Dedicated to putting the baking back into its bakeries, this 26-unit chain is expanding its fresh-baked offerings and increasing customer awareness through branding. Efforts are paying off: bakery sales are up six percent from last year.
Bruce Weitz (left), pictured with Kenneth Downey, increased King's weekly advertising insert to 12 pages, including one full page devoted to the in-store bakery.
King's remodeled in-store bakeries include an expanded bread display.
Pie boxes and muffin liners feature the King's logo to emphasize branding of the in-store bakeries.
Passion for baking is often passed from one generation to the next in retail baking families. No surprise, given such families live and breathe baking. On the other hand, second-generation owners of supermarkets with in-store bakeries rarely pursue baking programs with similar enthusiasm.
This cannot be said for Bruce Weitz, owner and operating partner of King's Supermarkets, a 26-store chain based in Parsippany, N.J. Weitz grew up at the knee of his father, Mel, who from the 1970s into the 1990s owned Melmarkets Inc., which operated 16 Foodtown supermarkets on Long Island, N.Y. Among other strengths, Melmarkets was well regarded for its scratch-mix bakeries. Last April, Weitz and other investors purchased King's from Marks & Spencer Ltd., a British food retailing firm. Under Marks & Spencer's 12-year ownership, King's in-stores had changed bakery production from mostly scratch-mix to nearly all thaw-and-sell and direct store delivery purchases; hot baking was limited to pies.
Weitz explains that he wants to return to the days when customers came first, when they found high-quality bakery foods they wouldn't see in other stores, and when helpful, friendly service was the rule, not the exception.
He acknowledges that the process will be difficult and results will not come soon. But, King's has begun to take the first steps in that process. Kenneth Downey Sr., bakery sales manager, who joined King's almost three years ago, is leading the transformation. His changes include:
- Product lines that feature items unique to King's bakeries.
- In-stores offer more fresh-baked products.
- Good customer service continues to improve.
- Customers' perception of King's bakeries as destination locations is increasing, supported in part by branding bakery foods with King's logo.
The changes are paying off. The bakery program is pulling in nearly six percent more sales to date this year, compared with a year earlier, while posting almost 20 percent contribution to profit, officials say.
Thinking like a customer
Bolstering King's bakery program is part of Weitz's corporate growth strategy, based in no small way on his experiences as a King's customer for many years; he has lived in the King's market for several years. "When I visit our stores, I don't think like a grocer, but like a King's customer," he explains. "I know what I want to buy, and how I want to be served."
Weitz says he purchased King's because the market offered a niche for a company like King's that no other company was servicing. "We offer distinctive products from around the world, primarily driven by perishables, along with competitively priced center store items," he says.
King's kicked off its revitalized format just after Labor Day at grand reopenings of seven remodeled stores. In the bakeries, customers can buy fresh artisan breads and imported dessert cakes that they will not find elsewhere, Weitz says.
The strategy includes reducing prices of many everyday grocery items-like paper towels, coffee, meat and milk-to be equal to those at conventional supermarkets. "We believe we can attract customers to shop more frequently at King's for a larger portion of their food dollar if we're more competitively priced on many everyday items," Weitz reasons. "So, King's is both a gourmet retailer and an everyday retailer," he continues, adding that the chain's motto is "From everyday to fabulous gourmet, expect the unexpected."
Return to fresh baking
The bakery program received a jump-start when Downey joined the company. Previously, he had been bakery director for a 13-store chain near the New Jersey shore; each store's bakery prepared products mostly from scratch or mixes.
When he joined King's, its in-stores were baking off only croissants, cookies and a few other items. Downey increased hot baking to include muffins, pudding and creme cakes, cookies, scones and croissants from frozen raw products, and some par-baked bread items, such as baguettes. Still, King's bakeries out-source many finished products.
"What will distinguish it [in-store bakery] from the commercial bakery racks?" Downey asks. "First, we need to always have something coming from the oven. The theater and aromas convey an image of fresh baked."
Second, King's needs certain out-sourced products that customers cannot get anywhere else, he says. "For example, we worked with a local kosher bakery to develop formulas for chocolate babka and cinnamon babka exclusively for King's. Customers know we are the only source."
Returning to fresh baking of muffins has been particularly successful, he adds. He worked with an ingredients manufacturer to develop a line of 12 different predeposited muffin batters and to custom-design parchment muffin cups, each of which features repetitious King's logos. The baked muffins weigh 6.25 ozs. each and a four-pack retails for $4.99.
During the six months after their introduction, muffin sales increased by about 25 percent, compared with the year-earlier period, Downey says, "and the retail was $1 more per package."
Based on this success, Downey had the manufacturer apply a similar tactic to mini muffins, using the new formulas and mini-size versions of the custom-designed muffin cups. Offered in six varieties, 12 mini muffins are packed in a clear plastic container and priced at $3.99. Subsequent sales increased by more than 40 percent, he says.
