From Farmer's Market to Macy's

Interview with Kathleen Escamilla-Hernandez

http://www.cocoamains.com/

By Kathryn Gordon and Jeff Yoskowitz of FoodStartUpHelp.com

Kathryn:  Hi Kathleen, you’ve come a long ways since you started at ICE (Institute of Culinary Education) as my student 2 ½ years ago!   We’re very excited. Is it true you just got your first purchase order to sell your Cocoamains macarons at the Macy’s flagship store in Manhattan?

Kathleen:   Yes!  It was interesting to be in the negotiations with such a large customer.  Prior to this, I was selling my macarons and other baked goods at a farmers’ market!   I loved the farm market and meeting my customers directly – but this is a fantastic next step for my business. I do plan though, to continue selling at the farmer’s market in the spring.

Jeff:  You began at a farmer’s market in NJ earlier this year. Can you talk about that process?

Kathleen:  The farmer’s market debut allowed me to pull together my business structure.  When I first started at ICE, I was looking to do something in baking that was creative since I formerly designed children’s wear.   I didn't know precisely what I wanted to do, but I loved pastry and it was a creative outlet from the stress of my former career.  The opportunity to sell on weekends at the farmer’s market came along, and I took the plunge.  I also started to do some dessert catering.   It helps to have a supportive husband, who is also a graphic designer!  At first, I wasn't sure what would sell and I offered pound cakes, madeleines and macarons.  The macarons sold out immediately! 

Process wise, I had to file my LLC, get a trademark, have the website developed, do my Serv Safe certification (which you can do entirely online through www.servsafe.com -- it’s very interesting!), obtain general liability insurance, complete the mandatory paperwork to sell at a farmer’s market, find a commercial kitchen to work in, develop my macaron formula, flavors and prices, buy a tent, and create signage, flyers and business cards!  At that point, I didn’t yet need packaging.  

All summer, I was baking all night, working from 4 am to 2 pm for my regular job, and getting 4 hours sleep.   However, it was a fantastic way to work out the kinks, make money, allow clientele to get to know my product and also allow me to get feedback on my product.

A friend of mine said:  "You don't go to the farmer’s market to make money - you go to promote your product."  But I told him you go to do both or else why bother going if you don't make money?

Jeff:  When do you launch at Macy’s?

Kathleen:  We just opened at Macy’s Cucina and Co. earlier this week.  We gave away free macarons from 11 am until 2 pm!

Currently I am working on my display case – I can create whatever I want in terms of macaron cakes, gift baskets, etc.  It’s a lot of fun.  I like figuring out how to make lacquered display macarons look as realistic and beautiful as the edible ones!

Kathryn:  Originally the Macy’s Department Buyer for Cucina and Co. wanted you to just have fresh, loose “grab and go” macarons available for purchase out of their refrigerated case?  

Kathleen:  Yes, but then a Macy’s Vice President decided that he wanted to offer gift boxes.  There was a bit of going back and forth.  We decided to do both, and now, my custom boxes are being created.  When we open, there will be 2 sizes of macarons available in 8 flavors:  large and Cocoamain’s mini Mac Poppers!  Pre-packaged Cocoamains gift boxes will be available for the holidays which is great, because a lot of people shop at Macy’s and it’s located so conveniently to Penn Station that commuters can pop in and pick up a present!  We’re all hoping that the eye-catching appeal of macarons will do the trick!

Jeff:  What makes your macarons different from other macarons, Kathleen? 

Kathleen:  I respond to my feedback from my customers and offer fresh, accessible flavors.  I have some popular standard flavors (5) and will rotate in (3) others seasonally.   For example, the Macy’s buyer mentioned that she would like to attract customers at breakfast time – and I turned around and gave her my cinnamon raisin twist macaron with cream cheese filling.  It’s absolutely delicious, especially with morning coffee!  So I have flavors that appeal throughout the day to consumers.

Cocoamains offers American theme flavors in appealing colors.   Compared to other macaron start ups, my texture is soft and my flavors are “bumped up.”  The large size fits into someone’s palm in an appealing way like the size of a cupcake.  The mini Mac Poppers are cute, and allows someone to sample all the flavors.

Jeff:  Kathleen, where do you do your production?

