The retail bakery industry has experienced many ups and downs over the decades, but perhaps no situation is more vexing than the one today. A few years back, the industry rode the wave of dramatic new product innovation matched with radically changing consumer lifestyles, setting the stage for a renaissance for uniquely flavored products that were baked fresh daily.

And then came Covid – driving a lot of innovation to a screeching halt.

The recovery process emerging today is gaining clarity, yet bakeries large and small face the same troubling situation: lack of qualified labor. Thousands of talented workers left the retail bakery business during Covid, in many cases through no fault of their own, but now bakery owners say they are not returning.

“The bigger issue today is the labor challenge. There is nothing more critical right now,” comments Josh Allen, founder of Companion in St Louis. “This is the first time in 28 years that we can sell more bread than we can bake.”

Retailers from specialists to full-line operations are experiencing similar challenges.

“There are weeks when we literally don’t know if we will be able to open all four stores – because of labor,” comments Pete Linde, owner of Meshuggah Bagels in Kansas City, with four stores (their first opened in March 2016). “The whole situation is an exercise in grinding and persistence.”

Ever since Companion pulled the first loaves out of their ovens in 1993, the intermediate wholesale bakery has been making craft breads and pastries every day. By focusing on the 4C’s – “our Companions, our Customers, our Community and our Company” – the company has built a small family-owned business with a strong reputation for doing things right.

Companion is in the business of baking bread. But they are also in the business of supporting small growers and producers, encouraging sustainability, pushing culinary limits, even fostering friendships. To this company, the creative process, and the many people it touches along the way are as important as the loaf itself.

Now comes the critical challenge.

“We have to figure out how to produce more product in less hours,” Allen says, “It pushes to the forefront the need for that type of equipment.”

Successful solutions

Some are finding solutions to these pressing issues through a promising myriad of strategies and tactics.

Los Angeles-based Lodge Bread Company is owned by James Beard-nominated Chefs Alex Phaneuf and Or Amsalam, whose dedication to creative pastries and unmatched sourdough has garnered great critical acclaim and many fans over the past six years in Los Angeles. Phaneuf and Amsalam have worked diligently to grow their business - first opening a new kosher hummus spot, Hasiba, and also buying locations for a second Lodge Bread and a standalone pizza concept set to open this fall. 

Bake magazine reached out to chefs Alex Phaneuf and Or Amsalam to profile and share their success strategies and emerging projects.

BAKE: How do you determine cost estimations while scaling up your business?

LODGE BREAD: We are always getting ahead by running projections. New shops, new farmers markets, new clients, new needs always demand running a projected schedule of increases. We may need to source more, buy more of one thing, build new recipes, hire another driver and buy a new mixer. It’s all possible with planning and actually just screwing it up very often.

BAKE: How do you handle equipment needs and prioritization of purchases?

LODGE BREAD: You have to be flexible and open to what comes up day-to-day, as you can’t predict every cost. For the larger purchases like a dough divider, we first look to see if there is someone locally selling a pre-owned option. We also see if any local restaurants might be getting rid of equipment. This is our first instinct, and it typically saves a lot of money. Lately, if it absolutely burns us out and an old yet reliable piece of equipment can help us a lot we begin chatting about it in the mix room. Purchases are hard emotionally and on the wallet, so we usually try and make it count.

BAKE: What are your target food cost percentages, and how do you manage production costs and efficiencies?

LODGE BREAD: We like to keep our target food cost between 20-30%, and some items are higher than others. We make those more expensive decisions for food cost on-the-fly and based on ingredient availability. We’re not such a huge business yet that we need to purchase things months in advance, so we make purchases as needed and do our best to stick to a budget. We’ve also raised prices to account for increased operation and food cost margins constantly evolving. 

A passion project

BAKE: Please share the history of your shop – how you got started and how you have responded to change in the past couple years.

