by Jay Gordon
Rickerb Oil Co. at a glance
Headquarters: Anderson, Ind.
The convenience store chain, known for its "Ricker Pop," found new revenues in fresh-baked products.
Ricker's fresh breads enhanced the chain's sandwich program.
The bakery and commissary staff 31 employees, more than the company initially expected.
What began as a response to poor service has blossomed into a new profit center for Ricker Oil Co. The 31-unit convenience store chain based in Anderson, Ind., began its own bakery program more than a year ago and found the new focus on fresh food drew more customers.
"We used to pay 34¢ for a Krispy Kreme donut," says Owner Jay Ricker. "Now we're bringing high-quality donuts into the stores for considerably less. That's extra profit that drops right to our bottom line. And the bakery has raised the level of awareness for foodservice in our stores, too. It's raised the bar for everyone."
The idea for raising that bar may have been formulating in the back of Ricker's mind for years.
"I have always loved bakeries," Ricker says. "We used to cruise town, and we always stopped at the Frankfort (Ind.) Bakery. We ate at the bakery, not the drive-in."
While Ricker truly has a soft spot for bakeries, there were plenty of good business reasons for becoming vertically integrated in bakery too.
Many of the retail bakeries in his area had gone out of business, leaving supermarket in-store bakeries the primary source for most customers' fresh-baked products. Ricker Oil, with its own in-store program, sought to offer customers added convenience and the product quality Ricker remembered from his youth.
But Ricker was motivated by more than nostalgia. His company's own bakery suppliers had let him down too many times. Donuts are big business for convenience stores, and Ricker's former donut supplier occasionally forgot to deliver product. "We wanted to control our own destiny," says Marketing Manager Keith Broviak.
The decision to get serious about opening its own bakery threw the entire chain into a frenzy of activity. Jay Ricker and General Manager Dennis Williamson got busy with site selection, and finally found a corner location in a small strip center which, ironically, once housed a competitor's convenience store. The space already had a walk-in cooler and freezer.
In October of 2003, barely three months after the concept was developed, Ricker's Bakery threw open its doors and welcomed a hungry public. The initial response to the bakery from customers caught Ricker off-guard-and dramatically understaffed.
"We didn't have a panwasher when we started, so store managers would volunteer to come in and wash bakery trays," says Broviak. "We couldn't hire people fast enough," he says.
After working out the kinks, Ricker-Oil's 32 convenience stores now sell a full donut line that includes cake and yeast-raised donuts, Napoleons, Persians and eclairs as well as artisan breads (focaccia, pesto, tomato, veggie and sourdough), cakes, pies, muffins and cookies. The bakery also makes bread, rolls and croissants for the company's commissary and provides custom-decorated cakes to stores.
"Bakery has a very prime piece of real-estate in our stores," says Foodservice Manager Dean Butgereit. Selfservice bakery cases are positioned in the front of the stores. Products inside the cases are well lit, and store managers know to keep shelves full throughout the day.
"Bakery has become a big draw for our stores because the products are so fresh," he adds.
The bakery produces two batches of donuts each day. Second-shift bakers prepare about 250 dozen donuts a day to be delivered to the stores, with trucks leaving the bakery at 10 p.m. to make deliveries to 31 stores in a 40-mile radius by 5 a.m. Third-shift bakers then make another 100 dozen donuts for the bakery, plus muffins, cookies, coffee cakes, cinnamon rolls and other specialty items. Pies and cheesecakes come in frozen and are baked off; everything else is made from mix or scratch.
Custom decorated cakes, including wedding cakes, are a major growth area for the chain.
Currently, Ricker's Oil stores sell decorated cakes, but allowing customers to custom-order cakes from each store is a work in progress. Butgereit plans to provide each store with books featuring examples of their decorated cake options. Customers will be able to order their custom cakes for delivery to each store within 48 hours.
"We're going to continue to get betterand perfect everything we do before we add things," Butgereit says. "My long term goal would be that everything we make, including hot foods, will be served by us and not self service."
There has definitely been a learning curve. Sales forecasting, for example, has proven to be an inexact science. "Some days you hardly sell any, and the next day you're out by 10 a.m.," Broviak says. Stales are currently running at about 14 percent, but are dropping steadily.
A big reason for the bakery's early success is that it has leveraged the brand equity Ricker has built on the c-store side of the business. For example, the chain is famous for its "Ricker Pop" fountain offer in the convenience stores. Ricker's Bakery also features a reach-in cooler for milk and the fountain drinks.
"People love our pop," says Ricker."There are generations of 'Ricker Pop-ers.' As a c-store chain we want to be ahead of the curve-we want children to be customers that turn into adults who are customers."
Ricker hopes that kind of strong brand equity can be a two-way street. He's encouraged so far. "We're getting different demographics in the bakery, a lot more seniors," says Ricker. "Will that rub off on the stores? I don't know-but it can't hurt."
A sampling of Ricker's prices
Bakery boosts sandwich sales
With its bakery in place, Ricker Oil Co. saw an opportunity to turn its deli offerings around by supplying its own fresh-baked breads and delivering fresh sandwiches to stores.
"We have had deli programs before, but they were always inconsistent in their quality," says Owner Jay Ricker.
The Ricker commissary originally operated out of the new bakery, but when space became an issue it migrated to a brand new store the company had opened just five minutes away.
The set-up has made it convenient for bakery trucks to deliver fresh breads and croissants to the commissary, then pick up sandwiches to deliver to stores along with the donuts. Stores get donuts seven days a week, sandwiches three days a week.
In addition to using its own bread, Ricker also upgraded its deli meats, designed new packaging and installed new bakery cases. Sandwiches are wrapped using an automated packaging machine that incorporates nitrogen inside the package to improve shelf life.
Sandwich sales have more than doubled in many cases, reaching $2,100 a month or more in the highest-volume locations. The commissary is now experimenting with new items, such as panini sandwiches, to increase variety and build sales.