Kathleen:  I was working in one commercial kitchen in NJ but I am switching to a larger, brand new facility that lets me rent time on a monthly basis.  I just signed that contract.  I had outgrown the freezer space in the first kitchen.

Kathryn:  How will you transport your macarons to Macy’s?

Kathleen:  As an approved vendor, we have a wide range of hours we can unload at the loading dock from even as early as 5 am.  I plan to arrive early to avoid city traffic, and will be able to bring the macarons straight from my commercial kitchen facility up to the refrigerated case at Macy’s Cucina and Co.  

Kathryn:  What’s one of the biggest lessons you learnt between finishing at ICE as a pastry & baking student and becoming an entrepreneur?

Kathleen:   When your instructors tell you to practice piping, they mean it!  On my first day of externship at Bouchon Bakery, I piped their signature Bouchons for 12 hours.  I had recently had a carpal tunnel operation and there was nothing like that much piping to bring back my hand strength.  I will be hand piping my own macarons until I can justify a depositor, since I am now so fast at piping!

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Starting a business with your family

Family Ties
Interview with Margaret Wong and her sister Suzy Wong

80 Riverside Café (expected open January 2013)

Interview with Jeff Yoskowitz and Kathryn Gordon

Kathryn:  Hi Suzy, Hi Margaret. This space is so open and airy, and with the plants and the overhead fans it reminds me of a stage-set for a Cuban café.  How did you find this space, and what are you planning to do here?

Suzy:  We’re sitting in the hotel lounge area and this is where we will set up our cafe. We are located at the corner of 80th St. and Riverside Drive in a Landmark building hotel. There are no cafes along Riverside Drive and there are 120 rooms in the hotel. Hotel guests have to walk 2 blocks to Broadway if they want coffee and breakfast in the morning. Based on a survey I conducted of guests staying at this hotel and based on the overwhelming positive response of guests wanting a cafe on premises, we’ve decided to open a breakfast café here. The owner is a very dear friend of mine. He wanted to have a restaurant/outdoor cafe here many years ago but it was very difficult in the past to get the Landmark Preservation Committee to approve an outdoor cafe. We are in a sense fulfilling the owner's dream - many years later.

Jeff:  Landmark status is difficult to work around.  How are you managing that?

Margaret:  We’ve used the hotel’s architect, because there are very few landmark specialist architects.  He has now obtained permission from the NYC Landmarks Preservation Committee for us to create a new door opening facing the park.  That will allow us access to neighborhood foot traffic, in addition to hotel guests.  We’re hoping to attract customers throughout the day, then transition to light lunches and finally to afternoon snacks and treats as mothers and nannies take kids to the park after school.

  

Kathryn:  So Margaret, we know you from when you were a Chef Instructor at the Institute of Culinary Education (ICE).  Obviously, you’ll be managing the kitchen.  Suzy, what’s going to be your position?

Suzy:  I'm the day-to-day manager. Once the cafe opens I will be front of the house and barista/counter person.  

Jeff:  Margaret, what’s it like to work so closely with your sister?

Margaret:  Well actually, there are 2 more siblings involved!  My other sister will be in charge of the Café’s aesthetics and when we open she will be doing the sandwiches and wraps for lunch.  

My brother Simon, who is a architect, will be in charge of the inside renovations (and the hotel architect is working in conjunction with him for the outside modifications under the landmark rules).  There is also a pre-existing bathroom that we will spruce up and are sharing with the hotel.

Kathryn:  Wow, that’s an amazing group of resources to be able to draw upon. So where will the kitchen that your brother is designing be located?

Margaret: Right now, it’s the suitcase storage area for the hotel.  It actually was a kitchen once so there are pre-existing gas hookups. There is good solid floor tile, and windows and I’m thinking we might open up the art deco archway and have an open kitchen view from the café.  I might be able to host some demos and classes here eventually.

Suzy:  Can you visualize a kitchen in there?

Jeff:  I can visualize a kitchen anywhere!  It’s really tiny though!

Margaret:  It’ll be even smaller since the lease requires us to carve out a suitcase storage closet.  But I will have a Hobart mixer, convection ovens and other equipment.

Jeff:  What kind of terms did you get on that lease?

Suzy:  It’s a 5-year lease with a 5-year renewal option. We don’t begin paying until we are actually in business.

Jeff: Those are fantastic terms to have negotiated.  

Kathryn: And there really is nothing like this around you in this whole very residential neighborhood.

