Chicago, the city of big shoulders, has a sweet tooth. Whether residents are rooting for the Cubs or the White Sox, they see eye-to-eye when it comes to bakery foods–they like them, a lot. According to the Perishables Group, Chicagoans spend an average of $13,405 a week at in-store bakeries, compared to the national average of $10,008. “We’re a ‘it’s steak and potatoes and dessert, and you’re done’ kind of town,” says Scott Schwartz, bakery manager, Blue Goose Market, St. Charles, Ill.
More than half of the money Chicagoans spend in the bakery is on desserts, which account for 53.7 percent of in-store bakery sales. Although the nation’s third largest city has its smallest population since the 1920s, that’s still a lot of desserts.
“For some reason, people here always want to eat dessert,” says Pamela Fitzpatrick, executive baker, Fox & Obel Food Market, Chicago. “People in the Midwest always seem to want bread with their dinner entrées and dessert. Other places I’ve lived, they only eat dessert when it’s a special occasion.”
Breads and rolls are the second most popular category, making up 27.6 percent of sales with breakfast bakery products accounting for 18.4 percent, according to Perishables Group data.
“Baguettes are always the number one seller, then bagels and rolls. And of course, everybody wants sandwich pan breads,” Fitzpatrick adds.
Chicago has a long commitment to bakery foods in general. Schwartz, who previously worked for a bakery supply distributor, has been in a number of area bakeries, both retail and in-store. “It always blew me away that there were so many retail bakeries that were 100 years old,” he says. “I can’t tell you how many pictures I saw of Ronald Reagan thanking them for 100 years of business.”
Fox & Obel, a new in-store operation by comparison, finds the city welcoming to bakery business. “I’ve been surprised at the support we’ve received at Fox & Obel,” Fitzpatrick says. “Bakeries in general are very successful here, especially with the hearth-baked breads.”
Bakery, whether in-store or retail, is no joking matter in the Windy City.
Like many other urban areas, Chicago’s population has fluctuated, with the 70s and 80s suffering sharp declines and recovering in the boom years of the 1990s. However, the 2010 census revealed the city’s population has again declined to less than 3 million. But, the city’s far suburbs saw substantial growth, and Chicagoland accounts for 9.6 million people, more than half of the state of Illinois’ population.
The region’s ethnically diverse make-up is a boon for the in-store bakery. “One culture seems to pick up another culture’s bakery products,” Schwartz says. He cites paczki as an example. The jelly donut-like quality of the product makes it attractive to more than the traditional Polish consumer, and Blue Goose’s paczki sales are growing in an area that is not known to have a large Polish population.
Independent chains, such as Blue Goose and Fox & Obel, seem to prosper in the region, which is predominately served by two key players: Safeway’s Dominick’s with 12 percent market share and Jewel-Osco, owned by Supervalu, with 35 percent market share. Both chains have long histories of operating in the area; Dominick’s celebrated its 85th anniversary last year, and Jewel has been operating in the area for more than 100 years. Dominick’s has about 80 stores within a 60-mile radius of Chicago, and Jewel Osco locations number more than 180. Each have deep commitments to in-store bakeries, but after both were acquired by national chains, their fates diverged.
Jewel’s in-store bakeries were left largely unchanged, and Dominick’s in-stores operated similarly to its parent company, Safeway. Although Dominick’s has had more focus on scratch/mix production than Jewel, it suffered from Safeway’s decision to move away from local brands throughout the store. Customers rebelled, and Dominick’s has been unable to recover its market share.
With the two companies having such deep roots in the minds of Chicago consumers, it can be tough for other chains to gain a foothold. Some of the more recent failures include Indianapolis-based Marsh Supermarkets, the now defunct Eagle Foods and Minneapolis-based Byerly’s.
National chains, such as Meijer, Whole Foods Market and even Wal-Mart, are making strides in the region. Other regional chains, such as Strack & Van Til and Mariano’s, each have one location in Chicagoland. Strack & Van Til, Highland, Ind., has announced no plans for any more locations, and Mariano’s plans for three more stores in the region may be on hold as parent company Roundy’s, Milwaukee, is up for sale again.
Wal-Mart, the nation’s largest grocery retailer, has had little influence so far on Chicago’s in-store bakery landscape. The chain has 21 stores and 5 percent market share in the region. However, it operates only one store (without an in-store bakery) within the city proper. This could soon change as the chain recently brokered a deal with organized labor, opening the door for expansion within the city. Wal-Mart officials announced they are planning several dozen stores across Chicago in the next five years. One of the new stores, located in the city’s West Loop neighborhood, will be the chain’s smaller format Neighborhood Market.
Grand Rapids, Mich.-based Meijer also is focusing on smaller format stores in its Chicagoland expansion plans. The chain, which operates more than a dozen stores in the suburbs of Chicago, will open small-scale stores in Melrose Park and Berwyn, which will be its closest location to downtown. The smaller format stores are more grocery focused than its larger supercenters, and they include in-store bakeries.
Independent success
While some larger chains have struggled to find a market in Chicagoland, independent supermarkets have prospered for the most part.
“We’re an independent, and the bakery is allowed to run like a bakery is supposed to run,” Schwartz says. “Our customers aren’t looking for cheap but rather for quality. People want something unique to that particular bakery; they’re not looking for something that is sold in every supermarket in the country.”
Blue Goose’s business revolves around desserts made with top quality ingredients. “They’re expensive and good,” Schwartz adds.
The bakery trend for smaller portion sizes is as evident in Chicago as it is in the rest of the nation. Fox & Obel continues to sell a lot of cupcakes, and Fitzpatrick also has noticed customers trending away from larger cakes for dinner parties; instead they turn to several small individual desserts to make up a platter.
Healthier items also are seeing an uptick. Schwartz reports that his customers are asking for more gluten-free and whole grain products, in particular.