In a marketplace dominated by chain and big box operations, it can be daunting to turn one languishing landmark grocery store into a vital retail competitor. But Kathy and Greg McDade have done it four times in Jackson, Miss. They have focused on customizing product offerings, particularly in the extensive bakery departments, to suit each of the diverse communities the stores serve.

 

Using various combinations of frozen dough, thaw-and-sell, proof-and-bake, par-baked and RTU products, each of the four McDade’s Markets is able to maintain its own distinctive departmental configuration. Offerings at each include on-premise-baked breads, cookies, muffins and croissants that are prepared as needed. Up to 60 percent of bakery items are thaw-and-sell, including cakes, pies, donuts and brownies.

“When we took over the first market, everything was made from scratch, but we found that training and keeping bakery personnel was one of the biggest problems in terms of maintaining consistency,” Kathy McDade explains. “When we switched to frozen, thaw-and-sell and bake-off products, we were able to more easily maintain quality levels and, at the same time, expand and customize our offerings for maximum profitability.”

McDade’s total sales are more than $27 million, ranging from about $5 million to $7.6 million per store with bakery/deli sales accounting for 8 percent to 13 percent per store. Bakery makes up 4 percent to 6 percent of those departmental sales.

Investing in upgrades
The McDades’ emphasis on bakeries as key profit centers is particularly evident when they plan store renovations. Of the $1 million invested in the remodeling of the flagship store in 2006 and the introduction of the upscale McDade’s Market Extra concept, about one-quarter was allotted for wall shelving for bread (freeing up display table space for other items) and the upgrading of an upright 8-ft. frozen bakery case to a 6-ft. frozen cake case and two 8-ft. self-service refrigerated bakery cases for pies and cakes.
As part of this renovation, the McDades introduced a 5-ft.-long refrigerated case dedicated to individual-size, European-style desserts, gourmet pie slices and fruit tarts (averaging in price from $3.29 to $3.99 each). The dessert case has been so successful in the one location that they are planning to add a similar case to the bakery of another store.

This year, the couple budgeted a quarter of a million dollars for leasehold improvements for another store. About 40 percent of that investment will go into upgrades for the bakery/deli area, including the addition of bread and pastry tables, shelves and the transformation of 150 ft. of display area used for beer into bakery merchandising space.

Kathy and Greg McDade opened the first of four markets in 1996.

 

“We think that this investment will increase our sales in the bakery/deli department by at least 25 percent,” Kathy says. “We analyze every square inch of the merchandising floor for sales performance. If any space is not living up to its potential, first we change the products. If it still doesn’t perform, then we reposition or replace the case.”

When Kathy and Greg decided in 1996 to purchase a 40-year-old independent market in northeast Jackson, they had more than half a century of combined experience in the grocery business, encompassing every aspect from cash register running to corporate multi-store management. Based on the successful rejuvenation of the first location, they purchased and renovated a former Winn Dixie market in 2004, then a third the following year.

In 2005, when Winn Dixie closed its store in Jackson’s oldest shopping center, the city council and mayor asked the McDades if they would take over the facility. The couple re-opened the store under the McDade banner in the fall of 2006.

At 14,000 sq. ft., the original store is the smallest. The other three range from 23,000 to 31,000 sq. ft. Bakery display space ranges from 1,000 sq. ft. at the downtown store to 2,500 sq. ft. Three of the four stores have 2,000 sq. ft. or more. Production space ranges from 300 sq. ft. to 800 sq. ft. All but one of the stores have their ovens open to customer view.

Although three of the four stores are within a three-mile radius, they serve different neighborhoods and clientele. Income levels for two of the stores range from upper to medium; the third one is in an area made up of primarily medium income level customers. The fourth location, the downtown store, serves a mostly lower income level clientele.

Extensive product line
Breads–“soft-crusted because in this area, most customers think hard-crusted means stale,” Kathy notes–are big sellers in all four of the stores. Each stocks between 25 to 50 varieties, ranging from RTU packaged Hawaiian loaves and rolls to frozen proof-and-bake French, rye, pumpernickel and other basic doughs.

Value-added items, such as cheese and jalapeños, are often used as a topping on French bread.

 

In all four stores, the top sellers in the bakery department are petite rolls, a McDade’s signature item since 1996. To make the 3/4-oz. rolls, staffers cut frozen pre-formed white or wheat “butter and egg” rolls in half prior to baking.

The resulting three-bite rolls are the preferred bread for the sliced pork loin sandwich that is particularly popular party fare. This is especially true during tailgate season in the football-focused town, Kathy adds. Caterers purchase hundreds of the rolls at a time.

