Gonnella Baking reinvents itself … again
Oct. 1, 2012
by Dan Malovany
Survival in the business world often depends on how a company evolves with an eye on the future while remaining true to its roots. Over its vast 126-year history, family-owned Gonnella Baking Co. has thrived — and changed — by transitioning from a local Chicago, IL-area producer of French, Italian and Vienna breads and rolls to a coast-to-coast provider of frozen dough, par-baked products and fully baked frozen items.
The evolution didn’t happen overnight, noted Nick Marcucci, the bakery’s president and CEO. Even its regional fresh-baked business, which still operates 50 direct-store-delivery routes serving a market from Milwaukee, WI, through Chicago and down to Indianapolis, IN, is standing on its head from when he officially joined the company 37 years ago. “Back then, fresh was 95% retail and 5% restaurant and food service,” he recalled. “Today, that has totally flipped, and food service is 95% of our fresh business.”
In 1980, Gonnella opened its frozen dough operation in Schaumburg, IL, a move that dramatically changed the course of the company’s history, according to Tom Mazukelli, treasurer. “The single biggest decision this company ever made was to enter into the frozen dough market,” he said. “That area of the baking industry allowed us to expand nationally and provided us with the profits to then enter other emerging markets that we currently supply.”
Throughout the years, Gonnella’s frozen dough division built a national sales force that now consists of dozens of bakery technicians. Today, these customer service representatives visit in-store bakeries and food service chains and work on-site to troubleshoot issues, ensure quality, set up merchandising displays and roll out new products.
Perhaps more importantly, its sales force and frozen distribution network drive the company in yet another direction. “We have a national footprint on frozen dough, which we built in the 1980s and 1990s, and we felt we could take advantage of that national sales force by introducing our fresh-baked products into that system,” explained Ron Lucchesi, Gonnella’s secretary and president of its frozen products division.
To accomplish this goal, Gonnella is currently in the process of marrying those two businesses and their separate cultures into one cohesive organization so it can better serve its customers and offer them a full spectrum of bread, rolls and frozen dough products. In many ways, it’s a logical progression, considering how the business adapted during the past 30 years.
“At one point, fresh and frozen were separate entities,” Mr. Marcucci said. “The focus now is getting everybody consolidated on the same platform. The whole idea is to become one company again by offering a complete line of bread and roll products. From the standpoint of frozen dough, par-baked or fresh-baked frozen, we can meet the needs of our individual customers.”
To achieve this goal, Gonnella moved to centralized headquarters in Schaumburg, putting the management teams of the fresh and frozen businesses under one roof. “When communication is face-to-face instead of over the phone, the flow of ideas is better,” Mr. Lucchesi observed.
The move consolidates purchasing, food safety, human resources, marketing and even the diverse sales and production departments. It allows the company to explore interdepartmental synergies and better coordinate daily operations.
It also makes it easier for Gonnella’s board of directors — which includes Mr. Marcucci, Mr. Lucchesi and Mr. Mazukelli — to build a strategy for the future and ensure that it’s properly executed. “It puts our management team in one location, which enables us to make decisions more quickly and communicate more effectively for future product development,” Mr. Mazukelli explained.
From hearth to heartland
In many ways, Gonnella hasn’t changed over the years. “Our heritage is a family business,” Mr. Lucchesi said. “We believe in this company, and we carry this feeling out by serving our customer with high-quality products at pricing that is reasonable. And we believe in long-term relationships with our customers.”
The company’s strategy is to work one-on-one with customers to develop products and find ways to grow both businesses. “Service is the No. 1 motto that’s been passed down for generations,” Mr. Marcucci said.
Unlike most conventional baking companies, Gonnella started out as an ethnic bakery that’s gone mainstream as it expanded geographically in recent years. Call it the baking industry’s version of reverse evolution. “Chicago is a hearth-bread market. It’s ethnically diverse,” Mr. Lucchesi noted. “It’s where we grew and cut our teeth. As you go outside into the regional and national market, you find it’s a much more soft bread market.”
During its heyday a quarter century ago, the fresh bakery filled tens of thousands of invoices during an average four-week period. Even today, the fresh operation carries more than 500 SKUs, although that number continues to shrink to make the business more manageable. “The fresh side is more made-to-order,” Mr. Marcucci said. “It’s harder to run from a logistics standpoint when you are making 1,200 deliveries a day and you’re pulling in suppliers’ products from 10 outside sources along with hundreds of SKUs.”
On the other hand, the frozen business is a much more streamlined operation with only 400 SKUs, 140 products and a dollar volume significantly higher than that of the company’s fresh business. The frozen product division has a much better margin. Because it produces items for inventory, the frozen operations have longer runs and fewer changeovers. Also, there are no changeovers like there are on the fresh side. And its customers are much larger. “The volume you can generate with one in-store bakery customer dwarfs what you can do in the fresh food service market,” Mr. Lucchesi said.
