The bakeries of Whole Foods Market, South Region, vary according to local tastes. The company's unique management structure, which encourages this differentiation, has become a true asset in handling today's fickle consumers.
Only a few years ago, an in-store bakery operator could develop and maintain a bakery program successfully with only minor changes. The operator understood customers' product preferences and could anticipate their buying patterns. Though successful in-store programs never have been candidates for automatic pilot control, they rarely required frequent course corrections.
Those days have passed, thanks to the explosion of instant communications — email, text messages, Facebook and, most recently, Twitter — which have taxed consumers' attention spans and hastened decision-making. One manifestation: Consumers are changing their minds more frequently.
This environment and the deepest recession since World War II have created the greatest challenges ever for the nearly 40-year-old in-store baking industry. Just ask officials of Whole Foods Market's South Region, based in Atlanta, who believe they have the controls in hand to keep the region's bakery program on course and to meet the challenges ahead.
Upper-most is a requirement to ensure that the bakeries stand out from competitors' operations. “We always ask ourselves, ‘What will differentiate us? What will set our bakeries apart from other operators?’” says Scott Allshouse, South Region president.
He notes that asking these questions has become more frequent. “Customers have become very immediate in changing their wants. It's what's important to them right now. They drive our programs; we cannot force feed what we want to offer.”
The South Region, which spans Alabama, Georgia, Tennessee, and North and South Carolina, operaes 18 Whole Foods Markets, all with in-store bakeries. The company has 12 regions, each of which functions autonomously, selecting the strategy and tactics to best address the needs of its customers. In bakery, the structures of the 12 regions are similar in that the in-stores receive semi-finished and/or fully baked products from central bakeries, called bakehouses, and purchase baked items from local vendors. All bakehouses and in-stores adhere to Whole Foods' strict quality standards to use only all-natural ingredients: unbleached, nonbromated flour; non-hydrogenated fats; all-natural food colors; cage-free eggs and hormone-free dairy products.
While it differs by region, each chooses its combination of in-store production procedures. In the South Region, three bakehouses supply in-stores with ingredients, frozen raw and par-baked product, comprising about 85 percent of in-store sales; vendors supply the remaining 15 percent. Further, while all in-stores in the South Region offer many of the same products, each location fine-tunes its product mix to appeal to local tastes.
“This makes each store and its bakery unique,” says Steve Schulte, region bakery coordinator. “We have seven stores in metropolitan Atlanta. Each bakery has refined its product mix and merchandising set for its customers. That's what gives each bakery its flair.”
Whole Foods' regional programs with local stores' touches serve better than would a national program, Allshouse adds. “The coordinators are in much better positions to know what their region's customers want, compared to how a national coordinator would function.”
To keep current with its dynamic demographics and economies, each region's bakery team leaders (bakery managers) regularly test product categories and production procedures. “For example, one year it might make sense to make a product from scratch in store,” Allshouse says. “A couple of years later, having a bakehouse prepare it makes sense. Or, a new large store might have capacity to make it, while an older, smaller store would receive the product from its bakehouse,” he notes.
Regional autonomy also challenges each coordinator and the bakery team leaders to be more creative, Allshouse says, adding, “Twelve creative coordinators who share ideas bring a lot more to the table than a single person would.” Creativity, Schulte continues, extends throughout the in-store organization. “Our team members take food seriously, as do team members in the other departments,” he says. “When we hire, we look for outgoing ‘foodies,’ people who show a passion for food and eagerly express it. This goes a long way to getting team members who look forward to tasting products, helping customers and explaining the bakery's products.
“Just as important, most of the new ideas come from our team members because they are deeply interested in bakery and its products.”
In-stores receive shipments daily of different items from the region's bakehouses: two in Morrisville, N.C. and one in Atlanta. One North Carolina bakehouse produces only kosher organic products, while the Atlanta bakehouse supplies non-organic, all-natural items, such as soft dinner rolls and hamburger buns.
The second North Carolina bakehouse supplies only gluten-free products, among them a large selection of breads, scones, cookies, pies, muffins, corn bread and brownies. Lee Tobin, former bakery team member at the Chapel Hill, N.C. store and who has celiac disease, started the bakery after he had developed gluten-free items for the store. The company took his idea, established the dedicated gluten-free bakehouse nearly five years ago and placed Tobin in charge of production. The bakehouse now supplies products to all stores across all Whole Foods regions.
A few years ago, the bakehouses fully baked most bread products for the in-stores. But, as the region expanded, obtaining fresh-from-the-oven product became an issue. “Baking bread from par-baked product ensures a fresher product,” Schulte says. “We enhance this by baking throughout the day a minimum of three times. After baked crusty bread passes the four-hour mark, its crust just isn't the same.” All par-baked breads and rolls have a one-day shelf life. Allshouse adds that use of bakehouses with in-stores provides an effective balance of productivity and in-store baking. Bakehouses offer “greater productivity and product consistency, compared with store-to-store performance. And, we need the in-stores to provide the visual excitement and specific products that customers want,” he says.
