Gold Standard Baking: Setting the New Standard

by Laurie Gorton
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When Americans reach for a croissant, the managers at Gold Standard Baking Co., Chicago, IL, want it to be one of theirs. Chances are it will be, thanks to changes that took place during the past year. Creation of a new ownership structure and installation of a major new production line came about through what the company’s new president, David M. Shanholtz, termed "a convergence of opportunities."

When Arbor Private Investment Co., Chicago, acquired Gold Standard from the Caparos family, the deal brought solid financial support and new executives, yet it also allowed the family to keep a minority interest and to continue in key management roles. The new investors approved the addition of a second high-tech automated croissant line. Results can now be seen in output capacity that has more than doubled and in new customers who keep the company growing despite the current economic downturn. "It has been a successful first year for this business," Mr. Shanholtz said.

The bakery, a 145,500-sq-ft facility set on 6 acres and located on Chicago’s Southwest side, outputs 3 million to 4 million croissants per week, making it North America’s largest independent producer of croissants. It is also a significant player in the manufacture of strip danishes. By specializing and investing in the necessary automated lamination technology, the company has established itself as the low-cost, high-quality manufacturer of these products.

Demand for the company’s croissants has been growing rapidly because they are increasingly popular for sandwiches made at sandwich shops, convenience stores and, especially, quick-service restaurants (QSRs). As a mid-market supplier and contract manufacturer, Gold Standard markets its products to distributors, large supermarket chains, QSRs and other food-processing companies.

To suit its customers’ needs, Gold Standard produces croissants made with butter, margarine, trans-fat-free shortenings and blends and in sizes that vary from 0.7 to 4 oz each. The bakery’s danishes includes some 15 varieties. It also uses its expertise in lamination to make a number of specialty items such as butterflake dinner rolls. "These are basically croissants baked in a muffin pan," explained George Caparos, vice-president.

"Our strategy in manufacturing is to do a few things but do them exceptionally well," Mr. Shanholtz said. "Our strategy in selling is to be a customer-focused organization. Everyday, we remind ourselves of what we really do here at Gold Standard and of our need to do it better than anyone else."

LOCAL TO NATIONAL.
"Gold Standard is an interesting business with an interesting history," Mr. Shanholtz said. The company began as a neighborhood bakery in 1987 and soon moved into its current site. The plant made a full array of baked foods from bread to cakes to sweet goods. During the 1990s, East Balt, Inc., a large Chicago-based fast-food bun baker, bought the business and brought in longtime Chicago baker Constantin Caparos and his sons Yianny and George to build sales and improve operations. In 2002, East Balt took another direction and sold the bakery to the Caparos family.

George Caparos explained that the family decided to refocus the bakery on croissant production, a product starting to grab a bigger part of the sandwich shop business. It was a product already on Gold Standard’s roster.

"We knew what we did best," Mr. Caparos continued, "and that was croissants. The equipment we had then was, at best, makeshift. So, one of our first moves was to invest in a state-of-the-art Rademaker croissant line."

That was 2004. The investment enabled the company to pursue large-scale customers among food-service distributors and to engage in contract manufacturing. The new line started up just in time for the company to land an account that was about to launch a new line of breakfast sandwiches. This customer’s success — and the big increase in its order sizes — allowed further investment to scale up proofing and baking operations with a high-tech tray proofer and a high-capacity tunnel oven. Products soon reached national markets.

"The next leap was securing a contract to produce strip danish for a major in-store baking marketer," Mr. Shanholtz explained. "The strip danish we make is now the ‘brand standard’ in private label." This contract led to the installation of another production line in 2007.

Rapid growth doubled the company’s sales by early 2008 and pushed the plant’s output capacity almost beyond its limit. The Caparos family sought additional resources and, ultimately, decided to change Gold Standard’s ownership structure.

ENTER ARBOR.
About the same time, Mr. Shanholtz was looking for new challenges. With 25 years in the baking industry, his experience included contract bakery manufacturing expertise on both sides of the desk. He knew the Caparos family, and by coincidence, he and the Arbor managers had a mutual point of contact with Gold Standard. "We actually worked on this for about 1½ years," Mr. Shanholtz recalled. "A ‘sweet spot’ window occurred in mid-2008, and we closed on the deal June 5."

The Caparos family kept a partial ownership interest in Gold Standard. "This has helped us maintain customer relationships," Mr. Shanholtz stated. "George Caparos, his sister Helene and his father Constantin continue to be active in the business. The family culture is an essential part of the company’s strength."

With the ink barely dry on the acquisition agreement, Arbor faced another big decision: what to do about the capital investment for the second automated croissant line. The bakery had already bought the new proofer and oven. "This immediate need for additional capital is unusual in a buyout situation," Mr. Shanholtz said, "but we all saw the potential for this business. Therefore, the investment partners made that capital expenditure and others since to optimize plant operations."

Completion of the second line became a "must do" project. The bakery was already running 24/7, with overtime a rising expense. "When we got the new line up in December, everybody could breathe again," Mr. Caparos observed.

