RETAILERS SEEK FLEXIBILITY TO PROTECT QUALITY OF ISB ITEMS

LYNNE MILLER

INDIANAPOLIS -- Labor costs, sales expectations and quality-control issues have become the principal factors in determining production formats in the in-store bakery, panelists said during a seminar at the Retailer's Bakery Association Marketplace 2001 convention here.

Production methods -- from mix/scratch and frozen, to pre-baked to thaw-and-sell -- figure prominently in the success of any bakery operation, said Philip Crow, a Jackson, Mich.-based consultant to the baking industry, who moderated the discussion.

In fact, they are "almost the holy grail of our industry," he said. Balancing the mix of formats directly affects the bakery's costs, merchandise quality and profitability, he said. At Schnuck Markets, St. Louis, ISBs rely primarily on frozen products. "We are a frozen bake-off operator," said Bill Mihu, bakery director for the privately held chain.

The system leaves plenty of room for in-store finishing. For example, doughnuts -- one of Schnuck's top-selling ISB items -- are made at Schnuck's 88,000-square-foot central baking facility and are delivered to the stores, where employees proof, fry and glaze them, Mihu said.

Actually finishing doughnuts at the stores keeps the quality higher than it would be if the doughnuts were made at the central kitchen, then shipped to the stores, Mihu noted.

At Merritt's Bakery, Tulsa, Okla., about 60% of the products are made from scratch, and the rest includes thaw-and-sell products and baked goods made from mixes.

Products that generate the highest sales warrant the greatest outlay of labor, said Larry E. Merritt, who operates the two stand-alone, independent bakeries, which have 75 employees.

Merritt said he considers the sales potential of a product when determining which production format to use. If a product generates just 2% of sales, "I won't give it 10% of my labor," he said.

From his standpoint, Bob Blaida, senior vice president and general manager of Pennant Foods, a Lisle, Ill., bakery supplier, sees demand growing for thaw-and-sell products. "We are acquiring more oven capacity due to the increase in thaw-and-sell," Blaida said. "Our mix business is flat."