Prudent equipment purchases and a new management structure provide this retail/food-service/catering operation with the flexibility it needs to adjust to changing demands.
Deising’s Bakery, Restaurant & Catering Co.’s owners have never hesitated to make capital investments to improve business. Uwe and Ingrid withstood competition from area bakeries, becoming one of two left standing, and expanded the business to two locations. Their children, Norman, Eric and Kirsten Wright (son Peter has since retired from the bakery due to injury) have continued what the elder Deisings started and are making the bakery their own.
In 1965, Uwe and Ingrid purchased Ketterer’s Bakery in midtown Kingston, N.Y. Though the Deisings immigrated from Germany, they promoted the business as a European, not strictly German, bakery to meet the needs of the area’s divergent population.
By 1980, they had outgrown the space and purchased a second location in uptown Kingston. This second location has been expanded several times in the intervening years. Uwe and Ingrid answered customer calls for soup and sandwiches by adding a lunch counter, which was then expanded into a full-scale restaurant when a neighboring building became available.
The uptown bakery expanded again with the purchase of another neighboring building. Now the location featured a full-line retail bakery, a restaurant and catering service and three banquet rooms. All bakery production also had been moved to the uptown location.
When Uwe and Ingrid retired in 1999, they handed the reins of a very successful business to their children. In the 11 years since, the bakery remains successful, but the second generation of Deisings made some changes to put its own stamp on the business.
“Business has changed,” says Eric Deising, president. “What worked 15 years ago doesn’t work today. You have to keep up with the changes or you will quickly find yourself out of business.”
A major change the Deisings implemented was management of the bakery. Previously, all problems large or small were brought to Uwe or Ingrid and then to Eric or one of his siblings–it was the way business had always been done.
But a consultant changed that. “It was something I never thought I’d do, because what was [a consultant] going to tell me that I didn’t already know about running a bakery?” Eric says.
However, a consultant came into the bakery instead of calling one day and happened to catch Eric at the just the right moment when he was frustrated from dealing with several petty problems.
“He admitted he knew nothing about bakery, but he told me he wasn’t going to be a consultant for the bakery–he was going to be a consultant for the business. He was the first consultant who had said that to me. I heard him out, and he sold me on what he could do,” he says.
The consulting firm worked with the Deisings for three months. Managers were designated for each of the business’ five departments–production, retail store (one for each location), restaurant and kitchen. All 84 employees report to their respective manager.
The five managers in turn report to Eric. The managers meet with Eric once a month to keep everyone on the same page and abreast of any changing situations.
“This new structure has really helped us,” Eric says. “Now we’re running the business instead of the business running us.”
The siblings are able to focus on the business side and long-range planning, although Eric and Norman still work in the production department every day.
“I don’t have to be there, but I am. It’s more for me to see what’s going on,” Eric says.
An established management structure also allowed some longtime employees to take on additional responsibilities. For example, Keith Grant, a long-serving production employee, was named production manager and is in charge of purchasing. “He’s the best shopper in the world,” Deising says, only half in jest. “I think the consultant cost us $60,000. That sounds like a huge chunk of money, but I think it’s already paid for itself just on Keith being the purchaser and the deals he can get.”
Deising views the cost of the consultant as an educational expenditure, similar to going to college, except he only had to learn things that pertained directly to his business. “Now I’m more of a business man and not just a baker who only knows the bakery trade,” Deising says. “I’m running a business, not just a bakery.”
Another change the Deising siblings implemented also altered the bakery, this time in production. When commodities prices started to rise, they began looking for ways to offset the costs so they wouldn’t have to raise product prices. They joined RPIA, a purchasing group, which allowed them to receive discounts on ingredients and packaging, but it still wasn’t enough.
The Deisings had wanted to purchase a flour silo for many years. The bakery was using about 50,000 lbs. of flour in a four- to five-week period. Storage space was cramped, and the task of handling the bags was becoming overwhelming for the production staff.
However, a silo also meant that only one type of flour could be used for the majority of the bakery’s 400 products. This would require a complete reformulation of the product line.
