Opening a New Business In a Campus City

Interview with Katalina’s Bakery Owner Kathy Riegelmann

www.katalinasbakery.com

New Haven, CT

By Kathryn Gordon and Jessie Riley

Jessie:  Kathy, you have a pretty big space here!  How did you get started with your bakery business and find this particular location?

Kathy:  Several years ago I had a coffee shop in the area, so I knew people and people knew me.  I had been taking baking classes and was interested in getting back into the food business.  Yale University had begun a local economic development program to generate more foot traffic in this neighborhood near the campus.  There were some new schools and dorms nearby, and they were looking for a cupcake type business so Yale helped me to find this space. 

Kathryn:  Can you tell me more about your relationship with Yale?

Kathy:  Yes.  Yale is like a partner in that they paid for the commercial architect.  The construction bids went to Yale, and the university arranged the build out for $150K, and arranged my loan.  Yale takes a percentage over my break-even rent each month.  They have been motivated to support several other local businesses in this way because they want this neighborhood to be vibrant.

Jessie: That’s a great opportunity!  How many days a week are you open?

Kathy:  Currently we are open 6 days a week, but we are planning to expand our hours until later at night for the students and to open on Sundays because the families in the neighborhood have been making it a destination location.  I am also taking out a small loan to remodel the back retail area and have a tea counter, and add in loose teas for purchase by the pound.

Kathryn:  Looking around the front counter, you have a frequent buyer type card system here. Can you tell us about it?

Kathy:  We are working with a new automated rewards card system called “Spot On” (www.spoton.com).  It allows me to learn about our customer base through a loyalty card system tied to social media reporting. 

Jessie:  With the “neighborhood focus,” you have a nice space with room for more chairs and tables.  Are you planning to fill that in more?

Kathy:  Actually, no.   You can get wireless internet (Yale) access here but I do not want Katalina’s to become a free parlour (like Starbuck’s) for people to sit around in all day.  We’d rather turnover the tables.  That’s why I am trying to expand my menu in terms of what appeals to different customers buying at different times of the day.

Kathryn:  We came here today to offer a hands-on macaron baking class.  I know you already have regular baking classes, and host birthday parties; are you planning to expand the school part of your business?

Kathy:  Yes, we’d like to.  We have a good open production area.  I can even hear what’s happening at the front retail counter when I am in the back, and go back and forth if I need to. 

Jessie:  Are you here baking personally every day?

Kathy:  At the moment, yes.  But I have staff and I am not here all day!  I still teach at a local fitness center and coach my son’s hockey team (I’m a single parent).  Being in touch with the local athletics world gives me access to our customer base, and helps get me out there.  I have also been able to develop some catering contacts that way.

Kathryn:  Are you happy with your branding?  Do you think that has helped you attract more outside business?

Kathy:  Yes, and I think the bakery has become successful because local people recognize the logo. 

Kathryn:  I see that you do both catering and decorated cakes here.

Kathy:  Yes. I have an assistant Briana who is mind blowing in terms of cake decorating.  I am not as proficient; I don’t have enough patience.  We are doing more catering however.  For example, I was recently approached by the New Haven Symphony.  People know I am a food snob and believe in only good ingredients – and I will not compromise. 

Jessie:  That must help drive up your food costs!

Kathy:  My sister helps with the accounting.  I know that we cover our costs and are able to put some money in the bank each month.  I’m not yet paying myself a salary because I am still earning money teaching at the gym.  I don’t have a precise handle on food costs.  But the customers have no problem putting their money down for good product.  Grad students have more funds than undergraduates, though!

Kathryn:  Thank you Kathy, I can’t wait to eat a cupcake!

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Pop Up Bakeries

Pop Up!

Interview with Eugene Ashton Gonzalez

Eat My Heart Out Storytelling Dinner Theatre

By Kathryn Gordon

Kathryn:  Hi Eugene.  Pop Up restaurants and bakeries are appearing everywhere as promotional tools to attract attention and investors and also to earn profit. I know you've been working on a pop up restaurant, and I know you’ve been involved with one before.  Can you tell us about it?

Eugene:  In October we will have a one-night dinner theater and storytelling performance.  I am the writer/director in charge of the theatrical part, and I am working with the chef and crew that we worked with last year for a prior popup.   Diners will enjoy dinner while watching a show.

