WHEN the ego has landed In bakery the ego has a lot to answer for when it comes to the argument for making your own products and expanding your business, argues Tony Phillips

06 April, 2007
Page 13 
Recently I was reading a biography of Al Capone, the Chicago gangster boss of the 1920s, and it made me think of the comparison between him and the government. Both stole from the people and told their victims it was for their own good.
Yet one great difference was that Mr Capone was very efficient and controlled crime, only allowing the crooks to kill each other, not the public. Plus, he kept very tight control of his costs and every part of his operation worked smoothly.Meanwhile, the government allows the crooks to kill and rob us and I cannot think of anything they manage working well - neither health, nor transport, nor benefits. In fact the list is far too long and depressing to think any further.So let's think about our own future in the year ahead, over which we do have some control. Those of us mainly in the retail trade have to work hard on our marketing, which made me think about our production costs. No one would question that our return on capital in the baking industry is appal- lingly low and that bakery consumes capital on equipment like a drunk in a brewery.Stop investing in new equipment and failure is virtually guaranteed, as costs would get out of control. This has made me wonder whether we should close our bakeries and buy in products we need. After all, if savouries, bake-off and filled rolls represent 50% of our turnover, why are we putting in so much capital and effort to produce the other 50%? The problem is, of course, that we have so much invested in our bakeries that we could never sell them and recoup our costs.Then there is the question of ego, where we all think no one else could make the products we need to our own standards. While that may be true, I rather doubt it, because if we took our recipes to another bakery for the volume we require, they would produce it to our own standards as they would be so desperate for our business. Let's face it, the supermarkets demand what they want and get it.Will this happen? I rather doubt it as we all take a great pride in what we do and the reason for our existence would be gone. But small groups of, say, three or four shops may have to consider whether they can produce economically without working every hour of the day. This leads me on to the big question: what is the ideal size for a company to control and make money? Rather than number of shops, I think the deciding factor should be distance from the bakery. We have 10 shops within five miles of our bakery, which means that, when we are short of shop staff, which is most of the time, we can at least move people about quickly.Our Candy Shop experiment is 18 miles from the bakery and already we can see the problems. Would we do it again? A truthful answer is, I doubt it. But we had to do it, or we would be forever wishing we had. In about a year, we will know if the extra work was worth it.Ego has a lot to answer for. It is always leading us to keep expanding. So I suppose there is truth in the theory that the one thing a man has that gets bigger when you stroke it is his ego. n



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