When flour prices skyrocketed several years ago, the Deisings decided it was time to get serious. It took a year of R&D, but the Deisings were able to complete the product reformulations in-house due to the experience and knowledge of their bakers, many of whom have been with the bakery for almost 30 years.
In 2009, they installed a 55,000-lb. flour silo, which now saves the bakery about $8 per 100 lbs. of flour. “Those savings will allow us to pay off the silo in three years, and we were able to keep our prices competitive. Customers didn’t notice the switch [in flour]. It’s one of the best things I’ve done since my father retired,” Eric says.
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Key equipment purchases
For as much as the bakery has changed since the second generation took over, much has remained the same. Uwe believed in using equipment wherever possible, especially to eliminate some of the repetitive jobs in the bakery. Many of Uwe’s equipment purchases have sustained the bakery’s growth.
In the late ’80s, he invested in bread and roll equipment. The roll line can produce as many as 8,000 units per hour, although the bakery currently runs it at about 5,000 rolls per hour. It is in production three to four days a week for six hours each day.
The bread line, installed about 15 years ago, produces as many as 3,000 loaves an hour. The two lines replaced several smaller pieces of equipment, which the bakery keeps in storage in case either line breaks down.
“You always have to have a backup plan,” Eric says. And, the staff even knows how to use the older equipment because they were working in the bakery when it was in use.
Recent purchases include a larger sheeter and a cookie machine. Since installing the cookie machine, the bakery sells eight times more decorated, cut-out cookies, Eric says. The machine makes the cookies so easy to produce that they now are always kept stocked in the display cases.
When he purchased the cookie machine, the sales person also gave Eric the formula for dog biscuits, which are cut on the machine. “The dog biscuits alone have paid for that machine,” he says. “We’re going to do cat biscuits next.”
Uwe also was quick to adopt freezing technology, with all products frozen at some point in their production cycle. In some instances, freezing actually improves the product, Eric says. The bakery currently has 1,200 sq. ft. of freezer space, which is often filled to capacity.
By working out of a freezer, the bakery was able to switch to mostly daytime production. Bakers arrive at 1:30 a.m. to begin baking that day’s products.Additional production shifts arrive at 3 a.m. and 6 a.m. to begin packaging wholesale orders and mixing doughs. Most doughs are made from scratch or bases. Once products are mixed and shaped, they are moved to the freezer until they are needed for bake off. At the end of the day, products for the next day’s order are taken from the freezer so they are ready to be baked the next morning.
Production flows smoothly from the back of the building to the front. When Uwe purchased the uptown location, an old 8,000-sq.-ft. tire factory, he worried that it was too big. However, the large, mostly open interior allowed him to design the 5,300 sq. ft. of production space from the beginning instead of growing piecemeal as is the case for many bakeries. What this meant was production could run in one continuous line.
Smooth production flow
Ingredients are stored at the back of the production area with the mixers located right outside the storage room, which also now houses the flour silo. Next to the mixers are the bread and roll lines with the makeup tables located just behind. The freezer doors are off to the side of the makeup tables. A few feet away from the tables are the proofer and ovens–two rack and one four-deck–so racks of product don’t travel far once leaving the freezer.
The wholesale packaging area is located at the front of the production area. The packaging for retail products and decorating are in separate rooms right outside the main production area.
Five trucks deliver to wholesale accounts within a 45-mile radius. Each truck makes two runs–a local one and one to accounts farther away. One truck makes several runs to the midtown store to deliver product and pick up product when that location closes at 1 p.m. to return it to the uptown store.
Wholesale is where Eric currently sees growth. It now accounts for 33 percent of sales, more than the uptown retail bakery’s 27 percent.
Retail customers still come to the bakery’s two locations in the same numbers, but they are spending less money per visit, while his wholesale accounts have grown in number. To keep that side of the business growing, Eric is considering hiring a sales person.