Downey has expanded King's product branding to pies, ice cream cakes and garlic bread, and he expects to add more categories.
In a move to increase awareness and sales of crusty breads, Downey this summer asked one store to bake 9-oz. baguettes three times a day and display them at $1.99 each for one month at the store's first checkout and in the produce department, as well as at the bakery.
"Each baguette was time stamped and was never more than six hours old when sold," he says. In-store promotion included point-of-purchase signs and public address announcements. The bakery posted a 110 percent increase in sales, compared with the 30 days a year earlier, Downey notes.
King's launched the program company-wide just after Labor Day, promoting it in the company's newspaper advertising and point-of-purchase materials, which contain photos of finished bread and text that declares the fresh baking and time-stamping of baguettes.
Improve product selection
The strategic plan for the bakeries called for offering a wide variety of gourmet desserts and different styles of artisan breads from new service bread displays, Weitz says. "I want King's customers to be able to select from several different types of really good bread at one location-King's bakeries."
The new bread line is a combination of loaves baked off in the stores and DSD varieties from five specialty wholesale bakeries, each well known for its distinctive products.
Each bakery's service bread display includes a station for sampling product. "We want our associates to talk up and sample the bread," says Carol Donnoli, bakery field merchandiser and formerly a bakery manager for nine years.
Samples, offered under clear domes next to the displays, help support the effort; some stores use premium branded olive oils to accompany the samples, which also helps to promote the olive oils.
Officials recognize that a strong commitment, which includes facing increased stales, will be required if the new bread program is to be successful. "We have to give it a fair chance," Donnoli says. "This includes sampling the bread consistently, promoting it and offering only fresh product, never day-old bread." The company expects to introduce the service bread program in remaining stores during the next few months.
King's factored in expected greater stales from the new breads. When Downey joined the company, stales accounted for 11 to 12 percent of sales. The bakeries subsequently reduced the rate to 7.5 percent. Currently, it hovers at 8.5 to 9 percent, which is appropriate for King's type of operation, Downey says. "We take our lumps and throw away out-of-code product. For example, we never sell day-old crusty bread."
Too many operators are concerned about shrink, rather than focusing on taking money to the bank, he continues. "Sure they cut shrink, but they also don't display enough product to build sales. You must have your eyes always open to the total picture."
The in-stores minimize stales, for example, by using Italian bread to make garlic bread and bruschetta, baguettes to make garlic toast and bagels to make bagel chips. King's plans to make bread crumbs, including savory crumbs, from the new bread line. "These are good quality products made from items that we would have thrown away," Downey says. "They pull in more than $100,000 in annual sales."
King's bakery managers recently found themselves selling their way out of a stales problem at their service dessert cake cases. Stales were running 24 percent company-wide. A couple of months ago, operations management wanted the cases pulled. "King's is noted for its service throughout the store, and we kept the cases and committed to reducing the shrink," Downey relates. "We 'spent' the 24 percent, rather than throwing the money away." The bakeries reduced the prices of cakes, ranging from $14.99 to $19.99, with a special $5 off and have promoted the "sale" price since.
"We took our 50 percent gross profit with a 24 percent shrink down to a 32 percent gross with only 5 percent shrink," he continues. "This has put more dollars in the bank, inventories turn more quickly, the product is fresher, and the cases look better."
He acknowledges the conundrum he faces to raise prices back to their original levels and maintain sales. "I think the smart thing we did was not to reduce regular prices but to make them sale prices," Downey says. "That way, we'll be able to take the cakes back to their original prices. We'll see what happens."
Commissary on the horizon
Centralized baking is another step King's is taking to further limit stales, as well as control costs, provide consistent quality and be more responsive to customer demands, Downey explains. King's is testing the viability of limited central production by one in-store for five other bakeries. "A central facility would allow us to respond to a need quickly and produce exactly what we want in the quantities we want," Downey says.
Plans call for the designated bakery to supply more in-stores and to expand two other locations to become central facilities, supplying the remaining bakeries. "If this is successful, eventually we would lease a building and install one large central facility," Downey says.
"A commissary will give us complete control from costing through baking to pricing. Not only could we produce products in volume, like muffins, but we could make the items that carry higher margins, like dessert cakes, which would really enhance our profitability."
The plan fits into Weitz's vision for his bakeries. "My dream is to have real bakeries in our stores," he says.
"Everyone will tell me that I'm nuts, but I'd like to have my father's bakeries. This will require adequate store volume and considerable training, and it won't happen in a year. If we do it, we will have something that no one else can duplicate."
...at a glance
Headquarters: Parsippany, N.J.
...a sampling of prices
Glazed, yeast-raised donut: $0.55