Seventy-three years ago, Park Cakes was a small bakery selling to corner shops. Now it is a major manufacturer of premium cakes and desserts, on track this year to turn over £115m.
Last year, Park Cakes was named Bakery Food Manufacturer of the Year at the Baking Industry Awards, which MD Anne Allen attributes to the workforce. "Our people are the differentiator," she says. "They deliver the highest-quality products. Fifty-two per cent of our staff are highly skilled and we have a rolling programme of NVQ training."
However, the recent history of Park Cakes has not been entirely happy. Five years ago, the business, under then-owner Northern Foods, was "a serial loss-maker". In January 2007, it was bought out by Vision Capital and has undergone some radical changes.
The company’s biggest customer is Marks & Spencer, for which it makes products including its famous Colin the Caterpillar cake and its popular chocolate ganache birthday cake. In fact, Park Cakes’ relationship with M&S goes back over 60 years and, in 2002, the manufacturer created a new category in cakes mini-bites a concept swiftly adopted by other retailers. Mini-bites as a category is now worth £100m, she says. Park Cakes also supplies Sainsbury’s, Tesco and Asda.
Allen, who was previously change management director at Northern Foods and became Park Cakes’ MD following the acquisition, has implemented a clear strategy. "There has been an infusion of new talent and a much clearer focus with a very simple strategy," she says. This focused on the five areas the business did best mini-bites, slab cake, sponge roll, whole cake and hot eating puddings and cut loose other ranges, including cream cakes, choux pastry and Viennoiserie. This was a major decision, as it involved sacrificing the products that made up 15% of the firm’s turnover. But the products sacrificed were the ones where "we felt others could do better", she says.
Millions of pounds were then ploughed into developing the five key areas that remained. "Previously we were all things to all men, but we decided to just focus on the categories where we could add value and be a scaleable player," she says.
Allen pays tribute to how the staff have handled all the changes. "Everyone just keeps coming into work and producing amazing, high-quality goods," she says. Demand peaks around Christmas, when up to 40 seasonal SKUs, including mince pies are produced.
Investing in staff training is a big priority for the company, says Allen. Park Cakes has two sites a craft bakery in Oldham, which focuses on chocolate products, and a manufacturing plant in Bolton, producing cakes. The firm employs between 1,500 and 2,000 workers depending on the season. In Oldham, 50% of staff are qualified with a Level 2 NVQ, and the target is to get to as close to 100% as possible. In Bolton, the figure is even higher, with 250 of the 400 staff trained. "It is all about investing in people over the years," she says.
Park Cakes’ transition from loss-making to profitability is particularly remarkable considering it happened at the height of the recession. "It has been a phenomenal transition," says Allen, "especially as cake is a discretionary purchase and we have had to deal with all the pressures of inflation."
She says the firm has benefited from consumers buying cake as a recessionary treat, but notes there was a certain amount of down-trading to standard lines during the recession. "Consumers clearly needed to tighten their purse-strings. But premium ranges are coming into their own again," Allen says. The company is currently developing a new range of restaurant-quality desserts for M&S, as well as some new premium Christmas products.
Allen has ever-more ambitious plans for Park Cakes. It is aiming for another 20% growth over two years and is on target this year to turn over £115m, up from £110m in 2010. Few would doubt that she and her team have the determination to succeed.
l ADM is sponsoring The Craft Business Award at BIA 2011.
How Park Cakes stripped out costs and became profitable
"In the first couple of years of Vision Capital’s ownership, there was a big programme which we called ’self-help’ internally, which was about how we could take cost out of our manufacturing process to help stability," says Anne Allen, MD of Park Cakes. "There were a whole range of initiatives designed to improve our processes, take people off-line, automate where possible and push all elements of our business from supply chain, to productivity in the factory, to improving yields. Under our core categories we invested in automation to become a lowest-cost manufacturer. One example is we automated our mini-bites line, so we took people off lines where they were packing mini-bites into tubs manually and then putting the lids on tubs."
The judges’ verdict
Anne Allen said she entered the award to get recognition for the dedication of her staff. The judges were in full agreement, saying they were "particularly impressed with the commitment and dedication" of staff and by the company’s investment in them. They added this had helped Park to exceed its challenging targets and grow the business with really innovative, quality-focused products.
On Park Cakes’ rivals
"There is certainly very healthy competition within the industry," says Allen. "We look at our competitors with a huge amount of respect for their ability to innovate and that constantly keeps us on our toes and means we are always trying to do things better to reward the end-user. Within the baking industry there is a huge amount of innovation and, as a result of that, very healthy competition."
On the value of the BakingIndustry Award
"Quite clearly it is an extremely prestigious award to have won and it has given us huge internal PR in terms of recognising the achievements our people have made in turning around the business," says Allen. "In that respect, it really gave the business a feelgood factor internally, because it made people feel we were going in the right direction with our strategy, which has always been pegged on performance, morale and productivity. Externally, it is something the rest of the industry is aware of and it has enabled us to talk positively about it with our customers. It hasn’t necessarily led to new business wins, but it makes you stand out from the crowd when you are talking to customers about new business, because you have got that accreditation and accolade."