Interview with Margaret Wong and her sister Suzy Wong
80 Riverside Café (expected open January 2013)
Interview with Jeff Yoskowitz and Kathryn Gordon
Kathryn: Hi Suzy, Hi Margaret. This space is so open and airy, and with the plants and the overhead fans it reminds me of a stage-set for a Cuban café. How did you find this space, and what are you planning to do here?
Suzy: We’re sitting in the hotel lounge area and this is where we will set up our cafe. We are located at the corner of 80th St. and Riverside Drive in a Landmark building hotel. There are no cafes along Riverside Drive and there are 120 rooms in the hotel. Hotel guests have to walk 2 blocks to Broadway if they want coffee and breakfast in the morning. Based on a survey I conducted of guests staying at this hotel and based on the overwhelming positive response of guests wanting a cafe on premises, we’ve decided to open a breakfast café here. The owner is a very dear friend of mine. He wanted to have a restaurant/outdoor cafe here many years ago but it was very difficult in the past to get the Landmark Preservation Committee to approve an outdoor cafe. We are in a sense fulfilling the owner's dream - many years later.
Jeff: Landmark status is difficult to work around. How are you managing that?
Margaret: We’ve used the hotel’s architect, because there are very few landmark specialist architects. He has now obtained permission from the NYC Landmarks Preservation Committee for us to create a new door opening facing the park. That will allow us access to neighborhood foot traffic, in addition to hotel guests. We’re hoping to attract customers throughout the day, then transition to light lunches and finally to afternoon snacks and treats as mothers and nannies take kids to the park after school.
Kathryn: So Margaret, we know you from when you were a Chef Instructor at the Institute of Culinary Education (ICE). Obviously, you’ll be managing the kitchen. Suzy, what’s going to be your position?
Suzy: I'm the day-to-day manager. Once the cafe opens I will be front of the house and barista/counter person.
Jeff: Margaret, what’s it like to work so closely with your sister?
Margaret: Well actually, there are 2 more siblings involved! My other sister will be in charge of the Café’s aesthetics and when we open she will be doing the sandwiches and wraps for lunch.
My brother Simon, who is a architect, will be in charge of the inside renovations (and the hotel architect is working in conjunction with him for the outside modifications under the landmark rules). There is also a pre-existing bathroom that we will spruce up and are sharing with the hotel.
Kathryn: Wow, that’s an amazing group of resources to be able to draw upon. So where will the kitchen that your brother is designing be located?
Margaret: Right now, it’s the suitcase storage area for the hotel. It actually was a kitchen once so there are pre-existing gas hookups. There is good solid floor tile, and windows and I’m thinking we might open up the art deco archway and have an open kitchen view from the café. I might be able to host some demos and classes here eventually.
Suzy: Can you visualize a kitchen in there?
Jeff: I can visualize a kitchen anywhere! It’s really tiny though!
Margaret: It’ll be even smaller since the lease requires us to carve out a suitcase storage closet. But I will have a Hobart mixer, convection ovens and other equipment.
Jeff: What kind of terms did you get on that lease?
Suzy: It’s a 5-year lease with a 5-year renewal option. We don’t begin paying until we are actually in business.
Jeff: Those are fantastic terms to have negotiated.
Kathryn: And there really is nothing like this around you in this whole very residential neighborhood.
Suzy: We are fortunate as we already have a captive audience - the hotel guests!
Margaret: And especially in the summer, the amount of foot traffic passing outside is amazing! The baking aromas should help draw them all in, and there’s visibility to the kitchen thru these tall windows.
Kathryn: Margaret, for the 9 years I’ve known you, you’ve been a pastry and baking instructor. You’re making quite a transition from teaching. How do you feel about that?
Margaret: I’ve always wanted to have something of my own, and I’m the only member of my family in the food business. I told my students what I was planning to do, and they were very supportive. I needed something more. This is the time to do this, for myself and I couldn’t teach and focus on the business at the same time.
Kathryn: It helps immensely to have support from your family, as well.
Suzy: We’ve pooled our resources to finance everything and we are reluctant to take a bank loan. Having Simon overseeing the architect/design portion of the business has been a tremendous help in keeping our costs down.
Jeff: Sometimes that’s risky, because you’re risking your own family relationships.
Margaret: I think at the end of the day if this fails, we’ll still be ok as brothers and sisters.
Suzy: As a family we are very close and each of us will work very hard to make this dream come true. We’re in a bit of shock today, because we just got our first bill from the hotel landmark architect. We should probably double the estimate for each project moving forward.
Jeff: Did you have a concern that you were leaving a salaried position for a business that was going to take a long time to get off the ground?
Margaret: Thankfully I have somewhat of a cushion and obviously, having an architect in the family will ultimately save on costs.
Jeff: Do you have a business plan?
Suzy: Yes, we do and I find SCORE's website to be very helpful. You have to do a lot of your own work, but they give you guidance. We welcome any guidance/suggestions as this is so new to us.
Margaret: We’re sort of all over the place, because we’ve never done this before.
Kathryn: In your business plan, how many customers are you expecting once you’re open?
Suzie: I tried to be very conservative. We need on average of 75 customers a day, estimated from the hotel. There are 120 rooms, and we believe based on my surveys that roughly 80% of those will get something for breakfast. Throughout the rest of the day, if another 45 people total come in thru foot traffic from the neighborhood that would not be unreasonable. We’re located right on the park! On average we need each customer to spend about $4 to break even.
Jeff: That’s pretty reasonable for a break-even projection, given the cost of coffee and a croissant or danish!
Kathryn: Have you figured out your menu?
Suzy: We’re going to focus mainly on breakfast items, sandwiches and coffee for now. If we could expand we would ultimately want to do wine and dessert.
Jeff: Since this is a hotel, are you planning to be open 7 days a week? What are your business hours going to be?
Margaret: 7:30 am till about 6 pm. I think we can handle that every day, between all of us.
Jeff: Besides the process of working in a landmark building, were there any surprises for you that you had no idea you were getting into?
Margaret: No, not yet. We thought we would have to go all electric, but then we’ve been told that we have the ability to go gas, because there once was a kitchen here.
Jeff: There’s an existing bathroom – have you determined how you would share the responsibilities with the hotel of updating it, cleaning it?
Suzy: You’ve just brought up an important point! Like what happens with the shared space – that we have not thought about. I think that we’ll be able to work out some plan with the hotel staff.
Kathryn: Is it a concern that people might just hang out in the space here off the hotel lobby, and you won’t be able to turn tables?
Suzy: The hotel guests usually come in and check emails and go off to do other things in the city. I am noticing more and more hotels in Manhattan share their lobby areas with something like a Starbucks.
Kathryn: Can we come back and see how the space comes out after the build out, before you open?
Margaret: Sure! I’d love to share my menu with you when it’s ready, too!
The Right Tools For the Job
Interview with Ed Delandri, Food Equipment Technical Advisor at Interline Brands
By Kathryn Gordon and Jessie Riley
Kathryn: Ed, I’ve known you since 2005 but can you tell our readers exactly what you do?
Ed: I help sell commercial kitchen plumbing and food service equipment. I am in the corporate office of an equipment wholesaler. Our sales force sells to the end user, the restaurant or bakery. I am the technical advisor for both our sales people, and the end customers. In other words, the salesman will start to talk to a customer – but if the customer doesn’t know what they want or need – I get involved, and source it and get it for them. I’m on phone, email, video or teleconferencing all day and occasionally I travel.
Jessie: Do chefs and owners typically agree on what they need?
Ed: No, it doesn’t usually mesh! What would be ideal for the chef may not be affordable to the owner, so I need to help both of them figure out how to do something else. We work with vendors around the world so there are infinite options regarding what can be arranged for any customer and given the variables, every situation is unique.
Kathryn: Why do customers generally come to you about custom design vs. stock, already available equipment?
