Companion Bakery
Companion provides baked goods for St. Louis supermarket chain Straub's.

Small-batch flexibility

Companion’s growth has extended its geographical reach to Florida, Pennsylvania, Ohio, Montana, Wyoming and other far-flung locales. The West,  Southwest and Northeast are the only regions left largely untapped. But despite the company’s production and reach, Mr. Allen still considers Companion to be a small-batch operation, with the flexibility and nimbleness larger wholesale bakers don’t have. For instance, Companion typically turns out 300 different fresh-market products alone per day, and it’s nimble enough to do private label programs for its grocery customers.

“We embrace that nimbleness and try our best to leverage it to be successful,” he said. “I’ll let you know in a few years whether it’s successful.”

That mentality extends also to Companion’s grocery customer mix. The company’s sweet spot is stores with 5 to 75 units — some too small to bake their own bread in-house, others who “can’t get the attention” of other suppliers, Mr. Allen said. Focusing on customers that size allows Companion to cultivate relationships they may not be able to have with bigger clients, Mr. Allen said. It’s those relationships, like the ones the company has with St. Louis-based chains Dierbergs, Schnucks and Straub’s, that can help guarantee business success.

“They all really wanted us to succeed in St. Louis and as a result we’ve been successful,” he said. “This is definitely a relationship business and a trust business.”

Companion Bakery
Companion Bakery turns out 30,000 lbs of dough a day.

It’s not just small- and medium-sized chains that are a good fit for Companion, which Mr. Allen considers to be in the “middle space” between small and big bakers that supply instore grocery. Natural-food and other smaller footprint stores are also a good target market.

“For them, it’s all about the fresh perimeter,” Mr. Allen said. “We sell more bread in a store like that than we do in a major grocery store. Artisan bread is more a part of the basket mix in that environment.”

Fortunately, he said, the stores that favor artisan bakers like Companion also happen to be thriving, thanks to the increasingly rapid evolution of the retail grocery world.

“Grocery is changing so dramatically,” he said. “I can’t even fathom being a grocer, because they’re getting hit from all sides.”

The quality of food at QuikTrip, for instance, has increased dramatically, Mr. Allen pointed out. At the same time, drugstores like Walgreen’s are selling huge amounts of milk and eggs. And many big chains are “getting hammered” by 20,000-square-foot natural food stores and 10,000-square-foot Trader Joe’s, Mr. Allen said, because younger shoppers prefer a smaller, more “curated” experience.

“The hope is that that curated mix can include us and other artisan bakers, that what we do is unique enough, we can play a role,” he said. “The footprint of the store is small enough, the scale doesn’t work for them (to produce baked goods instore). The question is, how far can we take this and still do things with intention. I believe that good quality bread is still in demand and I believe the dietary changes in the country have been beneficial to us. When people choose a carb now they choose a ‘better’ carb — sourdough that’s good for digestion, or whole-grain bread.”