all-occasion decorated cakes and 70 to 90 custom-decorated cakes.
While most other in-store operators have emphasized self-service merchandising, Forest Hills has seen its service sales increase. “We prepare everything in the service cases, and the perception is products from the cases are fresher and more like homemade,” Bajema says. “Because of this, people are willing to stand in line to be served.”
Still, Forest Hills gets a lot of bang for its investment buck in self-service merchandising. The bakery was remodeled in July, which included installation of new merchandising equipment: a 5-ft. self-service upright donut case, 4-ft. service candy case and four custom-designed oval-shaped octagonal island displays.
The traffic pattern remained the same. But, Forest Hills reduced the number of island displays from five to four and the custom-designed merchandisers present product more effectively, Bajema says. Fewer displays added open space, enabling customers to browse more comfortably and view product more closely.
In addition, the donut case, though smaller than the previous unit, is generating greater sales. “Customers can see the donuts better,” he notes. Since the remodel was completed, average weekly sales have increased by about $2,000 a week.
VandenBerge says the bakery's mix of fresh donuts and upscale desserts appeals to the demographics of Forest Hills' marketplace.
“Our area has a good mix of upper middle- and higher-income families and small office complexes,” he explains. “Employees of those offices shop one to three times a week for their families or stop for donuts for their offices. And, they frequently come for lunch at our café.
“They also buy cakes and tortes for office parties. And, many pharmaceutical sales reps pick up dessert bars for their customers' offices.”
In addition, the bakery has adapted its bread program to local tastes and changing consumer needs. Bajema says the store's diverse clientele requires the bakery to carry hard-crusted artisan-style breads and rolls and similar, but less-crusty, items, all baked off from frozen raw or par-baked product.
Further, the bakery merchandises three varieties of fresh-baked breads and rolls supplied by a local specialty wholesale bakery, whose name and reputation for high quality are well known in Grand Rapids. The wholesaler, Bajema notes, uses only ingredients from Michigan producers, such as honey and unbleached organic flour.
Another local wholesaler delivers a small line of gluten-free breads and muffins twice a week. “I was reluctant to introduce gluten-free products,” he recalls. “We couldn't make them because they must be made in a wheat-free environment. As a result, they are expensive, and I was worried about stales.
“However, gluten-free has become an important niche. The store has a list of gluten-free products by aisle, and I see customers everyday looking for gluten-free foods.”
Through the years, Forest Hills has employed targeted marketing programs to grow and nurture its base of loyal bakery customers. Some 15 years ago, the company initiated a free birthday cake program, which enables a family to receive a 7-in. double-layer cake each year for a designated family member.
The family's primary shopper completes a shipping address card, which includes the name and birth date of the designated family member. The family receives a birthday cake card, which the shopper can redeem each year at a checkout to order a cake before the designated birthday.
About 30 percent of bakery customers who receive the promotion order cakes. “Later, when they have parties, they think of us,” Bajema says. In 2008, the bakery produced more than 3,000 cakes for the promotion. He also signs and mails $5 gift cards every quarter to the bakery's top 100 customers, thanking them for their business. ‘This complements our one-cake-per-household program,” he says.
VandenBerge and Bajema note that while these efforts contribute to increased sales, the officials continue to be challenged to price products to account for increased expenses, notably ingredient costs, and not turn off customers.
“I was fearful of consumer resistance, especially toward higher donut prices,” Bajema says. He increased prices; sales did not decline and, instead, continued to grow. “Still,” VandenBerge adds, “after gradually raising retails, we're struggling with pricing.”
Other challenges will involve ensuring an effective mix of baking on-premise and outsourcing products. “Other operators are going another direction (backing away from hot baking) because it is becoming increasingly difficult,” VandenBerge observes. “Of course, we must examine what it takes to produce and offer the products in our bakery.
“For example, our cookie baker recently went to part-time employment. My first question for Jason was, ‘Do we need to continue to make cookies, or should we have that part-time person do something else and obtain cookies elsewhere?’”
He and Bajema examined cookie sales and production costs. “We're making money-not a ton of money-and cookies are contributing to overhead,” VandenBerge continues. “So, if cookies are making money and are contributing, why should we take them away from our customers?”
