Food retailers need to consider a wide range of factors when determining whether to centralize their baking operations, and they also need to consider what degree of centralization to pursue.
Equipment costs, employee skill levels, square footage available and transportation issues all need to be taken into account.
Many retailers say that having an in-store bakery adds to the ambiance of the supermarket and lends itself to a higher degree of customer service, but others say the product consistency and the cost efficiencies of centralization favor that approach instead.
“There are benefits to both,” said Peter Barbaro, program bakery director at Riesbeck’s Food Markets, St. Clairesville, Ohio. “We like doing scratch baking in the stores — it allows us to interact more closely with our clientele. Plus, we have a lot of people in our stores who are very experienced — some who have been here 30 or 40 years.”
Having a high degree of skills and experience at the store level is an important element of in-store baking, he noted. Retailers with less experienced staff, or those who lack the square footage to install the equipment needed for a comprehensive in-store scratch bakery, might be better served by having some degree of centralized baking.
Some retailers employ centralized baking for seasonal or specialty items, and others for items such as cake blanks that can be assembled and decorated at individual store locations. Centralization can also be a profitable solution for retailers making a big push into gluten-free or nut-free baking, he noted, because it enables the establishment of a dedicated facility for these types of items.
Coborn’s, for example, opened a dedicated gluten-free bakery last year, and Whole Foods also has a gluten-free bakehouse, according to its website. Products from Whole Foods’ gluten-free facility — which include sandwich breads, pizza crust, cookies and desserts — are shipped frozen to individual Whole Foods stores.
Labor and equipment
Bread-baking in particular requires a high degree of investment in labor and equipment, Barbaro noted, and therefore lends itself to a more centralized approach.
Riesbeck’s has considered the possibility of centralizing its bakery operations in the past, but for now conducts much of its baking at the individual store level, including doughnuts and custom cakes. For fresh-baked breads, the company has full bread-baking operations in about half a dozen locations, which each supply two or three other nearby stores with fresh-baked bread and rolls every day.
This type of operation, in which designated stores supply certain bakery products to other locations, “is similar in process to centralized baking,” Barbaro said, but “broken into smaller volumes.”
“If you do this repetitively, and using your seasoned bakers at one location, there is greater [return on investment] because of consistency,” he said.
While bread-baking might be better suited to centralized baking, custom cakes are often best left to the individual stores, Barbaro noted.
“When you are doing custom cakes, you need that one-on-one interaction with the customer,” he said. “It’s like a hairdresser — the customer is used to getting it from that one location, and if they go someplace else, they can tell the difference.”
Transportation is also an issue retailers have to consider in a centralized bakery operation, Barbaro explained. Costs can add up quickly if deliveries have to be made over a long distance from the central bakehouse to the store.
In fact, Peter Sommers, bakery director at Martin’s Super Markets, South Bend, Ind., said distribution issues — such as maintaining delivery trucks, cabinets and shipping containers — were one of the challenges when it comes to operating a central bakery operation.
Martin’s divides up its fresh bakery items between its Central Bakery in Mishawaka, Ind., and its in-store baking operations.
“We have taken a ‘who can do it best’ approach,” said Sommers. “Our Central Bakery makes items across many categories — breads, cookies, doughnuts, sweets, and all-occasion and custom cakes.”
Martin’s continues to bake many of its items in-store, “especially short-shelf-life items,” he explained.
“We also bring high-quality thaw-and-sell items where it makes sense,” Sommers said. “Our goal is to be unique as possible in our marketplace.”
Efficiency and consistency
In addition to using the Central Bakery to create unique items, the advantages of centralized baking include efficiency and product consistency, he said.
Although Martin’s does hire bakers with outside experience, the retailer trains most of its bakers in-house, and rotates them through the Central Bakery to learn new skills.
In addition to its gluten-free facility, Whole Foods also operates five bakehouses around the country (as of late last year), according to a recent local TV report.
Whole Foods declined to comment on its baking operations.
According to the report, the newest facility, which relocated from Plantation, Fla., to Pompano Beach last year, measures 29,000 square feet and employs about 60-70 bakers per day. It supplies 24 Whole Foods locations in the region, churning out 29,000 pounds of bread per day.
Some of the product ships ready to eat, while other items are par-baked and flash-frozen, according to the report.
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