Mark Dyck

Bakery Owner and Bread Baker

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Orange Boot Bakery

We are a small, family run bakery in Regina, Saskatchewan that specializes in hand made artisan bread and sweets made from classic recipes, just like you (hopefully) made with your Grandma when you were little.

We have been open for three years but in 2014 my wife and I are focusing on where we want to take the bakery over the next five years.  Terms like "repeatable" and "scalable" often have me flustered.  There are a million things we could do, but some choices will build on what we have already made, while I'm afraid other choices may detract from what we've built.  I hope this course will help me clarify my thinking on how to grow my business.

Our goal is to serve the needs of a specific group of people in the city - people who are looking for fresh, "clean" baked goods that are made from scratch using real ingredients.

Our baking evokes memories of a time when food wasn't over processed and bakeries used real ingredients like flour, butter, eggs, milk and sugar rather than factory made mixes and bases.  

Our hope is that the bakery itself evokes a sense of wonder (what amazing baking!), belonging (this is 'my' special place) and connection (the production area is open so customers can watch us bake and talk to the bakers.

The hard part, as Seth puts it, isn't what to make or how to make it.  It's sometimes "how much to make" because we bake fresh every morning and sometimes we sell out early and others we have lots of leftovers.  

Repeatability of the baking is something we can handle through training and documentation. We made great strides with this in our third year.  

Repeatability of an amazing customer experience is more difficult - finding the way to train our service staff on how to make decisions and serve customers even better than the owners can.  

I think the real hard part is scaling the business.  How to get noticed by potential customers so they make a special trip to the bakery.  How to get us and our products out in the community while keeping an awesome buying experience for customers.

We started selling at the local farmer's market last year.  Great win, because we ran our own booth and could treat customers the Orange Boot Way.  

We also started selling our bread at smaller organic grocery stores.  Questionable move, because we don't control freshness / shelf life or how the bread is displayed.

The Business Model

- I lease a space for production and retail sale

- I buy raw ingredients like flour and butter and nuts and yeast.  I buy the best ingredients I can find.  Local and organic where I can find it.

- I hire and train bakers and front counter staff.

- We bake fresh bread and sweets every morning and sell them at the bakery that day.  We also sell at a farmer's market two days a week in summer.

- Because everything is fresh, we try to predict how much to bake every day so we don't sell out early and don't have too many leftovers at the end of the day.

- We continually change parts of the menu to keep things interesting for customers (holiday items, bread of the month, Pretzel Thursday, etc.)

- We charge a premium price compared to the grocery stores for what is perceived (by me and our customers) as a higher quality product.  

Freelancer vs. Entrepreneur

When I started I didn't know the question, let alone the answer.  

The entire idea of a bakery came about because I love to bake bread and I'm very good at it.  My friends loved what I baked and I loved making them happy.

But I also want to build an institution in my city.  A beacon of awesomeness that isn't about Mark the Baker, but about this group of amazing people who feed people with care and craft.  

So, I'm an entrepreneur.  When I realized that it freed up my energy and my mind to try and build something bigger than me.

But the third item - cash flow - is the kicker.  We're not at a point where I can completely step away from the day to day baking.  But we're getting there.  That's my challenge going forward.

Funding:

We started the bakery with a home equity line of credit. I wish I did this chapter before I put my house on the line but at the time I thought it was the only way I could get started.  

I'm still not sure how to have the conversation with the bank about removing my personal guarantee.  I think it's connected with being able to sell the bakery.  I mean, if I could sell it today for $xxx, and that's more than my loan, I should be OK with the bank.  

But the questions about selling at some point, for how much, etc.  have me stumped. I can put a value on my hard assets (ovens, mixers, etc.) but not on anything else.  I think I need to be able to show that a new owner could generate $x in sales and profits without being a master baker and put a value on that too.

Hiring:

 We opened without a hiring plan.  And as Seth defines it, we still don't have a hiring plan.  We have a vision though:

- We are forming a Federation of Awesome Bakers.  A place where bakers can create new products based on their passion and interest.  

- We hire new pastry / baking school graduates and people with a passion for baking but perhaps no professional experience.  

** warning flag **  I haven't had a baker who is 'smarter than me' apply yet.  I may have a mental block here as I'm more comfortable training people to bake 'the Orange Boot way.'  This is really something to think hard about and see whether I'm the problem here.

