Looks Sell First

Interview with Vicki Wells

Consultant and former Executive Pastry Chef

Magnolia Bakery

www.magnoliabakery.com

With Jeff Yoskowitz and Kathryn Gordon

Event theme table, a growing business for Magnolia Bakery 

Kathryn:  Hi Vicki!  Can you tell us a bit about what Magnolia Bakery is up to, 17 years after it opened?

Vicki:  Originally there was just the (Greenwich) Village location (the Sex in the City one...).  Now we have 5 retail (brick and mortar) stores in Manhattan, one in Chicago and another in LA, and 4 franchised stores in the Middle East – with additional locations opening this year. 

Jeff:  Vicki, we’re talking with you in the Magnolia Bakery centralized NY production kitchen for online orders and product development.  You seem to be preparing a lot more than cupcakes in this location.  Can you tell us about the product line?

 Chef Vicki's baby hand-held cherry pie for Valentine's Day

Vicki:  It has evolved over the years.  Originally there were layer cakes, but cupcakes became popular, and essentially Magnolia was the first cupcake store – and cupcakes still account for 53% of sales.  Now we offer wholesale, and more large cakes, cheesecakes, bar cookies, cookies and seasonal large and baby pies.  We have been doing dessert tables for weddings and parties.  Still, vanilla-vanilla and vanilla-chocolate cupcakes are the best sellers. 

Kathryn:  How would you describe the product line?

Vicki:  Everything is homey-style and freshly produced.  Our motto is American affordable luxury.  Everything is appealing but simple – like "made by mom."

Looks sell first!  So I work on product development – but one of the fun parts of my job is to develop seasonal décor for our cupcake specials. 

Last Christmas elf hat meringue decor for a seasonal cupcake 

Jeff:  You started working for Magnolia about half a year ago.  What’s the rest of your job scope?

Vicki:  Magnolia Bakery evolved from one simple store, and was sold in 2006 to an ownership group who has been rapidly expanding its locations.  What worked in one location (measurement in volume) does not work for franchises and additional corporate owned stores.  I have now converted all the cupcake recipes to measurement by weight, and standardized the yield (60 cupcakes per batch).  The equipment in each location is still small, and not geared for production.  Busy locations like Rockefeller Center work continuously baking fresh batches – no location has large industrial size equipment.  I am now working on converting all the cupcake icings.  Everything takes time, to make changes and implement controls.

Kathryn:  And you said that one of those locations actually had converted your recipes (by grams) back to volume measurements, when you visited it…

Vicki:  Unfortunately, yes!  One issue has been that there has been a very decentralized structure in each store – no hierarchy.  That means no central person to talk to, for me, when I have to make changes in the procedures or formulas.  I am working now to have a head baker assigned to each bakery.

Jeff:  What other issues have you encountered, as the original formulas have been replicated in each new location?

Vicki:  It’s interesting, I visited Chicago because they were having issues with a cupcake.  I learned by going to Target and buying Arm & Hammer baking soda (which is available nationally) that the commercial baking soda in Chicago was different, and that was causing them issues with the recipe.

Kathryn:  I’d always heard that chemical leaveners around the world were regional!  Very interesting proof of that theory.

  Commissary production kitchen in Manhattan

Vicki: Also, now that we have (franchise) locations in the Middle East – we cannot use traditional vanilla extract because it is alcohol based.  So we have reformulated the recipes.  Actually, all of the baking ingredients for those locations have to be shipped from NY, because the ingredients there are just different, or just not available (like in Dubai).

Kathryn:  You have an enormous number of Styrofoam shipping components here.

Vicki:  Everything that has to be shipped is test shipped.  We send shipments to family and friends to ensure it all arrives with the quality intact.  Everything is insulated in double boxes.  In fact, we’ve determined that for cupcakes to be shipped – they have to be frozen over a 3 day period to be solid enough and ship intact.  Temperature alone isn’t enough.

 3-day frozen cupcakes ready for internet order shipping, with signature frosted swirl

Jeff:  What’s your next project here at Magnolia Bakery?

Vicki:  I am continuing to work on having a head baker in each store because I need someone who I can contact with a clear line of communication, and who understands new standards when we introduce them, and who will be responsible for training all their staff to produce new and existing products consistently.  We have a great staff training program – but consistency is key as we get ready to open additional national locations.

