A dramatically designed bakery facility allowed its owners to build a foundation for future business expansions into outlets. At first glance, the imposing building looks like anything but a retail bakery. Peach-tiled, glass-fronted, cantilevered, it could house anything from a furrier to an investment bank.
But it is a retail bakery, and a European gourmet and deli, as well. Built by owners Wolfgang and Carla Buchler two years ago, the Heidelberg Pastry Shoppe in Arlington, Va., takes advantage of all the latest in design and architecture to make a strong statement. It says: quality.
That first impression of quality is reinforced when customers enter a 1,600-sq.-ft. store that’s a fantasyland of delicate and delicious cakes, pastries, breads, candies and cookies, all made on the premises. A selection of imported meats and cheeses complements the line of bakery products, and a display of gourmet coffees provides another tempting aroma.
Customers who may believe that only Santa’s elves could have put together such an appealing display only have to sweep up a staircase to view the workings behind the magic. At the top of the stairs, they can watch bakers and decorators putting together marvelous delicacies with precision and care. If they want to learn more, they can join one of the Wednesday-morning tours the bakers conduct to explain the mysterious workings of yeast, gluten and baking powder.
The Buchlers’ dream bakery didn’t come easily or effortlessly. In fact, it took more than 18 months of plans, projections, meetings, and construction before this $1.5 million building was ready for its grand opening. But their risks and efforts paid off with consecutive 30% increases in annual sales since the door opened in September 1988.
An apprentice who didn’t fit the mold
Although grand, this Heidelberg bakery is hardly the end of the road for the Buchlers, who have plans to expand into cold spots within a year. But it does represent a pinnacle of achievement for Wolfgang who, as a slightly outspoken apprentice in his native West Germany, may not have lasted in the field had he stayed there.
“When I started as an apprentice,” he says, “I wanted to learn both baking and pastry work, so I completed my master’s degrees in both areas. But, you don’t learn much management because things are always done the same way, everywhere you go. For me, the problem was that you can’t question the system, especially not when you’re an apprentice. I could see that management was more democratic in America.
“I also wanted to learn how to produce more efficiently. When I was in Germany, making 10 to 15 cakes a day was a big deal. But in the United States, 10 to 15 cakes better be done in an hour. And, here, there is no sharp division between a baker and a konditor. American bakers know how to do all kinds of products.”
That kind of freedom appealed to Wolfgang, and he came to the Washington, D.C., area 22 years ago to work in a German-style konditorei. After seven years, he thought it was time to strike out on his own.
Wolfgang found a retail store available in a busy strip shopping center. The store was only about 700-sq.-ft. wide at the front end, narrowing toward the back, but it did come with a basement for production and storage. With other thriving businesses in the shopping center, the bakery soon built up a steady clientele for its European-style specialties. Best of all, says Wolfgang, he met Carla when she applied for a job soon after the bakery opened.
The Heidelberg Pastry Shoppe stayed at that location for 13 years, and might still have been there had Wolfgang not started calculating again. But, the landlord wanted to raise the rent. After figuring how much money he was directing towards rent, Wolfgang thought he could do better paying a mortgage on a building of his own.
The question was where to start looking for the financing necessary for the type of building the Buchlers had in mind. After putting up with their cramped quarters for so long, they were bursting to move into a building that would provide the room to produce and display a greater variety of bakery products, as well as to add other items, such as deli foods.
When they decided to move, Wolfgang and Carla approached the local chamber of commerce about finding money for a new building. “We knew we needed some other entity to help with the financing,” Carla says. “Banks tend not to lend money unless you already have money.”
“Before I talked to the chamber, I checked with the Small Business Administration,” Wolfgang says. “With SBA, the bank would get the government’s guarantee that I would repay my loan. But the chamber told us to contact the Virginia Asset Financing Corporation. The corporation’s 504 Loan program was more attractive.”