Kathryn:  How do you promote something that only lasts one night?

Eugene:  We are raising funds via Kickstarter.  We also have a website and a Facebook page.  We still have a mailing list and followers from our last event.  Last time, we sold out our available tickets in 72 hours because we attracted the attention of food bloggers.

Kathryn:  With your ticket sales, is something like this pop up model economically viable? 

Eugene:  Honestly, we can’t really pay the servers.  Mostly, they are volunteers (friends of friends).  We have to have enough funds to rent the space and the equipment, pay for the food and pay some of the cooks who join the team for the night.

Kathryn:  What’s the biggest challenge of arranging something like this?

Eugene:  Risking exposure of the event to health officials!  It’s not treated completely like a private party.  It’s quasi open to the public and it’s not an invitation-only private event so it’s kind of in a grey area in terms of inspections.  We try to keep the final location hush hush until the last possible minute so the health department won’t be there to shut us down when we need to serve dinner!

Kathryn:  How did you find the space you will be using this year?

Eugene:  The first event was in a friend’s loft.  We served 80 covers and outgrew that space, so this time we are renting a larger space.  We also rent the kitchen equipment, table ware, everything. 

My partner, the culinary director, is in charge of renting the ranges, refrigeration and everything they need in the kitchen.  He designs the menu.  I am making the front of the house arrangements.  My background is in food and theater  and I write and produce the show with a troupe of actor/friends.

Kathryn:   Eugene, what’s next in terms of projects for you?

Eugene:  We are planning to open in California. There is a market everywhere now for storytelling and a huge fan base and we plan to feature the local food economy in California and independent food producers.  For example, the chefs come out to describe the recipe development for each dish in between serving the courses to the audience.

Kathryn:     Thank you Eugene!

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Up From the Basement

Interview with Denise Anderson

Bagel Basement, Hanover, NH

www.bagelbasement.com

By Jeff Yoskowitz and Kathryn Gordon

Kathryn:  Denise, how was the transition from being a lawyer to becoming a baker?

Denise:  It was a long transition and did not happen overnight, although the final jump off the bridge only takes one step!  It started with a divorce and an opportunity to move to NYC from Kansas City (KC) to be near some of my kids.

My friends told me to just be honest with myself and admit that I loved to bake.   Being a lawyer, I of course analyzed the options of a second career.  I had a successful practice and my own law firm, so whatever I did would take some planning.  Eventually I hired a head hunter and sold my firm to the highest bidder.  I almost signed a lease on a bakery in KC, when I asked myself; what happened to your one-time dream of living in NYC?

I looked at the Institute of Culinary Education (ICE), amongst its competition in NYC, and liked the attitude, the way everyone shared experiences, and the idea that I could get a pastry and management diploma in less than one year.  I kept a few cases and practiced part-time in NYC.  It paid the tuition and rent.  I felt "at home" with the environment even though at my age it was scary going back to school, particularly with people who never went to college, and of course in a city where I was a complete stranger. 

Kathryn:  What advice do you have for another professional thinking about changing careers, and ultimately becoming an entrepreneur?  Was it worth it?

Denise:   When I first decided to leave law, I was afraid to admit what I wanted to do was not as glamorous and lucrative as my career as a lawyer.   What would my family and friends think? 

I made the shift in my career because I was burned out and, at the time, I wanted to do something that was a win/win. My passion is baking, being in the kitchen, making others happy with food.  Making this transition in my career, so late in life, I learned we are who we are because of our experiences.  I am a lawyer of 23 years.  I have skills and a way of thinking because of having practiced business and trial law.  I bring that to being a pastry

chef.  I struggled with how to join the two parts of my life, but then realized I always have had both parts.  I have always been an entrepreneur and love to build a vision.  I did it with my law firm, which was not easy but a huge success.  I will do it in this industry too, but this time I will enjoy the ride.

Jeff:  How much baking experience do you have, besides your externship at ICE?

Denise:  I have been baking since I was very young.  I learned from my grandmothers, both of whom were very skilled at baking.  My dad's mother was a baker in Germany and worked as a baker after she came to America. I was self-taught until ICE.