LODGE BREAD: Lodge Bread Co. first started as a passion project for us. After stints in acclaimed restaurants across the country and around the world, we met through the high-end restaurant industry in Los Angeles in 2014. We quickly realized our baking styles and dreams were complementary, and we set out to open a restaurant and café committed to whole grain flour and sourdough bread. Lodge Bread quickly gained an excited fanbase, and critics praised Lodge for its consistency, innovation, commitment to high-quality flour and careful attention to detail. We were 2017 and 2018 James Beard semi-finalists for Outstanding Baker, and we’ve subsequently opened a kosher hummus restaurant, Hasiba. Our naturally leavened New York-style pizza concept, Full Proof Pizza, will open in Los Angeles in 2021. 

In terms of how we’ve responded to changes, we’ve had to stay nimble throughout the pandemic and as we source new locations. We ended up selling many items to-go, which helped our business and proved popular, including our house-made shakshuka, our house-made almond butter, and at-home baking kits for bread and pizza. We also made the leap and sold our menu items on popular delivery apps, making sure people across Los Angeles could have access to our food and brand. 

BAKE: What is your expertise (and your individual backgrounds in baking)?

LODGE BREAD: We have quite different background stories. We met while working together at Goldie’s, a California-inspired restaurant in Los Angeles, and we noticed we shared a common interest in making amazing bread. We started adding more items to the menu, offering people many types of sourdough bread. Once people received it super well, we decided to go into business together. 

As for myself (Or), I come from a Moroccan and Israeli background and gained a passion for cooking at a young age. I later lived in Israel and served in the military then attended Le Cordon Bleu to expand my knowledge, which led to high-profile gigs as a private chef in Los Angeles. Though I had no formal baking training per se, I quickly learned the ins and outs alongside family and through many restaurant positions. 

My co-founder, Alex Phaneuf, worked his way up in the Bay Area restaurant scene, serving as the Chef de Cuisine for Morimoto Napa and the Chef de Cuisine under acclaimed French chef Dominique Crenn at Atelier Crenn. He later helped open the restaurant TBD, and his attention to the slow food movement and his expert handling of a 50-foot wood-burning hearth gained him many fans. 

BAKE: What do you consider to be your signature products – and why?

LODGE BREAD: Our bread is what people mainly seek us out for. Our Country Loaf is the perfect table bread and is our number one seller. It’s simple, made with a Type-85 Hard Red Wheat to retain whole grain appeal and flavor and mixed and shaped softly to stand up any side dish a table has to offer. 

Our most popular pastry is our giant sourdough cinnamon roll with labneh icing. It’s less traditional, not just because of its size, but because the sourdough base makes it less chewy and more complex in flavor. Taking a classic but adding extended fermentation from a sourdough culture rather than quick yeast. The icing is made with a labneh yogurt base, adding the right amount of sweet, but sour on top. 

BAKE: What are your baking processes?

LODGE BREAD: We craft all of our baked goods out of a central bakery in Inglewood. We built the space out to spec from the ground up in an old tortilla factory from the mid-40’s and it’s a constant work in progress slash fun workshop. This provides a home-base for us to get our baked goods to our locations in Culver City and Woodland Hills and Mid-City. This hub and spoke concept was a dream of ours for years, having all of our staff under one roof is proving to be key for our operations. 

BAKE: How do you prioritize working with naturally fermented dough?

LODGE BREAD: We don’t work with any yeast in the bakery and only use sourdough cultures.  It’s the way people have made bread for a long time, and we like that tradition, in addition to the flavor profiles we’re able to achieve. 

BAKE: How do you differentiate your business from others?

LODGE BREAD: We stand out by being a 100% sourdough bakery that uses whole-grain flour not found on the mass market. We don’t make white loaves of bread or hyper-sweet pastries; we make good, simple products with respect to the grain and respect to the talented bakers under our roof.

BAKE: How do you scout out and determine the best location for your stores?