Ed: We’re the 4th largest wholesaler in the world, so people know our name. I take pride in helping people find the right fit. We will not sell a new chef or baker something we do not think they need, won’t help them, or will cost them too much in the end and create risk. We have a good reputation, and people know we can customize equipment. The customers drive the demand, not our salespeople and actually, even our competitors use us sometimes to sell to third parties.
Kathryn: How do you start the process of determining exactly what a customer who is designing a new retail (brick & mortar) location needs?
Ed: Videos and photos can go a long way. It helps to have an integrated team of the architect, engineer, electricians and plumbers.
Jessie: For custom designs, do customers have to pre-pay?
Ed: Not if it’s a repeat client who provides us good business like purchases of $500K per year. Bottom line: we want happy customers. If it’s an all-new customer, some sort of a deposit will be negotiated based on what the vendor for that type of equipment requires.
Jessie: But what happens if the customer specifications are wrong?
Ed: Someone has to sign off on the contract before the work is started. It could be the end-customer, or the architect. Custom items are non-returnable but if the vendor is wrong, they will take the responsibility to fix the situation. Occasionally an architect or engineer has to take the responsibility if they were the one to provide the incorrect specifications regarding space, etc. on behalf of the client.
For big ticket items it’s key for you to be involved hands-on in making your own decision. If you know your own business, don’t let anyone push stuff on you, standard or custom, or you’ll wind up with the wrong equipment.
Kathryn: What are the most common mistakes you’ve seen in terms of wrong equipment selection?
Ed: A lot of novice people screw up ordering ice machines. They don’t provide enough specifications on how they want it to work, and there are a lot of options.
I’ve also seen a lot of errors around fryers. Experienced chefs know they are purchased in pounds per hour. New businesses don’t always know how to project how many covers they will have, let alone peak frying volume and we need to know that and how many items on their entire menu will be fried to be able to help recommend a specific fryer that will actually work for the customers’ needs.
Sometimes, refrigeration is ordered because a restaurant chef loves the equipment design, but nothing was measured correctly and when they arrive, the reach-ins don’t fit under the counter.
Kathryn: How can customers best help an equipment purveyor understand what they need, especially since you can order from wholesale equipment purveyors all over the world?
Ed: The more specifications on how they want everything to work, the better. Allowing time for custom work is also important. Customers have to be articulate and videos and photographs help immensely. I can also go out and visit a difficult situation if necessary but remember you may be forced to select domestic vs. international given the shipping costs (like for a heavy espresso machine, or an AGA-type stove).
Jessie: What do you do with equipment that’s returned, or cannot be sold?
Ed: Periodically, our locations will host sidewalk sales!
Kathryn: Do you think that custom versus stock is the way to go, especially since you’re in that side of the business?
Ed: Actually, no I don’t. Blending custom and stock is usually the best thing but owners should never jump in with huge dollar investments without prior understanding of their business. We take pride in what we do, and we want the businesses to come back to us so we will not sell them equipment that’s wrong for them no matter how much more we could make. I am also a chef, and I will try my best to help steer them in the right direction. You have to remember, the artistic side of fancy custom equipment appeals psychologically but does not ever translate to commercial quality.
Jessie: So where should people start?
Ed: There can be a benefit of a seamless, integrated team recommendation – but that’s often impossible. So don’t just use “too many cooks” to make key decisions. You can start directly with calls to manufacturers to determine some of your initial possibilities, and you can do that yourself. Look at websites, communicate with equipment engineers and start making your own decisions. If you’re stuck, use a knowledgeable middleman and trust us to help guide you. It costs too much money to take the risk of wrong equipment selection, especially if you’re new to this part of the business.
Kathryn: Thanks Ed!
Everyone Needs Someone to Call
Interview with Enid Hoffman, CPA
By Kathryn Gordon and Jessie Riley
Kathryn: Enid, we’ve been discussing various tax aspects of new businesses while we’ve been driving around in the van in rural France! (Check out Kathryn’s trip under www.moulinbregeoncuisinecourses.com or trips through www.iceculinary.com).
I know you are a partner in a company with 250 accountants or so, so you’ve seen lots of food businesses over the years. Let’s try to formalize some of the great recommendations you have for food start ups.
What’s the biggest accounting issue you’ve seen for start-up bakeries, cake/chocolate specialists, etc?
Enid: The most constant question I’ve seen over my 34 years in the accounting business is: you need help, but are you going to pay this person as an employee or an independent contractor? There are legal and illegal ways to pay workers. The legal way adds an average of 15% to your cost structure, and that is a huge expense for a new company. By law, if you hire an employee you have to pay workers’ compensation, disability, and you have to match the employee’s Social Security contribution. If you pay the worker as an independent contractor you do not have to pay this extra 15%, but this method of payment is illegal if the person is working as an employee in your place of business.
Kathryn: Is the cost of processing an employee’s payroll also an issue? Like costs an employer would have to pay to someone through ADP?
Enid: No, that’s small potatoes, maybe $20 a month per employee. And I would definitely recommend someone with more than one employee to use a service for the payroll, because a payroll service can and should impound the payroll taxes. If you utilize this service, the tax and insurance liabilities are withdrawn from your bank account immediately. That guarantees the start up business will actually have the money paid to the various government agencies when the debt is due.
The business may not use a payroll service but still must remit the money on a monthly or quarterly basis. Too many businesses think they will have the funds available but then spend the money for other business needs. A new business cannot survive if they are not able to pay their bills on time, and you don’t want to accrue penalties from the government.
Jessie: Speaking of survival, I think new businesses are also afraid of having to pay an accountant on a monthly basis and what those accounting services will cost them.
Enid: Sole proprietorship income and expenses are incorporated in a personal tax return. If you have a good computerized general ledger such as Quickbooks, and no payroll, the return should run $700-$800 if there is no employee payroll.
Kathryn: So you recommend people use Quickbooks?
Enid: Some sort of accounting program should be used daily or weekly to assess your cash flow. You could post entries into Quicken, but it is less robust than Quickbooks. Either will tie to your bank account, but Quickbooks will allow more long term flexibility and growth with your company. You still need an accountant to help you set up the books correctly, conduct a review of the books and records every 3 months for the first year, then semi annually thereafter.
In any business you must reconcile the books and the bank statement which Quickbooks does as a byproduct of the program. If you do not reconcile, the books become unreliable because one does not know if all items have been posted and therefore you may or may not be reporting more profit or not showing the proper loss.
Kathryn: I gather you recommend people absolutely hire an accountant.
Enid: A lot of food-oriented businesses are cash businesses. One of the biggest mistakes I’ve seen people repeat over the years is that if it’s a cash business – and you either pay too many people in cash, and/or take out too much cash yourself – you can’t justify to an auditor that you’re making enough money to justify the expenses you’re claiming such as food costs or your personal living expenses. For example, you need to take money to live on, or your business will never be sustainable, and auditors know that. You do not want to create a risk of a longer, more extensive audit because your expenses, sales and labor costs do not tie.
Let’s say you operate a 24-hour a day pizza business. If you claim expenses for vast quantities of flour for your pizza dough, and you don’t show commensurate sales or payroll for the workers, then a government auditor would clearly know you are hiding sales and will conduct a tougher audit – and you could be facing criminal charges and would lose more than the cost of hiring an accountant to provide advice in the first place.
Jessie: I know several small food-related businesses that don’t seem to handle everything exactly correctly, like co-mingling personal and business funds or might have questionable practices paying their employees…
Enid: If you are co-mingling funds into one checkbook, the IRS or the state could audit all of your personal and business transactions which can be a costly and tedious audit. If the business has a separate account, the auditors will audit only the business account and will not review the personal expenses.
It can also create a risk if an employee pays the staff without a W-2 (generating the 15% additional overhead for the workers’ compensation, disability and matched Social Security). This can result in a penalty for the business. Another problem is if you pay the worker as an independent contractor (also known as a 1099 worker) – unless the worker truly is an independent contractor. And for independent contractor status, the worker has to: a) work for more than one employer doing this type of work, and b) “hang a shingle out” advertising that you are in this type of business. For example, if you’re in the yellow pages as a freelance chef, only then, whether you work 1 or 30 hours for a company, you would get a 1099. Only if you are a corporation, you will not get a 1099.
