Dan Malovany: Pricing the calculated risk
BakingBusiness.com, March 1, 2013
by Dan Malovany

When it comes to engineering a better bakery, most project managers loathe being the guinea pig on a prototype or revolutionary new system. Conventional wisdom: Let someone else work out the kinks. Who needs those headaches?

Sure, there are dozens of horror stories about blue-sky initiatives gone gray, but being risk-adverse often isn’t a better alternative. When Tennessee Bun Co. decided to replace its aging biscuit oven because of quality issues, the company searched for the most consistent bake it could find — of course, within its price range. After it identified a system it liked, the management team did its homework, which involved four months of analysis on a European hearth impingement oven, to be exact, before it felt comfortable cutting the purchase order.

“The real challenge was nobody in the world was using that oven for biscuit baking, so there was a lot of concern about that,” said Alan Edington, vice-president of operations. “You never want to be serial No. 1, but we were the first serial on this one.”

For Mr. Edington, the homework paid off. “That oven delivers the most consistency of any oven out there, and quite honestly, it has been the easiest oven to operate,” he said.

The problem with playing it safe is that companies end up making similar products on the same equipment and competing on price instead of on quality, noted Nadine Salameh, executive vice-president, Bakery de France. Maybe using tried-and-true systems works for baking white bread or buns for a sandwich chain. However, she noted artisan bakers are wired in a different way. They tend to avoid off-the-shelf systems. In fact, Bakery de France worked with vendors for up to a year to custom design its equipment for its new Frederick, MD, bakery. The move helped separate the bakery from competitors who were selling what she called “commodity artisan bread.”

“If you don’t take a risk, you don’t make any progress,” Ms. Salameh explained. “If you want to invest millions of dollars to compete against the biggest in the industry over price, that’s not a good idea, especially for someone our size.”

By taking the road less traveled, Bakery de France is learning more than ever about making its signature artisan breads. The equipment, Ms. Salameh said, is teaching them new ways about how to make their line of all-natural products.

“What are we best at? Making creative and innovative products,” she said. “It always costs more, but in the long term, it is a winning formula for us and the baking industry in general.”

Her advice for companies planning to invest at IBIE 2013? Find a way to differentiate yourself — or else.

“The industry needs to wake up,” she stressed. “Everything you are faced with as far as pricing is your own doing. Progress is never easy.”

Just don’t forget to do your homework.