Suzy: We are fortunate as we already have a captive audience - the hotel guests!

Margaret: And especially in the summer, the amount of foot traffic passing outside is amazing! The baking aromas should help draw them all in, and there’s visibility to the kitchen thru these tall windows.

Kathryn: Margaret, for the 9 years I’ve known you, you’ve been a pastry and baking instructor. You’re making quite a transition from teaching.  How do you feel about that?

Margaret:  I’ve always wanted to have something of my own, and I’m the only member of my family in the food business.  I told my students what I was planning to do, and they were very supportive. I needed something more.  This is the time to do this, for myself and I couldn’t teach and focus on the business at the same time.

Kathryn: It helps immensely to have support from your family, as well.

Suzy: We’ve pooled our resources to finance everything and we are reluctant to take a bank loan. Having Simon overseeing the architect/design portion of the business has been a tremendous help in keeping our costs down. 

Jeff: Sometimes that’s risky, because you’re risking your own family relationships.

Margaret:  I think at the end of the day if this fails, we’ll still be ok as brothers and sisters.

Suzy:  As a family we are very close and each of us will work very hard to make this dream come true. We’re in a bit of shock today, because we just got our first bill from the hotel landmark architect. We should probably double the estimate for each project moving forward. 

Jeff: Did you have a concern that you were leaving a salaried position for a business that was going to take a long time to get off the ground?

Margaret:  Thankfully I have somewhat of a cushion and obviously, having an architect in the family will ultimately save on costs.   

Architect Simon Wong’s plan for the cafe

Jeff: Do you have a business plan?

Suzy:  Yes, we do and I find SCORE's website to be very helpful. You have to do a lot of your own work, but they give you guidance. We welcome any guidance/suggestions as this is so new to us.

Margaret:  We’re sort of all over the place, because we’ve never done this before.

Kathryn: In your business plan, how many customers are you expecting once you’re open?

Suzie: I tried to be very conservative.  We need on average of 75 customers a day, estimated from the hotel.  There are 120 rooms, and we believe based on my surveys that roughly 80% of those will get something for breakfast.  Throughout the rest of the day, if another 45 people total come in thru foot traffic from the neighborhood that would not be unreasonable.  We’re located right on the park!  On average we need each customer to spend about $4 to break even.

Jeff: That’s pretty reasonable for a break-even projection, given the cost of coffee and a croissant or danish!

Kathryn: Have you figured out your menu?

Suzy:   We’re going to focus mainly on breakfast items, sandwiches and coffee for now. If we could expand we would ultimately want to do wine and dessert. 

Jeff:  Since this is a hotel, are you planning to be open 7 days a week?  What are your business hours going to be?

Margaret:  7:30 am till about 6 pm. I think we can handle that every day, between all of us.

Jeff:  Besides the process of working in a landmark building, were there any surprises for you that you had no idea you were getting into?

Margaret:  No, not yet. We thought we would have to go all electric, but then we’ve been told that we have the ability to go gas, because there once was a kitchen here.  

Jeff:  There’s an existing bathroom – have you determined how you would share the responsibilities with the hotel of updating it, cleaning it?

Suzy:  You’ve just brought up an important point!  Like what happens with the shared space – that we have not thought about.  I think that we’ll be able to work out some plan with the hotel staff. 

Kathryn: Is it a concern that people might just hang out in the space here off the hotel lobby, and you won’t be able to turn tables?

Suzy: The hotel guests usually come in and check emails and go off to do other things in the city. I am noticing more and more hotels in Manhattan share their lobby areas with something like a Starbucks.

Kathryn:  Can we come back and see how the space comes out after the build out, before you open?

Margaret:  Sure!  I’d love to share my menu with you when it’s ready, too!

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Choosing the right equipment for your food business.

The Right Tools For the Job
Interview with Ed Delandri, Food Equipment Technical Advisor at Interline Brands
By Kathryn Gordon and Jessie Riley

Kathryn:   Ed, I’ve known you since 2005 but can you tell our readers exactly what you do?

Ed:  I help sell commercial kitchen plumbing and food service equipment.   I am in the corporate office of an equipment wholesaler.  Our sales force sells to the end user, the restaurant or bakery.  I am the technical advisor for both our sales people, and the end customers.   In other words, the salesman will start to talk to a customer – but if the customer doesn’t know what they want or need – I get involved, and source it and get it for them.  I’m on phone, email, video or teleconferencing all day and occasionally I travel. 

