RICHMOND, Va. -- Ukrop's Super Markets here is positioning itself for expanded bakery production with the $5 million purchase of two local buildings.
The family-owned retailer purchased the buildings, which have a combined 393,000 square feet of space, along with 25 acres of land from May Department Stores Co., St. Louis. The purchase was completed last month.
The most immediate benefit to Ukrop's is the opportunity to increase bakery production, which is currently at capacity, said Robert Ukrop, who was recently named president of the 22-unit chain.
Plans call for doubling bakery production space from its current 30,000 square feet by the fall of 1995, Ukrop said. At this time, production space includes a full-line central bakery and a bagel operation that is in a different building. Those operations will be incorporated in 60,000 square feet of the largest building at the new site.
Eventually, the company expects to consolidate all its fresh food preparation operations un-der one roof, Ukrop added.
"Ukrop's was one of the pioneers with central kitchens, and it's been successful. So it follows that they would be planning to bring all these operations together," said Neil Stern, a partner in McMillan/Doolittle, a Chicago-based retail consulting firm.
"Centralizing production is labor-saving. You're not replicating procedures, and it provides good quality control. There's a consistency of product. And in the long run, it cuts down on shrink. At store level, products are apt to be made in batches [which is sometimes too much]. With central production, you can send out
what's actually needed at stores," Stern said.
Another food marketing consultant, Brian Salus of Salus & Associates, Midlothian, Va., a former Ukrop's food service executive, called the purchase "a clear signal of Ukrop's commitment to their customers in the Richmond metro market.
"By building their own brand image through consolidation of their fresh product production centers into one, they're taking a strategic step in reaching their goal of becoming a 'world class provider of goods and services' as their mission statement says."
For more than a year, Ukrop said, the retailer has been exploring options to create additional space for bakery production. The current central bakery is located near company headquarters, which is across town from the new site. Also near the corporate offices is a 2,000-square-foot bagel bakery housed in a separate building. That operation, too, is at capacity, producing nearly 100,000 bagels a week.
In the new building, space beyond the initial 60,000 square feet allocated for production will be used for receiving a variety of products that are now slotted through warehouses. Space may also be set aside for a produce ripening room. Space not needed in the short term will be leased out to other parties.
"The new space will allow us to extend our bakery product lines and give us the flexibility to react quickly as consumers' demands change," said Ukrop.
"In particular, we'll continue our emphasis on bread," said Scott Ukrop, the retailer's marketing director. "We'll be able to include more formulations. We'll add more crusty and whole grain breads. We're committed to keeping up with what customers want and that's what they're looking for now," he added.
A major plus at the new site will be better production flow, the marketing director said. "Essentially, we'll be building a new bakery within a shell. So this gives us the opportunity to create a layout that's the most efficient for us." Although some updated equipment will be added, most will be moved from the old sites, including a bagel oven the company purchased last year from a local bagel restaurant. Ukrop's now delivers fresh-baked products to its stores and its recently opened take-out shop in downtown Richmond, Fresh Express, at least twice a day. "The new capacity will enable us to continue doing that. It [the acquisition] is part of our continuing effort to give customers what they want and to continue to improve the quality and freshness of our products," Robert Ukrop said.
Ukrop's bakes off some bread at store level from dough made at its central plant, and will continue to do so.
"It keeps the aroma of fresh baking in the store. It's a good marketing and merchandising tool," said Scott Ukrop. He added, however, that with expanded central capacity, less bread probably will be baked in-store.
The company had considered several sites in the Richmond area for building a new bakery plant, but location was a deciding factor in this acquisition. "The location and the space will make it possible to receive goods there and will facilitate distribution to our stores," said Robert Ukrop. "It's located no more than 30 minutes from the vast majority of our stores," he said. The amount of space available also was attractive, he added, because it allows for future expansion.
He said there are no plans at this time to manufacture baked goods for other companies. Production will be to supply Ukrop's retail and food service units only .
Eventually, all fresh food preparation and floral distribution will be brought to the new site. The 30,000-square-foot central kitchen, however, will not be moved there for several years because it was just renovated last year at its present site near the current central bakery, Ukrop officials said.
Kevin Hade, formerly general manager of the central kitchen, has been appointed director of manufacturing. He assumes the responsibility of consolidating and overseeing operations at the new site. He will report directly to Robert Ukrop. Louis Underwood, general manager of bakery, will report to Hade.
The buildings acquired had recently been the site of a Hecht's department store and distribution center.