Providing fresh, scratch-made cookies is one example of why Forest Hills in-store bakery sales have increased, Bajema says.
“Sure, higher retails have contributed to increased sales,” he says. “But mostly it's because customers try a product, find that it's good and return to buy two or more products. It's this, and because our customers know us by our names, and know that our products are really good.”
No wonder Forest Hill Food's bakery program is succeeding. VandenBerge and Bajema are pursuing the same general strategy that enables full-line retail bakeries to become prosperous. How unfortunate that other western Michigan in-store operators have not recognized this.
Then again, their loss is Forest Hills Foods' gain.
Founded: 1959
Location: Grand Rapids, Mich.
Website: www.foresthillsfoods.com
Management: Jeff VandenBerge, president and owner; Jim Rings, store director; Jason Bajema, bakery manager; Robert Bingham, assistant bakery manager
Number of stores/bakeries: 1/1
Store/bakery size: 53,000 sq. ft/1,600 sq. ft.
Market served: greater metropolitan Grand Rapids
Annual sales: more than $1 million
Number of bakery employees: 19 with 10 full-time, including three bakers and four cake decorators
Products: full line with about 250 products of 400 available offered daily
Major production equipment: two 80-qt. vertical mixers, hydraulic bread divider, semi-automatic roll divider/rounder, sheeter/moulder, donut proofer, donut fryer, 30-pan revolving tray oven, rotary rack oven, six-rack proofer, donut filling injectors, computerized decorating machine, pan washer, bread slicer, walk-in refrigerator and freezer
Bakery supply distributors: Dawn Distributors of America, Lipari Foods, Gordon Food Service
| White and variety bread/rolls | Bases and mixes |
| Crusty bread/rolls | Par-baked |
| Donuts | Mixes |
| Decorated cakes | Frozen layers, scratch white icing |
| Pies | Frozen raw, fully baked |
| Cookies | Scratch, frozen dough, fully baked |
| Muffins | Frozen raw |
| Bagels | Par-baked |
| Sweet dough | Frozen raw |
| Croissants | Frozen raw |
| Puff pastry | Frozen raw |
| Danish | Frozen raw |
| Brownies | Mix |
| Glazed, yeast-raised donut | $0.69 |
| Bagel | $0.79 |
| Cinnamon rolls, 6 count, 12 ozs. | $3.59 |
| Butter croissants, 2 count, 4 ozs. | $2.49 |
| Blueberry muffins, 6 count, 12 ozs. | $3.59 |
| Gluten-free blueberry muffins, 4 count, 12 ozs. | $6.50 |
| Cream cheese Danish, 16 ozs. | $3.19 |
| Chocolate chip cookies, 10 count, 10 ozs. | $3.29 |
| Fudge-iced walnut brownies, 12 ozs. | $3.99 |
| Pumpkin pie, 24 ozs. | $5.79 |
| Raspberry tart, 8 ins. | $5.99 |
| White chocolate truffle torte, two layer, 8 ins. round | $18.99 |
| New York-style cheesecake, 7 ins. | $16.99 |
| 4 ins. | $5.99 |
| Lemon bar, single serving | $2.39 |
| Decorated cake, 4 ins., double layer, | $5.99 |
| 7 ins., double layer | $10.99 |
| 8 ins., double layer | $15.99 |
| ¼ sheet, single layer | $18.99 |
| ½ sheet, single layer | $26.99 |
| photo image surcharge | $8.00 |
| Decorated cupcakes, 6 count | $3.29 |
| Baguette, 12 ozs. | $3.29 |
| Sourdough boule, sliced, 16 ozs. | $2.69 |
| Asiago cheese sourdough loaf, 20 ozs. | $6.99 |
| Cherry walnut loaf, 20 ozs. | $6.99 |
| Roasted garlic batard, 16 ozs. | $4.49 |
| Petit pain, each | $0.59 |
| Gluten-/casein-free honey oatmeal bread, 24 ozs. | $8.00 |
| Gluten-/dairy-free French white bread, 24 ozs. | $8.00 |
| Rye bread, 16 ozs. | $2.69 |
| White bread, 16 ozs. | $2.69 |
| Kaiser rolls, 6 count | $2.69 |
| Hot dog buns, 8 count | $2.69 |