There's cause for celebration at Market Place Food & Drug.
The family-owned company, based in Bemidji, Minn., has mixed high-margin cakes, a master decorator with a talented team, and an appreciative customer base to whip up sales that could be the envy of any big-city bakery.
What's more, most of the action is taking place in a tiny town in the middle of North Dakota at the seven-unit company's flagship store.
That 90,000-square-foot unit in Minot (pronounced MY-not) is one of the biggest buildings in a town that's home to fewer than 35,000 people. It's there that, under the direction of Nyla Stromberg, the cake business got so good it was running out of space, monopolizing the bakery, and becoming such a sales star that the company split it off from the rest of the ISB, making it a separate department.
Since then, sales have soared to new heights. The store retails decorated sheet cakes for up to $60, depending on the intricacy of the decoration, with a half-sheet creation selling for about $33. Margins average an impressive 55% to 60%.
"Selling $1,800 worth of cakes on a Saturday in June is nothing for us. We often do better than that. In fact, one week this spring, cake sales hit $18,000," said Stromberg, who was named cake department manager at the time of the foldout.
When graduation season gets into full swing, her department produces such a volume of decorated cakes that she rents a semi truck to provide additional refrigerated space for the cakes until they're picked up. The necessity for such parking-lot refrigeration is testament to how fast the cake business is still growing. Indeed, the department is outgrowing space that was increased at least five-fold when the store was remodeled three years ago.
Stromberg has rack shelving put in the semi, and then she color-codes the shelves by day of pickup. Large tags on each cake's front also display an order number. Such organization became necessary as volume increased, she said. Sometimes, the semi will hold up to 500 cakes at a time.
Since wedding season begins before graduation winds down, Stromberg's team -- expert, too, at creating special-look wedding cakes -- continues to get plenty of orders throughout the summer. Just this past week, Stromberg told SN she had just finished putting the finishing touches on three wedding cakes.
"When I started here several years ago, the company had made a corporate decision that there was big potential in cakes. That year, we sold three wedding cakes. Now, we're apt to do three in a day."
Still, it seems like the department produces an uncommonly large number of decorated cakes for such a small town. Stromberg explained it this way: Word of mouth has carried the department's reputation across the state, drawing people from pretty far away, even from across the Canadian border. And then, while it's a small town, Minot has a central high school that buses in students from a wide area. For that reason, Minot High School can have a graduating class that numbers 600. Then there are private and Catholic schools nearby and a college in town.
"Graduation is definitely our busiest time. We run the cake department nearly around the clock for two-and-a-half to three weeks. Some of us work 14 hours a day. People come in and ice cakes all night, and then we come in and start decorating them," said Stromberg, who's a prize-winning decorator with 25 years of experience.
The sheet cakes are custom-decorated, and whatever the request, the department tries to meet it, she said. To facilitate that effort, she has tried to simplify other aspects of production, particularly of graduation cakes. For example, the department uses butter cream icing because it's easy to work with and holds up better than other varieties. Likewise, the use of fillings is discouraged in the high-volume cakes because it can bog down output.
In that regard, the cake department recently acquired a new printer and scanner that enable associates to print a photo image on a sheet of icing rather than on top of the cake after it's iced. That has helped a lot because it's so much less cumbersome, Stromberg said.
Her department, which now houses three 12-foot decorating tables, is solely concerned with icing, decorating, merchandising and selling cakes.
The in-store bakery produces all the cakes for the cake department to work its decorating magic on. So the ovens there are almost always working in the spring, too.
"We went through two, [50-bag] pallets of mix a week during that time," said Bryon Schoenberg, bakery manager. "That gives you some idea [of volume]."
Schoenberg said it was a boon to his department when the cake department was spun off because his staff could then concentrate on things other than orders and decorating. Bakery sales manager Peggy Kallias echoed that sentiment.
"It gave us more time to focus on our own stuff -- like our artisan breads and cookies -- and on our customers. We were spending a lot of time taking cake orders on the phone," Kallias said.
The creation of the cake department coincided with a remodel of the flagship store that also brought benefits.
"The department was opened up. We have more room, and customers can see what we're doing. We used to be behind a wall with just a little window, and the cake decorators were behind us. So customers never saw anyone decorating a cake," Kallias said.
Stromberg and Kallias believe the open production has driven sales across the board.
"We used to be working at just two eight-foot tables. Now we have three 12-foot decorating tables, and our department now runs maybe 70 feet long. It's about 15 by 70," Stromberg said.
She pointed out that the cake department also now has its own 45 feet of three-deck display case, which allows her to merchandise theme and specialty cakes the way she wants to. The lower two decks are self-service, but the entire top run is service, over which customers can see decorators at work. There is also an eight-foot, four-decker that displays just cheesecakes and some specialty pies. Another 12-foot, five-deck frozen case shows off doughnut cakes, eight-inch rounds, standard birthday cakes, and the like.
The team of eight who work in the cake department get a lot of tutelage from Stromberg, whose decorating expertise runs the gamut. One of the finalists in the International Dairy-Deli-Bakery Association's first Cake Decorating Challenge in 1996, Stromberg works with fondant, does figure-piping, and especially likes to use chocolate draping. The draping, she said, sets off Market Place's wedding cakes.
"I don't know of anyone else who's doing it, not around here. It's taking white chocolate, making a clay of it, and draping it like ribbon. It looks just like satin ribbon."
Market Place corporate obviously is investing further in Stromberg and her skills.
As she spoke to SN last week, Stromberg was preparing for a trip to ICES, an international cake decorating expo held this year in Las Vegas. Market Place is footing the bill to send her and a head decorator.
Retailers shouldn't be fooled by Market Place Food & Drug's size, location or format because the independent cake operation offers valuable insights for all operators -- large and small, regional or national.
"It's smart. They're really trying to cement the relationships they have with their customers," said Rich Donckers, president, Retail Strategies International, a Rogers, Ark.-based consulting firm.
Even with no competition in their operating area, Market Place demos its cakes as if it were surrounded by Wal-Marts or Krogers. It holds open houses, delivers samples to local businesses, shows off its best at bridal fairs and community events, and donates them to charitable events.
More than selling cakes, the effort sells the total store.
"The person buying the cake is very apt to buy other key items for a celebration or party," Donckers, a former Wal-Mart executive, told SN. "The cake traffic can bring a lot of other sales."
Of course, retailers may say they don't have the volume to maintain a separate department. Yet Market Place has learned that it takes volume to build volume, Donckers said, adding, "It's one of those 'which-comes-first, the-chicken-or-the egg' things."
Market Place spreads customer enthusiasm across the ISB like frosting. The store also intercepts shoppers by actively demoing artisan breads, including an organic line, every day of the week from 3 to 6 o'clock in the afternoon. On top of that, the bakery has been announcing "French bread hot out of the oven" every day at 12 and 4 in the afternoon, and it now has begun demoing cookies as well.
"We know we're No. 1 in cakes," said bakery sales manager Peggy Kallias. "We want to be No. 1 in cookies, too."
While nobody would divulge figures or percentages, it's apparent that it's working because top management is urging other departments and other stores to do what the bakery and cake departments are doing.
"At every meeting, they talk about the importance of demoing, for example, and use our sales figures to prove that it works," Kallias said.