Ed works for J.A. Sexauer, a division of Interline Grands (www.sexauer.com)

Jessie:  Do chefs and owners typically agree on what they need?

Ed:  No, it doesn’t usually mesh!  What would be ideal for the chef may not be affordable to the owner, so I need to help both of them figure out how to do something else.   We work with vendors around the world so there are infinite options regarding what can be arranged for any customer and given the variables, every situation is unique.

Kathryn:  Why do customers generally come to you about custom design vs. stock, already available equipment?

Ed:  We’re the 4^th largest wholesaler in the world, so people know our name.  I take pride in helping people find the right fit. We will not sell a new chef or baker something we do not think they need, won’t help them, or will cost them too much in the end and create risk.  We have a good reputation, and people know we can customize equipment.  The customers drive the demand, not our salespeople and actually, even our competitors use us sometimes to sell to third parties.

Kathryn:  How do you start the process of determining exactly what a customer who is designing a new retail (brick & mortar) location needs?

Ed:  Videos and photos can go a long way.   It helps to have an integrated team of the architect, engineer, electricians and plumbers. 

Jessie:  For custom designs, do customers have to pre-pay?

Ed:  Not if it’s a repeat client who provides us good business like purchases of $500K per year.  Bottom line:  we want happy customers.   If it’s an all-new customer, some sort of a deposit will be negotiated based on what the vendor for that type of equipment requires.

Jessie:  But what happens if the customer specifications are wrong?

Ed:  Someone has to sign off on the contract before the work is started.  It could be the end-customer, or the architect.   Custom items are non-returnable but if the vendor is wrong, they will take the responsibility to fix the situation.  Occasionally an architect or engineer has to take the responsibility if they were the one to provide the incorrect specifications regarding space, etc. on behalf of the client.

For big ticket items it’s key for you to be involved hands-on in making your own decision.  If you know your own business, don’t let anyone push stuff on you, standard or custom, or you’ll wind up with the wrong equipment.

Kathryn:  What are the most common mistakes you’ve seen in terms of wrong equipment selection?

Ed:  A lot of novice people screw up ordering ice machines.  They don’t provide enough specifications on how they want it to work, and there are a lot of options.  

I’ve also seen a lot of errors around fryers. Experienced chefs know they are purchased in pounds per hour.   New businesses don’t always know how to project how many covers they will have, let alone peak frying volume and we need to know that and how many items on their entire menu will be fried to be able to help recommend a specific fryer that will actually work for the customers’ needs.

Sometimes, refrigeration is ordered because a restaurant chef loves the equipment design, but nothing was measured correctly and when they arrive, the reach-ins don’t fit under the counter.

Kathryn:  How can customers best help an equipment purveyor understand what they need, especially since you can order from wholesale equipment purveyors all over the world?

Ed:  The more specifications on how they want everything to work, the better.  Allowing time for custom work is also important.  Customers have to be articulate and videos and photographs help immensely.  I can also go out and visit a difficult situation if necessary but remember you may be forced to select domestic vs. international given the shipping costs (like for a heavy espresso machine, or an AGA-type stove).

Jessie:  What do you do with equipment that’s returned, or cannot be sold?

Ed:  Periodically, our locations will host sidewalk sales! 

Kathryn:  Do you think that custom versus stock is the way to go, especially since you’re in that side of the business?

Ed:  Actually, no I don’t.  Blending custom and stock is usually the best thing but owners should never jump in with huge dollar investments without prior understanding of their business.  We take pride in what we do, and we want the businesses to come back to us so we will not sell them equipment that’s wrong for them no matter how much more we could make.  I am also a chef, and I will try my best to help steer them in the right direction.  You have to remember, the artistic side of fancy custom equipment appeals psychologically but does not ever translate to commercial quality.

Jessie:  So where should people start?

Ed:   There can be a benefit of a seamless, integrated team recommendation – but that’s often impossible.  So don’t just use “too many cooks” to make key decisions.  You can start directly with calls to manufacturers to determine some of your initial possibilities, and you can do that yourself.  Look at websites, communicate with equipment engineers and start making your own decisions. If you’re stuck, use a knowledgeable middleman and trust us to help guide you.  It costs too much money to take the risk of wrong equipment selection, especially if you’re new to this part of the business.

