Hitting the Sweet Spot
August 1, 2005
Hitting the Sweet Spot
By Andy Hanacek
Clyde’s Delicious Donuts remains positioned to succeed because of its ability to quickly adjust its strategies, processes and personnel.
Ask any golfer or baseball player about their best tee shot or longest home-run ball, and they’re likely to tell you that everything came together just right — perfect form, follow-through and contact right on the sweet spot — after they made the proper adjustments.
In the bakery industry, particularly the sweet goods category, however, not many manufacturers have been hitting home runs or monstrous drives of late, and the “sweet spot” for the industry has been more challenging to locate.
But don’t tell that to nimble, flexible and diminutive Clyde’s Delicious Donuts. The Addison, Ill.-based, self-proclaimed “niche manufacturer” of donuts, fritters, seasonal and other sweet goods has found its sweet spot and is poised to dig in and hit more home runs in the wake of those tough times in the industry.
“We’re not committed to being the biggest company in the marketplace,” explains Kent Bickford, president of Clyde’s. “We certainly don’t have the capital resources that [the much larger] companies have. But what we do see here is a continuing opportunity to be a niche manufacturer. … What we see going forward is an opportunity to grab a lot of market share by serving customers and channels that aren’t necessarily in the sights of the big guys.”
Clyde’s has remained successful in spite of a slew of challenges to overcome in recent years, from the low-carb craze and other health trends all the way to highly increased competitiveness in the donut industry, particularly in the in-store bakery channel.
“Every time there’s something like low-carb or cholesterol that comes along, it reflects on us, and we have to meet it,” says Bill Bickford, Clyde’s chairman and the father of Kent and Kim Bickford, the company’s vice president. “Having said that, I don’t see that there will be any great changes in the eating habits of Americans. If they want a donut, they’re going to eat a donut. … I just believe in putting as good a product as we can in front of the public and let them decide.”
No “I” in “Team”
Clyde’s success can be attributed to the company’s ability to make swift adjustments to improve its position, whether that means to act on a new product idea, modify production practices, make capital improvements or alter the day-to-day operations by adding an experienced management team.
All of these things Clyde’s initiated in the last decade, and each has contributed to keeping the company locked in a sweet spot.
Certainly, recent times have been taxing on the industry, but Kent believes that Clyde’s was able to survive beyond expectations.
“There are a lot of bakery companies right now that are having some very difficult times,” he adds. “In my view, we’ve been enormously successful through that period.”
Kim stresses that in his mind, the management team hired to help in the day-to-day business has made the greatest impact over the last decade.
“Ten years ago, when we added the new team members, we wanted to hire good people and smart [people] and let them do the job,” Kim explains. That goal was accomplished, building upon the successful foundation laid by Herman Seekamp, who founded Clyde’s in 1920, and the Bickfords, who have run the family-owned business since 1962, when Seekamp sold it to Bill Bickford, his son-in-law. Of course, all the fresh faces on board brought about another adjustment within the walls of Clyde’s.
“It’s been a learning process for us, going from a family-owned, family-held company where people would come to us for everything,” Kim continues. “And it’s really begun showing fruit in the last three to five years. … I just can’t say enough about the team we’ve assembled, because that’s what’s enabling us to be successful in this industry.”
Around the same time the decision was made to add staff members, Clyde’s took a look at its customer portfolio and reassessed its strategies. What the Bickfords realized was that a large percentage of the company’s business was with one customer, a poorly balanced foundation for business. At that point, diversifying the customer base became a key strategy and is now a company strength, says Kent.
“Typically in any given year, there are two or three customers that may represent 10% of our business,” he says. “We’ll have those customers in 2005, but … there’s more turnover with customers today than there ever has been.”
It’s All in the Timing
Although Clyde’s pumps out plenty of standard donuts, one of the main focuses of the company is to provide the value-added, specialty items that it has mastered through many channels, including private label and co-packing.
“[Success has] allowed us to make products that other manufacturers either aren’t very good at or aren’t terribly interested in making,” Kim says. “And we do very well at a lot of those items.”
