Ken and Betty Slove give high-quality cakes and baked products their due with top-notch merchandising.
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After investing in the best possible ingredients, marshalling the advanced skills of lifelong bakers and spending the requisite time to create attractive products, it’s unfortunate when bakers fumble the ball on the final play by failing to give presentation the same sort of meticulous attention the product itself receives.
You won’t catch Ken and Betty Slove, owners of Lovin Oven Cakery, Round Lake Beach, Ill., making that mistake. Presentation is a key part of their bakery’s success. With everchanging displays and a flair for retail theater, the Sloves make a trip to their bakery a memorable experience.
“One of the great experiences I have when I’m on the retail floor, and this inevitably happens a few times per week, is overhearing customers say that they forgot what they came into the store for,” Ken says. “They come in with a specific thing in mind, but once they come in the store, their imagination takes over. To me, that’s when we’ve got ’em.”
One key element to their merchandising philosophy is to nurture a sense of abundance and plenty. The display cases are always full, and the feast for the eyes doesn’t stop at the top shelf of the case. Customers can be seen with necks craned upwards, eyeing Betty’s latest seasonal creations that climb toward the ceiling from the display case.
The impressive retail space earned the bakery Modern Baking’s 2010 Leadership Award for merchandising, and the Retail Bakers of America (RBA) asked Betty to speak about merchandising at the recent IBIE in Las Vegas.
Betty was honored by the recognition, but as she was only involved in her own shop, she wasn’t sure what she had done to deserve it. It took a tour of a few other bakeries for her to recognize that her merchandising methods were unique.
“For instance, some bakeries use metal pans to display their product,” Betty says. “Many take product right out of the oven and display it on the same pan–it blows me away.”
Before moving to their current plaza location, the Sloves attended a bakery convention in Las Vegas for ideas. While other bakers scoped out equipment, Ken and Betty focused on display pans. They tried different color combinations and sought feedback from other attendees about which looked best in which case.
“These pans were a main part of the convention for us,” Betty says. “They were as important to us as our flooring or our wall color. Bakers use the best ingredients, the best skills that they can in the back, but if it’s not presented the right way in the front, the hard work can be wasted.”
Sources of inspiration
And the Sloves know about the work that goes into baking. Ken is a secondgeneration baker who has been in the business his entire adult life, and as a high school sweetheart-turned wife, Betty’s been with him every step of the way. They ran the family business, Slove’s Country Charm Bakery, from 1973 until 1981 and continued in various baking jobs in and around Chicago until they opened Lovin Oven Cakery in 1989. They moved to their current Round Lake Beach location in 2000, and a year ago opened a cold storefront in nearby Libertyville, Ill. Through their 37 years in the business, Ken had been responsible for the baking and the back of the shop and Betty for the front, honing her merchandising techniques along the way.
Ideas for presentations spring from all over, but two elements seem to be constantly at work in creating new displays–seasonality, which offers a steady rotation of familiar themes from one year to the next, and popular culture, which is constantly providing new trends and fashions. One example of the two elements acting in concert was this year’s overwhelmingly popular witch’s shoe cookies. The high-heeled shoe has been a pop culture meme in recent months, so when Halloween rolled around, Betty applied the new trend to tried-and-true sugar cookies. The result was a fresh take on a seasonal product.
Inspiration also springs from shopping trips. At grocery stores, Betty selects the longest checkout line so as to have time to peruse the home decorating magazines. “Also, I’m a big window shopper. I go to places like Pier One Imports and watch consumer reactions,” she says. “People walk in with a specific thing in mind, but with all of that [seasonal] stuff, they all see what’s out and new, and they all walk away with something else, just because of the attractiveness of the displays.”
To help facilitate impulse purchases and reach different types of consumers, Lovin Oven features a lot of packaged, self-service items. Although many customers come to the bakery wanting to interact with employees, ask questions about products and choose the exact item for their needs, the Sloves also recognize the class of customers that wants to make its own decisions about products and to grab and go with as little interaction as possible. Packaged items, such as individual cookies, brownies or cupcakes, simultaneously cash in on the individual portion size consumer trend and provide for speed and convenience for on-the-go shoppers.