Kathryn:  Thanks Ed!  

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Do I really need an accountant?

Everyone Needs Someone to Call

Interview with Enid Hoffman, CPA

By Kathryn Gordon and Jessie Riley

Kathryn:   Enid, we’ve been discussing various tax aspects of new businesses while we’ve been driving around in the van in rural France!  (Check out Kathryn’s trip under www.moulinbregeoncuisinecourses.com or trips through www.iceculinary.com). 

I know you are a partner in a company with 250 accountants or so, so you’ve seen lots of food businesses over the years.  Let’s try to formalize some of the great recommendations you have for food start ups.

What’s the biggest accounting issue you’ve seen for start-up bakeries, cake/chocolate specialists, etc?

Enid:  The most constant question I’ve seen over my 34 years in the accounting business is:  you need help, but are you going to pay this person as an employee or an independent contractor?  There are legal and illegal ways to pay workers.  The legal way adds an average of 15% to your cost structure, and that is a huge expense for a new company.  By law, if you hire an employee you have to pay workers’ compensation, disability, and you have to match the employee’s Social Security contribution.  If you pay the worker as an independent contractor you do not have to pay this extra 15%, but this method of payment is illegal if the person is working as an employee in your place of business.

Kathryn:   Is the cost of processing an employee’s payroll also an issue? Like costs an employer would have to pay to someone through ADP?

Enid:  No, that’s small potatoes, maybe $20 a month per employee.  And I would definitely recommend someone with more than one employee to use a service for the payroll, because a payroll service can and should impound the payroll taxes.  If you utilize this service, the tax and insurance liabilities are withdrawn from your bank account immediately.  That guarantees the start up business will actually have the money paid to the various government agencies when the debt is due.

The business may not use a payroll service but still must remit the money on a monthly or quarterly basis.  Too many businesses think they will have the funds available but then spend the money for other business needs.  A new business cannot survive if they are not able to pay their bills on time, and you don’t want to accrue penalties from the government. 

Jessie:   Speaking of survival, I think new businesses are also afraid of having to pay an accountant on a monthly basis and what those accounting services will cost them.

Enid:   Sole proprietorship income and expenses are incorporated in a personal tax return.  If you have a good computerized general ledger such as Quickbooks, and no payroll, the return should run $700-$800 if there is no employee payroll. 

Kathryn:   So you recommend people use Quickbooks? 

Enid:  Some sort of accounting program should be used daily or weekly to assess your cash flow.  You could post entries into Quicken, but it is less robust than Quickbooks.  Either will tie to your bank account, but Quickbooks will allow more long term flexibility and growth with your company.  You still need an accountant to help you set up the books correctly, conduct a review of the books and records every 3 months for the first year, then semi annually thereafter.    

In any business you must reconcile the books and the bank statement which  Quickbooks does as a byproduct of the program.  If you do not reconcile, the books become unreliable because one does not know if all items have been posted and therefore you may or may not be reporting more profit or not showing the proper loss.

Kathryn:   I gather you recommend people absolutely hire an accountant.

Enid:   A lot of food-oriented businesses are cash businesses.  One of the biggest mistakes I’ve seen people repeat over the years is that if it’s a cash business – and you either pay too many people in cash, and/or take out too much cash yourself – you can’t justify to an auditor that you’re making enough money to justify the expenses you’re claiming such as food costs or your personal living expenses.  For example, you need to take money to live on, or your business will never be sustainable, and auditors know that.  You do not want to create a risk of a longer, more extensive audit because your expenses, sales and labor costs do not tie.

Let’s say you operate a 24-hour a day pizza business.  If you claim expenses for vast quantities of flour for your pizza dough, and you don’t show commensurate sales or payroll for the workers, then a government auditor would clearly know you are hiding sales and will conduct a tougher audit – and you could be facing criminal charges and would lose more than the cost of hiring an accountant to provide advice in the first place. 

Jessie:   I know several small food-related businesses that don’t seem to handle everything exactly correctly, like co-mingling personal and business funds or might have questionable practices paying their employees…

Enid:  If you are co-mingling funds into one checkbook, the IRS or the state could audit all of your personal and business transactions which can be a costly and tedious audit.   If the business has a separate account, the auditors will audit only the business account and will not review the personal expenses. 