Food Festivals and Weddings = Profits

 Interview with JulianPlyter

Co Owner/Chef of Melt Bakery

www.meltbakery.com

Interview by Kathryn Gordon

Kathryn:  Hi Julian!  I’d wanted to come and visit you at Melt Bakery ever since you were a guest panelist at one of our How to Start a Successful Bakery-Related Business at ICE (Institute of Culinary Education); and I absolutely love ice cream…

Julian:  And cookies. I really enjoy baking the cookies! 

Kathryn:  It’s very “neighborhood” here.  Already 3 guys have come in for ice cream sandwiches, and one has already come back for another one of the “sandwiches of the day.”

Julian:  We opened in this retail (brick and mortar) location in 2012 after 2 years of being in markets. The majority of our customers here do live or work in the neighborhood.  At our second permanent location, on the High Line, sales are more tourists driven. 

Kathryn:  Are all of your sales retail?

Julian:  We’re also in about 20 wholesale outlets, for example we’re in 5 Brother Jimmy’s BBQ locations. 

Kathryn:  How do you transport your ice cream sandwiches from here to the other locations?

Julian:  We use a delivery-around-town service that some friends started called “Dessert Run.”  The will cover wholesale and retail sales:   (www.dessertrun.com)

Kathryn:  And how did you get your wholesale clients?

Julian:  We’ve been working with a salesperson.  He finds it easier to sell ice cream than what he did before, which was energy sales.  Who doesn’t want to sample ice cream?

Kathryn:  Can you talk about how you got started in the ice cream sandwich business?

Julian:  I was working as restaurant and hotel pastry chefs, and was ready to “do my own thing.”  I had catered a party several years back and met my business partner Kareem Hamady; he still works in finance but was looking for a food project.  Initially he helped with the business financing but we've essentially been self sufficient after an initial $300 food investment.

At first we rented from 2 different commercial kitchens for our production, and outsourced to run the ice cream.  We knew where we wanted to locate and found this (former leather jacket) store (1,400 square feet on 2 floors).  We built it all out ourselves over 4 months, except hiring someone to do the tiling, plumbing and electric. 

Kathryn:  And you were able to do that because…

Julian:  I come from a line of handymen!  When I was 7, I helped my father build a log cabin – I worked on the shingles.  Now I can fix my own electric if I have to.

Kathryn:  How did you find this location? 

Julian:  Kareem and I just walked around.  It was very near where we first started selling at the Hester Street market.  Note:  Melt Bakery's first location is at 132 Orchard Street.

Kathryn:  And now you rent your kitchen out to other food entrepreneurs?

Julian:  We have both NY State Department of Agriculture and NYC Department of Health oversight, so we have been able to rent to other people who need ice cream machines.  Not many kitchens can offer that option – and the utility cost is high. 

Melt Bakery’s 37.5Q Carpigiani 660 Volt machine, bought at auction

Kathryn:  What are the state level inspections like for you?

Julian:  Everything is from samples.  If they take a sample away, and it grows in a petri dish – they would come back.  The NYC Department of Health is much more focused on “what they see” immediately in the kitchen, versus data.  One risk is that it's my responsibility for any other businesses who produce in my kitchen (for other ice cream companies who rent from us as an incubator kitchen).

Kathryn:  Are you thinking of expanding locations?

Photo:  machine to track data for state inspections

Julian:  I am always thinking about expanding!  Right now our target is Tokyo!  We have a lot of press in Japan – some people have gotten off their air plane and come straight here for ice cream sandwiches and a photo op.  

Kathryn:  How cyclical have you found the ice cream business?

Julian:  I really consider us to be in the “ice cream sandwich business,” not ice cream.  Ice cream is a very different proposition – people have to wait in lines, make their choices, the ice cream has to be scooped and then put on a cone or in a cup.  Our sales are quick.  That’s why the format works from carts in food festivals, etc.  Everything is pre packaged. You just have to decide what flavor and size sandwich you want. 

Kathryn:  How many satellite locations/carts do you have?

Julian:  It varies.  With the High Line location (open April to October), some weekends in May we will have 6 outlets running (such as Madison Square Eats). Sometimes we do weddings. It’s a good growth niche with a high profit.  They are also easy to plan for and not weather dependent.  If I have leftover inventory, it's frozen and protected to sell another day.  E-Commerce is also expanding. We can also ship within a 2-day delivery zone.

Kathryn:  You’ve been on TV and you’ve gotten some very good press. 

Julian:  It’s actually been entirely from word-of-mouth.

Kathryn:  To what do you attribute your success to date?