Jessie: So what should businesses be aware of that might be a red flag for getting audited?
Enid: “Invisible employees.” A red flag is raised as soon as a company has a pregnant “invisible employee” who files for disability because she can’t stand in your bakery 12 hours a day. Other examples are someone washing dishes, who is paid as a “invisible employee”, gets hurt on broken glass and goes to the hospital thinking he/she has worker’s compensation, or the work is cyclical and the “invisible employee” files for unemployment in a down period after making seasonal chocolates.
There’s no record of the “invisible employee,” because the business hired the worker as an independent contractor (1099) therefore the company didn’t pay the required workers’ compensation, disability or match the Social Security – and that’s a risk for opening an enormous can of worms. Worker’s compensation alone can issue 5 years of financial penalties and close down a business!
Kathryn: I know that at some times in the past that I’ve been an “invisible employee.” I also know I’ve worked for someone who never issued me a 1099. Where do these lines get legally drawn?
Enid: There’s something called “20 common law questions” regarding having to issue a 1099 for someone who is truly working for you. The question has to do with who can generate the ultimate profit from a scenario. Someone is considered truly freelance and will receive a 1099 if they are in business for themselves. Then this person is not an employee.
For example, if I am hired to make a wedding cake and I hire you to do the work for $300, you can make the profit/loss depending on the ingredients and time it takes you. This person is an independent contractor. If I ask you to come to my bakery and bake a wedding cake and I give you $30 per hour and supply the ingredients, you are an employee, as the bakery is going to make the potential profit or loss.
Kathryn: What’s the threshold someone has to earn from one company to get a 1099?
Enid: If a company pays someone more than $600 in a calendar year, they should issue a 1099. Not all businesses do, but the burden is on the taxpayer as the taxpayer must report all income whether the taxpayer received a W-2 or 1099. An employer can get a $50 penalty – but it is rarely issued, so it’s a risk some businesses are willing to take. (By the way, if an independent contractor did not receive a 1099 and they feel that they should get one, they can report the business to the IRS via a complaint form you can download on the IRS website – and that’s a better way to get action than just making a phone call to the IRS).
Jessie: How often should I be contacting my accountant to make sure my business is doing everything the correct way?
Enid: As an accountant, I accept calls all the time. Every business needs someone they can just call. I truly enjoy helping new businesses establish themselves – what could be more rewarding? Eventually though, someone has to realize that time equals money for professionals, and you might be sent a bill if you continuously ask questions during the year.
Kathryn: So you might get a bill if you’re calling your accountant 5 times a day, I guess?
Enid: People ask questions all the time. It comes with the territory, and I like sharing my expertise. I’ve always liked helping young businesses, and have found that ones owned by women especially need pushing. I like doing it and it has become my niche, with over 70% of my client base being women business owners.
Kathryn: Do you ever make field calls and visit your clients?
Enid: It can actually be more cost effective to visit a business at least once so you have a better understanding of what the client is talking about, but on a routine basis for a single proprietor it probably makes more economic sense for them to come into the accountant’s office.
Hint from Chef Kathryn: Always enter your receipts on a timely basis into your accounting software, and scan them. After a period of time, most check register receipts fade. I've seen one (failing) small business not file their taxes for a long time, because they knew they wouldn't owe anything because their expenses far outweighed their receipts. Eventually garbage bags full of 5-year old, illegible receipts were brought to the accountant... Not a great business procedure.
Time to Expand?
An interview with Master Boulanger Philippe Soulard by Kathryn Gordon
Name of Business: La Maison du Pain
At location # 1 of 3, Angers France
Kathryn: So Philippe, I’ve been coming here to visit with you at la Maison du Pain for the annual ICE culinary course to learn about artisan, levain leavened breads since 2006. Now I hear that you have opened 2 additional locations of la Maison du Pain?
Philippe: Our city, Angers, underwent an extensive 3-year construction project for a tramway. After the first few years, the construction really impacted our business. Nobody could really drive through the city so demand for our product was limited to neighborhood walk-in customers, so we were forced to expand to other locations.
Kathryn: Do you offer the same products in the new locations as you do in the original location, or does it vary by neighborhood?
Philippe: We sell the exact same products at each location. We make 65 different bread products from 29 different doughs! The second location is a second production bakery that I took over – and the third location is retail only. Honestly, the third location is in a better neighborhood (people with more income) than the second location, and the demand is steadier there across the product lines.
Kathryn: If you took over a production bakery, how did that go, if you changed a pre-existing product line over to your products and renamed everything to the name of your business, “la Maison du Pain?”
Philippe: The transition was a bit rough at first. For example, there was a type of bread people wanted, but I didn’t want to make it so I didn’t bake it. We lost some people at first but since then, demand has stabilized. We’ve been open in that second bakery location about 6 months. The third location has only been open a few months.
Kathryn: I know you use a lot of organic (biologique) flours – but you’ve also said your customer base is not affluent enough to solely demand organic products because of the higher retail price. What are your food costs?
Note: the stone-ground, water-driven mill that produced Philippe’s organic flours is Moulin de Sarre, www.moulin-de-sarre.fr and is very interesting to visit if you are in the Loire Valley.
Philippe: My food costs are about 25%. I don’t look at it on a product-by-product basis, but overall that’s what it is.
Kathryn: You and your wife Catherine live here with your family above the original location, and she manages the retail shop. And that has allowed you to tell if your staff are starting work on time at 4 am! How on earth are you managing the other full scale production bakery you are now operating?
Philippe: I only need 4 hours of sleep a night. It was difficult at first, because I needed to find very good people, including a very friendly retail staff. In France, firing employees is difficult so you have to be very careful making sure you are selecting the right employee… For the production staff, I moved over one of my sous chefs as the manager of the second production bakery. I kept the bakers who had been employed by the bakery I acquired and brought each of them to work here with my staff to learn my product. Gradually everyone was trained.
Kathryn: Your specialty is levain leavened breads – you seem to try to only use commercial yeast minimally, like for the rich yeast products (brioche, croissants) and for one of your 10 different baguettes.
(Philippe produces one cheaper, machine driven, yeast risen baguette for the older generation who lived through WW II and don’t care for the more chic/nutritious/high end breads with whole wheat, rye and grains. That customer base likes the commercial white flour).
Kathryn: Are the breads truly the same in each location, because I’ve tried making “your” breads in NYC and they work. They’re great breads, but they’re not exactly what you make here in Angers. And your 3 locations of la Maison du Pain are all within the Angers city-limits (or about 5 miles apart).
Philippe: It’s true. I try to have the same product line at all 3 locations but at the second bakery location, even using the same brands of flour, and having trained the staff myself, – some of the breads come out a little different.
Kathryn: And within the same city, the available city, water in the bread doughs is presumably the same! For instance, if I try to make your formula using water from NYC (which has chlorine, fluoride and who knows what else), I should expect a different result! Of course – you have a bit more of the “wild yeasts” available here in a location that has been a boulangerie for decades, than some people have at their US bakeries (or their homes).
Kathryn: How much commercial yeast to you use in your dough formulas?
Philippe: There’s nothing wrong with using a bit of commercial yeast and I use the fresh variety in some of my doughs.
If you strictly use levains for all your doughs, the levains and the doughs take up more space in your bakery. You need space for longer fermentation of the levain and space for longer fermentation of the pates (doughs). And space equals money.
Kathryn: How did you finance your expansion?
Philippe: In France, you can get a bank loan for 7 years if you file an application that includes your resume.
After 7 years of operating a business, I would have to pay a higher tax to the government than for the first 7 years.
It is more economically viable in France to re-mortgage and expand a business, or at least try to expand until you retire and sell your business (where you would then pay less taxes because you are in retirement).
