Turano Baking: A Tale of Four Cities
March 1, 2011
by Dan Malovany and L. Joshua Sosland
Every business goes through the best of times and the worst of times. Eventually, however, a company experiences that moment of truth when it faces stark reality and has to dig deep to discover its true character and determine whether it is capable of moving the organization to the next level.
In the early 1990s, Turano Baking Co., Berwyn, IL, found itself at that crossroads. After nearly 30 years, the company had blossomed into a solid regional bakery supplying Chicagoland retailers and food service establishments with fresh Italian, specialty and hearth breads and rolls. However, as the food service industry went through a sea change and many regional chains aspired to become super-regional and even national players, Turano Baking had to decide if the company had what it takes to grow with these companies by supplying them with frozen par-baked products or remain in its comfort zone as a family bakery content with serving the Second City and its surrounding areas.
Based on demand from a single, rapidly growing food service operator, the company decided to build a second plant in suburban Bolingbrook, IL, to supply frozen par-baked rolls to this particular customer. From a business perspective, the location was ideal. Settled on 10 acres of land, the bakery was the first business to occupy a prime location about a 30-minute drive outside of the busy city, just minutes from a major highway. The goal was to build a 100,000-sq-ft bakery that would house a high-speed roll line and enough freezer capacity to move the company into a whole new business model.
When the plant opened on schedule nine months later, however, its sole customer had suffered a business reversal and no longer needed product from the Turanos. In that moment of truth, the company found itself with a large new plant, a heavy amount of debt and no business.
Rather than retrenching, the three Turano brothers — Renato (Ron), Giancarlo and Umberto (Tony) — who have been working together at the company since the late 1960s, scrambled to find other customers for the new plant. Within a year, they had succeeded to the point where a third production line had to be installed at the plant. The bakery today now houses six lines —four high-speed French bread lines and two roll lines — and the company is looking to further expand the operation to meet new business demand.
The Bolingbrook experience is just one of several chapters in Turano Baking’s history. However, it is perhaps one of the most important because building the Bolingbrook bakery offered invaluable lessons for how it would undertake future expansions.
More recently, Turano Baking successfully added a new plant in Villa Rica, GA, in 2007, and just last year, it opened a state-of-the-art bakery in Orlando, FL, to supply several hundred quick-service restaurants in the area. Today, the story about Turano Baking is the tale of four cities, but more is to come.
From its experience in the early 1990s, Turano Baking transformed from a hometown specialty bakery in Chicago to one with an increasingly national presence. Back when Bolingbrook was built, the company sold about $25 million annually. Today, the company sells more than $200 million with its Berwyn, Bolingbrook and Villa Rica plants each accounting for about 30% of sales, while its start-up Orlando business pulling in 10% of its revenue.
In many ways, each of these bakeries represents a chapter in the history of Turano, and the company indicates it’s currently in planning stages to write more chapters in the years to come.
Because of the company’s commitment to customer service, its passion for baking, its continued growth over the years and its successful adoption of a “what doesn’t kill you makes you stronger” motto, Milling & Baking News and Baking & Snack magazines named Turano Baking their 2011 Baker of the Year.
In a recent interview at the company’s Berwyn headquarters, the three brothers reflected on their years together as business partners, the successes and challenges they’ve faced, and the leadership transition currently under way at the company.
The three brothers, as boys, moved to Chicago from Italy with their mother in 1958, a few years after their father, Mariano, had immigrated. Mariano worked at his brother’s bakery, baking and delivering bread to homes in the neighborhood.
According to Ron Turano, while the company has grown dramatically in recent years, its fundamental philosophy has never changed.
“Our three priorities are family unity; taking care of the customer, who becomes our partner; and the continuation of what our father started — the idea of baking and a passion for baking,” he said. “You do it because you love to do it. Our goals remain the same: Take the best produced loaf of bread to the customer.”
Improvisation epitomized the company’s approach in the early years. Its first baking plant, Campagna Bakery on Addison Avenue on Chicago’s West Side, was only 600 sq ft. When additional space was needed, the company acquired an adjoining garage that became a makeshift cooling room. Eventually, in 1965, their father purchased a building in suburban Berwyn because of its central location for distributing throughout Chicagoland.
“It was a 3,000-sq-ft complex,” Ron recalled. “We had a lot of room. The building had possibility. There was an empty lot to the west, a couple of stores already leased to other people. That helped cover the mortgage.”
The company began selling wholesale to retailers in the early 1960s. The company would use a surround-and-conquer approach to get into a specific store. Specifically, Turano would go into a neighborhood and sell its Italian bread to every family around a certain store.
“[That store soon] realized they weren’t selling any Italian bread,” Ron noted. “So they came to us and said, ‘You might as well sell to us also.’”
As large as the Berwyn facility seemed when the company bought it, Turano began expanding quickly, adding offices in 1967 and beginning to take over the leased storefronts in 1969 to make room for additional baking lines. In 1974, the company purchased the building to the west.
By the 1990s, Turano Baking was expanding too dramatically at Berwyn to accommodate new business with restaurant chains that were “going great guns,” Giancarlo said. These customers accounted for a third of Turano’s total business.
At the time, the company couldn’t envision squeezing enough capacity into the Berwyn site, although a few years later the company negotiated with the town to allow it to close a road and add another 60,000 sq ft to the bakery to house its state-of-the-art, stress-free artisan bread line that automated the production of the family’s signature, 2-lb Pane Turano round loaf.