It can also create a risk if an employee pays the staff without a W-2 (generating the 15% additional overhead for the workers’ compensation, disability and matched Social Security).  This can result in a penalty for the business.  Another problem is if you pay the worker as an independent contractor (also known as a 1099 worker) – unless the worker truly is an independent contractor.  And for independent contractor status, the worker has to:  a) work for more than one employer doing this type of work, and b) “hang a shingle out” advertising that you are in this type of business.  For example, if you’re in the yellow pages as a freelance chef, only then, whether you work 1 or 30 hours for a company, you would get a 1099.  Only if you are a corporation, you will not get a 1099.

Jessie:  So what should businesses be aware of that might be a red flag for getting audited?

Enid: “Invisible employees.” A red flag is raised as soon as a company has a pregnant “invisible employee” who files for disability because she can’t stand in your bakery 12 hours a day. Other examples are someone washing dishes, who is paid as a “invisible employee”, gets hurt on broken glass and goes to the hospital thinking he/she has worker’s compensation, or the work is cyclical and the “invisible employee” files for unemployment in a down period after making seasonal chocolates.

There’s no record of the “invisible employee,” because the business hired the worker as an independent contractor (1099) therefore the company didn’t pay the required workers’ compensation, disability or match the Social Security – and that’s a risk for opening an enormous can of worms.  Worker’s compensation alone can issue 5 years of financial penalties and close down a business!

Kathryn:   I know that at some times in the past that I’ve been an “invisible employee.”  I also know I’ve worked for someone who never issued me a 1099.  Where do these lines get legally drawn? 

Enid:   There’s something called “20 common law questions” regarding having to issue a 1099 for someone who is truly working for you.  The question has to do with who can generate the ultimate profit from a scenario.  Someone is considered truly freelance and will receive a 1099 if they are in business for themselves. Then this person is not an employee. 

For example, if I am hired to make a wedding cake and I hire you to do the work for $300, you can make the profit/loss depending on the ingredients and time it takes you.  This person is an independent contractor.  If I ask you to come to my bakery and bake a wedding cake and I give you $30 per hour and supply the ingredients, you are an employee, as the bakery is going to make the potential profit or loss. 

Kathryn:   What’s the threshold someone has to earn from one company to get a 1099?

Enid:   If a company pays someone more than $600 in a calendar year, they should issue a 1099.  Not all businesses do, but the burden is on the taxpayer as the taxpayer must report all income whether the taxpayer received a W-2 or 1099.  An employer can get a $50 penalty – but it is rarely issued, so it’s a risk some businesses are willing to take.  (By the way, if an independent contractor did not receive a 1099 and they feel that they should get one, they can report the business to the IRS via a complaint form you can download on the IRS website – and that’s a better way to get action than just making a phone call to the IRS).

Jessie:  How often should I be contacting my accountant to make sure my business is doing everything the correct way?

Enid:  As an accountant, I accept calls all the time.  Every business needs someone they can just call.  I truly enjoy helping new businesses establish themselves – what could be more rewarding?  Eventually though, someone has to realize that time equals money for professionals, and you might be sent a bill if you continuously ask questions during the year. 

Kathryn:   So you might get a bill if you’re calling your accountant 5 times a day, I guess?

Enid: People ask questions all the time.  It comes with the territory, and I like sharing my expertise.  I’ve always liked helping young businesses, and have found that ones owned by women especially need pushing.  I like doing it and it has become my niche, with over 70% of my client base being women business owners.

Kathryn:   Do you ever make field calls and visit your clients?

Enid:  It can actually be more cost effective to visit a business at least once so you have a better understanding of what the client is talking about, but on a routine basis for a single proprietor it probably makes more economic sense for them to come into the accountant’s office. 

Hint from Chef Kathryn:  Always enter your receipts on a timely basis into your accounting software, and scan them.  After a period of time, most check register receipts fade.  I've seen one (failing) small business not file their taxes for a long time, because they knew they wouldn't owe anything because their expenses far outweighed their receipts.  Eventually garbage bags full of 5-year old, illegible receipts were brought to the accountant...  Not a great business procedure. 

