FORT COLLINS, Colo. -- Steele's Markets here is drawing customers to its in-store bakeries -- and raising its total bakery sales -- with a new bake-off, European-style bread program.
That wouldn't seem out of the ordinary if it were a different retailer, but Steele's has long been known in this market for the products, including breads, that it bakes from scratch at its central baking facility.
Now, ironically, a bake-off program is not only boosting sales but enhancing the retailer's scratch image, officials said.
"I think it's a help to our scratch and scratch-mix image because customers are actually seeing product being freshly baked. We have customers who call in and say they're going to be coming in and ask that we bake them whatever it is they want. Then, when they come, the product's hot and fresh," said Barb Harner, director of bakery for the four-unit Steele's.
The new products, called "Two Sicily's Breads," are baked off in ovens situated right on the sales floor. The aroma of fresh-baked bread wafting through the department is a surefire draw, according to Harner.
"Companywide, our sales are about 4,000 a week just in Two Sicily's breads and they are definitely additional sales," she told SN, adding that sales of Steele's own breads are up significantly as well.
Profits from the bake-off products, too, are maximized because the program can be so closely controlled that there's practically no shrink, she said.
After a test run of 90 days, it wasn't a difficult decision to take the program on, she said. What particularly pleases Harner about sales of the branded bread is that they have not cannibalized sales of Steele's other breads, made at its central baking facility. She said the Two Sicily's products more than earn their keep, with a gross margin of 47% to 50%. Simplicity and flexibility are the keys to the program's success. "Since the oven can be turned basically every 20 minutes, you can bake as you need product. It's a really big key to keeping down stales," Harner said. If there's an unexpectedly slow day, the store can just cut down on the number of batches it bakes.
Harner noted that sourcing a product from a wholesaler, or even from your own central bakery, doesn't allow for that type of flexibility.
"The stores would have standing orders for product from an outside facility. It just comes to them and comes to them. But with this program, with these breads, the stores have total control."
That control is a crucial ingredient in the program's recipe for profits, she explained. "I see a lot of empty shelves in other people's stores that have a specialty bread program, because they don't bake enough. They're afraid they'll have too many stales at the end of the day."
On the other hand, a typical Steele's store is selling upwards of 100 Two Sicily's items a day, and ending up with virtually no stales. Any products left at the end of the day are made into croutons, for example, or go to the deli department where they're used for sub sandwiches for the grab-and-go deli case, Harner said.
The program is a fully integrated setup developed by Drayton Enterprises, Fargo, N.D. It includes quick-baking ovens, a self-service, lighted European-style display case, and marketing and merchandising materials, even radio spot ads.
The program is not small in scope; it features 25 varieties that fall into five categories: boules, baguettes, batards, petit pans and pretzels. But it remains easy to execute.
"You just watch your first bake to see what you need to replenish. The products are all preproofed and there's no thaw time necessary. These products go directly from the frozen state into the oven and the ovens are programmed for each category of product," Harner said.
Indeed, the buttons used to operate the oven are appropriately labeled for each product, saying "boules," "baguettes," et cetera.
"That simplicity is really important with the turnover you have in retail. You've got entry-level people who don't know proofing, and they can just take the products in their frozen state, load them into the oven, press a button and get consistency time after time," she said.
All the products come in frozen, and some arrive fully baked and proofed. "The boules, for example -- we just finish the crust on them. Petit pans and baguettes are fully proofed but unbaked," she said.
But all the products can go straight into the oven without thawing time. Baking time from frozen state to the finish is 8 minutes to 20 minutes, depending on the product.
Each bin in the self-service case has a bag rack right beneath it, holding bags, with Universal Product Codes on them as well as the Two Sicily's logo. The bags are placed that way to prompt consumers to put each product into its corresponding bag, so that it can be accurately scanned at checkout.
Colorful magnetic starbursts identify the products in the bins. They, too, enhance flexibility because the starbursts can be easily moved from bin to bin, Harner said.
The manufacturer requires that retailers use the brand name, "Two Sicily's." And Harner said that's OK with Steele's. She said she sees the brand as a plus.
"I don't think of it so much as a brand for that company, but more as a theme for our crusty European bread program. We'll be known for Two Sicily's bread," she said, adding that people tend to remember a brand.
She did say that in the beginning she had reservations about taking on a frozen program, and a branded one at that.
"There were a lot of considerations. I was a little worried that people would be concerned that we were getting it from somewhere else." But then, she said, she began to wonder if customers were mindful at all about what "scratch" signified, and were perhaps more interested in the fact that it was being baked fresh and offered hot in the stores.
"Some of our customers know that the breads we offer in our bakeries are made from scratch, but some don't," she said.
In any event, Harner is confident this program fills a need. "Customers love it. They can come in any time of day and get hot, fresh bread. I can't do that from our central bakery. Even though we deliver it fresh every morning, it's certainly cool by the time it gets to the store."
Harner said she views the markets for hot bread like the Two Sicily's brand and for the more extensive variety of breads made in Steele's central bakery as pretty much separate, with some overlap.
Some examples of the prices of Two Sicily's breads are 39 cents for petit pans, $2.99 for boules and $1.69 for baguettes. The baguette retail contrasts with a sourdough baguette from Steele's central bakery that retails for 99 cents.
"The hot bread is very much an impulse item," Harner said, something a customer might pick up to have with dinner tonight. Indeed, peak sales from the Two Sicily's cases are between 4 p.m. and 7 p.m.
For the most part, the Two Sicily's ovens take up about 20 square feet on the sales floor. Actually, in Steele's smallest store, Drayton Enterprises installed a custom-made Two Sicily's oven that's less than 3 feet by 3 feet, Harner said. In that particular store, the mini oven is located behind the sales counter because space is so limited.
The location of the ovens and display cases differs a little from store to store. At Steele's largest store, the equipment is situated right beyond the lineup of Steele's other breads.
In that store, a 16-bin, shop-around, European-style case is placed opposite the oven, with a chalkboard sign hanging overhead. The oven has a green laminated casing around it, which Harner said both "dolls it up and holds supplies such as baking pans and oven sprays." The casing also protects customers from the heat of the oven.
Through a window in the oven door, people can walk by and see the product baking. "And then you want the showcase to be no more than 5 feet away from the oven. The idea is for the customer to be able to view the bread being put in the oven, baking in the oven and then see it go into the showcase.
"Cosmetically, it looks good. It looks very European," she said of the setup. "There are baskets and olive oil set around, and the cases themselves are lighted. It makes the products look great."
Steele's aims to keep downtime in the oven to a minimum no matter what the day's demand for bread is, by using it for other products as well. "Our largest store is bringing in a line of preformed, frozen gourmet cookies and baking them off in between and we have the blessing of the Two Sicily's company with that," Harner said. "So now, in addition to the breads, that store is getting a nice ring from the new gourmet cookies."
That store is also about to try a parbaked bagel program so it can offer hot bagels in store, Harner said. Any product that doesn't need proofing lends itself to being baked in the Two Sicily's ovens, she added, and whether it's cookies, bread or bagels, the smell of fresh-baked product is a customer magnet.
"We make sure to bake off a pan or two of baguettes first thing in the morning, just to get that aroma in the store," she said.