Back then — specifically, in 1992 — a major customer was purchasing par-baked frozen product, and the company desperately needed additional capacity and needed it quickly. So the brothers decided to make the big move to a second facility in Bolingbrook. “The plan was to install an automated line for the volume. Could we put up a building and a line within nine months? If we couldn’t, we would lose the business,” Giancarlo recalled. “When we looked at the risks, we concluded that if something went wrong, we would be able to bring all the Berwyn production into the new facility.”
Beyond meeting the needs of the customer, the construction of the Bolingbrook plant — appropriately named the Knead Dough bakery — also allowed the company to significantly broaden its distribution beyond the Chicago market.
“We had wanted to expand to other places, and the only way to do that was with par-baked products,” Ron said. “Customers would have the option to take product from the freezer, pop it into an oven and serve something fresh. We really believed in it. Artisan bread demand was growing. It is tough to bake [this style] outside of Chicago, New York or maybe San Francisco. By freezing, you could produce it in a customer-friendly way. Our fresh business was growing, too, but modestly.”
The brothers’ pride at completing the plant quickly turned into dismay when the customer went out of business.
“It was very stressful,” Giancarlo said. “You reflect on what you did right and what you did wrong. You try to avoid what you did wrong. We tightened our belts and became a lot more aggressive on frozen business, which produced opportunities to build volume quickly. We hustled.”
The effort paid off, and the plant increased volume steadily. Ironically, the gourmet bun the company planned to sell back then is now a major seller today.
Ron said that while the company had considered the option to shift production to Bolingbrook from Berwyn when the business prospect disappeared, the brothers rethought the strategy.
“Things were going well in Berwyn,” he said. “So we decided, let’s go get more frozen, par-baked business.”
It isn’t enough to learn lessons from a misstep, but learning the correct lessons is key, Giancarlo said.
“We asked ourselves, ‘Should we do business with large customers?’” he recalled. “The reality is you can’t avoid it. The answer isn’t to avoid large customers but to work with several. You need to be sure no large customer represents more than 10% of our business. When you decide that, it puts extra pressure on you to grow. Because when you add one large customer, you need to add several others.”
Having successfully built a business shipping par-baked product around the country from a Chicago plant, in 2007, Turano took a major step by building its first plant outside of its home region. The Villa Rica facility also moved away from the company’s comfort zone by venturing for the first time into the white bread market.
“We looked at the country and asked, ‘What would the next logical place be for frozen business?’” Ron said. “We looked at population. From a freight and trucking perspective, we concluded Georgia would be great. It’s centrally located for the Southeast; we could certainly serve the Northeast and the nearby Southwest from Georgia as well. From a freight perspective, it had similar qualities to Chicago.”
Giancarlo said lessons from the Knead Dough plant included securing solid commitments from prospective customers on a contractual basis, which allows the company to take its plans to the bank and secure financing while minimizing risk. As a result, the strategy worked as planned and the bakery is operating like “gangbusters,” he noted.
In many ways, Tony added, Villa Rica added “a new dimension.” “The Georgia plant bakes white bread, all on a contract basis,” he said. “It has the capacity to produce 10,000 loaves of pan bread per hour on a high-speed line. It runs round the clock, five days a week, 80 million lb of bread a year.”
CHAPTER IV ... AND MORE.
Like Villa Rica, the recently opened Orlando bakery was built after securing advance business, specifically 800 McDonald’s restaurants in the area. The operation houses one line turning out 1,000 buns per minute, but the facility has room to add a second line as business grows.
“It is automated from beginning to end, from ingredient gathering and handling to packaging,” Tony said.
“We do what our clientele wants,” he said. “It was a great opportunity with business already in place. Capacity of the facility will be 80 million lb.”
While declining to disclose what major capital project is next, Ron said plans currently are being formulated as the company, once again, secures additional business prior to committing to yet another major investment.
“In this kind of business, you need to plan a few years forward in terms of major capital expansion,” he said. “We want to be geographically balanced. Where we have opportunity is in the Northeast and the West Coast.”
Change at Turano Baking has not been limited to the company’s baking plants and product line. The three brothers, all in their late 50s or 60s, are in the midst of a transition to the next generation of family ownership and management. Ron said that their children grew up in the business in a way not too different from that of their own generation. He expressed confidence that the next generation will uphold the basic principles that have guided the company during the course of the second generation.
“For all practical purposes, we don’t know anything different,” he said. “The three of us have been working together for the last 49 years. Our children grew up in this environment. For many years, we lived near one another, and our children grew up as brothers and sisters. They have those values. They still see one another that way.
“They have proved they can work together and work through issues,” he continued. “They have not only interest in the business but concern for one another. We feel very good about the future.”
In contrast to the older generation, the family placed a greater emphasis on schooling and outside work experience for the third generation of Turanos. No one was running a truck route like Giancarlo did when he was a 12-year-old.
“We wanted to be sure each one had an education and a chance to find their vocation,” he said. “They needed to do work away from the business for three years. We set these parameters to be sure they were prepared and they followed what they wanted. We wanted them working with other people, working for other people.”
The brothers modeled a good working relationship that has worked well over time, Ron said. Next year, the company will celebrate its 50th anniversary, and with great fanfare.
“When it comes to making decisions over the years, for the most part, we pretty much think alike,” he said. “We all have our own opinions. God knows, we’ve expressed them. But we came to the realization that if we made a decision and would get behind an idea, we would get there together.”
Perhaps the biggest lesson learned is that family bakeries need to focus on family as much as the business to survive in the highly competitive baking industry. Despite any initial disagreements in opinion, when a business decision is made, the family pulls together as one.
“At the end,” Tony said, “it’s a consensus.”
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