MAKING DOUGH RISE

ROSEANNE HARPER

LAUREL, Md. -- The Retailer's Bakery Association here is stressing profitability.

The association, which serves both the supermarket in-store and independent retail segments of the bakery industry, has seized upon the pursuit of better profits for bakery as its rallying cry -- and in two weeks that cry will doubtless ring loud and clear at RBA's convention and exposition in Philadelphia.

During the meeting, RBA will hit on just about every bottom-line aspect of the business in its line-up of seminars. Some of the sessions will explore broad, strategic issues as they affect a bakery's profitability, but others will bring the focus in on store-level operations, according to Peter Houstle, executive vice president of the trade association.

"We'll have a pair of top-level executives from retail talking about profitability," said Houstle in an interview with SN. Those executives are Roger Dow, vice president of sales and marketing services for Marriott, and Frank Meeks, one of the most successful franchise operators of Domino's pizza outlets.

In another session, Houstle himself will discuss how to make the best use of a computerized labor-cost matrix system that RBA developed.

Besides making the bottom line a central theme of the convention, RBA will incorporate it into its regional workshops and hands-on "workbenches" training seminars in the course of the year.

Houstle said this determination to raise the level of discourse on profitability is more than just good business for RBA -- it's about survival for its members.

"We keep talking about profitability, because with the competition getting heavier, the slice of pie gets skinnier. It gets more important to increase profits in that slice," Houstle explained.

"I still wonder to what degree in-store bakeries understand bottom-line profitability.

"When you have shared costs like an in-store bakery does, it's difficult to isolate costs to the department. But increasing competition is driving the need to squeeze the fat out of every operation."

Still, the bottom line is not the only thing RBA will be watching on behalf of its members this year. The trade group will also monitor important legislative issues facing the industry, Houstle said, and it will keep tabs on itself as well, regarding its own responsiveness to members.

Excerpts from SN's preconvention interview with Houstle follow.

SN: What are the major issues facing the supermarket in-store bakery, and how is RBA addressing them?

HOUSTLE: Profitability heads up the list. And labor as a profitability factor is a major concern. Competition has become so stiff in the industry that profitability has become more and more important. As a trade organization, one of our roles is to help our members make more money.

And we're emphasizing that. We're doing that by focusing on just about all the aspects of the business as it relates to profits at our convention next month. Seminars will address the subject, and our new Solutions Center will offer consultations with RBA directors, past presidents and general counsel on specific problems.

We also offer other tools such as our cost-matrix system [computer program].

On labor, we're trying to find ways to provide members with better qualified people by getting more education programs out and around the country. We're introducing a new job candidate screening program, and the new segment of our video training program will be released at the show.

SN: What are the major challenges ahead for RBA as an association?

HOUSTLE: The biggest challenge for us -- and I believe this is true for all organizations -- is how to meet the needs of our members five years down the road. We're going through a major restructuring aimed at that. [Houstle was referring to a reorganization of the RBA board of directors that will give supermarkets more representation. SN reported on that strategy in an earlier issue.]

That and other changes are being driven by what's going on in the food industry. It's getting turned upside down. There are not so many changes in in-store bakeries themselves, but other changes in the industry are having an impact on the role the in-store bakery is expected to play. Consumers are looking for convenience, quality and freshness, and everybody is selling food these days.

SN: Has the in-store bakery come of age? Is it being taken more seriously?

HOUSTLE: Retailers are certainly becoming aware of the power of the in-store bakery when it's done right. They've become aware that consumers are putting value on quality and freshness. And those in-store bakeries that are doing a good job are seeing more fruits of their labor. But I still wonder to what degree in-store bakeries understand bottom-line profitability.

When you have shared costs like an in-store does, it's difficult to isolate costs to the department. But increasing competition is driving the need to squeeze the fat out of every operation.

SN: What are you doing to show retailers how to do that?

HOUSTLE: Overall, our show seminars and other programs are related in these ways to profitability: better targeting to a particular customer base; calculating profit per product, rather than by department, and calculating the cost of labor accurately.

And we've had a survey done on consumers' price sensitivity when it comes to the bakery. The question is: If bakery is such an impulse buy, is price important? Our study attempts to answer that, among other things. The results will be summarized at the show.

SN: What new programs have you developed since last year?