Although ornate merchandising displays often spark impulse purchases, they also are valuable in the long-term goal of making favorable impressions on customers, planting seeds for future sales. “I may not get sales instantly off of something on display, but I know I’ll reap the benefits down the road based on the impression that I make with it,” Betty says. Customer comments and a thriving cake business bear that out.
Products, demographics and business
And as the name implies, a cake business is exactly what the Sloves were shooting for when they first hung their Lovin Oven Cakery shingle in 1989. The idea was eventually to franchise small shops specializing in cakes.
“What we underestimated was the demand for a retail bakery in the area– a full-line bakery,” Ken says. “People came in and asked, ‘Where are the donuts? Where are the sweet rolls?’”
In the days of Slove’s Country Charm Bakery, most of the smattering of towns that make up Lake County, Ill., and Chicago’s northwest suburbs had at least one or two full-line retail bakeries of their own. But not too many retail bakeries are left, so the Sloves responded by adding items piecemeal to fill the void. Eventually, they were back to a full-line bakery format.
But cakes are still number one at the shop, representing 60 percent of total business. Cupcakes make up a sizeable chunk of cake sales, and the bakery routinely produces more than 40,000 cupcakes per month. In the summer months, that number can balloon to 52,000. And the business continues to grow, “not in leaps and bounds, but there’s a real nice, consistent growth in cakes,” Ken says.
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Cookies have also been on an uptick, making up 20 percent of sales. The bakery sells 8,000 to 10,000 lbs. of cookies in December. Bread and rolls, once a major staple in the retail bakery, haven’t done as well recently at Lovin Oven. The Sloves recognize the potential in artisan breads, but knowing their customer base and production capacity, they keep bread and roll production to a minimum. Danish and donuts comprise 11 percent of sales, that business owing largely to morning commuters and the bakery’s fortuitous location on a major throughway.
Lovin Oven’s 2000 move outside of Round Lake Beach’s downtown area into a four-unit, 6,000-sq.-ft. anchor of a retail plaza on central Route 83 helped open up the bakery to the surrounding communities. Given the dearth of local retail bakeries and ease of access, this has brought customers from far and wide.
Ken doesn’t consider supermarkets to be his competition, saying the supermarket bakery is a different type of retail and attracts a different type of customer altogether. The new location has assisted in casting a wider net, as the customers the Sloves seek aren’t as concentrated as in-store customers. Over the years, the bakery’s location has helped it become as much of a destination for surrounding areas as it is a convenience for locals and commuters.
About 30 percent of the business stems from wholesale accounts, with one major account–a pharmaceutical company with 18,000 employees–providing the lion’s share of the business. “That constitutes our biggest account, and we cater to them. So then we don’t have to go out and do a ton of other wholesaling,” Ken says.
“Depending on wholesale isn’t ideal for us because we don’t want to be at the mercy or whim of a client,” Betty adds. “We don’t want too many eggs in one basket.”
Ingredients and pricing
Given its self-imposed requirement of an always-full display case, Lovin Oven Cakery is forced to stretch products’ shelf lives for as long as possible. “I’m not afraid to make a little more than I think I’m going to sell on a given day because I’m using a higher quality shortening, and I know the product has a better shelf life,” Ken says. “Bakers are afraid to spend money on proper ingredients because they are watching costs, but they are asking the wrong questions. They are asking ‘how much do I have to pay?’ instead of ‘how much is it costing me?’”
The answers to those questions are two different things. “Will an unintended consequence of using an inexpensive ingredient, where I can’t make as much, be that I disappoint a customer who comes in at 6:30 at night looking for an item we’ve sold out of?” Ken asks. “That’s cost versus price.”
Though he receives good-natured ribbing from baker friends over his expensive European butter and shelf life-friendly shortenings, Ken continues to turn a healthy profit with ample display cases and a less than one percent shrink rate. A big reason for his accuracy has been a point of sale system and the reports it generates. Years ago, pricing was arbitrary–the rule of thumb was to price an item at three times material cost. With the POS system, Lovin Oven goes by the data.
Ken uses exact material costs calculated by the program, allocates labor and then, depending on the item–cake is a lot different than Danish–calculates to get a 50 to 85 percent margin.
“Cakes require an 85 percent margin because my overhead and store sales costs come out of that, but it’s actually quite easy once you know your real cost,” he says. “Honestly, without the computer keeping track, I never knew what my costs were.”
