Ace of Hearts
ACE Bakery found success not only because it produces authentic artisan breads and rolls the traditional way, but also because its management team got involved in the business for the love of it.
By Dan Malovany
To make a great loaf of bread, it takes a lot of skill, a little luck, a wealth of patience and a ton of something else.
“The bottom line is that it’s all about passion and passion about bread,” says Philip Shaw, president and CEO of ACE Bakery.
That passion for creating artisan breads also attracted Jonathan Roiter to join the Toronto-based company in 2007, first as its chief financial officer and now as its chief operating officer. Roiter, who had worked at McKinsey & Co. advising emerging and multinational companies on how to manage their growth, saw that the people in this business had a lot of heart.
“Why I got so excited and jumped at the opportunity here touches on this passion,” he says. “It’s a passion toward the consumer and being customer-centric that you rarely see.”
For Shaw, ACE Bakery provides the opportunity to take a successful regional bakery that’s been named one of Toronto’s best by the local media and spearhead its transition into a fast-growing player in the broader market throughout Canada and the United States.
His model for managing that growth is none other than La Brea Bakery, North America’s largest artisan bread company where he joined in 1988 and rose up the ranks to become chief operating officer and CEO until he left in 2003.
“I believe our success stems from a very simple formula that I refer to as the ‘P’ principal: people, processes, products and passion equal profits,” Shaw says, who joined ACE Bakery in 2006. “If you are not true to the belief that the input and value that’s greatest in order of priority is the investment in people, you are overlooking the single biggest point of differentiation you have from your competition - the unique contribution of your employees.”
Founded in 1993 by Linda Haynes and Martin Connell, ACE Bakery began as a café on Toronto’s King Street baking its signature baguettes as well as handmade European-style rustic breads using proven formulas and processes such as traditional starters, all-natural ingredients and long fermentation times and finishing them all off in a stone-hearth oven.
Now owned by Glencoe Partners, a private investment firm based in Chicago, the company has seen net sales rise at a compound annual rate of 30% between 1997 and 2007 and today has revenue upward of $50 million annually.
Overall, ACE Bakery produces more than 100 varieties of Old World breads and rolls in a plant situated in 50,000 sq. ft. of production space. These products range from the company’s top-selling baguettes, organic sliced breads and classic products such as Country Wheat and ciabatta to more neo-traditional varieties such as Cheddar Cheese Twists, Potato Chive Focaccia and the new Olive Fougasse made with whole black olives, sea salt and dried thyme.
Locally, 12 route trucks deliver products fresh to supermarket in-store bakeries and some of Ontario’s top restaurants, hotels, caterers and gourmet food shops. Fueling its double-digit growth is an increasing amount of sales of frozen parbaked products to supermarket in-store bakeries to be baked on site. ACE Bakery also supplies some of the continent’s largest foodservice chains to provide an artisan flair to traditional fare.
“People are looking to upscale their sandwiches and their burgers, and with burgers, you can only add so much to them,” says John Nailor, national sales manager for Canada. “They’ve done it all with condiments so the bun is the last territory they haven’t touched. They’re willing to spend a few extra pennies to get a better product.”
With its new product lines, ACE Bakery is taking its artisan heritage and leveraging it against other categories and to other areas of the store. In the freezer case, it sells Bake Your Own packaged Demi-Baguettes and Petits Pains. In the deli, the company offers Artisan Crisps or round toasted slices of its classic baguettes in such flavors as Cranberry & Raisin, Potato Chive, Roasted Garlic and Rosemary & Sea Salt.
For snacking, ACE Bakery came out with addictive Artisan Granola filled with fruit and nuts. The company also sells multigrain and whole-wheat products that cater to ongoing consumer trends.
To fuel sales, Shaw says, the company continually focuses on being flexible to meet its customers’ ever-changing needs.
“We still have high-end restaurants and hotel customers in Toronto for whom we develop unique small batch products. This allows our product development team to be focused on both the boutique as well as the commercial,” he says. “In the same week, we could be working on an opportunity for a large, U.S. supermarket chain where the volume is in tractor trailer loads while simultaneously working on product for a single Toronto restaurant. The R&D process is the same for both of them.”
Power in Diversity
Shaw has put together a management team comprised of long-time employees along with seasoned professionals like himself who have experience working in both small and large companies. As a result, he says, ACE Bakery is run by a group of veterans, in more ways than one, whose “eclectic backgrounds” bring multiple disciplines to the table.
For instance, Marcus Mariathas, director of research and development, and Michelle Heywood, customer service and quality control manager, have been with the company for more than a decade since it baked bread in a single deck oven on King Street and sold its products to less than a hundred regional accounts. Philippe Gaudet, marketing manager, is another veteran, having joined the bakery right out of college five years ago.
