Sunday, January 6, 2013

Wholesale vs. Retail: Interview with Diane Stevens

Cupcakes are no fad.

Interview with Diane Stevens
Sara’s Cookies, Long Island City, New York

By Jeff Yoskowitz and Kathryn Gordon

Kathryn:  Hi Diane, it’s nice to meet you and be able to see your production facility, since I know that Jeff has known you for a long time! 

Diane:  I met Jeff after I completed the professional baking program at FCI (French Culinary Institute). Before that I was in graphic design. I used to rent production space from Jeff for my cookie business and I worked with him at Maurice Pastries for 3 years.

Jeff:  How many years have you been in this production kitchen in Long Island City?

Diane:  7 years now! 

Jeff:  I see tons of cupcakes. Are you still selling cookies?

Diane:  No actually, I’m really not.  There is more profit in cupcakes than cookies, even using 100% butter and quality ingredients because there is more labor for miniature items like cookies.  I also produce bars, brownies and loaves.  My current business is 70% wholesale production of jumbo cupcakes for numerous distributors. I now have thousands of cookie cutters in storage!!

Kathryn:  How did you find this space?  Did you build it?

Diane:  No, it was the original production location for Tom Cat Bakery.  This area is pretty food oriented.  My landlord lives here, and owns the building next door which is a loft where Bobby Flay cooks.  In fact, Bobby used to say that cupcakes were just a fad – but they definitely lead the production mix 3 years later.

Jeff:  Over the years, how would you say business has changed?

Diane:  This is definitely a business “based on pennies.”  I have to keep food costs very low.  Packaging alone is $2 for a giant cupcake, because it has to be sturdy enough to stack in a freezer for distribution.

I've seen orders for large cakes cut back in the economic recession.  I used to work with several large caterers, such as Great Performances.  They used to order gifts such as gingerbread houses for clients such as Google, but that business is now gone.  

Jeff:  What do you think is the biggest surprise the entrepreneurial bakers need to know about an established, profitable business structure?

Diane:  Everyone has the idea that everything is baked fresh every day, and that what you are buying in a store was baked somewhere just that morning.  It’s not.  There may not be long term freezing involved, but to organize production runs efficiently, some items are frozen for a period of time.  So you have to allow for freezer space in your kitchen plan.

Jeff:  What’s your least favorite part of running a large kitchen like this?

Diane:  Maintaining the grease trap!!  We constantly have to rotor-outer the grease trap.It’s also hard if a piece of equipment isn't working since suddenly, nobody knows anything.  I don’t care what happened or who managed to break something.  I just need it reported immediately, so I can address the issue and get the piece of equipment up and running again before we need it.

Kathryn:  What are your hours, as the owner and primary production manager?

Diane:  We start by 8 in the morning and usually finish by 5 depending on the season.  I find there are less distractions early in the day – no phones ringing!

Jeff:  How is the product distributed? 

Diane:  My distributors each have a key and pick up at night between 11 and 12 pm. The drivers just want to get in and get out and go home.  The drivers have been coming here for years.  Their employers are reliable businesses and by supplying to distributors it is less volatile and has less turnover than selling to restaurants or other parts of our business.  I have to trust them. 

Jeff:  What’s your highest operating expense with such a large facility?

Diane:  The electricity, because of the air conditioning required to counteract the heat generated by the equipment.  Utilities are about $3000 per month.

Kathryn:  Do you experience a lot of staff turnover?

Diane:  No, I have 7-14 staff members depending on the time of year.  I have both loyal employees who have been with me from the beginning and people who come and go.

Kathryn:  What advice would you give a new entrepreneur?

Diane:  You should consider the wholesale route, because there is definitely money to be made that route versus having the overhead of a brick and mortar retail store.  You always will mentally worry about your business!

You should also be proud of yourself and what you produce.   Don’t give up even when people come at you from all different angles!  You just have to be driven and motivated, and focused. 

Jeff:  Thank you Diane, it’s been really great seeing you again!

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