I was able to get the bank loan for the expansion because we were successful with the first location.
Boulanger Philippe showing how his ovens work in a class; we visit Philippe for an artisan bread lesson in the annual ICE Cuisine Course in France (www.moulinbregeoncuisinecourses.com)
Kathryn: And you have quite a resume! You even come from a family of bakers.
Philippe: My father was a baker, and my brothers are bakers. I went to school for several years for bread, and then I travelled around the country to boulangeries working for a flour company. I had to help work at different bakeries every day. I really learned a lot about bread doughs, in different environments, and what I wanted to produce for my own line of levain leavened bread.
Kathryn: With all this expansion, you need a website! You have all this cute stuff in the retail shop: aprons with your logo, bread baskets with your logo, reuseable shopping bags…
Philippe: Yes, we know! As we’ve been discussing for years. It will be live this summer.
Kathryn: OK Philippe, thank you! And we’ll follow-up again with you in a few months when the website is live.
Interview with Cameca Johnson by Kathryn Gordon
Kathryn: Cameca, you graduated from the pastry program at ICE August 2011, and since then you’ve said that you’re baking cakes for friends and family?
Cameca: I went to ICE initially with the idea that I would master plated desserts in a restaurant and open a dessert bar. But after going through the program, a friend asked me to make a cake for her daughter’s birthday, and I continued doing that as more friends and family asked me to do it. Now I’m really interested in all the different aspects of cakes, decorating and sugarcraft, and driving myself to learn as much as possible.
Kathryn: How are you doing that?
Cameca: I currently subscribe to a cake decorating magazine, and I work my way through each of their “projects” systematically. I’ve also taken a lot of advanced classes, and I go anonymously to various classes offered at bakeries to check out what they’re doing and how they operate. But that was difficult to do during the day with my 9-5 job. So I’ve just resigned my day job! Going forward, I’ll have more time flexibility.
(Kathryn interviewed Cameca on the annual ICE Cuisine Course in France. Cameca’s last day at her finance job was just before the trip to the Loire Valley. www.moulinbregeoncuisinecourses.com)
Kathryn: Wow, you quit! Ok, so let’s talk about that decision making process. How are you planning the steps to take to go from not charging friends and family anything except base ingredient costs – to quitting your day job and jumping into this business?
Cameca: I took a 16-week workshop in business opportunities designed for business entrepreneurs to learn how to make their businesses sustainable, versus supporting an “expensive hobby.” I’m just finishing those last classes now: Workshop in Business Opportunities www.wibo.org. I have my last session when we return from France.
Kathryn: So you have a business plan, from having finished that course?
Cameca: The WIBO program gives you a structure, and then you fill in the aspects of the business plan for your own specific business, customer base, etc. They provide a wealth of information. And they bring in actual entrepreneurs to give insight regarding their own experiences. They provide mentoring resources via direct contact as well as seminars, workshops, etc. to participants who need specific legal or accounting questions addressed, before someone is ready to start paying for those services on their own.
Kathryn: So having gone through that program, what about your business incorporation, liability insurance, websites/marketing, your overhead/food/labor cost analysis… Where are you with all of that part of the process?
Cameca: I did cost out each of my cakes, and know what it costs me to make using wholesale ingredient prices and packaging costs.
Kathryn: Up till now, you’ve worked in finance – so that must help! Since you have that skill-set, are you planning to keep up with all of your own accounting, or use a program?
Cameca: Right now, I am manually maintaining my own general ledger.
Kathryn: What about paying yourself? Do you think that your customer base will support it as compared to other market prices for cakes?
Cameca: I think so. Honestly, I didn’t think about paying myself at first. But I think I should “pay myself,” because it is taking me 8-10 hours to make, decorate and deliver each cake. I’ve also looked at what people are willing to pay for cakes – people in other markets besides people living within Manhattan.
Kathryn: How are you charging for the cakes? By the serving?
Cameca: Yes, but I do charge differently for simple buttercream versus the more expensive fondant, and I charge additional fees for sugarpaste flower decorations (which require more labor skill and time).
Kathryn: How do you get your cakes to your customers?
Cameca: I am actually about to buy a second hand car. Friends and family can continue to pick up their cakes from me, or I will charge a delivery fee from my production place in Queens with gas and tolls.
Kathryn: Where will you be doing your production?
Cameca: I will be using an incubator kitchen in my area on a shift-by-shift basis (The Entrepreneur Space). Not too many of their customers are cake bakers – so the incubator has cake pans I can use, as well as additional equipment. I pretty much just have to schedule time to bake and bring in my ingredients. My friend’s husband goes to Restaurant Depot, so that is one way I can get wholesale ingredients. So I have no overhead cost unless I have a customer order.
Kathryn: What if this takes off, what would be your next step for production?
Cameca: Next, I would sign a lease for monthly space at an incubator kitchen that would be open 24 hours a day. After that, I would try to rent and renovate a studio space for a commercial kitchen. I think that jumping to a retail storefront as a next step is too expensive.
Kathryn: What does the incubator require besides the fee for the 8-hour production shift?
Cameca: In addition to the application, the incubator requires: 1) a security deposit; 2) proof of insurance (including worker’s compensation if applicable; 3) Food Handler’s certificate; 4) business registration and tax ID number; and 5) emergency contact information.
After I start using the kitchen I will apply for the 20C Food Processing Establishment License.
Kathryn: How are you marketing your new business?
Cameca: After France, I am meeting a high school friend of mine shortly to work on the website and Facebook page. I am trying to obtain some free PR through doing competitions and charity events. I will make samples for a charity event for 500 people in June, so I am hoping to have brochures ready by then with the website up live. Another strategy I plan to try is advertising in small local papers. Friends are also already helping me with referrals. And I’ve been trying to take my own photos of all my cakes, to help get the website and Facebook pages up and my brochures ready.
Kathryn: How many flavors of cakes are you offering, and are you doing tastings?
Cameca: I have about 7 standard flavors, but I will customize. I do tasting consultations and that cost is included in the final proposal to the client. So far, most of my current customers want round, tiered cakes with fondant and “wow” colors. Maybe from watching TV!
Kathryn: What kind of deposit do you require?
Cameca: Currently I collect 25%, but I am considering going to 50% upfront.
Kathryn: Cameca, I hate to ask, but how are you financing this? You rent your apartment now, right? How are you going to be able to pay for all of this?
Cameca: I have some savings from my prior job in the finance industry that will cover me a few months, and some employee stock that will be automatically liquidated shortly since I am leaving. This, together with the rehire policy from my employer (since I left on good terms), is my safety net. The stock sale may actually generate some tax losses, so I am hoping that I will not have to pay any taxable income penalty.
I also still have a part-time (evening and weekend) job that I got after my externship that will be continuing, for now. And I’m lucky it allows flexibility in scheduling, because it’s in catering and I can tell them when I’m available, and when I’m not. If I had to start working there full-time, the catering job would pay for my rent.
Kathryn: So what words of advice would you give to some other person, like a recent graduate, who thinks they might also be ready to make this kind of a move?
Cameca: Think everything out. You need a plan prior to doing anything. Don’t just quit your day job without a plan – if you work for someone, find out what that company’s termination procedure is. In some positions, you might be vested. Determine if this the right time strategically to leave, or if you wait a bit longer is it more beneficial to you in terms of future retirement pay? Do you have any unpaid vacation days that they will owe you based on how many years you’ve worked there? And finally, how many months will all of that accumulate to help pay your production and living space rent(s)?
Kathryn: OK Cameca, those are very useful questions that anyone else in your shoes who is considering jumping into this industry on your own should be ask themselves.
Thanks for sharing those thoughts, and we’d like to follow-up with you in a few months of baking cakes in the incubator kitchen!
Interview by Kathryn Gordon with Expert Food Photographer Steve Legato
Kathryn: Steve, I know you did the beautiful photography for my book, Les Petits Macarons! and everybody loves it, too. What is your background?