Kathryn: How did you wind up moving to NH and finding a place to acquire there?

Denise:  When I was practicing labor and employment law in KC, the owners of

Bagel Basement, one of whom is my son, contacted me to consult on the finances and structure of the company.  I advised the owners on contracts and other business issues. 

After I moved to NYC and was working as a pastry chef/cook, one of the owners contacted me.  On behalf of the company, he asked if I would consult again, this time on the labor and management side.  They wanted a full analysis of the cost of goods sold and whether the business was able to continue.  They had gone through several managers and the business was losing money. 

At the end of January, I moved temporarily to NH to advise on Bagel Basement.  If Gordon Ramsay had approached me for a segment on Kitchen Nightmares, we would have aced the deal!  It was the worst. Anything that could go wrong, went wrong.  Being a lawyer, coming from my work ethic and having had the training at ICE and working in NYC, I was able to negotiate and save the business.

Jeff:  How long was the bagel place in operation before you obtained it and why was it for sale?

Denise:  It was started in the late 70's by a couple who wanted to steam bagels.  It was the cool thing to do.  It was the only bagel place in the area.  The current investor group purchased the Bagel Basement around 2004, with the idea it would remain the historical, unique bagel college hangout (near Dartmouth College). 

They have had several managers, none of whom have had the passion to run it to make a profit or grow it beyond just bagels.  When they contacted me, the business was not worth anything.  I doubt they would have been able to sell it for anything more than the equipment.  A bankruptcy would have been the final outcome.

Jeff:  And now you believe you’ve turned it around?

Denise:  After the consulting period, the owners asked me to stay for another 30 days, which I agreed to, because I could see the business turning around. To convince me to stay on, the owners offered me a majority ownership interest, with full control of the daily operations.

Today, I am the CEO and majority owner.  I feel that my legal background has fully transitioned into part of who I am and what I am doing.  My investors are absolutely the best partners I could ask for.  I am now in conversations with a couple who want to invest in the business, to grow it into a full bakery. 

Kathryn:   The location was originally a bagel place. Are you continuing to offer bagels as you expand the bakery aspect? 

Denise:  When I began my consulting, I was faced with a business that had been mis-managed and employees who were used to doing things as they pleased, without rules or care for the premises.  Several of the employees ended walking off the job when I ran the schedules, held them accountable for the cash drawer, and implemented processes.  I had to find another lead baker.  I had to find staff/employees, etc.  Everything was wrong and nothing was a standardized procedure or process.  It was everything it should not be.  I mean dirty, smelly, etc.

The last General Manager was selling premade frozen muffins.  I sold the rest to empty the freezer and began making our own muffins.  I have since created and designed a process and procedure for our own dry mix and muffins.  I have added cookies, coffee cake, cinnamon rolls, baked bread, and much more, on a daily basis.  We make everything everyday, from scratch, in our ovens.  We also have sandwiches, soups and salads. We also have a retail location in the Medical School, which I have completely revamped.  The menu is entirely in-line with the guests and customers. 

Kathryn:  Have you had to buy new equipment for the new production?

Denise:  We have a 23-year old Excalibur oven and bagel former.  There was a mixer that was probably 10 years old, which has since been replaced.  Since the bakery was bagels only, with muffins frozen, I have supplied the rest of the equipment.  We recently purchased a Viking 7 quart mixer, food processor, baking pans, pastry equipment, etc.

Jeff:  What’s next for you at Bagel Basement?

Denise:  I am finally writing a training manual.  I have put in place many processes and now need to get them in a binder.  I am hoping to franchise the business model and open another bakery.  I may also rename the establishment.

Meanwhile, I am targeting local residents and business owners to help expand our customer base beyond the Dartmouth student population. We have 10,000 people in Hanover, in the surrounding area, and on campus.  The downtown is mainly a Main Street, and we are located on a side street.

Jeff:  How are you financing the purchase of the establishment and your new equipment for the bakery?

Denise:  I have paid for the new mixer and other new small equipment with revenue generated from sales.  We have not borrowed money, yet.

On a good note, the current investors have made current our past due accounts.  I have since been able to make current the old loan and other bills with revenues being generated through our sales.


Editors: Thanks Denise! We will check up on your progress with the turnaround in a few months.

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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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