Learning to deal in high finance
The 504 Loan program is part of the SBA’s Economic Development Program, and is administered by private, nonprofit certified development companies, such as the VAFC. A retail bakery that wants to expand by acquiring land or building a new facility is the ideal candidate. The development company’s role is to structure the loan in a way that’s attractive both to the bank and to the borrower.
“Most of us don’t know what banks are looking for in terms of a loan application,” Carla says. “And, banks really don’t understand your business, so it’s up to you to make it easy for them to loan you money. That’s was the VAFC did for us.”
Basically, the 504 program structures the loan in a 50-40-10 proportion: 50% of the required investment money comes from the bank. The development company itself provides 40% of the money–the 504 loan. And, 10% must come from the borrower’s equity, as cash applied to the project costs. (For a more detailed description of the 504 loan program, see page 28 in Bakery’s May 1990 issue.)
Because the bank wanted the financing package presented in a certain way, the VAFC’s Kathleen Strawhacker worked with the Buchlers to improve their presentation and sharpen their business plan.
“Kathleen helped us to set up our projections for the bakery’s business after we put up the new building,” Wolfgang explains. “We had to submit architect’s plans, contractors’ bids, the land contract, everything. Everything works together, but you don’t really know if you’re going to get the money until the end of the process. So, you have to assume you’re going to get the money, and proceed as if the project was going on.”
Of course, nothing goes as smoothly as planned, as the Buchlers soon learned. “We had worked on the presentation to a banker with whom we’d been dealing for a long time,” Wolfgang says. “At this point, we’d been in business for 13 years. The banker assured us that everything looked good. So, we went on vacation; we only had three days after we got back to close the deal on the land. But our accountant called and told us that the bank had had cold feet. So we had three days to get the money.”
However, all the careful preparation that Strawhacker had guided them through was going to pay off. “Luckily,” Carla says, “our lawyer introduced us to another banker. We explained to him that we needed $70,000 by the next day; we didn’t think we had a chance. But being a small bank, only three people had to look over the paperwork. Kathleen really prepared us well, and we had the check the next day.”
The moral here: it’s not what you know, but who you know. The Buchler’s connections with the chamber led them to the VAFC; a good accountant and a lawyer with banking connections also paid off.
A location on the morning side
The loan for which the Buchlers applied allowed them to build a new 6,700-sq-ft. facility only six blocks from their original location and more than double the size. They picked a corner on a busy thoroughfare, and located on the morning side of traffic. However, the bakery’s entrance is on a quiet side street, allowing customers to ease back out into traffic.
Because local ordinances required a parking space for every 200 sq. ft., regardless of its use, Carla and Wolfgang had to modify their original plans somewhat. For example, they had planned to cantilever the second story dramatically over the first floor, but didn’t have room for the additional parking spaces that would be required.
Still, Wolfgang had decided to build the bakery on two floors; he wanted plenty of light in the production area, as well as the store. “As a working baker, I spend a lot of time here,” he says. “I wanted to know whether the sun was shining, or whether it was raining, or whatever. I was tired of working in a dungeon, so we designed the building with production on the second floor.”
He also was tired of the heat; he included 30 tons of air-conditioning for a more comfortable atmosphere throughout the bakery. To keep those costs down, he also had powerful fans built over the ovens to vent their heat away on hot summer days.
The design included a basement, which encloses some garage parking and a storage area. Ingredients and finished products are transfered among the storage area, retail store and production area via an elevator, located in the building’s back corner. The elevator holds one rack, but the building is reinforced, and another, heavier, freight elevator can be added later to haul up pallet-loads.
Besides the elevator, the bakery includes two stairways. The one at the back of the building runs all three floors; another stairway, accessed from the store, allows customers to come up and observe the bakers at work. That gives Wolfgang a chance to have some customer contact.