Steve: I first was interested in being a documentary photographer actually- that was about 16 years ago -but my first opportunity to photograph for magazines was to shoot food for their restaurant reviews. My passion for photography was immediately fueled with a newly found intrigue and passion for food; there is just so much to know and experience and see; tastes, ingredients, techniques, history, culture, trends, philosophies... Food is amazing.
Kathryn: Do you specialize in photography for magazines, books, websites, brochures, packaging, etc. or “do it all?”
Steve: I do all of these, and each requires a certain nuance in the way you shoot it. Editorial, websites and such tend to be more cutting edge and creative, whereas packaging and book photography is very exacting and meticulous. I love and enjoy aspects of each.
Kathryn: We visited your studio in Philadelphia for a week to shoot for my book with Running Press. Are all shoots done in a studio? I know that you travel a lot. Are your shoots ever done on site in restaurants and bakeries?
Steve: I've done food shoots in generator rooms, bathrooms, kitchens, dining rooms, rooftops, on my back porch- as well as my studio and on location at restaurants, bakeries. Where ever there is light (an outlet) and a little room, there is a way!
Kathryn: What are the challenges to food photography, particularly to pastry, baking and confections? Do you cringe when you see bad photos of food?
Steve: The challenge is always to describe the food clearly (even if it’s messy!) I want the viewer to quickly understand the food as if they were also present there and took a bite of it…What is the experience of eating this? How does it feel? Dry, moist, tender, crisp- even sweet, savory, salty, bitter, creamy, acidic, hot, cold... I'm trying to portray the sensuality of food, of the experience of eating, the perceptions...
In a purely photographic sense, there is the challenge of composition; to create a flow to an image, a tension, a sense of poetry or beauty; sometimes that's based on just the food itself, sometimes on how elements are arranged within the frame, the focus, point of view, etc.
I do cringe sometimes but more so if I see an indelicacy or indifference in treatment. That might sound strange, but there are parallels in almost any occupation; music, cooking, writing, etc. That being said, a bad picture of an exquisite meal can be a wonderful reminder of that experience- like a post-it note rather than a poem, and I appreciate that as well.
Kathryn: Your studio had a fridge, basic stove, microwave and a freezer, which helped to shoot the ice cream chapter! What kind of kitchen is required to help shoot food? Do you always have to have kitchen facilities available too?
Steve: It's certainly nice to have the tools to create the food you need for the shoot. Think about it like having tools to fix your car, it's easy to have the 3 or 4 things you need to change the oil, but to change the timing belt, well...
The kitchen is the same way. You can get away with a minimal amount of tools and some creativity, but if you’re photographing 50 dishes this week, it indeed takes a full resource of kitchen and culinary tools, and expertise, to get that done and done well.
Kathryn: Do you ever provide the food styling and props, or do clients typically have to provide their own (or hire food and prop stylists)? On some photo shoots I've been on everyone has an assistant, too! The photographer has theirs, the food stylist theirs, and the prop stylist theirs! It can get crowded.
Steve: I usually work together with the client to hire a prop stylist and a food stylist when applicable (cook books, advertising, packaging, etc.) Their contribution to the final image is invaluable. A great food/prop stylist is behind every great food photo!
Kathryn: What should clients be prepared with before they enter the studio for a shoot? (What's the worst-story you can think of in terms of “bad food photography” you've encountered?)
Steve: I'd say to just be prepared for the process. It takes great ingredients, talented people, tools, organization and time, especially the time to make it all work well. Mostly I think it’s a fun and interesting experience for the client! (I do remember a chef at a diner wanted to draw grill marks on the “grilled” vegetables with a Sharpie...I talked him out of it, luckily :) Especially in editorial shoots, you have to be prepared for anything, really in quite a Zen way, you see how you can find, interpret, adapt, and capture the beauty in most anything.
Kathryn: To establish a time frame, how long in advance do people have to schedule a shoot? How long can it take to receive the finished product, now that there are digital support systems?
Steve: It takes time to plan a shoot, procure the ingredients, and hire the necessary crew. For the major project, you can certainly plan a month in advance (even just to give enough notice to avoid scheduling conflicts). For me, I'd say about two weeks are sufficient, but when more people are involved, the more advance you need.
Finished files can be delivered right away -within hours in some rare cases- but most of the time I'd say a few days a week. It does take time to clean up images, to make adjustments such as color balance. I'd say that it's best to be clear with the photographer what your needs (and timing expectations) are- certainly they should accommodate to the best of their ability- we are, in fact, working for you!
Kathryn: On average, is there an average length of time it takes for a shoot? Is the client usually present?
Steve: The time a shoot takes depends...Editorial shoots are often quite quick—a few hours—even with ~12 dishes (as long as the restaurant can create the dishes quickly enough). For a cookbook or other more meticulous photography project, you have props, a set to create, as well as the actual dishes to be made by the food stylist. Typically, I shoot about 6 dishes a day.
The client is typically present to make certain the pictures are being made to their specs/needs. (Note by Kathryn: given the digital editing software, the client can actually see their shots set up in real-time on the screen and at the end of the day help review the progress made by looking at all the photos on the computer).
Kathryn: We assume someone of your experience level is expensive. Can you provide any general costs or price ranges (only if possible in this format, of course)!
Steve: Prices vary and depend on a few different things including what type of project, how the pics are used and to what extent, the complexity, and finally associated costs of producing the images. Think of shooting a bowl of soup for a major soup company vs. shooting a bowl of soup for a local diner. Within each level of project, there will be a range of prices that you will find most photographers come in at.
Kathryn: If someone who needs photo cannot (yet) afford an experienced food photographer, and they're trying to do their own photo shoots, do you have any words of advice regarding what kind of lighting generally works best? Any tricks of the trade you could share regarding setting up the food?
Steve: The best trick of the trade is to engage yourself and take a lot of photos. Even if the majority of them are failures, there is a lot to learn from each image. Consider what direction the (main) light source is coming from. Consider if it’s harsh or diffused light, a small source like a light bulb or a large source like a window. How dark are the shadows, how moody? (Shadows define the surface/textures as much as light does, so please do not try to take away all the shadows :)
In a very general way, I try to light food side lit or slightly backlit. If, on a clock face, the camera is positioned at 6 o'clock, the plate of food at the center of the clock, then I'd want the light to be coming anywhere from 9 to 3 o'clock, depending. If the light source is coming from the camera, it tends to rob the dish of any volume, flattening out its surface blandly, filling in any and all shadows (the same goes for overhead light in general).
Try setting the dish near a window and shoot facing towards the window. Then move slightly left or right and see the difference it makes. If shadows are too harsh, set up a piece of white paper or foam core to reflect the light back towards the dish. Vary the distance of the reflector to the dish to change the effectiveness. Try under or over exposing just to experiment.
You'll develop an eye for this, sensitivity and a sensibility over time. Just keep shooting!
Kathryn: That is extremely helpful information, thank you for sharing that. Are there any general comments you'd like to share that we didn't ask about?
Steve: Just like a chef would say, “taste!” I would say, “see!” Food photography is a wonderful thing to be a part of and to experience and be effected by, inspired by. I do believe that a good image makes a difference.
Operating a food incubator
Interview with Pete Herman and Mike Schwartz by Jeff Yoskowitz, Kathryn Gordon and Jessie Riley
Name of business: BAO (Bad Ass Organics) and Organic Food Incubator
http://baofoodanddrink.com or http://organicfoodincubator.com
Kathryn: So you just gave us a great tour of this 12,000 square foot organic, Kosher facility; can you tell us how you got started?
Pete: My background is in investment banking and finance. A lot of my past work was in management and development of businesses around the world on behalf of banks. I was looking to do something more interesting, and had been in touch with Mike Brady (the third partner), who I went to high school with. We wanted to have a business that provided good jobs to people, and offer healthy products to consumers. A lot of my current work is business management, contract negotiation and some of the sales and marketing for the permanent clients and the daily use clients of the incubator.