With its frozen business, Gonnella distributes its products through major food service distributors or direct to customers. It also sees solid opportunity with convenience store chains that are now rapidly diversifying the foods they offer with upgraded deli and grab-and-go programs. Adding a complete line of fully baked frozen breads and rolls dovetails nicely into these alternate channels of distribution. “C-store is a growing business,” Mr. Lucchesi said. “It’s amazing how many people shop at convenience stores to save time and energy.”
Likewise, the company partners with some of the biggest players in the food industry by providing them with products in multiple formats that can be incorporated into frozen entrees. “As we become a national supplier with a national footprint, we’ve certainly taken contract manufacturing as one of our channels of distribution,” Mr. Marcucci said.
Gonnella scours for opportunities outside of the conventional bread aisle, identifying ways in which bread and rolls can be used as a component by the larger meal replacement category, according to Tom Marcucci, vice-president of sales and marketing. “We look at what’s going on in the marketplace and become aware of how we can leverage that fad or trend in our business that maybe someone else just missed,” he said.
A niche product for some of the nation’s largest retailers or food manufacturers can result in substantial business for a company of Gonnella’s size, noted Mike Lucchesi, vice-president of manufacturing. “We listen to our customer and see what’s out in the market before others see it,” he said. “We’re pretty seasoned fighters. We’ve been in one heck of a competitive market in Chicago for more than 125 years. There’s hardly a bread product that we haven’t produced over the years.”
One recent rollout included telera rolls that are similar to but more rounded than the bolillos so popular among Hispanic consumers. Gonnella discovered the concept in Southern California and developed it into a new product and merchandizing program for its national customers. “We have developed a larger product line of ethnic and global breads with the implementation of Hispanic marketing displays, which has provided us with exposure to markets that were previously untapped,” Mr. Mazukelli said.
Piecing the puzzle together
Much of Gonnella’s growth has come since the beginning of the millennium, according to Tom Marcucci. “This isn’t a company that’s standing still,” he noted. “This is a company that’s forward-moving, and the pace of growth is accelerating. We’re doing it methodically but at a faster pace.”
As sales grew nationally and its product portfolio diversified, Gonnella needed to add production capacity to meet demand. Today, the $170 million company has more than 500 employees and five production facilities serving the nation.
“These five plants have given us a large amount of versatility just by the nature of what each plant is currently producing and capable of producing in the future,” Mr. Mazukelli said.
On the fresh side, Gonnella operates two hearth bakeries in Chicago, which have been the heart and soul of the company’s fresh-baked business for decades. In 2003, however, the company opened a highly automated, fresh soft bun, roll and pan bread bakery in Aurora, IL, where it contract-manufactures products and, more recently, began producing fresh-baked items for its frozen distribution system.
On the frozen side, the company expanded its Schaumburg facility several times over the years to keep up with demand. In 2007, to lower distribution costs and better serve its East Coast customers with frozen dough products, Gonnella built a 100,000-sq-ft greenfield facility in Hazle Township, PA.
This year, as a part of a $5 million investment at its 125,000-sq-ft Schaumburg facility, the company increased the holding freezer’s size 40% to 75,000 sq ft. This added capacity will handle anticipated demand for its thaw-and-sell line. The freezer also is used to redistribute frozen dough items that it exchanges with its Pennsylvania operation.
“By implementing better planning and lead time on all orders, we were able to streamline production in Schaumburg,” Mr. Mazukelli noted. “That lead time has enabled us to schedule long production runs, thereby eliminating bottlenecks, changeovers and capacity problems.”
Intelligent baking systems
At the 80,000-sq-ft Aurora bakery, streamlining production is an ongoing process. “I don’t think a day goes by without us trying to find a way to squeeze out another pound of production from this operation,” Mike Lucchesi said.
About 80 people work on two 10- to 12-hour shifts, six days a week to produce hamburger and hot dog buns, soft rolls, Pullman loaves, and pan breads. Because bread and roll makeup systems feed a single proofer and oven, buns generally run during the day with bread at night.
All lines are interconnected via an “intelligent baking system” that relies on PLCs, so that each piece of equipment communicates with one another from mixing to packaging, according to Tom Jagielski, quality control manager. If a pan jams, the entire line temporarily halts production, and the bakery must go through a sequenced startup to ensure that systems are properly set up for employee safety.
Flour is stored in three ShickUSA 150,000-lb silos — two for white flour and one for whole wheat. Typically, the plant uses 300,000 to 500,000 lb of flour a week. Both soy oil and corn syrup are held in 55,000-lb tanks. White flour initially is transferred to a ShickUSA 6,500-lb use bin. The bakery also relies on a 6,500-lb use bin for oat flour and an 8,000-lb use bin for whole wheat flour. Minor ingredients are transferred via a bag dump station while microingredients are prescaled into batch containers.