Team members begin production as late as possible to ensure that customers get the freshest product possible. That means displaying fresh-baked breakfast items just before the stores open at 8 a.m. and baking bread throughout the day.
By using par-baked bread and rolls, the in-stores can bake on demand and minimize stales, which total about 6 percent of sales, Schulte explains. “We can hold this level and still have enough product to sell because we use par-baked product to our advantage,” he says. Production begins at 4 a.m. with baking muffins, bagels, other breakfast items and cookies, while yeast-raised products proof. After breakfast baking concludes, bread baking begins and continues for three to four times daily. “Not many customers purchase bread at 8 a.m., so we don't fill the shelves before the store opening,” Schulte observes.
After displaying breakfast goods, team members fill cookie, Danish coffeecake and sweetgoods displays. At 10 a.m. team members prepare for a second bread bake and set up frozen items to be retarded overnight.
Meanwhile, one to two cake decorators arrive about one hour before store opening. After filling the service cases, they set up and finish custom-order, all-occasion and dessert cakes and pastries throughout the day in customer view. Another decorator arrives later to prepare items through the afternoon. The in-stores remain staffed until the stores close at 9 p.m. or 10 p.m.
The handful of local specialty wholesale bakeries that supplement the in-stores' lines with finished products, such as whole grain breads, soda bread and shortbread, must meet Whole Foods' product quality standards. “We have found suppliers who have adapted their ingredients for lines to sell in our stores,” Schulte says. “Doing this has turned out to be a win for both of us. They provide products we can sell, and they have stores to sell their products.”
Whole Foods encourages team members to watch for and suggest vendors' products. “After we check a product's ingredients, we sample it with other team members, test it in a store, and if it sells, we'll introduce it. This is a way for our team members to take ownership in what goes on,” he continues.
Merchandising is designed to appeal to Whole Foods customers. “Typical Whole Foods shoppers are not defined by income or social class,” Schulte says. “Most important, they want high-quality, all-natural foods. And, they enjoy a memorable shopping experience. Those people don't say they are ‘going grocery shopping.’ Instead, they are ‘going to Whole Foods Market.’”
Modern Baking visited the Whole Foods Market in Atlanta's trendy Buckhead neighborhood. Throughout the bakery sales area, warm colors complement the bakery foods and strategically positioned high-intensity tungsten spotlights not only highlight displays but help retain the foods' colors. Self-service displays are designed to meet grab-and-go needs and are grouped mostly by breakfast, snack and dessert items.
Coffee and gelato
Entering the bakery, customers first see a coffee and gelato bar.
“Coffee and espresso drinks are naturals with pastries,” Schulte says. In addition to preparing espresso-based beverages and brewing coffee, team members use the bakery's gelato machine to make about a dozen gelato varieties. The display also includes three to four dairy-free sorbet flavors.
Near the coffee bar is a 4- by 4-ft. tiered display of packaged breakfast items, such as scones and Danish ring coffeecakes, and a four-door, semicircular upright display with Danish, croissants, bagels, muffins and 12 varieties of cookies.
The in-stores do not sell donuts. “We want to appeal to our customers with a superior breakfast product,” Schulte explains. “That's our all-butter Danish. No donut will come close to our apple or cherry Danish.” Muffin and cookie selections also include three to four vegan varieties each. Vegan products, priced the same as their conventional counterparts, have attracted customers who otherwise would not have patronized the bakeries.
A rectangular kiosk features low-volume self-service shelves of all-natural chocolate creams, truffles and other candies, supplied by local vendors. To help encourage interest, bakery team members hand-dip items, such as strawberries and pretzels. Offering confectionery sweets gives the bakery added flair, Schulte says.
Two-tiered, square islands contain snacks, out-sourced products as well as fresh-baked items. Two refrigerated service cases are filled with eye-catching whole and smaller portions of dessert cakes, cheesecakes, and fresh fruit and nut tarts. The products show off the creativity of decorators, who have wide latitude in selecting products.
Decorated cakes, offered in 4-, 6- and 9-in. sizes, have three layers. Schulte notes that their presentation has improved greatly because food color manufacturers are producing all-natural colors that better retain their intensity.
Cake sales collectively continue to grow, he says. Much of that growth is a result of sampling. “Many customers are unsure of all-natural cakes, but when they try our very moist cakes iced with real buttercream, we win them over,” he explains.
Sales of dessert cakes, such as strawberry, black and white and German chocolate, are increasing the fastest. Often these sales are last-minute, impulse sales for dinner, Schulte says.
Sales of decorated cupcakes, which retail for $2.99 each, also are trending higher, he adds. Decorators created a pull-apart cupcake cake, which features cupcakes gathered on a board in a shape and then fully iced and decorated to appear like a whole cake.
In a nod to the growing popularity of smaller dessert portions, the cases prominently display cake slices, 4-in. two-layer cakes and cheesecake by the slice, including vanilla cheesecake, chocolate mousse and cake layered on a brownie base.
Taking the concept further, decorators prepare “bitelets,” or bite-size desserts (99 cents each; 12 for $9.99). Examples are pecan and fresh fruit tartlets, mousse cups, brownies and cupcakes.
