Starr Culinary Delights mastered the art of developing custom-designed, restaurant-quality desserts. Now, the $30 million company is adding the systems and controls to adeptly compete for business with any sized customers at any level.

By Dan Malovany

If it’s a fad, that’s no problem. Starr Culinary Delights has it covered.

When the low-carb craze hit a few years back, the Mississauga, Ont.-based company was all over it. After sugar-free products became the rage, Starr Culinary Delights provided a full lineup of elegant, frozen desserts that could make themselves at home on the table of any fine-dining restaurant.

In fact, Kelly Perera, the company’s founder, developed a line of miniature mousse, cream bars and petit fours and predicted that mini-desserts would take the freezer case by storm seven years before others jumped on the bandwagon.

For several retailers, the current trend du jour involves limited-time offerings. In the retail channel, where supermarkets, club stores and mass merchandisers are constantly changing their product mix to entice curious consumers to visit their stores more frequently, Kelly notes, the lifespan of a new product is measured in days and weeks instead of months, years or longer.

In some instances, lightening fast isn’t quick enough. Starr Culinary Delights has tailored its operation for this environment with its veteran product developers and versatile, but labor-intensive, semi-automated operation.

“We enjoy working with companies that like to see products come and go, and we are very good at doing those types of products,” he says. “They want to add a little bit of more excitement to their shelves, and we’re doing more and more unusual items.”

The company’s ability to adapt has founded the foodservice mentality that Kelly had when he created it in 1990 during the height of a recession, after seeing several hotels shut down their bake shops to lower their overall costs.

A former food and beverage director at the Hilton Center Hotel in Toronto, he sensed a perfect opportunity. Why shouldn't every hotel have a staff of bakers and pastry chefs when he could supply them with pre-portioned, restaurant-style desserts? Kelly then hired a couple of pastry chefs and set up a 2,000-sq.-ft. shop that began supplying these treats to the city’s hotels, but he kept his job just in case the new venture didn’t pay off.

It didn’t take long for Kelly to see that the new business was viable. A year later with business booming, he ditched his daytime job and hasn’t looked back.

Today, the $30 million company and its 100,000-sq.-ft. bakery specializes in classic coffee cakes along with a wide variety of frozen cheesecakes, strawberry shortcakes, tiramisu, cream bar cakes, petit fours, loaf cakes, layer cakes and even crispy flatbread crackers. Starr Culinary Delights still has a small fleet of trucks that deliver products to restaurants throughout the Toronto metropolitan area.

Today, the company’s desserts are sold throughout Canada and in 30 states. While foodservice accounted for 60% of its business a decade ago, retail now accounts for 90% of its volume with about 30% of its sales coming from U.S. accounts.

“In the beginning, it was all foodservice, but I knew that if I wanted to make it big, I had to be in the retail channel so that’s why I got into retail and it has been treating us very well,” Kelly says.

Customizing desserts remains one of its core strengths, adds his son Christian Perera, who along with his brother, Markus, oversees day-to-day operations at the bakery.

“We’re not looking to sell a product out of catalogue,” notes Christian, who’s the bakery’s vice president of operations. “It’s more of what that particular customer is looking for.”

Adapting to Change

As a result, Starr Culinary Delights’ business tends to be more program-driven by what retailers want.
“When a retailer comes to us and says, ‘We want to perfect our current program or better our current program,’ that’s where we strive to help them deliver consistency to their stores,” Christian explains.
In such a highly reactive environment, sticking to a five-year business plan is out of the question. With the current environment, even 12-month budget projections often get tossed out of the window before the fiscal year is over.

Perpetual change has become the norm.

By May of this year, for instance, the company realized it had to completely change course from what it had anticipated just six months before. A global economic crisis and a collapse of consumer confidence tend to do that to a business plan.

“Last year, we envisioned that a lot of our business would come from just cheesecake because there was a lot of demand for that business,” Christian says. “Now, we find that the mini type of items and value type of items are back bigger than we had thought. We didn’t think we were going to do a lot of layer cakes this year, and layer cakes have been the biggest press that we have seen from retailers.”

Because of the recession, “value” has become the buzzword as retailers search for more attractive price points that encourage consumers to indulge in simple luxuries as they spend more time eating at home instead of splurging on dining out. Recessions, it seems, often bode nicely for frozen dessert manufacturers. However, such companies need to react with value propositions of their own.

“We’re looking at a lot of lower-cost items,” Christian says. “People are looking for a lot of value-added items. On the cake items, there is a bit more toward smaller cakes that are lower cost but still delivering that dynamic taste to them.”

In addition to its burgeoning mini-mousse and petit for business, Kelly notes, sales of the company’s signature regular-sized and mini coffee cakes also remain strong.

Comfort foods, it seems, perform well during any economic time.

“One of the best products we make is the coffee cake,” Kelly says. “We found the right item for the right price, and everybody buys coffee cake. For us, it’s the ingredients. It’s rich. It’s moist. It has a long shelf life. When you add the caramel, it makes it even more interesting.”

Systems and Controls

During the past decade, Starr Culinary Delights has experienced strong growth with sales routinely rising double digits annually. In fact, sales have more than doubled over the last seven years.

With such growth, coupled with the current retail environment, the company now is focusing on streamlining its purchasing, order management and accounts receivables departments, notes Markus, who joined the company a year ago as systems manager.

“We want a more formulized structure to the business,” he says. “National retailers now want to know more about the details of your business. They want to know more about cost structure, where you’re spending money, how you’re spending money, where you’re saving money, how you’re saving money, what the profit is for your products and how much it costs to develop new products.”

With wildly fluctuating ingredient prices and retailers searching to lower everyday prices, today’s wholesale bakers need to keep a tight lid on their exact costs on what’s produced each day. That can be a challenge for companies like Starr Culinary Delights, which produces dozens of products daily and constantly adds new ones to its portfolio as requests for custom-designed desserts come in.

Additionally, many of the products require hand applications, which is what makes the company’s products so unique.

“The major key is formalizing the formulas to make it easier for us to monitor production,” Markus notes. “We may produce something based on a purchase order at a supermarket, but they may come back to us a month later and ask us to change the topping or something else with the product that completely changes the composition of the formula and its cost.”

Of course, he adds, standardizing costs also isn’t easy whether or not new ingredients are involved.

“The formulas can vary when you increase volume or when factors like humidity or even heat changes,” he explains. “So, nailing down the actual formula is a challenge. Once we’re able to do that, we’re able to measure what we’re doing more accurately.”

Adding predictability to a perpetually changing environment requires constant management, he adds, but that’s exactly what retailers are demanding from their suppliers with electronic data interchange (EDI) and other electronic management systems. Everything from order taking and pricing to fluctuating commodity costs and distribution needed to be tracked.

“A lot of different grocery chains have different systems, and now they’re moving toward EDI communication, and we’re also moving in that direction to make it easier to take orders and streamline shipping and making the process a lot easier,” Markus says. “If you don’t have a clear vision into your business these days, you’re lost as far as business goes.”

The company’s philosophy to adapt to changing times and to never say “no” to new product requests continues to pay off. As many bakers seek new customers to grow their business, Starr Culinary Delights has seen much of its recent growth come from its existing base.

“A lot of customers in Canada are coming back and asking us for new products because of what we have done with them in the past,” Markus says. “Once they have the success with the quality of one product, they want us to help them generate more avenues for growth.”

Although many of its products are sold under store brands or in the in-store bakery/deli section, Christian notes that the company also continues to promote the Starr Culinary Delights brand as an upscale product line that features premium ingredients such as all-natural butter and whipped cream.

That’s how the company keeps its place as an all-star in the freezer case.