Mike: Mike Brady and I went to college together, and he has an IT/ marketing background. About 3 years ago, Mike and I decided to start BAO. We wanted to make a healthy soda that was tasty and good for you, and after a number of experiments we realized we could get a consistent culture with kombucha. At the time, the market for kombucha was growing so fast we never went back to the sodas! We started in Hell’s Kitchen in an expensive, shared commissary-catering kitchen for the first year. We shared a small space (a third of a kitchen) with 2 other companies and our rent was $3000 a month plus utilities…we had to make a move.
Jeff: Mike, besides teaching with Kathryn and I at ICE, what is your background?
Mike Schwartz: I have a culinary degree and attended the CIA. I worked in restaurants for a long time and started teaching at ICE about 12 years ago as a career culinary instructor. A lot of my interests had to do with teaching nutrition at ICE. Talking to so many students, you realize how awful a lot of the food in the American food chain is. I figured I should put my money where my mouth is, and I should be making something healthy while also promoting other healthy eating oriented businesses through the incubator structure.
Jeff: How did you formalize how your partnership is set up?
Pete: We wrote an operating agreement that defines roles and responsibilities, and we structured as an LLC.
Jessie: Why did you choose this space?
Mike: Our prior landlord wanted to raise our rent and we had quickly outgrown our space, so we looked at over 30 spaces in Brooklyn, Bronx, Jersey City and Queens areas. This was the only space that was ready to go for our production and we were up and running in one and a half weeks. Once we installed some sinks and our kettle we looked around and the space was too big! We found some like-minded acquaintances that needed space and contacted them.
Kathryn: Do you help your incubator kitchen customers obtain their own organic certification?
Mike: There is a tremendous amount of paperwork required for organic certification. For example, a National Organic Plan (NOP) has to be developed and filed for each ingredient that you use – and you have to verify that your process is chemical-free. For our products, we use hydrogen peroxide here as our sanitizer because it oxidizes quickly and it’s naturally occurring. We had to learn all these rules because there was nobody to help us through the 230+ page organic statute. As a result, we can now help other businesses write their plans, and get through the inspection process here at the Organic Food Incubator.
Jeff: What were the major surprises you’ve encountered?
Mike: After working in restaurants for over 20 years, I had figured that food was food but working in a restaurant or hotel is not food manufacturing. The labeling alone is a learning curve – the nutritional labeling, the kosher certification, the types and costs of containers and everything else. Our bottles are fired in NJ because we wanted to have a green footprint but even locally, the material shipping costs are insane. The distribution process learning curve was also a surprise. Simple things like how to get your product onto a truck so a distributor would sell it to store, for example. To complicate matters, all of our products are refrigerated (because they are fermented and need to be temperature-controlled or they could explode).
Jessie: What kind of a margin does a distributor take?
Mike: It can be between 20-30 percent and the retailer marks it up an additional 30-40 percent before it reaches the consumer.
Pete: We put together a schematic to explain the process and mark-ups for an intern from the not-for-profit organization Opportunities for Tomorrow. If the farmer charges $1 for their ingredient cost, the final consumer cost at retail can be $4.50, with the product manufacturer and two distributors in between.
Jeff: Pete, what did you find surprising?
Pete: There are minimum orders for everything (bottles, labels). Most people also don’t appreciate the costs that add up in building out a kitchen with the required bathrooms, break rooms, security, sanitation, etc. to satisfy labor law.
Jeff: Are there trends that you’re seeing for the type of people interested in incubator kitchens?
Mike: Age-wise, I guess they tend to be young. Some were making products at home and selling (illegally) while others have come here with a great idea but are completely new to kitchens. We help them learn the ropes at whatever stage they’re in for their business.
Kathryn: How did your incubator kitchen customers find you?
Pete: We’re listed on a number of incubator websites such as the Cornell website and we were featured in the Daily News and the Wall Street Journal.
Jessie: How have you focused your marketing efforts for BAO?
Mike: We just used the internet. In retrospect, we could have done samplings and demos and we just have not, but need to build going forward. We don’t have a demo team, but a Long Island grocery store wants to pick us up, so we need a team to do product demonstrations in local stores. That investment is key for a small business to help get your product to customers. There are already a million products on grocery store shelves and you need yours to stand out.
Kathryn: What is the cost for the business to use your space?
Mike: To use the kitchen for a 7 hour shift, that price is currently $220 plus a per pallet cost in a walk-in refrigerator. To some extent, our clients are also making inter-client arrangements to rent each other’s equipment and help defray costs (such as sharing use of a blast freezer).
Jeff: The structure you have here for monthly incubator rental customers is very different than other incubator kitchens. You rent them raw space with plumbing hookups for their 3-part and hand sinks, and provide electric hookups and most bring their own equipment. How did this evolve?
Mike: It kind of worked out on its own. We have such a varied mix of companies and there are few who require ovens. We leave the space raw and it’s up to each company to bring in the equipment they require. Everyone shares the loading dock, and bathroom/break rooms as well as the walk-in refrigeration, if needed for that product.
Pete: Originally we thought we might have more shift kitchen usage, but we determined there was more of a demand for private kitchen usage on a monthly rental basis.
Kathryn: How big are the various spaces we saw on our tour?
Mike: They range from about 220 square feet to about 800.
Jeff: What are your long term plans for BAO, your own product line?
Mike: We’ve been focusing on getting the incubator kitchens built! But the brand has been building and sales have been growing, so I need to get back to that. We’ve been launching new products every 3-4 months.
Jeff: What are the long-term goals for the incubator?
Mike: We’ve talked to investors who like our incubator business model to either expand here or move to another city. There’s a strong culture around the US for locally produced foods which would imply that artisan, hand crafted food manufacturers need space – space that right now does not exist. We think our incubator model could be duplicated in other metropolitan areas. The per-shift kitchen model works up to 5 days a month, after that you want to be in your own space. It’s difficult to afford the right space that will pass inspection (FDA) as well as provide loading docks for bringing in materials or shipping out product, etc.
Jeff: What services do you provide for your customers at the incubator kitchen?
Pete: When a potential customer needs help with labeling, packaging, recipe development, licensing, etc. we will do some consulting to help them after they have a business plan and are ready for the next step. We’re working on a classroom to provide training on business management, sanitation, equipment use, and are developing a curriculum now. We can help set them up with an insurance company, obtain equipment, etc. because there are multiple new businesses here working together. Additionally, we can help companies bottle their product using our bottling line, operational procedures, etc. That kind of hand-holding is hard to find…
Furthermore, micro lender terms are very expensive for small businesses, and eligibility is based on personal credit scores. However, those loans can be used here to help get started on an initial packaging run, and we can help guide people to get started.
Mike: We’ve also been approached by companies who need us to be their co-packers and we don’t have the typical 5,000 production run requirement (we can do a test run of 100, for example). To be a co-packer customer, they have to have their own insurance, a license, (Cornell scheduled process for hot foods), and all their “ducks in a row.” There’s a lot of demand for that, so we think that business will expand.
Jeff: How did you fund your current set-up?
Mike: We started with friends and family, and we’re now “coming around,” three years in.
Jeff: What about the incubator kitchen customers, how are they financed?
Pete: A lot of the incubator customers are self-funded. Most have between 6-months and a few years of financing. Some of the smaller businesses have a goal to bring a test product to market and have a budget just enough for that. We don’t want people to over-commit for their own good, so I always talk to everyone in depth.
Jessie: What does a company need to be able to start-up here?
Mike: They just need a) license, b) insurance and c) to be able to make their stuff, or we’ll help them do that through sub-contracting out BAO employees. When we began, nobody would help us find 100 cases of bottles vs. truckloads full. We try to help people by providing what was not provided to us when we started up.
Jeff: Do you have any “words of wisdom” for our readers?
Pete: Start small, conserve capital and test your product. Get out there through the daily shared space to prove your concept. When demand grows and you know if your product is priced correctly, (through trial and error) you can obtain financing and grow.