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Owning A Retail Bakery (The Story 5 Years In)

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Meet the Entrepreneur

An in depth interview (with future follow up) to expore the lessons learned by others like you in the baking business

Owning a retail bakery

Interview with Marie Jackson by Jeff Yoskowitz and Kathryn Gordon

Name of business: The Flaky Tart, Atlantic Highlands, NJ

https://www.facebook.com/flakytart

“Coming out of a dark place…  Nobody knows what they’re in for, before they get a grip on balancing the financial viability of a business with creative freedom…” - Marie

Jeff:  Let’s start at the beginning.  What did you do before you opened the bakery?  You took a huge risk because you’d never worked in a bakery before, right?

Marie:  I have a degree in accounting, and worked for a year as a public accountant after college.  I thought it would be a good entry point for a future business but I also knew accounting was not for me.  I did some small jobs while going to culinary school at the New York Restaurant School. 

I got married and my husband’s family ran a snack shop at a seasonal beach club.  I asked if I could fix it up, make it profitable, and bake there for 2 years.  That gig wound up being 16 years long!   I was able to sell wedding cakes, make decorated cookies, do some catering, etc., out of that commercial space.  I found that I loved the summer business the best.  I had a staff to interact with, and customers to talk to.   I decided not to have an isolated wedding cake type studio, but to go into an actual retail bakery and have a community around my baking.

                                                         In The Flaky Tart Office

Jeff:  How did you take the leap to open up this business?

Marie:  Six years into baking out of the snack shop I looked at renting a space, but it fell through.   I was really relieved because I realized I wasn’t ready for my own establishment.  I didn’t have enough experience and my marriage was new, so it was time to put opening a business on the back burner. 

Ideally, I wanted to work in France, but by then I had three babies. Suddenly, the bakery in town where I lived went out of business.  It was the perfect scenario with the kids’ school being right across the street. I could work at the bakery and be able to pick up the kids right after school.  My husband and I looked at each other and decided this unique of an opportunity would never happen again so we decided to give it a try. We’ll be finishing up five years here at The Flaky Tart this fall and finally I will be able to work only when they’re in school.  That took three years longer than planned.

Kathryn:  How many employees do you have now?

Marie:  In the back (kitchen) we have five, including an intern and excluding me! In the front there are two working at any given time, so it’s three full time employees and four part-timers.  I have a nice mix of people with different ages, including high school kids.

                                                  A view of the bakery production area

Jeff:  When you started this business, did you have any partners?  Financial backers?

Marie:  I was so alone…  And it is so not the way to do it!

Jeff:  So now that you’re five years into it, what were the biggest surprises? Obstacles? Regrets?

Marie:   I was exhausted!  I am a marathon runner and a workhorse animal but the problem was that the bakery required me doing that every single day, and it beat me down physically, mentally and emotionally.  The lesson learned is that there are several equally mandatory jobs.  There’s the baking job versus managing “the vision,” and for one person that magnitude is not sustainable -there must be a partner or delegation- or money to hire more employees.

Jeff:  Was that the biggest challenge you’ve faced? 

Marie:  Well, sales have not been a challenge because I received good free publicity.  The back-of-the-house numbers crunching, even with an accounting degree, is the most difficult process to keep up with.  Employees are challenging in that if you want to hire professionals who are loyal and stay with you, they must be paid a livable wage. 

Kathryn:  What kind of rates do you pay your employees, is it more salary or hourly?

Marie:  I pay my “adult” (pastry chef) employees who have mortgage payments on a salary versus the younger ones who are paid on an hourly basis.  I actually think I would rather pay everyone hourly, so that sales and payroll expenses would stay more in line (busy time = more sales and more hours).

Jeff:  You’ve been in business several years now. How has your current menu changed and why do you think you needed to evolve it that way?

Marie:  Initially I was guided by a book (Growing Your Business) which believes a successful business has to be an extension of you. I want to make products that taste fantastic, and I don’t want to copy any French or American style bakery so we pretty much have a blend here of what I think I bake well.  Over time we’ve added some items but tried to keep it simple. 

Editor’s Note:  About 2 years ago, Marie talked with chefs Jeff Yoskowitz, Kathryn Gordon and Ciril Hitz about the direction her bakery was taking.  At that point she was managing the business and continuing to do the majority of the baking, or at least attempting to do both…

Marie, continued:  After talking with Jeff, Kathryn and Ciril I gave my staff some autonomy and mobility, and delegated the baking and they’ve introduced new product that is selling!  They’re now the growth engine and that’s awesome! I didn’t expect that.  