- Through my connection with the Bread Baker's Guild, we're getting a good reputation at some of the Pastry / Baking schools in Western Canada.  Some instructors are encouraging baking school applicants from Saskatchewan to check out our bakery first, especially if they have no professional experience.

- Our front sales / counter staff is not as far along.  We have some amazing people and I think we do a fair / good job of training, but there is much more we can do.  For sure we are not seen as 'the place to work' if you want to work in customer service.

- two big gaps to fill:  doing that outbound marketing to attract great people (maybe even those with jobs) to work with us; and getting better at doing projects before hiring employees.   I had never thought about how we could structure our work as projects before.  I'm certain this isn't done in our industry -- maybe we can change the game!

Naming

We actually came up with the name Orange Boot based on one of Seth's posts from 2009 or so (the Fish Eye post.)  We wanted something easy to remember, pronounce and spell.  Something empty that we could fill with meaning.  Something that specifically was not "waving wheat" or "staff of life" or "Wild Grainz" or something super serious.  We wanted our name to have a sense of whimsy and arouse curiosity in people.  (we could only get the .ca URL though!)

One of the first things we poured into the name was this image of a little kid playing outside, pretending to be a wizard or a warrior, wearing orange rubber boots.  That feeling of imagination, playfulness amazement and pure joy is very much  what we want to evoke when people visit us.

 Partnerships

Oy.  That's a tough one.  I think the biggest opportunity to partner is with local ingredients suppliers.  Local farmers and millers, local cheese makers, etc.  Not in an equity relationship but perhaps joint marketing or maybe some sort of royalty program..

Actually, a royalty program might be a really good idea.  Take einkorn wheat for example.  It's an ancient grain that, depending on your worldview is either low-yield, hard to grow grain or a miracle food.  My local miller is really high on einkorn and is pushing me to bake with it.

Rather than just buy the flour outright for $75 per bag (vs. $35 for organic wheat flour or $18 for conventional bread flour), maybe there's an opportunity to pay the miller a royalty on every loaf sold. 

The other big potential "partner" is my landlord, but that's a really tough one to get my head around as we haven't hit it off well so far.

I've been thinking of building an equity plan for my best bakers and have been researching that.   From the video it seems I need to tie any plan to significant contributions (sorry, Ringo.)   

Cash Flow

The good news is that we're on the proper side of the cash flow equation. Close to the equal sign, but on the right side.

- we buy our ingredients and for the most part have between 7 and 30 days to pay. We average paying in around 15 days.

- This is interesting though because I just changed butter suppliers. Better quality for a lower price, but I have to pay when it's delivered. This could be an issue if we grew very quickly but I only hold 3 weeks worth of butter at a time so it's not dreadful.

- since we're 99% retail, I have money in the till at the end of every day. I'm slowly growing wholesale accounts but work hard to get paid when I deliver, not 30 days later.

- The biggest cash flow issue is deciding when to hire new bakers. I don't hire part time baking staff because I want them to commit to the bakery so I commit to them. But it wreaks havoc on my cash flow if I hire in anticipation of growth. My payroll is very high in relation to sales until sales grow enough to pay for the new baker.

You know, that's the big insight from the first video in this section. My strategy towards hiring is causing huge cash flow problems for my small business. When you have 100 employees maybe 101 isn't that big a deal, but when you have 5 employees, going to 6 is a really big deal.

Pricing

Oh. My. Goodness. My soul stripped bare in the first 30 seconds. I worry so much about 1 person arching an eyebrow about our prices. I have to change my thinking on this.

Right now, we do pricing two ways:

#1: We use food cost as a guidepost of our 'floor' price. But our main contributor to cost is labour (all our baking is hand made, from scratch, but actual bakers) so I think I'm measuring the wrong thing anyway.

#2: We try to use 'value pricing' too. How do our muffins compare to the 'next best' in town? Are we charging the same? Slightly more? Our croissants are on par with a great San Francisco or Parisian bakery, so we felt justified in charging as much or more as anyone else in the city.

But neither of these pricing strategies have anything to do with the two things that I obsess over:

- is the baking, the way it's packaged, the way people feel when they come into Orange Boot or think about us, is it truly remarkable? Is it truly 'best in the world' so people are glad to pay what we need to charge?

- are we really charging enough to pay for quality ingredients, to pay our bakers a living wage, to pay down our loan and make a living? And even a profit?

We're close but we're not there. And I waffle between "keep prices lower and attract new customers" and "raise prices and focus even harder on my existing customers."

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