He didn’t realize how blind he was flying until his marketing-major daughter, Shellie Slove, performed an experiment with the front-of-store staff. She gave employees a quiz, asking for the prices of 10 items–the answers varied wildly, nobody hit the target, and they mostly were underselling. Ken calculated that a point of sale system correcting the employee errors would pay for itself in a matter of months. But the employees weren’t the only ones undervaluing products.
“One of the things I looked at was the cost of our coffee cakes. The system revealed that I was not charging anywhere near enough for them,” Ken says. “And I thought, ‘why am I even making it? Making 25 cents on a $5 item?’ Now our coffee cakes are $9.”
Expansion
The next step in streamlining pricing and profits will be adding storage to better take advantage of economies of scale and timed buying. The recent expansion into the Libertyville store increased production demands, exacerbating the need for more storage and associated buying power.
Having built name recognition throughout the county, the Sloves were on the lookout for a new location when a great fit fell into their laps. A 2,500-sq.-ft. Main Street-facing gelato shop went out of business in one of Lake County’s most affluent towns: Libertyville, Ill. Lovin Oven Cakery opened a cold storefront in that location in October 2009. It won’t be the last store opening if Ken and Betty’s son Matt Slove, longtime production manager-turned-general manager, has his say. Matt has his eyes set on nearby outposts, convinced that two satellite locations would optimize Round Lake Beach’s production capability. The idea is gaining traction with Ken and Betty.
“We are the type of people that don’t mind putting money back into our business,” Betty says. “We’re still young–still have a few years yet–and we love what we do.”
Lovin Oven Cakery at a glance
Location: Round Lake Beach, Ill.
Founded: 1989 by Ken and Betty Slove
Number of locations: 2
Store sizes: Round Lake Beach, Ill., 6,000 sq. ft. (1,400 sq. ft. retail, 4,600 sq. ft. production); Libertyville, Ill., 2,500 sq. ft. (2,350 sq. ft. retail, 150 sq. ft. preparation, storage)
Bakery’s primary business: retail 70%; wholesale 30%
Product line: full line of cakes, pastries, sweetgoods, donuts, cookies and breads
Production method: mix/base, scratch
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Sales breakdown: cakes (includes cupcakes, wedding and decorated cakes), 60%; cookies, 20%; Danish/donuts, 11%; miscellaneous, 9%
Management: Ken and Betty Slove, owners; Matt Slove, general manager; Jenny Cruz, head decorator
Number of employees: 48 (37 in Round Lake Beach, 11 in Libertyville)
Annual sales: $2.5 to 3 million in 2010 (est.)
Ingredients as a percentage of sales: 31%
Labor as a percentage of sales: 35% (40% during wedding cake season)
Bakery supply distributors: BakeMark, Dawn Foods, Standard Foods, Rungee Paper, South Holland Bakery Supply, Burton and Burton
Major equipment: double rotating rack oven, 25-pan deck oven, two 140-qt. mixers, three 20-qt. mixers, reversible sheeter, cake depositor, two 10-ft. by 20-ft. walk-in freezers, 10-ft. by 20-ft. walk-in cooler, 12-ft. by 12-ft. walk in cooler, cookie depositor, flour sifter and pan washer
Lovin Oven Cakery sampling of prices
Butter cookies, per lb. $14.63
Gourmet cookies, each $0.89 (chocolate, chip, peanut butter, sugar, double chocolate chip,)
Character sugar cookie, each $2.96
Brownies
Fudge, Tollhouse, each $1.05
German chocolate, turtle, each $1.16
Éclair, each $3.18
Canolli, each $3.18
Cream horn, each $3.18
Pie, slice $1.09
Pies, 9 ins.
Fruit $11.28
Whipped cream $12.93
Pecan $13.70
Continental cake, slice $3.18
Opera cake, slice $3.25
Tortes, 8 ins.
European (20 varieties) $25.95
Gourmet (8 varieties) $33.95
Cupcakes $1.49
Decorated/special $2.39
Cakes, 8 ins. $25.95
10 ins. $48.13
Quarter sheet, unfilled $35.75
Quarter sheet, filled $43.84
Decoration charges
Drawings $24.00
Simple art $12.00
Photo art $11.00