HOUSTLE: We have more tools for calculating and improving profitability and a program to help screen bakery associates. We've had a company develop a profile of the ideal bakery associate; they've done this by interviewing numerous retailers. Then, they've developed a questionnaire that's aimed at screening job candidates to help retailers evaluate the candidate beyond just an interview. Research shows that when this type of screening is done, retention and productivity rates have doubled.

We've also put our legal counsel on-line. So, for the first time, we're formally offering a free legal help phone line.

SN: What are your legislative goals this year?

HOUSTLE: We'll continue to work on getting Occupational Safety and Health Administration requirements modified so that associates under 18 can be trained on the job. Since last year, we've identified a couple of legislators who share our viewpoint. We're also still working toward getting rid of peanut and sugar price supports, but I'm not too hopeful about results.

SN: What about the regional financial workshops you initiated last year? Were they a success?

HOUSTLE: Yes and no. We hitched up with Dun & Bradstreet and those seminars were well set up; but we decided to discontinue that effort just because there are so many other organizations already doing that. Instead, we'll be doing more industry-specific workshops. We tried some "workbench" sessions last year. They're hands-on production training sessions. We'll do more of those.

SN: Where does the industry stand with nutrition labeling?

HOUSTLE: There haven't been any significant changes legislatively. But more and more retailers are using nutrition labeling, even though they may be exempt, because they know that's what consumers want.

We're still getting a fair number of inquiries on the subject, but instead of asking whether or not they're exempt, the members who call are more often saying, "We want to do this. How do we go about it?"

SN: Are there any concerns in the industry you've received a lot of inquiries about this past year?

HOUSTLE: We've had quite a few questions about copyrights. They want to know what the law is about using Disney or other characters on cakes.

We're very quick to tell them that you can't just slap a Garfield on a cake, without risking getting slapped yourself.

We give them a list of companies that are licensed to produce edible lay-ons and figurines and stencils.

But we also warn them that they themselves should confirm that a particular company is licensed. There are horror stories about independent bakery operators losing everything in lawsuits because they freehanded images of licensed figures on cakes.

We're also getting inquiries from people about how to use a computer in their businesses. We'll address that at the show this year. In our Solutions Center in Philadelphia, we'll have three personal computers set up. One will be connected to our data base here, and the other two will be used to demonstrate some of our other programs. Retailers who are actually using the programs in their businesses will be showing others how to use them.

SN: RBA has pulled back from a recent focus on deli to concentrate on a tighter focus on bakery instead. Why is that?

HOUSTLE: We've decided to stick with what we do best. We had risked diluting our strength in bakery. But we're also making efforts to collaborate with other organizations that do address deli. We want to build as many bridges as we can.

SN: What on your show program will be of particular interest to supermarket bakery executives?

HOUSTLE: The premium sessions certainly, such as the one in which Gene Hoffman, who's a former executive at both Kroger and Supervalu, will explain top management's point of view when it comes to in-store bakery. Besides drawing on his own experience, he has interviewed several chief executive officers of supermarket chains over the last few months in preparation for that session.

Actually, all the sessions would probably be of interest to supermarket executives. And I would emphasize the value in just walking the show floor to find out what's going on in the industry. You get a good idea of what's on the leading edge that way. We have almost 1,100 booths and about that many new products being shown.

SN: Have you made any changes in the format of your show and convention this year?

HOUSTLE: Not really. We're keeping to the three-day format we went to last year. It worked for most people. We have tried to organize our program better this year to make it easier for attendees to identify what they want to see, or what seminars they want to attend. A program planner is part of the package this year.

SN: What about feedback? Last year, you made a rule that attendees couldn't get seminar handouts until they had turned in their evaluation sheets.

HOUSTLE: We won't do that again. We got a lot of feedback last year, but some people were annoyed at the requirement. We'll just keep emphasizing verbally how important it is to us in planning future programs. All of the sessions last year got high ratings. There was one on security, and one on lighting that got particularly high marks.

SN: Do you have more exhibitors this year than the 375 last year?

HOUSTLE: Yes, we have 383 companies exhibiting, and we could have had more. Exhibit space has been sold out since October. We've had to turn potential exhibitors away.

SN: What are you projecting for attendance this year?

HOUSTLE: I think we'll top 10,000. Our preregistration is running 25% ahead of last year. I know that doesn't tell you a lot because 40% to 50% of our registration is on-site, but it looks good.