Julian:  Correct growth.  What I mean by that is:  no loans, no borrowing, no equity shares.  From the time I quit my paying job, this business has been self financing.  In fact, the most surprising aspect is “how much money we didn’t need” to be able to do it ourselves.

Kathryn:  What advice would you give another food entrepreneur?

Julian:  Look into wholesale.  And food festivals.  You are only constrained by time in terms of what you sell.  If you have the capacity to have stock (and restock) and “move the line” you will make profits – even with apparently high entry fees.

Kathryn:  Thank you Julian.  I'm going to come visit you on the High Line next!

Want to Get Started with Low Start-Up Money? You need an Incubator Kitchen

Interview with Michasel Hu

Pastry Chef/Owner Hana Enterprises

www.hanaenterprises.com

With Jessie Riley, Jeff Yoskowitz and Alan Someck

(Editor’s note: Michael Hu, acclaimed Pastry Chef, is owner of a wholesale pastry business and an incubator kitchen)

Jessie:  Hi Michael; since I worked with you here about 6 years ago, you’ve really expanded your space here in Sunset Park, Brooklyn.

Michael:  We now have 12,000 square feet total space.  I actually expanded after the economic downturn because my own wholesale clients weren’t ordering as much product.  People who had lost their jobs wanted to start their own food businesses.  But not all entrepreneurs have the business financing they hope for to fulfill their dream.

My open commercial kitchens were the perfect match for entrepreneurs to rent.   We’re open 24 hours a day for 3 production shifts a day. It’s fully equipped, offers office space, laundry and cold storage. Parking is possible and it is near the subway. 

Jeff:  How do clients find you?

Michael:  We have an open house the first Saturday of each month (10 am – 2 pm).  Everyone is welcome!

Section of Hana Enterprises Checklist for Incubator Clients

Alan:  How many kitchens do you operate?

Michael:  Currently we have 10 kitchens here.  Not all are operated for pastry – it ranges from candy to BBQ, mac and cheese to macarons, sausages to granola, and organic dog food to ice cream. 

Jeff:  So you have USDA oversight?

Michael:  Yes. We email the production schedule to the USDA inspector, so they can choose whether to be onsite or not. 

 

Chef Michael with the production schedule

Jessie:  Are you still doing some of your own production here?

Michael:  Yes, I am still producing and selling kosher pastries.

Jessie:  How do you juggle your own production and that of all your clients?

Michael:  We have a central scheduling system.  In fact, I have staff that runs all the centralized machinery for everyone, and it is also inspected after each use.  For example, we have direct wired the Hobart mixers so they have to be turned on by my staff – not people renting the kitchen. That ensures it is all fully operational and maintained for everyone.  

Some of Hana's Hobart Mixers

Alan:  Kathryn knows you from 1995 and we know you were the Executive Pastry Chef at the Waldorf-Astoria, have competed internationally and you have been named Top Ten Pastry Chef of the year.  Having that experience for an entrepreneur to draw on, what else distinguishes Hana from other incubator kitchens?

Michael:  Our management staff is quite experienced in the food field and are valuable resources for anyone starting or growing a food business.  We are also an approved vendor for Birch Street, which makes it possible for you to sell your product to all Hyatt and Marriott hotels. 

 Birch Street vendor

Jessie:  How do you decide what products you will back up for distribution through Birch Street?

Michael:  It has to be made with really great ingredients and it has to taste really good, and I have to believe it will be sustainable at a higher production level.

Jeff:  You have supported some very successful start-ups here; what do you see as the key signs if a food entrepreneur will succeed, or not?

Michael:  Assuming they have a good product, it is hard to find the right sales margins.  Then when they are able to optimize that, they need to streamline their production.  Some just increase production of product without optimization – and eventually that stunts growth.

Alan:  What outlets do your clients sell through?

Michael:  80% of my tenants sell in farm markets, and/or wholesale to stores.  Direct sales have a higher profit margin than going through distributors.  Incubator clients typically do not have the funds for building a brick and mortar location.

 Edible Brooklyn's picture of a production kitchen at Hana

Alan:  Is the incubator commercial kitchen here to stay? 

Michael:  We have good tenancy here now; I believe there is strong demand for incubator resources now, given the number of people who want to be entrepreneurs.  I’ve actually been looking at opening another location in the Bronx. 

Alan:  What’s next for you with Hana Enterprises?

