To compete with mass merchandisers, this 43-unit chain's in-store bakeries focus on attractive displays, helpful customer service and creatively decorated cakes. since 2001, profits have increased annually.

Pat Campbell (center) credits Farm Fresh's two field trainers, Debbie Smith (right) and Jackie Harlow, for much of the in-store bakeries' success.

New and remodeled stores feature a cake push cart at the store's entrance to draw customers back to the bakeries.

An old saw in the in-store bakery business holds that when decorated cake sales reach 30 percent of a bakery's sales, the bakery becomes profitable. Pat Campbell, vice president-bakery, Farm Fresh Food & Pharmacy, couldn't agree more.

Since he took over bakery operations of the Virginia Beach, Va.-based chain in 2001, cake sales have grown from about 23 percent of bakery sales to the low to mid 30s, while the bakeries have posted consistent year-to-year sales and profit gains. Concurrently, the bakeries are putting into place the building blocks for continued growth as they shape the company's reputation for high quality cakes, especially wedding cakes.

As more supermarket chains fill their bakery director positions with personnel lacking bakery experience, these operators manage their bakeries as they do their grocery and general merchandise departments, that is, by focusing on containing costs rather than increasing sales. Campbell, however, is drawing on his nearly 30 years of experience as an in-store bakery executive and scratch baker, applying good business practices with a commitment to high product quality to grow Farm Fresh's bakery program.

Campbell joined Albertsons Inc. in Florida as a scratch/mix baker and during a 25-year career rose to become director of bakery operations for nearly 400 in-stores in the firm's southeast region. In 2001, he accepted a company buyout and was recruited by Farm Fresh C.O.O. Ron Dennis, a former Albertsons executive, to join Farm Fresh. Among company objectives, enhancing its bakery program was a top priority.

Reticent to take credit for the progress to date, Campbell quickly points to his two field trainers (merchandisers) and 43 bakery managers who have been committed to making the bakeries successful. When he joined the company, bakery managers were more shrink conscious, rather than sales conscious, Campbell recalls. "It was short-term thinking; we needed longer term thinking. If you focus on sales, all of the other things come. So, we changed the thinking right away."

He introduced ideas developed while with Albertsons; others were offered by Dennis, who's largely responsible for creating the stores' merchandising strategy. "We're willing to try things," Campbell says. "If they work, great; if not, we don't let egos get in the way, and we drop the ideas and move to something else."

All the while, he has remembered his early baking days in upscale restaurants, when the owners instilled the need to buy high quality ingredients. "We committed to not make any product changes that would result in less quality," Campbell says. "To do so would have been a road map to disaster." Still, he recalls an instance early on that tested his commitment.

After joining Farm Fresh, he wanted to increase the selection of dessert cakes. The bakeries offered four to six four-layer varieties, using cake layers made to Farm Fresh specifications.

"They're expensive," Campbell acknowledges. "At first, I wanted to cut costs and buy a less expensive product. But, our merchandisers, who knew what our customers wanted, talked me out of it. The layers are richer and more dense and moist than standard layers. This helps make our cakes stand out and sell." The bakeries subsequently added as many as 14 varieties of dessert cakes.

In addition, the bakeries have introduced more than 20 varieties of year-round and seasonal specialty desserts. Most are prepared on premise. Popular sellers include yellow cake, filled with Bavarian crème, iced with whipped cream and topped with glazed fresh fruit; chocolate cheese torte, featuring chocolate cake and French-style cheesecake iced with fudge; and triple chocolate mousse with three layers of chocolate cake filled with chocolate mousse, iced with chocolate whipped cream and topped with chocolate fudge. Each single-serve cake sells for $2.99, a price that enables the product to sell in sufficient volume to generate acceptable profits, Campbell says.