BUSINESS MODEL.
In analyzing Gold Standard’s potential, Arbor evaluated the bakery’s position as a mid-market producer, the kind of company that its investors prefer to fund. The bakery’s business model emphasizes manufacturing, not distribution.

"As Arbor looked at this business as an acquisition, we took note of its basic philosophy to ‘keep it simple’ — to do the things it did do well," Mr. Shanholtz said. "That is, to be the low-cost producer."

There are even benefits to companies with established croissant and danish brands. "There are some national brand companies that have actually gotten out of the croissant and danish production business," Mr. Shanholtz said, "and we now make their products for them."

"We manufacture fully baked croissants and danishes; we don’t do frozen dough or par-baked product," said Herb Kilian, vice-president of operations. "Everything we make here comes out of our bakery and goes to the customer. We leave it to others to freeze, store and ship the product to the end seller. It is one of the main strengths of our business that we concentrate on manufacturing, not distribution."

"We are a make-to-order business," Mr. Shanholtz added.

LAMINATED CORE.
"At Gold Standard, our core competency is laminated dough," Mr. Shanholtz said. The bakery’s high-tech danish line and two state-of-the-art automated croissant lines prove it. The secret to the technology is the low-shear makeup system found on each line, and the bakery’s high efficiency comes from leveraging automation with manual methods where manpower (and womanpower) pays off, from the hand-adds at the mixer to the shaping in makeup and inspection right before packaging.

The bakery is divided into makeup, baking and packaging rooms, with croissant and danish production handled in separate bays. Climate control is especially important to the laminated doughs. The croissant dough makeup room’s temperature is kept at 55°F (13°C), and mixer bowls are chilled with glycol jackets. "Croissant doughs must be kept at low temperature; they are some of the baking industry’s coolest doughs," Mr. Kilian stated.

Both croissant lines are virtually identical in equipment and operation, although the newer line incorporates several improvements over the system installed just five years earlier. "We operate two Rademaker dough laminating, retarding and makeup lines to make our croissants," Mr. Kilian said, "and the new line is 20% faster than the older one."

With bulk flour and water supplied by a Shick ingredient system, Shaffer horizontal batch mixers produce croissant dough. The dough mixers kick out dough into troughs that transport transport the dough to the hopper of each line.

The initial sheet of dough, drawn by gravity from the dough hopper, is roughly 2½ in. thick. It goes through a multiple-roller sheeting head and emerges as a 1-in.-thick sheet. Butter or margarine is pumped out as a thick ribbon down the sheet’s center, and folders lap the dough over it.

"The shortening chunks are turned into a continuous stream," Mr. Kilian explained. "This method is highly accurate because the ratio of dough to butter is completely controlled by computer."

The folded dough passes through another multiple-roller reduction head and enters the lapping-and-layering section. Two lapping sections each followed by a multi-roller reduction stage multiplies the number of fat-and-shortening layers. The dough sheet travels up an inclined conveyor to enter the line’s overhead retarder and cooler. "The European style is to rest and cool the dough before forming the croissant," Mr. Kilian explained.

It takes approximately 30 minutes for the dough to traverse the cooler, traveling across and back again before exiting down a second inclined conveyor. The dough sheet moves through another multi-roller station and then into three sets of gauge rollers. "The final thickness of the sheet determines the weight of the finished pieces," Mr. Kilian said. At this point on line No. 1, a turning conveyor can be engaged to send the laminated dough to a bypass section. Here the dough is made into filled croissants, butterflake rolls and other specialty items.

COIL, CURL, PINCH.
To make croissants, the sheet of dough passes through a cutter-wheel assembly that divides the sheet into continuous strips. Any trim is returned to the mixer for use in subsequent batches. Next, a rotary cutter shapes the strips into individual triangles. A special alignment machine uses pins to turn each triangle, orienting them so that their long edges enter the curling belts first. The coils drop onto waiting baking pans.

Operators manually curl the croissant coils into the standard rounded-crescent shape. The workers then place the croissants into pans.

"From here on out, the process runs automatically," Mr. Kilian said. "The systems are so reliable that we don’t need a full-time oven attendant."

Pans are grouped as they enter the tray-style proofers, supplied by The Henry Group. "Most of the volume development of croissants takes place in the proofer The exact settings are programmed according to each style’s needs and can be changed with the press of a button," Mr. Kilian said.

The croissant lines’ automatic proofers have full temperature and humidity control via PLC, governing their operation and enabling data recording and alarms. Process control is based on identification of the key input variables and optimizes standard settings for each product style along with control limits management.

Line No. 2’s tray proofer extends the full height of the building, all the way up to the ceiling 30 feet above. "This is the largest unit we could fit into the building," Mr. Kilian observed.

BAKE AND PACK.
The two Henry Group direct-fired ovens operate by PLC. Zones are configured so that structure and volume set occurs in the first zones, with moisture removal and, finally, coloring taking place in the later zones.

As pans emerge in rows from the ovens, they are oriented for depanning. Capway depanners gently separate the croissants from the pans, lifting them onto conveyors leading to the I.J. White spiral cooler on line No. 1 and the G&F spiral cooler on line No. 2. A Burford spray system is engaged, according to variety, to apply a shine coating before they enter the cooling spirals.