“One disadvantage to building from scratch,” Carla says, “is having to follow all the rules and regulations. For example, health regulations say you have to have one bathroom on each floor; other building regulations said we needed two bathrooms, each handicapped-equipped, on each floor. Fortunately, we had to build only one on each floor.
“We also had to include a handicapped ramp. As a result, the building has a really unique shape, because of the lot size and shape, county requirements and architectural limitations.” The architect wrapped the handicapped ramp around a curving glass front, both allowing access and creating a unique entry that also admits lots of natural light.
The store has a counter along the window and a small interior bar where customers can park with a cup of coffee and a pastry. Although the store is roomy enough for tables and chairs, the Buchlers preferred not to have to follow restaurant codes. They would have had to have additional parking spaces, and would have had to give the public access to the bathrooms.
To bring natural light into the second floor, the building has skylights and windows, which save electricity and promote an airier feeling. There’s a window next to the oven, so the oven man and the decorators can see the world. “We can check on the number of cars parked out there,” Wolfgang says, “to check whether the store is crowded and needs help.”
For now, the building’s production area is adequate, although business volume jumped 30% the first year after Heidelberg relocated, and repeated that performance last year. In fact, Wolfgang is projecting another 30% increase for fiscal 1990; his actual figures are showing about 26% so far. The bakers work on staggered shifts from 3:30 a.m. to about 6 p.m., so there is some room for expansion.
“We have thought about buying the buildings next door and knocking them down for additional parking,” says Wolfgang. “Then, we could close in the open parking area in the basement to create additional production space if we need it.” And they might, considering Wolfgang is in the planning stages for as many as seven additional outlets.
Planning ahead for success
“When we built the bakery,” he says, “we planned for the future. We plan to open another outlet next year, in a nearby town. We chose that town for the high average income of its residents. The average income of the people in this neighborhood is over $60,000. That’s what I would look for in a cold spot location.”
In fact, Wolfgang has his eye on several locations. Eventually, he plans to get out of day-to-day production and run the overall business instead. He plans to hit that goal in two years.
To prepare himself for that new challenge, Wolfgang attends management and business seminars on a regular basis. In fact, he makes it a point to spend about $200 a month on self-improvement and education.
His meticulous planning is evident in his organizational system. He uses a binder-type organizer to keep track of things that need to be done. In the binder’s various sections, he jots down tasks completed, calls made and received, people talked to, special orders taken, meetings scheduled, the day’s production targets, etc. The book serves as a record of what the bakery did when. Wolfgang keeps the book near his work station so he can check it periodically during the day. Since he is in production himself, he says, this binder is a good management tool.
“When we had to put together the projections for the new store,” he says, “I could look back at these records to provide a basis for our estimates. As it turns out, we were a little conservative, but our bank is very happy with us. Of course, we can’t do everything ourselves.”
Instead, the Buchlers rely on advisors, such as their lawyer and accountant, as well as reports generated by their computer, which is tied into the store’s four cash registers. Each salesperson has her own sales drawer. Four registers are hooked in series; at night, a master register polls them and transfers the compiled information to the computer.
From the office computer, the Buchlers can generate reports on sales by time, by item, by salesperson, etc. The computer also allows them to compare their performance with any time period. It’s equipped with a modem; their accountant also has one. At the end of the night, he can pull the computer’s sales data into an accounting program.
“We’ve had a computer for more than 11 years,” Wolfgang points out. “But sometimes we get so busy that we neglect things like checking formula costs. Now, we have our accountant enter inventory invoices and check costs for us.
“For example, I have a gut feeling that we’re not making money on donuts. We still make glazed donuts, and fry for about three hours a day. We used to run all the donuts here, but I’m buying cake donuts from another baker now. Over the years, our donut production is down by about 50% from what we used to sell. I know it’s not my product. It’s people’s eating habits that are changing.
“We sell about 30 to 40 dozen a day, but we’re checking it out on the computer. We’re pulling together all the time and labor costs versus sales to see if we’re still making any money on them. The computer will confirm whether or not we’ll keep donuts in the product line. It’s just changing trends, and we have to keep up with the trends.”