Mike: You have to charge the end (retail) price when you start-up, even at farmer’s markets. Initially sell the product for the grocery store price, and when you do grow and have distributors to take your product to the retail customer base; your pricing model will work.
Meet the Entrepreneur
An in depth interview (with future follow up) to explore the lessons learned by others like you in the baking business
Owning a retail bakery
Interview with Marie Jackson by Jeff Yoskowitz and Kathryn Gordon
Name of business: The Flaky Tart, Atlantic Highlands, NJ
“Coming out of a dark place… Nobody knows what they’re in for, before they get a grip on balancing the financial viability of a business with creative freedom…” - Marie
Jeff: Let’s start at the beginning. What did you do before you opened the bakery? You took a huge risk because you’d never worked in a bakery before, right?
Marie: I have a degree in accounting, and worked for a year as a public accountant after college. I thought it would be a good entry point for a future business but I also knew accounting was not for me. I did some small jobs while going to culinary school at the New York Restaurant School.
I got married and my husband’s family ran a snack shop at a seasonal beach club. I asked if I could fix it up, make it profitable, and bake there for 2 years. That gig wound up being 16 years long! I was able to sell wedding cakes, make decorated cookies, do some catering, etc., out of that commercial space. I found that I loved the summer business the best. I had a staff to interact with, and customers to talk to. I decided not to have an isolated wedding cake type studio, but to go into an actual retail bakery and have a community around my baking.
Jeff: How did you take the leap to open up this business?
Marie: Six years into baking out of the snack shop I looked at renting a space, but it fell through. I was really relieved because I realized I wasn’t ready for my own establishment. I didn’t have enough experience and my marriage was new, so it was time to put opening a business on the back burner.
Ideally, I wanted to work in France, but by then I had three babies. Suddenly, the bakery in town where I lived went out of business. It was the perfect scenario with the kids’ school being right across the street. I could work at the bakery and be able to pick up the kids right after school. My husband and I looked at each other and decided this unique of an opportunity would never happen again so we decided to give it a try. We’ll be finishing up five years here at The Flaky Tart this fall and finally I will be able to work only when they’re in school. That took three years longer than planned.
Kathryn: How many employees do you have now?
Marie: In the back (kitchen) we have five, including an intern and excluding me! In the front there are two working at any given time, so it’s three full time employees and four part-timers. I have a nice mix of people with different ages, including high school kids.
Jeff: When you started this business, did you have any partners? Financial backers?
Marie: I was so alone… And it is so not the way to do it!
Jeff: So now that you’re five years into it, what were the biggest surprises? Obstacles? Regrets?
Marie: I was exhausted! I am a marathon runner and a workhorse animal but the problem was that the bakery required me doing that every single day, and it beat me down physically, mentally and emotionally. The lesson learned is that there are several equally mandatory jobs. There’s the baking job versus managing “the vision,” and for one person that magnitude is not sustainable -there must be a partner or delegation- or money to hire more employees.
Jeff: Was that the biggest challenge you’ve faced?
Marie: Well, sales have not been a challenge because I received good free publicity. The back-of-the-house numbers crunching, even with an accounting degree, is the most difficult process to keep up with. Employees are challenging in that if you want to hire professionals who are loyal and stay with you, they must be paid a livable wage.
Kathryn: What kind of rates do you pay your employees, is it more salary or hourly?
Marie: I pay my “adult” (pastry chef) employees who have mortgage payments on a salary versus the younger ones who are paid on an hourly basis. I actually think I would rather pay everyone hourly, so that sales and payroll expenses would stay more in line (busy time = more sales and more hours).
Jeff: You’ve been in business several years now. How has your current menu changed and why do you think you needed to evolve it that way?
Marie: Initially I was guided by a book (Growing Your Business) which believes a successful business has to be an extension of you. I want to make products that taste fantastic, and I don’t want to copy any French or American style bakery so we pretty much have a blend here of what I think I bake well. Over time we’ve added some items but tried to keep it simple.
Editor’s Note: About 2 years ago, Marie talked with chefs Jeff Yoskowitz, Kathryn Gordon and Ciril Hitz about the direction her bakery was taking. At that point she was managing the business and continuing to do the majority of the baking, or at least attempting to do both…
Marie, continued: After talking with Jeff, Kathryn and Ciril I gave my staff some autonomy and mobility, and delegated the baking and they’ve introduced new product that is selling! They’re now the growth engine and that’s awesome! I didn’t expect that.
Jeff: How have food costs been working out for the new items?
Marie: Well, it’s happening too quickly and we don’t have a handle on it. This is the same issue that got us into trouble in the beginning. There’s a system out there on how to train you staff on costs, which we are actively looking into.
Jeff: What direction is your menu currently going?
Marie: We’re looking to balance the “cool things” with the low labor cost/low food costs and right now it’s the opposite. We need to figure out what our staples are and what sells whatever the weather, whatever the traffic.
One of my staff updates our Facebook page daily with our lunch menu and specials, posting all new items -- I have nothing to do with it and it works really well to help generate new customers.
Jeff: When you opened you replaced an existing bakery. What were your customer’s reactions?
Marie: Initially some customers had some expectations about heavily-decorated themed cakes (from the former bakery) and a few people were discombobulated, but I had changed the look of the bakery so much that they were excited about the new place and our new products.
Jeff: Do you know who your customer base is?
Marie: They’re everyone! We get people from all different types of socio economic and geographic areas. The local press awards I’ve received bring people in, as well. I have done every charity that’s ever walked in the door. I am co-participating in my first set of advertisements now, but that’s actually for our town, not specific to my own business.
Kathryn: You wanted to quit. What turned your feelings about the bakery around for you? You’ve said it was around the time when I introduced you to Ciril Hitz.
Marie: One really important turning point was when I was at my rock bottom (when we met), and I even went to NYC for a holistic doctor to try to get vitamins. I was so exasperated I believed that could help me – but he told me about a book called The E Myth. The line that I live by now is “if you want to be a baker, get a job in a bakery. If you own a bakery, you have a new job, you are a business owner and if you don’t do your job, you will fail.” It changed everything when I read that.
What really helped was a friend, Mike, who told me, you are a success! I had already achieved my goal which was to bake a great product. Mike told me I needed a new goal, and that was to be a financial success – that I didn’t have to sacrifice the integrity of my product to make money. I just had to adjust my thinking.
Ciril Hitz and I were talking about making money, and that it doesn’t just come if you make great stuff. Ciril told me that I was doing this as a hobby if the bakery was not making money. Wouldn’t I rather hang out with my kids instead?
I think a lot of people fail because they just want to do their art, and the trick is you have to do both; the art and the business. My heart and soul is in this bakery, but I have to find the balance to let my employees do their jobs and for me to manage better.
Jeff: You have to learn how to let go, and that’s a big step
Marie: I think I had to hit rock bottom. It was a process to realize I could not go on any more, but that I was unable to let go until I could acknowledge that I’m a control freak and my never-give-up-mentality had lead me into a hole. I had to let go completely then I could decide to take back what I wanted to…
Jeff: So you’ve told me you back the project completely alone. Any words of advice?
Marie: I think it’s kind of good that I don’t have the pressure of a loan, either from a bank or an investor.
Jeff: Although an investor would have forced you to have more control over a business plan and the numbers…
Marie: I never put it all together with my vision for beautiful, delicious, accessible, high quality food. It’s hard to forecast reality and write that business plan. I achieved the goals I had had, and now I’m ready for a different goal and to succeed financially in that.
Jeff: What investment are you happiest about having made over the years?
Marie: I hired a graphics designer for my packaging early on, and that was an important investment to have an iconic logo. I paid a couple of thousand dollars and it was worth every penny to have a focus, a by-line and an identifiable image.
Kathryn: Do you think your space here is adequate for your production?
Marie: I’ve learned that “if you have more room, you just spread out more.” I like the bakery to look busy.
Jeff: How’s the rent?