Jeff:  How have food costs been working out for the new items?

Marie:  Well, it’s happening too quickly and we don’t have a handle on it. This is the same issue that got us into trouble in the beginning. There’s a system out there on how to train you staff on costs, which we are actively looking into.

Jeff:  What direction is your menu currently going?

Marie:  We’re looking to balance the “cool things” with the low labor cost/low food costs and right now it’s the opposite.   We need to figure out what our staples are and what sells whatever the weather, whatever the traffic.  

One of my staff updates our Facebook page daily with our lunch menu and specials, posting all new items -- I have nothing to do with it and it works really well to help generate new customers.

Jeff:  When you opened you replaced an existing bakery. What were your customer’s reactions?

Marie:  Initially some customers had some expectations about heavily-decorated themed cakes (from the former bakery) and a few people were discombobulated, but I had changed the look of the bakery so much that they were excited about the new place and our new products.

Jeff:  Do you know who your customer base is?

Marie:  They’re everyone!  We get people from all different types of socio economic and geographic areas. The local press awards I’ve received bring people in, as well. I have done every charity that’s ever walked in the door. I am co-participating in my first set of advertisements now, but that’s actually for our town, not specific to my own business.

Kathryn:  You wanted to quit. What turned your feelings about the bakery around for you?  You’ve said it was around the time when I introduced you to Ciril Hitz.

Marie:  One really important turning point was when I was at my rock bottom (when we met), and I even went to NYC for a holistic doctor to try to get vitamins. I was so exasperated I believed that could help me – but he told me about a book called The E Myth.  The line that I live by now is “if you want to be a baker, get a job in a bakery.  If you own a bakery, you have a new job, you are a business owner and if you don’t do your job, you will fail.”  It changed everything when I read that.

What really helped was a friend, Mike, who told me, you are a success!  I had already achieved my goal which was to bake a great product.  Mike told me I needed a new goal, and that was to be a financial success – that I didn’t have to sacrifice the integrity of my product to make money.  I just had to adjust my thinking.

Ciril Hitz and I were talking about making money, and that it doesn’t just come if you make great stuff.  Ciril told me that I was doing this as a hobby if the bakery was not making money.  Wouldn’t I rather hang out with my kids instead? 

I think a lot of people fail because they just want to do their art, and the trick is you have to do both; the art and the business.  My heart and soul is in this bakery, but I have to find the balance to let my employees do their jobs and for me to manage better. 

Jeff:  You have to learn how to let go, and that’s a big step

Marie:  I think I had to hit rock bottom.  It was a process to realize I could not go on any more, but that I was unable to let go until I could acknowledge that I’m a control freak and my never-give-up-mentality had lead me into a hole.  I had to let go completely then I could decide to take back what I wanted to…

Jeff:  So you’ve told me you back the project completely alone. Any words of advice?

Marie:  I think it’s kind of good that I don’t have the pressure of a loan, either from a bank or an investor.

Jeff:  Although an investor would have forced you to have more control over a business plan and the numbers…

Marie:  I never put it all together with my vision for beautiful, delicious, accessible, high quality food. It’s hard to forecast reality and write that business plan. I achieved the goals I had had, and now I’m ready for a different goal and to succeed financially in that. 

Jeff:  What investment are you happiest about having made over the years?

Marie:  I hired a graphics designer for my packaging early on, and that was an important investment to have an iconic logo.  I paid a couple of thousand dollars and it was worth every penny to have a focus, a by-line and an identifiable image. 

Kathryn:  Do you think your space here is adequate for your production?

Marie:  I’ve learned that “if you have more room, you just spread out more.” I like the bakery to look busy.

Jeff: How’s the rent?

Marie: My rent’s low.  About $1700 per month (with a 3, 5 and 5 year lease renewal).

Jeff:  What were the rent increases for each of those periods?

Marie:  Generally there are small increases per year, up to 5%.  We haven’t received any in the last two years because I did a lot of renovations and the economy has been bad, so the landlord gets a lot of croissants from me!!!

Jeff: Marie, thank you so much for your time. Next time we visit we’ll check up on how you are doing and hopefully you will have some more success stories for us!

Marie: Thanks!

                                      Marie with the signature logo for The Flaky Tart

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