Farm Fresh decorators especially exhibit their talents when preparing cakes for the company's burgeoning wedding cake program. While the company has ten decorators highly proficient in decorating wedding cakes, one store produces most of the cakes. "Our decorator there is very creative, producing unusual, unique designs that you won't find in bridal books," Campbell says. "And, she is quick–a customer wanted a wedding cake the same day after another bakery had failed, and the decorator filled the order."

As more bakeries begin decorating wedding cakes, decorators in all Farm Fresh bakeries have begun to use rolled fondant. "Here's where our tech [person] has been very helpful, assisting decorators to become comfortable with rolled fondant," he adds. A bakery technician with a vendor brokerage firm and the company's two bakery trainers provide on-site decorator and baker training.

The company's events coordinator works with the bakery, floral and catering departments to fill customers' wedding reception needs. The coordinator's assistant and the wedding cake's primary decorator deliver and set up the wedding cake.

"Our wedding cake business is in its infancy, but it's growing," Campbell says. Per serving prices run as much as $5.50. "Anytime you can sell a cake for $500, it's a great business."

Decorators honing craft
Cake decorators are sharpening their skills in part as a result of interest in the company's "World Championship of Cake Decorators," an annual competition open to all Farm Fresh decorators. Contestants are judged on proficiency in three categories: technical skills, speed and creativity. Competition begins with individual heats within the company's four districts to yield two winners and an alternate from each district, all of whom compete in the finals.

In the technical skills category, each contestant decorates a cake from the same photograph. "The judges examine every aspect, including counting the number of shells on borders to see if they match the photograph," Campbell says.

The speed category requires each participant to decorate six saleable German chocolate cakes as quickly as possible. To show creativity, each contestant has 90 minutes to prepare a cake of personal choice. If a tie develops, the contestant who uses the fewest commercial props in the creative category wins.

Last year's first place winner received a Caribbean cruise for two people; the second place winner received a 27-in. color television. Each remaining finalist received a $100 U.S. Savings Bond.

At the conclusion of the competition, Farm Fresh raffled the creative category cakes and contributed nearly $1,000 to Farm Fresh Charities, which donated the money to a local children's hospital. Campbell notes that the company alerted the local news media and received print and electronic media coverage.

"The competition has other important benefits," he adds. "The public recognizes the decorators' contributions when they see the cakes in our bakeries, and it has encouraged the decorators to improve their skills.

"When you consider everyone in a store, you see that the most creative person is the cake decorator. That person does more than arrange a display; the decorator must manufacture something. The competition helps the decorators understand that they are important to their stores. They look at their displays differently, and do a better job, because everybody knows them."

In addition to emphasizing cake sales, Farm Fresh bakeries actively promote artisan and other crusty bread products, which also carry strong margins. In 2001, the bakeries offered about 10 different crusty bread products and since have added another 20 available varieties; individual bakeries select 12 to 16 to meet local tastes. Much of their popularity has come from the rapid population growth in Virginia Beach and the several military installations nearby, which attract personnel from across the nation, Campbell explains.

To promote the breads, bakeries sample four different products daily, often with gourmet olive oils and gourmet spreads, at the bakery sales counters. Each supermarket also operates a full-time product demonstration station near the store's entrance to the perishables departments. Demonstration themes regularly include bakery foods. For example, breads often accompany demonstrations of prepared entrées.

Bakeries, just as other perishables departments, seek to entice customers to purchase high margin products with competitively priced items. Among in-store products are 15-oz. French and 14-oz. rye bread (99 cents) and 5.5-oz. muffins (99 cents each). Each product group is presented on a unique self-service display, most of which were designed by C.O.O. Dennis and constructed by Farm Fresh in-house contractors. The displays, beginning with a large, multi-level wheeled wood muffin cart at the store entrance, lead customers to the bakery.

The bakeries offer these items daily and use them in themed holiday and seasonal promotions. Their sales also have grown. For example, in 2001, the bakeries sold only large blueberry muffins; currently they offer as many as 19 flavors from 22 available varieties in whole muffins and muffin tops. Muffin sales as a percentage of bakery sales have grown from less than one percent to five to six percent, according to Campbell.

