Contributed by Dawn Foods
JACKSON, MI — Owning a retail bakery is a challenge all its own. Maintaining and expanding a business to multiple locations is another task altogether.
Pete Schoepke and Randy McArthur, senior technical sales and service manager and national technical sales representative, respectively, for Dawn Foods, leveraged their combined 80 years of retail bakery experience to offer insights to bakery owners looking to grow their operations.
What criteria should be used to evaluate potential locations for a new bakery?
Randy McArthur: When you try to make the leap to multiple locations, it’s the hardest leap to make. Now you need to have systems in place. What are the procedures you’ll implement? Invest in a high-rent district with enough people to keep you in business.
For a second store, consider lower production costs. Can the first location support production for both? Centralize production if you can. Have a short- and long-term plan. Be honest about how much revenue is needed to be truly profitable. Don’t do it cheaply; you need to generate enough sales to pay that rent and try to avoid high equipment and ventilation costs.
Pete Schoepke: We just had a customer in North Dakota do this successfully, and now they’re looking at franchising. Cities have road data for their neighborhoods (realtors do too), like “20,000 cars pass this space every day.”
McArthur: We had a customer in St. Louis who didn’t have enough space in their first location, so they built a commissary to serve two locations. A good resource is Owning and Operating a Retail Bakery by Ricky Crawford. There’s also a session for beginners at IBIE called Business for Baking Beginners.
Nowadays, people know how to get money but not how to go about setting up a new operation. You used to just sell products in the bakery industry. Today, you sell an experience, and bakery goods are part of that. A lot of foodies start bakeries and work themselves into the ground. You don’t have to do everything from scratch to create a great experience.
How can bakery owners ensure efficient management of personnel across multiple locations?
McArthur: Clear roles and responsibilities are crucial. Good training procedures are essential, as most employees fade away due to lack of training. Recognize the standout employees you can rely on and compensate them appropriately.
Schoepke: Your hands-on approach is great, but not scalable for multiple locations. At Dawn, we add training guides and videos to our YouTube channel every month, like techniques for frying. Visual training is very effective in today’s world.
McArthur: With one store, you own a job; with additional locations, you are running a business. Train yourself to do a deep dive into your strengths and weaknesses. Taking an honest inventory is the most difficult but necessary thing.
Are there any strategies bakers should implement to differentiate the new location from existing one(s) while maintaining the overall brand image?
McArthur: Some people do a spin-off while others maintain the same brand. Both can be successful. You can test different product mixes and ask customers for feedback via surveys on social media.
What are some successful marketing strategies you recommend?
Schoepke: Continue using social media for marketing. Leverage TV and radio relationships. Look at examples like Sandy’s Donuts in Fargo, ND; they do a lot with local law enforcement and charities, and they’re involved in community events. Being consistently involved in the community helps you become known in your area. Consider hiring someone to help with social media, as small businesses often don’t have the expertise to do it well, but it’s crucial for advertising.
How will the expansion impact the supply chain and inventory management processes?
McArthur: You need to start with good systems in the first location. Identify your best sellers. By the time you open the third and fourth locations, it becomes easier because the systems are in place.
A point-of-sale system is important. BakeSmart and CyBake software platforms can take data from systems like Toast and integrate it into a forecasting system. Keep good data on your sales trends, including specifics like the number of cinnamon donuts, cake donuts, long johns, etc.
Schoepke: I used to keep a calendar book that included daily sales and expenses. It’s essential to know your costs and understand the cost of goods sold for each product so you know your price elasticity.
Visit the Dawn Foods website for more information.