In turn, these specialty products, such as apple fritters, sprinkled donuts for every holiday and seasonal flavors of donuts, have added a new dimension to Clyde’s potential, particularly in the foodservice and in-store bakery segments.
“Everyone wants the basic 12-count ring, but we think there are better opportunities with the other items we do,” says David Bennett, National Sales Manager. “Again, they’re difficult items to do, so they actually bring a better retail ring than sometimes the glazed rings do.”
But it’s not always an instant return on the seasonal products. Kim explains that the two seasonal flavors that Clyde’s introduced in 2003, Pumpkin and Cinnamon & Apple, debuted well but really showed nice growth in their second season on the market, after the company released two more new flavors in 2004 — Gingerbread and Egg Nog.
“It really jump-started it, because the retailer knew what kind of product they’d gotten before and what kind of success they had with the items initially,” Kim explains. “So we really started to get some successes there.”
Clyde’s wants to expand its specialty offerings and its status as a top niche manufacturer of those items, but what has really driven success to this point is the “standard” frozen donuts. Although Clyde’s started as a fresh donut manufacturer, Bill Bickford decided in the 1960s that a change was necessary, and the company’s move in 1990 to the Addison facility signaled the transition to a focus on frozen sweet goods.
Clyde’s still delivers fresh donuts via its own company-owned routes to more than 300 customers in the Chicagoland area, but the change in strategy has worked.
When Clyde’s moved to the Addison facility 15 years ago, fresh sales outpaced frozen sales by a ratio of about 4 to 1, Kim says. Now, he notes, the balance has shifted heavily, with frozen sales outpacing fresh by more than 4 to 1. For a company that has made adjustment after adjustment, that conversion of the company turned out to be the perfect move.
“Route distribution had gotten extremely expensive and more difficult to do logistically,” Kim explains. “The frozen business, while expensive and very competitive, allows you to run your equipment better, and that’s where our growth has been.”
Now, Clyde’s is staring at a vast in-store bakery marketplace hungry for an easy solution in the wake of the collapse of the direct-store-delivery (DSD) program that many stores had in place. Bennett, who worked for The Kroger Co. for 30 years before joining Clyde’s in 1999, believes moving in on this vacated turf is a great opportunity for the company.
“They’re looking for fully finished, because once they moved from pre-fried [products] to the DSD program, they took all the labor out of the store,” Bennett explains. “And, my experience in the grocery industry is, once you pull labor out of the store, the operator is reluctant to put the hours back in.”
That heightens the urgency to move on the strategy, and Clyde’s has taken the necessary steps to hit the ground running with it.
“There’s a fine line there, because you have to get a hold of that business when it starts dying off from that customer,” Bennett admits. “If you don’t, if it goes too long, what a lot of [retailers] will do is just write off donuts.”
Furthermore, while Clyde’s pushes its “Thaw and Serve” to major chains, Bennett believes that convenience stores and smaller chains with 12 to 15 stores are a perfect fit for the line.
“[They] can pick two or three items, and we have small quantities — 48 in a case,” he says. “They may not have a lot of freezer space, so if they pick two or three items, they can do very well with it.”
Clyde’s has even seen some cross-merchandising of its high-quality Apple Fritters in a Kansas C-store group, where the Apple Fritters are served with ice cream as an “apple pie-type” item. Bennett says Clyde’s is looking for other cross-merchandising ideas based on the success of that offering. Also, the donut producer is anticipating that customers will be looking for fast-food breakfast destinations in the future again and management believes specialty items like the Apple Fritter or twists would be fantastic on-the-go breakfast offerings.
“It’s an item [the restaurant] could carry that doesn’t cost them a lot to produce, because they’d just have to microwave it, and they could turn around and sell it for a premium,” Bennett says.
But the question in the new world order of healthy eating is, will people pay a premium for indulgence? The folks at Clyde’s believe they will.
“People still want their indulgence, and they want a couple of them throughout the day,” Kim says. “Now, if we enjoy the position of having a good-quality donut that someone’s reaching for early in the day or late in the day as a snack, that matches well.”