He points out that the bakery must exercise caution when pricing these promotional items: "Price helps shape customers' perceptions of product quality. If we priced our muffins at 50 cents each, customers probably would look at them as cheap muffins. I believe they're worth $1.29, but we can still make money at 99 cents because of the volume that we sell."

The objective of the promotions is two-fold, he continues. "We consistently remind customers that they can buy fresh bakery at very reasonable prices. When they understand this, they see our other products and sample them. This helps keep our bakery in front of them. They may not buy a decorated cake today, but they know where to go when they need one for a special occasion."

Bakeries ensure product freshness
Across all product lines, the bakeries bake or fry most products to ensure freshness, Campbell says. Still, he adds, some manufacturers make very good thaw-and-sell products, such as the bakeries' loaf cakes. Farm Fresh also purchases certain thaw-and-sell seasonal products and other low-volume or low-margin items that don't make financial sense to make fresh.

"We focus our production on cakes and other primary items and always look for opportunities to convert to baking items that we purchase fully baked," he explains.

Offering fresh product with high quality, broad selection and eye-catching displays, supported by helpful customer service, enables Farm Fresh to compete with the increasing presence of mass merchandisers, Campbell says. "A mass merchandiser will move in next to a supermarket and close it down because the owner believed it could not compete. That's not necessarily true," he observes. "You need something that differentiates your store from the mass merchandiser. And when you do, you must bring your ‘A' game every day, or you will lose.

"We don't need to advertise that we're the best; our people at the counter will convince customers we're the best. They see attractive displays and get friendly, helpful service right away."

Hot bakeries will continue to play an important role as Farm Fresh adds supermarkets and remodels stores. After Supervalu purchased Albertsons Inc. in 2006, Supervalu embarked on targeted growth plans for its existing divisions, including Farm Fresh. Last year, Farm Fresh opened three new or replacement supermarkets, each with a bakery. This year, the firm plans to construct five supermarkets and to remodel three locations.

The bakeries will support Farm Fresh's capabilities to compete effectively for consumers' food dollars, Campbell says. And, though all bakery categories are important, "cake sales are the key to bakery profitability. Cakes will always be our focus of attention."

Farm Fresh supermarkets...a sampling of prices

Farm Fresh supermarkets at a glance Headquarters: Virginia Beach, Va. Owner: Supervalu Inc. Bakery management: Ron Dennis, president and C.O.O.; Scott Bayne, executive vice president, merchandising; Chris Van Parys, vice president perishables; Pat Campbell, vice president, bakery; Jackie Harlow and Debbie Smith, bakery fields trainers Number of supermarkets/bakeries: 43/43 Average store/bakery size: 55,000 sq. ft./2,000 sq. ft. Number of bakery personnel per store: six to 15 Market served: Virginia's Hampton Roads area from Newport News west to Richmond, south to Portsmouth, and east to Virginia Beach Product line: full line of 350 to 400 SKUs Production methods: Variety breads/rolls, frozen dough/bases; crusty breads/rolls, frozen dough/par-baked; donuts, frozen dough/thaw and sell; decorated cakes, frozen layers/mixes; pies, frozen dough/thaw and sell; cookies, frozen dough/fully baked; muffins, frozen batter/thaw and sell; bagels, par-baked/thaw and sell; croissants, frozen dough/thaw and sell; puff pastry, frozen dough; Danish pastry, frozen dough; brownies, thaw and sell; dessert cakes, frozen layers/fully finished Major production equipment: vertical mixer, donut fryer, roll-in proofer, rotary rack oven, computerized decorating machine, walk-in refrigerator/freezer Bakery supply distributors: Supervalu distribution center, Dawn Food Products, DPI Mid Atlantic, Richmond Restaurant Service, Atlanta Foods International