Michael:  I want to attract bread bakers.  I see a need for a “central oven,” like when people years ago made their own dough and brought it to the baker to bake.  Except this could be for multiple artisan bread manufacturers, not just individuals. I would like that to be a center point where one day I can open my facilities to also become markets where the incubator clients can easily sell their products.

Alan: That sounds great Michael We’re really impressed with what you’ve done here.

Work Your Friend of Friends Circle

Interview with Michelle Tampakis

Chef/Owner Whipped Pastry Boutique

www.whippedpastryboutique.com

By Jeff Yoskowitz, Jessie Riley and Kathryn Gordon

(Editor’s note- Michelle has been a long time Instructor colleague at the Institute of Culinary Education (ICE). In 2010, she was named one of the Top Ten Pastry Chefs by Dessert Professional Magazine. She was diagnosed with celiac disease 6 years ago.  Her medical diagnosis turned into a passion to be able to eat delicious foods again.  Whipped Pastry Boutique is a gluten free bakery.)

Kathryn:  Hi Michelle!  We’re so excited to be visiting you here in Red Hook, Brooklyn, because it feels like we never see you at ICE anymore after you’ve opened your bakery.

Michelle: I’m still teaching but mostly weekends. I love teaching and it would be very hard for me to give it up.

We opened the bakery January 20^th.  We had been planning to open Whipped Pastry Boutique before the holidays, but everything got delayed in Brooklyn because of Hurricane Sandy.

(Michelle pointed out where the high point of the water from the hurricane rose to, and explained all the damage it caused in the pre opening period last fall)

Jessie:  As we were coming in, we saw a sizable wholesale delivery going out from your bakery. How is everything progressing; 2 months after opening?

Michelle:  Our biggest client is Juice Generation.  They bring me fresh squeezed juice for “input ingredients” for their custom line of muffins We recently started Kale muffins for them and now they are a best seller. Their delivery truck comes and gets their orders for Manhattan every afternoon. 

Custom gluten-free kale and other muffins featuring Juice Gernation's products

Jeff:  How did you get Juice Generation as a customer?

Michelle:  It was through a friend of a friend.  My favorite, FOF’s!  This one was through someone we all know (for many years) who represents a chocolate company.  He knew the owners. 

Jessie:  How do you structure your production?  It seems like everyone is working now on measuring eggs…

Michelle: Basically we start here around 8 in the morning with production. In the afternoon, we “mise en place” for the next day and then end with packaging by late afternoon. We can move to 2 staggered shifts a day if necessary when we're busy. 

I’ve been trying to schedule product tastings with potential clients in the morning so I try to be back in the early afternoon to help the staff.  I have a lead production manager, several assistant bakers and a dishwasher/prep person right now.

At the end of the production shift, everyone cleans.  There are floor drains so we can hose down everything and we clean everything, including inside the ovens.  Then when I get home, I do paperwork.   Sometimes I’m frantic; I’ll never get the paperwork done.  But overall I love it here.

Note:  Gluten free baking tends to incorporate lots of ingredients to mimic the complex functions of wheat flour – no one ingredient will act exactly like flour.  

Jeff:  What’s the biggest challenge you’ve faced?

Michelle:  Producing gluten free products, I have a very large and diverse set of ingredients. Meeting the minimum orders for each of my many suppliers is the most surprising challenge I’ve come across especially since some suppliers only deliver to certain areas on a particular day of the week. It’s very challenging for a new business that doesn’t want to keep too many supplies on inventory.  I’ve learned to be very creative as I place my orders during the week and look at everything a vendor sells, to meet their minimums.

Meanwhile, I’ve been very surprised.  Some vendors don’t even call you back!   Big vendors, ones I have worked with for years (like through ICE) and have actually gotten to know the local reps, now that I have my own small business, phone calls are ignored.  

Kathryn:  I know everything you bake here is gluten free. Is it also dairy free, egg free or cater to other dietary restrictions?

Michelle:  Dairy free baking I’ve been doing for a while.  I’m starting to get my first orders for egg free cakes, especially birthday cakes for kids. 

Jeff:  What’s next here for you at Whipped Pastry Boutique?  Would you want to have your own Retail (Brick and Mortar) General Patisserie location as well as wholesale production?

Michelle:  I have leads to wholesale my dry mixes and we’re starting the process to become HACCP certified.  We may need to purchase an x-ray machine as a result.  I’m also looking for a distributor for our frozen cookie dough.

Jessie:  Thank you Michelle. It’s really great to see that you have more room to expand your kitchen space into this facility as you grow. We’ll follow up with you to get updates on your new business. Congratulations.

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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