It’s that understanding of the consumer and the products it manufactures that keeps Clyde’s always in its coveted sweet spot in the industry.
Production at Clyde’s runs six days a week through two shifts per day. Of the three production lines Clyde’s operates, however, the company does not operate all lines during all shifts. Kim points out that is an avenue through which the company can grow, by adding runs and possibly even going into production on a seventh day. Line 1 is a yeast-raised donut line that can pump out approximately 30,000 lbs. per day, Line 2 produces cake-donut type products at 40,000 lbs. per day, and Line 3 can produce either, but typically is used to produce specialty goods at a rate of up to 27,000 lbs. daily.
Raw materials and packaging materials are held in the 16,000-sq.-ft. receiving area, and a secondary part of the warehouse can hold as many as 84 pallets of flour, sugar and other fast-moving ingredients, all in bags. Bakery mixes come in 50-lb. bags, flour in 100-lb. bags and sugar in either 50- or 100-lb. bags.
Shortening is delivered in bulk tanker trucks once or twice per week in 48,000-lb. loads, and nitrogen for the freezer system is delivered in bulk as well, several times per week.
The plant has three 1,200-lb. horizontal mixers, but only two are used regularly — the third is a spare. On Line 1, dough is mixed in one of the horizontal mixers and dumped onto a rolling table. There, an employee cuts it into slabs and puts the slabs into trays. The dough rests in racks for 30 minutes and is transferred to one of two sheeting tables, one that specializes in donut rings, bismarks and Long Johns and another that handles twists and cinnamon rolls.
Four rollers reduce the size of the dough and send it into a cross-roller where it is docked or not docked (holes punched to let gas escape), depending on the product.
Donut rings, which were being made on this line during Snack Food & Wholesale Bakery’s visit, are automatically stamped out of the sheet of dough and deposited onto single-row trays that travel on a conveyor that snakes up and down through the proofbox. Donut rings spend 30 minutes being proofed at 100°F and 80%-90% relative humidity.
After emerging from the proofer, the products splash into the fryer that is typically set between 350°F and 360°F. Frying times vary depending on product. Halfway through the fryer, donuts are flipped mechanically and continue on their journey.
Meanwhile, three steam-jacketed kettles make and store more than 400 lbs. of Clyde’s donut glaze, which is applied to the rings and other items by a waterfall applicator after they emerge from the fryer. The donuts then head to the spiral cooler, where they make 10 revolutions at about 3 minutes per revolution to cool to room temperature. They then head into one of Clyde’s three spiral freezers and spend 12-16 minutes at a temperature between -10°F and -60°F.
Once they are frozen, the donuts pass through a metal detector, which uses a blast of air to remove rejects from the line. Clyde’s has flexibility built into the packaging area, although most packaging is manual. Kim says the manual aspect is necessary, but it doesn’t mean the company isn’t looking for ways to improve.
“We have a lot of hands-on, but you have to have that, because a significant portion of their role is to perform a quality-control check,” he explains. “They’re visually inspecting product as it goes by and making decisions as product is being packaged whether the product meets specs. But I think that we can do some things ergonomically that make the workspace flow better, [and] reduce a little scrap and a little handling.”
Long Johns, rings, and other “Thaw and Ice” products are packed in poly bags and clips are put on those bags automatically. This bag-pack helps protect the product during transportation and storage, which Clyde’s thinks gives them an edge. The donut producer has a clamshell denester to make tray-packing of products more efficient, and it has the capability to use film overwrap on products. There is also a labeler on Line 1 for clamshell packages.
The plant also has a box-former for the company’s half-dozen boxes, which are manually filled with product and sent to an automatic sealer that glues the boxes shut.
Case-packing and palletizing also are manual, though cases are automatically taped and coded before heading to the storage freezer. If product is slated for one of Clyde’s fresh customers, it simply bypasses the storage freezer. All boxes are coded to facilitate lot-tracing and potential recalls.