Programs encourage sales
While retail customer counts have not decreased, the bakery works to keep the customers it does have and encourages them to spend more by offering frequent shopper programs. Customers who buy 10 loaves of bread or 10 coffees receive the 11th for free. Restaurant patrons who purchase 10 lunches receive a $5 coupon, and the restaurant also offers a 2-for-$20 program, where customers can purchase two lunches that include a half sandwich, soup or salad and a dessert for $20.
The bakery also has a 3:30 p.m. super sale where overproduced items are offered at a steep discount. The sale is often a BOGO, such as buy six, get six free or buy six bagels and get a baguette free. Sale items are products that would otherwise be given to food banks or tossed.
Eric dislikes discounting, but knows that if he doesn’t offer a deal, customers will find one elsewhere. “We will continue to do this as long as necessary,” he says. “But I’ve also noticed that creating a ‘deal’ can really turn into profits. What sold as 10 or 12 pans last week at regular price can end up selling 60 to 70 pans at the slightly discounted price.”
To help get customers to purchase more, Deising offers his sales staff incentives to upsell. Each month, Deising designates the products on the upsell list, and every time a salesperson sells that product, they earn points. Each month, the top three point earners receive a reward, such as free movie passes or a lunch at Deising’s restaurant.
Cashiers earn rewards by balancing their cash drawer. If the drawer balances, they earn five points, if it is within $3, they earn three points. When they reach 50 points, they receive a $25 gift card to area stores.
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“Since we’ve started this program, we’ve seen positive results,” Deising says. “People really like to win something. If employers give them that goal, they will go after it; it’s in their nature.”
As bad as the economy has been, the bakery didn’t really start to feel the effects until January of this year. Sales last year were up, but this year sales in the uptown location were down four percent, while sales at the smaller midtown location were up two percent. “Customer counts stayed the same, so I’m happy. It’s an aggressive fight to keep everyone coming,” Deising says.
He feels fortunate that the business is diversified enough that it should weather any storm. If the retail bakery business goes down, the restaurant and catering side should pick up the slack. And if foodservice goes down, then wholesale can fill in the gap. “You have to give customers a reason to come,” he says.
Deising’s at a glance
Location: Kingston, N.Y.
Founded: Uwe and Ingrid Deising purchased Ketterer’s Bakery in 1965
Number of locations: 2
Bakery’s primary business: retail bakery, 39% (between the two locations); wholesale, 33%; restaurant/catering, 28%
Store sizes: Uptown, 24,000 sq. ft. (production, 5,300 sq. ft.; retail and restaurant, 7,759 sq. ft.; banquet rooms, 2,866 sq. ft.; office and training room, 1,495 sq. ft.; basement storage, 8,626 sq. ft.); midtown, 15,400 sq. ft. (production/retail, 13,926; basement storage, 11,495)
Product line: full line of breads, cakes, pastries, bagels, donuts and cookies
Annual sales: $3.7 million
Management: Eric Deising, president; Norman Deising, vice president; Kirsten Wright, treasurer; Keith Grant, production manager; Betty Puchenko, uptown store manager; Corrine Boughton, midtown store manager; Al Freer, head baker
Number of employee: 83, 44 full-time, 39 part-time (in bakery–20 bakers, 8 sales people, 5 drivers, 3 cashiers, 2 packagers and 6 in the decorating department)
Production method: scratch, mix/base
Major equipment: 2 rack ovens, 1 deck oven, three mixers, sheeter, bread line, roll line, proofer, batter depositor,
Bakery supply distributors: Dawn Food Products, Otto Brehm
Deising sampling of prices
|Marble bread, 1.5 lbs.||$3.75|
|Black & white cookie||$1.60|
|Cake, 7 ins. |
|Strawberry shortcake, 7 ins.||$15.50|
|Bagel, 5 ozs., each |
|Hard roll, large, each |
|Focaccia rolls, 5 ozs.||$0.55|
|Baguette, 10 ozs.||$1.30|
|Sourdough bread, 1 lb.||$1.90|
|Apple turnover, each |
|Blueberry muffin, each |
|Butter cookies, per lb.||$9.50|