During the last two years, ACE Bakery brought in managers like Roiter and Fiona Mitchell, vice president of human resources, who has 25 years of experience in organizational transformation working with smaller, owner-managed businesses in all facets of manufacturing. She has provided structure to the organization to handle everyday issues such as hiring employees, orientation, absenteeism and safety programs. To improve communication and the exchange of information, she’s even used professional programs such as the Myers-Briggs Type Indicator, which is a psychometric questionnaire designed to help managers understand and respect one another.
At the same time, Mitchell wants to maintain the small company culture that has made ACE Bakery so successful.
“Management at every level has a lot of contact with employees throughout the operations,” she says. “Our essential message is that we respect our employees, we appreciate and value their skills and hard work and we listen to them. We want to see flour on the office carpet because that shows that there are no barriers between the bakery and the office.”
Mitchell says that employee teams are a new and important part of the evolving culture.
“Whether it is reviewing wage structures or improving safety or housekeeping, our employees have made real contributions to business solutions,” she says.
Then there are those people like Shaw, Nailor, Brian Sisson, director of operations, and Kevin Saunders, vice president of U.S. sales, who have extensive experience working for large baking companies.
It’s all about building a foundation and investing in the future, Shaw says.
“To grow at the speed at which we’re expanding and to meet the needs of the diverse customer base we’re growing year over year, you have to be incredibly focused on maintaining product quality by investing in employees, monitoring equipment and processes and evaluating our expansion needs,” he explains.
Investing in Expansion
To turbocharge sales, Nailor says, the key has been to focus on its burgeoning frozen parbaked lines.
“We try to switch more people from fresh to our frozen business because they’re getting a better product to the consumer,” he explains. “Fresh, from a logistical standpoint, accommodates a lot of customers with freezer space. Ultimately, if you can get them something that is flash frozen and baked at the store, the consumer is technically getting a better product.”
Think about it, Gaudet adds, from an oven-to-table perspective. Fresh product gets delivered by 6 a.m. and often doesn’t reach the consumers’ table until dinnertime. On the other hand, frozen products can be baked 30 minutes before it’s purchased and served at home 90 minutes later.
“It’s a far better product,” he says. “I’ve seen retailers embrace it when they can bake it off. It’s been a powerful strategy that has allowed us to grow.”
In some cases, ACE Bakery allows retailers to play both cards by serving a combination of fresh and frozen items. They can use fresh-delivered products in their displays, or they can make sandwiches in the deli and use its parbaked products to create a warm, fresh-baked aroma around the in-store bakery. In many ways, the programs play off each other, Nailor says.
Locally, fresh products must be ordered by 2 p.m. for the next day delivery, although many accounts have standing orders, Heywood adds. ACE Bakery makes three deliveries a day, the bulk of which is for breakfast or the start of the day between 3 a.m. and 9 a.m. There are also lunch and dinner routes, mainly for high-end foodservice establishments. For most products, shelf life is one day for fresh product, two days for some sliced sandwich breads and up to 150 days when frozen.
“What differentiates us is the commitment of the level of service we provide to our customers,” Heywood says. “It’s basically 24/7. There is always someone available to deal with our customers.”
Once in a while, she adds, the company gets some complaints.
“They’ve been the same since day one, and it’s about the holes in the bread, but that open-cell structure is actually something we strive for,” she explains. “There are just those few consumers out there who continue to say, ‘I tried to butter my bread, and it falls through the hole.’”
Although many retailers prefer private label, especially when baking off in the in-store bakery, Gaudet notes that ACE Bakery continues to push its brand as a premium alternative for quality-seeking consumers. In addition to providing premium products, the company supports the ACE Bakery brand with merchandising displays.
“We like to show the retailer, if they haven’t adopted it, the power of off-shelf merchandising,” Gaudet says. “We try to custom-design units that accommodate an ideal amount of product for their needs and have off-shelf merchandising so consumers can see the product front and center.”
Moreover, the bakery offers its signature white packaging and sampling programs with its own trained demonstration staff to engage and educate consumers, receive feedback and add a human side to the brand. The company’s charitable programs also build goodwill in the community.
“We support the brand with recipes and point-of-sale elements to enhance and raise its profile,” Gaudet says. “You create ‘touch points’ and brand loyalty with consumers. You don’t get that level of consumer connectivity in the private label space.”
Determining the value proposition of the company’s programs can be tricky, Roiter says. Because its customer base is so diverse, what quantifies as “value” changes depending on whether the bakery is serving the foodservice industry or a supermarket chain.
“For me, it’s making sure that we play a meaningful role in increasing the bottom line impact for our customer partners,” he says. “Our team is very flexible and can take the necessary steps to design a program that works for all parties. Becoming a ‘partner in profits’ is a large part of our success at the end of the day.”
When it comes to creating great-tasting bread, ACE Bakery holds the cards that can trump others by focusing on a combination of people, products, process, profits and passion.
Maybe that’s why the bakery’s slogan is simply, “We love bread!”