Nearly three years ago, Clyde’s doubled the capacity of its storage freezer, from 3,000 sq. ft. to 6,000 sq. ft. Once Clyde’s did that, Kent says it made scheduling production runs and outgoing trucks a much easier task.
“Ideally, you want to run one product from sun up to sun down, and only that item,” he adds. “Well, the reality is, sometimes you have to run two, three, maybe four items in a particular day, and we were stuck with a lot of [scheduling issues] before we expanded the freezer, because we had physical limitations on what we could store pending the arrival of trucks to take it away from here.”
With the new freezer space, Clyde’s has been able to schedule longer, more efficient production runs. Freezer temperatures are kept between 0°F and -10°F at all times.
Line 2, the cake-donut line, features two fryers that can run simultaneously. Dough is mixed in two 200-lb. planetary-type mixers and sits in the bowl for 10 minutes afterward to facilitate the development and proper hydration of the batter. An employee hoists the bowls and dumps the batch into one of two depositors — one is a pressure-type depositor and the other is a mechanical type.
During SF&WB’s visit, Clyde’s was producing cake donut Variety Donut Packs — one dozen donuts in three varieties: plain, crunch-coated and powdered.
The donuts are deposited directly into the frying shortening, nine across. They are automatically flipped halfway through the fryer, just like on Line 1, and after emerging from the fryer, the donuts travel through a highway interchange-like series of conveyors that keeps product flowing and divided properly for finishing.
First, three of the nine donuts across are divided temporarily from the group in order to pass under a waterfall applicator, which is equipped with an adjustable dam that allows application of glaze to a particular width of the conveyor only. Crunch is sprinkled onto these three donuts via a waterfall applicator shortly after the glazier. The trios of crunch-coated donuts quickly rejoin the six plain donuts, and the reunited group heads to Line 2’s spiral cooler.
After traveling around the cooler, six of the nine (three plain and the three crunch-coated donuts) head directly to Line 2’s spiral freezer. The other three plain donuts are detoured to be powdered. The donuts are briefly warmed and dropped into a barrel applicator, where powdered sugar is tumbled about with the donuts, which emerge fully coated. They travel up a conveyor and merge with the plain and crunch-coated donuts heading into the spiral freezer.
The donuts emerge from the freezer and pass through metal detection on the way to the packaging area. For the variety pack, three employees, one per variety, inspect and hand-pack the donuts into boxes by the dozen. Cases are manually packed, and an automatic taper seals them before they are palletized and sent to the storage freezer.
Line 3, Clyde’s newest line, is very similar to Line 2, except that the company makes much of its specialty product, such as its Apple Fritters, on this line through proprietary processes. During SF&WB’s visit, however, Line 3 was pumping out bulk-pack twists, a process extremely similar to the donut ring production on the other two lines.
On all lines, weights and measurements are taken throughout the process, and metal detectors are checked every two hours for accuracy. Shortening is filtered on lines 1 and 3 continuously and once at the end of the night on Line 2. Sanitation takes place during the 3rd shift, starting around 8 p.m. each night and ending by 1 a.m.
Clyde’s has two dock doors, one for incoming materials and one for outgoing product. Product is shipped in refrigerated trailers, and the company fills approximately 30 or more trailers per week.
At a Glance
Company: Clyde’s Delicious Donuts
Headquarters: Addison, Ill.
Plant Size: 56,000 sq. ft.
Production capabilities: More than 2 million donuts per week.
No. of Lines: Three (one yeast-raised donut line, one cake donut line, and one line that can produce either yeast-raised or cake donuts).
Distribution: More than 350 accounts (Locally via a fleet of six fresh routes, and nationally through retail grocers, foodservice and wholesale distributors).
Distribution: More than 350 accounts (Locally via a fleet of six fresh routes, and nationally through retail grocers, foodservice and wholesale distributors).
Chairman: Bill Bickford
President/CFO: Kent Bickford
Vice President: Kim Bickford
National Sales Mgr.: David Bennett
Sales Mgr., Fresh Division: Carlo DeBenedictis
Plant Manager: Larry Frank
Plant Superintendent: Nero Patel
Assistant Controller: Trent Snider