Competition, tightfisted banks and gluten-free diets have sliced into several independent bakeries in the Twin Cities.
The future of the bakery business rises and falls on the tastes of customers like Tina Kelly of Champlin. She enjoys buying chocolate cakes, bread loaves, dinner rolls and bread bowls.
But despite her passion for baked goods, Kelly has changed how she shops. She used to visit bakeries every two weeks. Now it’s once a month. “I’m trying to eat healthier,” she said. “Bread is high in calories and low in nutrients.”
Kelly, and millions of customers like her, are changing their buying habits, leaving independent bakeries scrambling. The number of stand-alone retail bakeries in the United States has declined from 30,000 in 1970 to about 6,000 today, according to Paul Sapienza, director of finance for the Retail Bakers of America.
In the Twin Cities, Bread, Coffee and Cake in Mendota Heights, Jack’s Bakery in Brooklyn Park, Hans’ Bakery in Anoka, and Tschida Bakery and Sweets Bakeshop in St. Paul have all closed in the past 15 months.
“Retail bakeries are slowly going away,” said Pete Nowicki, president of the Upper Midwest Bakers Association. “And there aren’t as many bakers going into the business anymore.”
It’s not only the independents lost in the flour dust. Three Sara Lee/Taystee outlets have recently closed in Eagan, Richfield and White Bear Lake, although Blaine and New Brighton locations remain open. Last year after Hostess/Wonder Bread entered bankruptcy, bakeries, distribution centers and outlet stores were all shuttered, including seven in the Twin Cities. Although the brand recently returned to some store shelves after being purchased by bakery conglomerate Flowers Foods Inc., none of the outlets are expected to reopen.
Experts say there are a variety of factors behind the trend, including consumer price sensitivity, a retail market spread thin, consumers’ indifference to scratch-made baking and gluten sensitivity.
Sandy Moeller, who co-owned Jack’s Bakery in Brooklyn Park until it closed earlier this year, said that one of her regrets is that she absorbed her cost increases for too long. “When customers told me they were struggling, I took it personally. I should have been more aggressive on prices.”
Marie Philippi, co-owner of Taste of Love Bakery in West St. Paul since November 2012, said that despite working 16-hour days, her bakery is just scraping by. She and her business partner have used social networking and a neighborhood town hall meeting to put out an S.O.S., but with little capital to keep the business running, they’ve had to tap friends and family since banks won’t lend them money.
“Banks want to invest in something that can’t go to zero,” said Tony Sisinni, owner of Mainstreet Bakery, an Edina-based wholesale bakery for restaurants, hotels and grocery stores.
Banks won’t lend
Young bakers have it harder since the recession, he said, because banks won’t lend them money anymore.
Philippi even had customers tell her to raise prices to bring in more money, but she worries that doing so would make her less competitive with the discounters on cakes, cookies and sweet rolls. “I can’t make a cake for the price that Sam’s Club charges,” she said. “Their half-sheet cake is about the same price as my quarter sheet.”
It’s not just warehouse clubs and discounters that are killing the local bakery. Buying habits have shifted to convenience, said Wayne Kostroski, co-owner of Franklin St. Bakery and Cuisine Concepts wholesaling in Minneapolis. “Now people grab a loaf of bread at the grocery store, Target or Holiday when they’re filling up for gas.”
In a survey conducted by Mintel last year, consumers were nearly twice as likely to buy bread and bakery products at a supermarket in-store bakery than at an independent. Convenience beats taste, quality and even loyalty, said Sapienza.
Supermarkets and even convenience stores have responded to consumers’ needs by adding their own bakeries. All 67 Cub Foods stores now have made-from-scratch bakeries. “About 120 items are baked fresh in our stores,” said Luke Friedrich, Cub spokesman.
Peter Kelsey, who owned New French Bakery wholesale business until he sold it earlier this year, said that with on-site bakeries in grocery stores, as well as par-baked breads to be heated at home, consumers aren’t sacrificing much by buying at chains.