Marie: My rent’s low. About $1700 per month (with a 3, 5 and 5 year lease renewal).
Jeff: What were the rent increases for each of those periods?
Marie: Generally there are small increases per year, up to 5%. We haven’t received any in the last two years because I did a lot of renovations and the economy has been bad, so the landlord gets a lot of croissants from me!!!
Jeff: Marie, thank you so much for your time. Next time we visit we’ll check up on how you are doing and hopefully you will have some more success stories for us!
Meet the Entrepreneur
An in depth interview (with future follow up) to explore the lessons learned by others like you in the baking business
Interview with Jenny McCoy and Diana Lovett by Jeff Yoskowitz and Kathryn Gordon
Name of business: Cisse
This is the initial interview in a series with the partners of Cisse, a partnership to bring “guilt free” free trade cocoa products to the consumer
Jeff: First of all, what is everyone’s involvement? Are you partners in Cisse?
Jenny: Diana and I are co-founders of Cisse and will be managing the day-to-day operations.
Diana: I am the fundraising, financing and business operations side of the business for long-term-growth planning, and meeting supply chain logistics. For example, all the cocoa is ethically sourced, and I will manage those relationships because I have worked in developing countries, non-profit enterprises and socially responsible businesses before.
Jenny: My background is baking and pastry. I went to culinary school after high school and worked in restaurants for over 10 years. Last summer, I met Diana and we decided to work together on the brand development for Cisse.
Diana: Jenny is responsible for product development, and will do any required business writing given her interest and background in writing cookbooks. Jenny will represent the brand from the food side and be the name and face of the brand. For this to be a successful partnership, we refined our roles right from the beginning and established a business partnership through legal papers (regarding vesting, likenesses, profit sharing, etc.). After this formal structure, our roles fall into natural patterns given our particular backgrounds and passions.
Jeff: Did you use attorneys?
Diana: In the beginning we used a friend-of-a-friend as a third party for negotiating the general terms, and then turned the specifics over to an attorney.
Jeff: Are you self-financing?
Jenny: Diana has provided the seed capital and we are now evaluating financing options, raising additional capital.
Jeff: Was there a particular defining moment for deciding to go into business for yourself?
Diana: You can purchase product at a fair price in communities to help support community development and I felt that the price premium for doing it ethically and through fair trade practices was do-able. This business became viable when I met Jenny.
Jenny: A few years before meeting Diana, I was thinking about the bigger picture and what would challenge me beyond restaurant work. I wanted to transfer my work as a pastry chef into other projects. An editor at Epicurious introduced us and our initial conversation led to a request to be involved more as a partner than a consultant. It helped me that I was talking to my very business savvy, conservative father and he said: “If this is something you want to do, this sounds like a cool opportunity.” That did it for me, and I took the leap and said okay to Diana.
Jeff: So you have a partnership, and everyone knows their roles. What happened next?
Diana: The phasing of the sales channel dictates every other aspect of how we structure the business. Our focus is on long term growth and ultimate profitability. We felt the grocery sales channel was the best fit, since it has a national presence. That initial decision focused our energy. We knew that Whole Foods was the biggest player and they were the company we needed to approach.
Jenny: We set up a deadline to race towards – the Whole Foods “Round 9” category review deadline (which includes items such as cocoa mixes and baking mixes). We started to work on product development, which meant me getting into a kitchen while we were simultaneously working with a graphic designer and doing market analysis. We wanted something that would be accessible and generate repeat sales, nothing too crazy like lavender brownie mixes (which might only appeal to a group of pastry chefs!).
Diana: Jenny’s teaching background and cookbook writing project helped a lot with being able to focus on consumer needs. Given our business model, the core ingredient had to be ethically sourced, so we went to the Dominican Republic to meet with the farmers.
Kathryn: How did you decide who to work with on this project?
Diana: At first it was cold calling for brokers, suppliers, graphic designers, co-packers, etc. We started with a list of questions and put the answers in a spreadsheet, to make an analysis and an apples-to-apples comparison possible. Otherwise we’d still be floating in a sea-of-data!
Jenny: We found some good fits through people who were also starting off and were very enthusiastic about working with us, like our graphic designer.
Diana: The costs for the initial development of our website, logo and packaging ranged from $2,500 to $140,000. It was definitely interesting to see that price range!
Jeff: So designing packaging is always interesting -- tell me about it.
Jenny: It’s amazing, learning that a small box of cocoa mix, or a baking mix, has to have so much stuff on it! It was overwhelming. Bar codes, our story, what shade of blue? There was the hurdle of getting through the actual design and then finding printers to generate a small run for samples. 30 pieces per SKU is very expensive! We had to call and convince people we were legit and going to grow as a company to get it done without a run of 15,000.
Diana: The consumer design interface took so much time – we didn’t know what would be required. Each step is so interrelated. Jenny had to finalize the recipes before the nutritional panel could be generated, for example. It takes a lot of manpower to get all those deliverables in.
Kathryn: What’s the timing of when you approached Whole Foods to market?
Jenny: We had some counsel from an insider’s perspective in the form of a meeting with the Whole Foods Round 9 product manager about a month before submitting the product. They originally asked if we could be up on the shelves in 1-2 months, but it will about 5-6 months when we think we’ll be ready (aiming for this September).
Jeff: Can you tell us a bit about the product development?
Jenny: I learnt that my 100% is too much -- that the product I initially designed was “too rich” or “too fancy” for what the ultimate product is going to be on the shelf. My 100% would have cost too much to produce for a variety of reasons. Maybe my original method to make that brownie was too involved for basic steps in consumer baking. Maybe I would have preferred a richer chocolate percentage, but it wouldn’t appeal to a wide range of people. I had to adjust my recipe approach from a 3-star restaurant experience, to make a product I still feel good about, and see how people react to the products that can be made from these mixes.
Kathryn: Did you put together any formal tasting panels or focus groups for the product development phase?
Jenny: It was mostly informal through families and friends. One interesting experiment was when I baked all available brownie mixes and all available cocoa mixes and had everyone react to it versus mine. That feedback was instrumental in reformulating my recipes.
Jeff: If you were able to achieve the quality you’re looking for, how about the price point?
Diana: Well, that’s a production volume question. To get gourmet ingredients with a socially responsible angle to them is the overall challenge – but luckily we’re now within their range for the price point.
Editors: We’ll track the progress of Cisse putting their products on the shelves of Whole Foods and report back to you!
Short bios on Jenny and Diana:
Diana Lovett, Co-Founder: While completing a Fullbright program and a year of volunteer work at an orphanage in South Africa, Diana became committed to a lifelong pursuit in creating social justice. Her experiences at such an early age inspired her to pursue a B.A. in African Studies at Yale, followed by an M.A. in Internal Development Studies from the University of Cambridge.
Her many experiences include being a legislative analyst for Governor Bill Richardson and being Director of Regional and International Campaigns for singer Alicia Key’s charitable outlet “Keep A Child Alive.”
As culmination of all her experiences, Diana co-founded Cisse, a small business that combines her dedication to social responsibility by aiding small growers of cocoa to ear living wages, and her love of chocolate.
Jenny McCoy, Co-Founder: Jenny held positions in a variety of Chicago’s top restaurants including Charlie Trotter’s, Blackbird, Gordon and Bittersweet Bakery.
After traveling to various countries to broaden her culinary vocabulary, Jenny completed a B.A. in Food Writing at DePaul University. She returned to the pastry kitchen where she would run three restaurant pastry departments for Emeril Lagasse.
Jenny has also worked in New York City as the opening pastry chef at Marc Forgione; for A Voce, where she oversaw pastry operations for both their Madison Square and Columbus Circle locations; and at celebrity Tom Colicchio’s flagship restaurant, Craft, where she helped earn its second three-star review from the New York Times.
Finally, Jenny won the 2011 Rising Star Pastry Chef Award; is the spokesperson for the Almond Board of California; and is working on her forthcoming dessert cookbook, to be published by Rizzoli in 2013.