McDade’s sells its petite rolls in 24-count plastic bags. Each of the stores sells between one-and-a-half cases to ten cases of the rolls per week. The cases contain 240 1.5-oz. rolls and yield double that number of petite rolls.

“If I didn’t have the petite rolls, our customers would holler,“ says Wanda Willridge, bakery/deli manager at one of the stores.

Kaiser rolls are available plain or with cheese, poppy seed and other simple toppings. French bread dough is shaped into a flower, then sprinkled with Italian seasoning, cheese and garlic or cheese and jalapeño peppers.

Cobblestone bread is pieces of French bread dough rolled into balls and topped with cinnamon and apples before baking. Mountain bread is French dough shaped into a spiral so the center rises higher than the rest to form a mountain peak. The loaf is dusted with flour after baking to represent snow.

Some of the Parmesan French loaves are cut most of the way through with scissors to make them easy to pull apart when served. Pumpernickel and rye doughs also are available marbled or twisted into various dark and light permutations.

On the sweet side, thaw-and-sell dominates products with packaged layer, pound and cream cakes, sold whole, by the half and in multiple slices in clear clamshells.

Far and away, the most popular is a six-layer caramel cake, a Southern specialty. One store sells an average of six cases each of 48-oz. whole (four per case) and 24-oz. halves (six per case). The other stores average a total of three and four cases of wholes and halves.

Differentiating each location
Like all of the McDade’s managers, the bakery/deli heads are encouraged to come up with new products and merchandising ideas. In her store, department manager Kim Luke has set up a rack towards the front of the store away from the bakery to encourage impulse purchases of store-made garlic bread, French bread loaves sliced lengthwise and topped with butter, herbs and cheese. All of the stores individually package slices of cake and position them at or adjacent to the deli’s hot take-out foods counter for grab-and-go sales

Some cakes, cupcakes, brownies and cookies are iced and/or enhanced with additional toppings or decorations in the store to increase their eye appeal, create greater product variety and add value to the items. For example, a regular brownie is 99 cents. Adding German chocolate icing or nuts and marshmallows to make a rocky road specialty bumps the price to $1.25.

Frozen brownie cookie dough may be topped with caramel, candies, colored sprinkles or sugars; half-dipped in white icing; or rolled in confectioners’ sugar prior to baking to create a crackle texture. A little more elaborate, yet still simple to produce, are “peek-a-boo” creatures–two cookies sandwiched together with a big scoop of icing that sport two round chocolate candies for eyes.

New ideas for turning basic bakery inventory items into new temptations come from a variety of sources, including product supplier representatives. For example, two thaw-and-sell cupcakes laid on their sides and butted end to end are iced and decorated to resemble puppy dogs and bees.

Rectangles of chocolate cake are sliced lengthwise, filled with whipped topping and iced to become store-made variations of popular hand-held snacks. A variation features white cake slices, icing, coconut and cherries or strawberries.

One of the most recent supplier suggestions is cookie dough coffee cake. For each cake, nine ready-to-bake sugar cookies are placed on the bottom of a square pan. The cookies are topped with apple, cherry, peach or other fruit filling, then sprinkled with an oatmeal and brown sugar streusel. McDade’s shoppers liked the simple sweet so much that it has been added to the product lines at all of the stores, Kathy notes.

Innovative products
“Shoppers expect more innovation from a small, locally owned and operated grocery store,” she says. “They tell us that they’re always excited to see and sample new bakery items. She also points out that unlike large chains, feedback about products and services comes up the chain from the stores and not from the top down.

“Chain-wide programs don’t tend to work, whether we’re talking about take-out chicken or thaw-and-serve pies,” she adds. “Each store has a range of options from which to choose its product offerings.”
Learning to monitor and rotate such large bakery product inventories–and particularly maintaining low stales, no more than 2 percent–is a hands-on process for McDade’s managers.

“It is extremely important that they understand that it’s not enough to bake enough to fill in holes in the displays; they have to learn to anticipate which products and how much they will need based on season, day of the week and even time of day,” Kathy says.

In addition to running the overall corporate operations, both Greg and Kathy make the store rounds every day to offer their managers support, advice and other assistance. To make sure that pricing is in line with their big-box competitors in the area, Kathy conducts comparison checks on a 90-day rotation.
Having rescued four local landmark stores, Kathy and Greg McDade already have a great deal invested in preventing the independently owned and operated neighborhood grocery market from becoming an extinct species. And, while the couple has no current plans to rehabilitate any more, Kathy admits that anything can happen.

“We thought we were finished after opening the first two,” she explains. “So you never know!”