Introduction of the bite-size desserts addresses the challenge to sell sweets to more health-conscious customers, Allshouse observes. “Shopping the bakery might seem counterintuitive to them, but ‘bitelets’ offer those customers a way to enjoy sweets without feeling guilty.” Schulte adds that customers also buy them for parties to add variety to their desserts and “bitelet” cupcakes are perfect when conventional cupcakes are too large for small children.
A self-service bread display features 11 to 16 varieties of par-baked, organic crusty breads. “We can trace the ingredients to their sources, and we explain this to our customers,” Schulte says. “This is an example of our merchandising. It's about service. Our team members like the interaction, and our customers appreciate it.”
Bakehouse crews hand-shape all artisan loaves, which receive long fermentation to enhance flavor. In-store team members bake off bread in four-deck ovens, as needed. Whole loaves are packaged in perforated poly bags to retain their crusts, and sliced loaves are sealed in bags to retain moisture.
“We view our certified organic hearth breads and gluten-free items as signature products,” he says. “Consumers either cannot obtain these products or find the wide variety that we offer in other stores.”
Adjacent to the bakery, the prepared foods department offers a dessert bar. To introduce more store customers to in-store desserts, the South Region two years ago began introducing dessert bars in new and remodeled stores. “Our prepared foods departments attract strong on-site lunch and take-out business,” Schulte says. “Customers select their food from salad, hot foods and specialty foods (for example, Mexican) bars. Customers then may move to our dessert bar.” The selection includes as many as three different hot and three cold desserts, sold by the pound ($7.99). Examples include decorated cakes and banana pudding, and peach cobbler and apple crisp. Seasonal examples include strawberry shortcake in spring and Key lime pie in summer.
Sandwich bread sales up
Bakery sales have remained stable during the economic downturn, Schulte says. (Whole Foods Market does not disclose sales results.)
Within these stable sales, cake sales continue to rise steadily, and sandwich bread sales also have risen. “We attribute this to more people taking sandwiches to work instead of buying lunch,” he explains. “Some personal friends have said they used to eat lunch out five days a week; they say they now eat out only one or two days.” In-store bakery plans include improvements in instructing team members in product knowledge. “This will be important as we introduce more whole grain and spelt breads and gluten-free products,” Schulte says. “We want to do this in part by adding more bakery instruction to the Whole Foods Market University curriculum,” an on-line, in-store teaching tool for team members.
Schulte also wants to capture more local vendors who can offer products to complete the in-stores' product mix. “Often the vendors are unique to their areas, and our customers would recognize their names when shopping,” he observes. “We could make some of the products, but if a recognized local vendor offered them, then we both could do well.”
Currently he is examining more-efficient ovens as well as production times to curb energy costs. “In a supermarket, heating, refrigeration and air conditioning consume the largest amounts of energy. Ovens follow next,” Schulte notes. “What would be the impact of starting the ovens an hour later and turning them off an hour earlier in the evening? Taken across all of the stores, this might mean significant savings.”
Last month, the bakery in the remodeled Chapel Hill, N.C. store, installed a display baking oven. Located at the bread counter, the rotating pan convection oven is circular, holds six sheet pans and features a glass exterior, which is only warm to the touch. “We plan to use the rack oven for the initial bake and the display oven for baking off smaller quantities throughout the day.” Schulte explains. “This likely will be more efficient, as compared with keeping the rack oven fired all day.”
Allshouse adds, “This oven is an example of our effort to bring the baking experience to our customers. Not only will we bake throughout the day, customers will see the activity up close.
“And if the oven is as efficient and effective as we believe it will be, I'll share the results with my counterparts in the other regions. That's how we exchange ideas.” The display oven also exemplifies how the South Region is jacking up its efforts to differentiate its in-stores from those of competitors and to capture the attention of today's harried, often distracted, consumer.
And, the oven reflects the hands-on control that the in-stores will use to stay on track to grow their businesses.
Whole Foods South Region …at a glance
Regional headquarters: Atlanta, Ga.
Senior bakery management: Scott Allshouse, South Region president; Joey Herndon, South Region vice president-purchasing; Steve Schulte, South Region bakery coordinator
Number of stores/bakeries: 18/18
Store sizes: 21,000 to 63,000 sq. ft.
Market served: Atlanta, Georgia, Tennessee and North and South Carolina
Bakery sales: not released
Number of bakery employees: 6 to 16 per bakery, including coffee bar and confectionary kiosk
Products: full line of nearly 400 products offered daily
Production methods: mostly frozen raw and par-baked product supplied by region's central bakeries
Major in-store production equipment: vertical mixers; rotary rack and four-deck ovens, bread slicer, reach-in refrigerators, walk-in refrigerator/freezer
Plans: enhance bakery team members' product knowledge, improve bakeries' energy efficiency; region to open new store in fiscal 2010, ending Sept. 27, three in fiscal 2011
Bakery supply distributors: Whole Foods Bakehouses (three central bakeries in region), United Natural Foods, Dade Paper