Changes in customer eating habits have also caused other product-line changes. For example, Carla says, croissants no longer are popular; instead, customers are buying more bagels. Wolfgang switched to margarine from butter in his Danish, as customers complained about butter’s cholesterol content. And, although most of the bakery’s products are still made from scratch, Wolfgang uses some sugar-free muffin mixes.
One product line that has definitely benefited from the trend to healthier eating is bread. They contribute about 15% of sales, with rolls adding another 7%. Thanks to the bakery’s large freezer, the store can stock 30 different types of breads on a daily basis. Customers confused about the difference between corn rye, farmer’s rye, Vollkorn rye and Jewish rye can pick up a descriptive brochure that also lists other products.
Because the brochure lists literally hundreds of different products, you might wonder how a bakery staff of eight full-time bakers can keep up with production. The key is freezing.
After moving into the new facility, the Buchlers soon realized that they wouldn’t be able to keep up with the increase in volume by baking everything from scratch every day. Wolfgang wants to keep ingredients costs at about 27% and labor costs below 33%, so he decided to rely on mass production and freezing for greatest efficiency in all-scratch baking.
Some products, such as Danish and puff pastry, are made up and frozen without any problems. Other items, such as cakes and breads, needed some adaptations. Because of most cakes’ rich, butter-based buttercream icing, freezing iced cakes presented some problems, including cracking as the cakes thawed. Instead, the bakers freeze uniced cakes inverted onto sheet pans. The bakery’s regular sizes of 6-, 8- and 9-in. cakes are baked with paper liners, which aren’t removed until the cakes are ready to be iced. The liners help to seal in moisture; in addition, all the cakes get a wash of flavored simple syrup before being finished to restore any moisture that might have been lost.
Wolfgang also found that made-up frozen breads tended to thaw unevenly, and didn’t have the same oven spring as fresh-processed loaves. Now the mixers add about 40% more yeast to the different bread formulas and mix them to a lower temperature–not more than 70 [degrees] F. The doughs are immediately scaled, washed with mineral oil to seal in moisture, and flash-frozen in the freezer, which is kept at -30 [degrees] F with the aid of 5-in. of insulation.
Each night, before they leave, the bakers pull the loaves they need for the next day, and allow them to thaw in the retarder. “This process allows the doughs to ferment,” Wolfgang explains. “The individual pieces ferment more evenly.” In the morning, when the bakers arrive, they make up the individual loaves, proof them and bake them in the rack oven. Although the bakery also has a reel oven, Wolfgang explains that his rack oven’s steam is more even.
Because most items are mixed in large batches–individual types of breads are made in 100- to 150-lb. batches–employees have their own work stations. The mixing area has several mixers, as well as a candy stove and steam kettle, allowing the baker to have several items going at once. Other bakers concentrate on making or finishing large batches, which are then transferred to the freezer or to the store’s display area.
When planning for the new bakery, the Buchlers didn’t shortchange the production area. In addition to the major pieces of equipment, it’s full of time-saving gadgets that ease the bakers’ workload.
For example, a paint sprayer loaded with egg wash speeds the processing of thousands of sugared pretzels, as well as Danish and puff pastry items that need a wash. A glaze heater/sprayer gives a fast, neat finish to fresh-fruit pastries. A chocolate shaver hums in the corner, spewing enough curls to decorate the hundreds of cakes made up daily. Timers tick everywhere, reminding bakers of tasks that need to be tracked.
Carla and Wolfgang knew they had the chance of a lifetime when they decided to build a new bakery. But they didn’t let the size of the opportunity fluster them. Instead, with careful planning and sound advice from outside experts, they built a masterpiece that can grow into the future. Indeed, this building will make a nice headquarters for the future chain of Heidelberg Pastry Shoppes.