Empty pans automatically return to the pan-loading section or into pan storage. Starting with line No. 1, the bakery installed a Stewart Systems automatic pan system using two stacker/unstacker units. Line No. 2 added two more such units. The pan system is fully computerized to add and remove pans according to line flow and product variety.

Croissants leave the cooler and travel into lanes that feed the bakery’s LeMatic pillow-pack packaging system. Assembled in groups, the croissants are sliced and bagged. The whole pack then slides down a short inclined conveyor into a waiting basket-like tray. The line operator stacks the baskets onto a dolly.

DYNAMIC INSTALLATION.
Because of continuing heavy demand for its croissants, the bakery had to install line No. 2 while keeping the older line in full operation. The new proofer and oven proved particularly challenging, yet the bakery was able to shoehorn the equipment into the existing space. A temporary wall separated the two lines to avoid possible contamination.

Gold Standard went to Dunbar Systems of Lemont, IL, for design, layout and installation of its first automated croissant line. Working with the same firm, the Caparos family laid out line No. 2 and purchased the proofer and oven before the Arbor acquisition.

DANISH EXPERTISE.
In a separate part of the building, Gold Standard installed its danish line, which managers described as "an older assembly of Diosna and Rheon equipment, an existing proofer and a Baker Perkins oven." It currently operates one 10-hour shift daily on a 5-to-6-day schedule.

Because danish pastries use many components — dough, filling, glaze, streusel and other toppings — Gold Standard laid out this line with several stations with stand-alone sigma-arm mixers and other processing equipment.

Doughs move to the Rheon sheeting, laminating and makeup line. The line’s extruder creates a tube of dough, with the shortening (butter, margarine or blended shortenings) pumped into the tube’s center. The tube is flattened by a multiple-roller station to create a continuous sheet and then lapped to laminate it.

After a final reduction stage, the filling is pumped onto the sheet, and the dough is folded over it. Next, the dough is flattened slightly and runs through a guillotine cutter. The cut strips go through a twisting machine of proprietary design. The twister drops the strips into shallow aluminum foil trays, and line operators manually align the strips. The aluminum trays are carried by permanent pans that stabilize them through the proofing and baking process.

Pans are racked manually and pushed into a first-in, first-out rack proofer. After proofing, operators pull the pans from the rack and place them onto a conveyor to pass under the streusel topper as needed. Pans are grouped and loaded into the tunnel oven. After baking, the pastries reach a takeaway conveyor leading to an I.J. White ambient-temperature spiral cooler and the permanent pans move off to be filled again.

Halfway through the cooling spiral, the danishes are routed into an icing station and return back to the spiral to finish cooling. At the end of the cooler, a line operator visually inspects all danishes. "These danish are supposed to look hand-made," Mr. Kilian explained, so visual irregularities are permitted, but underweight products are rejected by the Loma LCW checkweigher. danishes also go through metal detection by passing through a Loma LQ2 system.

A Colborne clamshell erector feeds the outer packaging into the line. Labels are affixed to the top and bottom of the clamshell before the finished products are loaded in groups of 12 into delivery cartons. The danish line’s packaging options include window-box style cartons, made on a Kliklok carton erector and sealer.

ONGOING IMPROVEMENT.
The data gathered during processing operations fuels Gold Standard’s process of continual improvement. "Both croissant lines have control systems that let us see trending over time," Mr. Kilian said. "The data become part of the continuous improvement program here."

The company recently introduced Vicinity manufacturing software to encompass all business aspects from order entry through bill of lading procedures. "It will do the accounting, but we will see the biggest benefits on the operations side," explained Mike McDermott, c.f.o.

"When you move from family money to ‘other people’s money,’ the level of detail increases," Mr. Shanholtz added. "There must be more reporting to investors, banks and other parties, and we are doing a lot of new things to address these needs."

Looking to the future, the company is well positioned to maintain its competitive advantage. "Producing croissants at high speed is a very capital-intensive process," Mr. Shanholtz said. "So, the barrier to entry (by competitors) is their willingness to invest at a significantly high level."

Addition of new products at Gold Standard is based on customer needs and evaluated for feasibility by projecting capital needs and product costs. "The contract with the customer has to make sense for both parties," Mr. Shanholtz said. "We have room here already for at least two more large-scale production lines."

"And we have the land to expand," Mr. Caparos said.

In the long run, the ability of Gold Standard to serve its customers by producing consistently high-quality products in a low-cost processing environment will make or break the company. "Customer service is what sets us apart," Mr. Caparos said. "We still have the family-business feel, and we will do whatever we can to make our customers happy with us."

"It is personal for all of us," Mr. Shanholtz added. "We are downstairs in the bakery a lot, to taste and see the product from our customer’s point of view. We have a great desire to be successful, and we take individual and collective responsibility for the success of the business."

END

This article can also be found in the digital edition of Baking & Snack, May 1, 2009, starting on Page 28. Click
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