A question of scale

04 June, 2010
Its ability to combine craft and scale, and to make it work, is one of the main reasons behind The Bread Factory winning The Craft Business Award at BIA 2009. Georgi Gyton finds out more
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The Bread Factory is anything but. Despite the company name, which, if nothing else, is a story to tell potential customers as we learn; its passion and aim as a business is to create artisan craft bakery products. It has successfully combined the benefits of scale with the traditional values of craft baking, making it the worthy winner of The Craft Business Award, sponsored by Rank Hovis at the Baking Industry Awards 2009.

The perhaps hastily-penned name The Bread Factory was made permanent after previous owner Gail Stephens, put it on a letterhead. More copies were printed than were needed, and she didn't want to waste them, so the name stuck. While the business was in a less-than-perfect state when co-managing directors Tom Molnar and Ran Avidan bought into it back in 2003, the pair have turned it into one that now embraces opportunities.

Based in Hendon, north London, the firm, which employs around 300 staff, prides itself on being a leading wholesale artisan bakery. It supplies handmade bread and pastry, via 22 vans, to a number of top hotels and restaurants. And first-class air travellers may even find themselves biting into a Bread Factory roll. In addition, it has launched its own high-street bakery chain Gail's.

Quality and volume

"Why we won the award and what sets us apart, according to the judges, was that they hadn't seen anybody achieve the volume we've achieved, with the level of quality that we have," explains Molnar. "We've had to fight people's perceptions that, with scale, usually comes a lesser product."

He says the firm wanted to improve the quality, while increasing the scale of its operations. "We saw the benefits of scale, but we didn't want to lose what makes us special our high-quality breads and craftsmanship."

He believes scale and a modern bakery help attract great bakers, and give them the opportunity to grow professionally. Good bakers, he says, want to work in a nice facility, and he quashes the notion that being in the depths of a dark and rambling craft set-up is some kind of romantic ideal. In addition to providing a great place to work, he says, it enables the firm to meet high health and safety standards. "And we have room to experiment, without risking harming the business," he adds. "I'm absolutely certain we make better bread today than when we were smaller."

This year, the firm invested a further £250,000 in the bakery on equipment such as new shaping tables, retarder provers and trollies. "We have invested around £2m over the last few years, building a modern facility and then adapting it to do craft/artisan products," explains Molnar.

When the firm first moved to the Hendon site four years ago, it had to relocate a lot of old equipment, and has been upgrading it over the years much like you would a new house, he says.

The Bread Factory expanded to another unit on the same business park around 18 months ago, which is now the dedicated site for the production of its cakes and morning goods. "Our wholesale business grew by about 20% last year, and that was mostly organically, through word of mouth," says Molnar. Yet despite the growth of the business, and a current turnover of around £10m, it is only running at around 60% of its total capacity.

So were there any difficulties in increasing the scale of its operations? "There have been lots of things we've had to think about," says Molnar. One of the aspects we were worried and then pleasantly surprised about, was that expanding production would threaten our levains, he explains. We have 18 of them, and a lot of them are over 15 years old. We had to keep them in smaller batches, and re-think the way we managed them, but in the end, it turned out to be a better system.

"Probably the biggest challenge has been to train people. Training for craft production is not just about the technical aspects, but about the culture behind our bread. You cannot teach passion, but you can exhibit it, and convey it," he explains, adding that the firm did have to be selective about the people who stayed, to ensure they were actively adding to the culture of the business.

Demand for good bread

Molnar seems undaunted by any threat from his nearest competitors. For example, in Hampstead Heath the location of its first Gail's shop there are two similar concepts, Maison Blanc and Paul, within a stone's throw of its outlet, but Gail's business is booming, he says, noting that, increasingly, people are willing to pay more for a decent loaf of bread. He believes the only reason people would choose not to have craft bread is because they either cannot afford it, or don't know where to find it. With a growing demand for good products comes a growing market for craft bread, he says.

When considering applying for the Baking Industry Awards, Molnar says he sensed that what the business was doing was something very different from others: "When my partner [Avidan] and I took the business over, it was losing money, had too much debt, and the wrong decisions were being made." He and Avidan didn't know much about bread when they took on the challenge, but they knew about business, and their passion for the product saw them get it back on track.

Molnar now describes the business as a "surviving marriage" between bakers and people who love bread, but who have other skills, such as marketing or sales. But he emphasises that it is still completely centred around the bakery, and the baker will always have the last say.

In its entry, The Bread Factory also highlighted the start-up of Gail's, which Molnar says was designed to "give a voice" to its bread. "We think our customers are doing a really great job of that already, but we thought there's more we can do, so let's put our bread, which is usually in high-end restaurants, on the high street, and see what people think," he says. However, the firm has "conservative ambitions" on the future growth of Gail's; its sixth outlet has just opened in Chiswick.

Even though he admits he was confident that the business would be shortlisted, he was surprised when it won. "You don't necessarily win business because of these awards, but it's a great reminder of why you put in all the hard work," he says.

The judging process was thorough, he says, with four judges spending the day at the bakery. And he describes it as a challenging, but positive experience and a good exercise for the business. The judges were impressed that the quality of its products hadn't deteriorated with the growth of its operations, he adds.

Looking ahead, he says, the firm's business strategy hasn't changed. "We want to make really awesome bread and other baked products, make sure people are aware of them, and that we get them to the people who value them."


On winning the award

"We took the award down to the bakery, and the staff took turns having their pictures taken with it beside the shaping tables and in front of the ovens"
Tom Molnar, co-managing director


What the judges said

"The Bread Factory submitted a very passionate entry, clearly answering the questions, backed up with simple visuals and elements of marketing support. On the judging visit, we were treated to a superb product presentation and were privileged to meet the bakers and see where the 'magic' happened the conversion of raw materials into some of the tastiest bread we'd ever had! Tom Molnar and the team run an incredible business the perfect balance of pure craft at a scale which is commercial."
Sara Reid, marketing director, Rank Hovis





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