The bakery has Shaffer 2,500-lb and 2,200-lb horizontal mixers outfitted with glycol jackets and ShickUSA 1,200-lb scales on top of them for incorporating and dispensing dry ingredients. Both bread and rolls are made using a straight-dough process. All mixing times and temperatures are preprogrammed to provide front-end control, and each batch receives an ID number for lot tracking and food safety.
After mixing, the batch is kicked out into a Shaffer screw-style dough pump, travels up a BMI incline conveyor and is diverted via a cross conveyor to either the bun or bread makeup line.
On the twin bun line, two AMF 4-pocket dividers each crank out 400 pieces per minute. Dough pieces travel along rounder bars and receive flour dusting before a brief intermediate proof. For hot dog buns, which the bakery made during Baking & Snack’s visit, the pieces then travel under a pressure board and drop into pans.
When making breads, the dough drops into a Peerless 5-pocket divider, which produces around 100 1-lb loaves a minute as well as 2-lb loaves, albeit at a slower rate. After passing through Turkington USA (now Baker Thermal Solutions) inline rounder bars, a Stewart Systems switch conveyor diverts dough pieces to one of two parallel conveyors that feed two Peerless Super Grain cross-grain moulder stations. After initial moulding, the pieces roll under a moulding board and drop into either 4- or 5-strap pans.
Versatility after proofing
On the bun makeup line, nine pans line up in an accumulator, which releases them into a tray proofer where they stay for about 55 minutes. The proofer can handle rows of 11 to 12 bread pans, depending on their size. After the proofer, Gonnella installed a variety of water splitters — including one for straight splits and two others for angle or pattern splits — to create a variety of products. A Burford topper can be rolled into the line to add cornmeal or cracked wheat. To avoid allergens, no seeds or nuts are allowed in the facility. The line also has a lidder for Pullman loaves as well as an AMF pan stacker and unstacker.
The pans loop around to a Pulver Genau 125-ft oven outfitted for steam in the first of three chambers. Buns bake anywhere from 9 to 12 minutes while breads average around 24 minutes depending on the type. After passing through a Capway depanner, the empty pans flow underneath the conveyor to a pan cleaner that tilts the pans on their sides and brushes out residual crumbs. The pans travel on a separate conveyor past the cooler and around the packaging room to give them time to cool before they recirculate back to the makeup lines.
Meanwhile, the buns, soft rolls or loaves travel on up to three IJ White cooling systems, each of which provides about 20 minutes of cooling. The bakery can run products through one, two or all three spirals to give products ample time to cool or for some of its contract-manufactured products to attain proper moisture equilibration, Mr. Jagielski said. Currently, the newest of the spiral conveyors runs a plastic belt as the bakery evaluates plastic vs. metal belt cooling advantages.
Soft rolls and loaves of bread are diverted to separate conveyors leading to their respective packaging systems. On the soft roll line, all products pass through Thermo Fisher and Lock metal detection systems. “If one system goes down, the other is still operating,” Mr. Jagielski observed. “The volume is so high on some products that we cannot afford to have metal detectors not working.” The redundancy also was requested by one of the bakery’s customers.
Soft rolls and buns then enter either a LeMatic slicer-bagger or two UBE packaging systems. Hot dog buns are aligned via single lanes through the slicer and bagged a dozen at a time. After they’re closed by Kwik Lok systems, the bags enter Newsmith robotic pattern formers that align the packages to drop through a trapdoor to a basket waiting below.
During bread production, loaves travel through metal detection and through two slicers and baggers. The bakery has a redundant packaging system just in case one goes down.
Filled baskets then travel to a Newsmith tray stacker. The baskets are placed on dollies, secured by an Orion shrink-wrapper and rolled into semitrailers for delivery. For quality assurance, operators gather samples for testing and holding. The baskets run through a tray washer when they return to the bakery.
Focus on the future
Currently, Gonnella is streamlining and expanding its Aurora facility’s packaging department to provide greater versatility and a wider variety of formats. Although no plans are definite, the company expects to eventually make the Aurora operation the hub of its fresh-baked business.
The plant is already outfitted with extra blowers on its bulk ingredient handling systems to expand the operation as needed. Located next to a major highway, the Aurora site has enough acreage to build another 80,000-sq-ft facility, Mike Lucchesi noted. The bakery also is exploring the addition of an on-site storage freezer in Aurora as its par-baked and fully baked frozen business evolves.
To strengthen its national footprint, Gonnella is scouting potential sites for a West Coast frozen dough operation to lower distribution costs and provide capacity.
From Ron Lucchesi’s perspective, this isn’t the first time that the company has found itself at a crossroads during its long history in the baking industry, and it won’t be the last. “Five years from now, I see us as a much more national company,” he said. “We’re just in the middle of merging all of these synergies. Everything is constantly under review, and yes, there will be change. Always.”