LODGE BREAD: It’s all about the customer for us. We look for spots with a family-oriented, neighborhood-y feel. For our spots, we don’t seek out the trendiest locations, because they come with a heavy price tag and the clientele isn’t as consistent and supportive. Neighborhoods like Culver City, Woodland Hills, and Long Beach have a ton of younger and older families looking for good food and pastries to support on a weekly business. We are a family-driven business, and we try to find pockets of family. We want to make sure folks are coming back. 

BAKE: What have you opened and what are your immediate business plans for store openings? How did you decide on the types of locations to open?

LODGE BREAD: After our first Lodge bread location, we have since opened another Lodge location in Woodland Hills and a kosher hummus restaurant, Hasiba, in the Pico-Robertson area. Hasiba is a passion project centered around a deep love for Middle Eastern cuisine, and we serve fresh hummus, hand-made pita, and sandwiches. Our next Lodge location will be in Long Beach, and we have plans to open two Full Proof pizza locations - one in Beverly Hills and one in Brentwood. The pizza is NY-style and  naturally leavened, with menu standouts like Goat Cheese and Chicories, Potato and Leek, and Wild Mushroom. 

We decided on the types of locations to open based around what we felt the city needed, in addition to what we do best. We definitely felt the need for more NY-style, ingredient-focused pizza joints, and we wanted to open a Hasiba to pay homage to my (Or’s) background and Israeli cooking. 

BAKE: What is your strategy involving in-store & online sales – and marketing?

LODGE BREAD: We don’t pre-sell! We’ve been really lucky in that word-of-mouth has carried us far. Our communities in Culver City and Woodland Hills have spoken highly of us, and the media has received us well, too. That’s part of why we look to open locations in community-oriented neighborhoods. Beyond that, we’ve gotten on all the major delivery platforms in the city to ensure folks who can’t swing by the in-store location can try what we have to offer. 

BAKE: Other thoughts?

LODGE BREAD: We’re excited for our upcoming projects previously listed. We couldn’t imagine running just one spot - we love the challenge and opportunities for growth. 

No quick out

For Josh Allen at Companion, he understands there are more and more customers that used to bake their own bread, but just can’t anymore

“There is an opportunity for us to take on contract baking. We have the ability to react quickly,” he explains. “It is a very unique situation. There is no quick out.”

The current labor situation adds enormous stress to the challenge. The food industry didn’t pay extremely well before, and the pool of people returning to the industry is down, Allen explains.

“It is more important than ever now to use social media as a huge reinforcement. We are reacting aggressively through social media. And we are on a push to automate more processes.”

For instance, Companion follows a sourdough preferment system. “We are struggling to get mixers (people). The issue is the volume of weight involved,” he shares. “If we could automate some preferments, that would help. (We are not there yet) But it is moving up higher on the list.”

Product innovation is helping drive growth. Pizza has certainly benefited, Allen says,

“We are producing a lot of pizza dough. We are not seeing big growth in pastry. I think that is going to be slow to return. If you spend a year at your house eating breakfast, that is a hard habit to break.”

One of the hardest parts is to see new technology (at trade shows), Allen shares.

“We are missing that. It is difficult to make long-term plans,” he points out. “We need to start seeing new pieces of equipment, and for the people in baking to see the products we need.”

Looking ahead, consumers are migrating to more online shopping, and the last thing the industry needs right now, Allen says, is more stress.

Portability is becoming a big thing at every level. Sandwiches are in higher demand. Deli sized sliced breads. Bun sales are up.

“The demand is there for food to be able to travel,” Allen says.

Future of omnichannel

“The puck is headed toward an omnichannel future,” exclaims Jim Hertel, senior vice president of client development – analytics, Inmar Intelligence, speaking at the Food Institute webinar on the Future of Food Retailing and the Accelerated Digital Age,

“Gen Z and Millennials are trending toward hybrid shopping. The ability to provide a seamless experience is critical between the haves and the have-nots. A cohesive instore/online experience is the key to the future of growing share of wallet,” he says.

Going forward, traditional grocery has more or less stopped the bleeding, Hertel explains. It has capitalized on ecommerce and will use that as a tool to regain market share within the convenience channel.

Ecommerce’s share of total food sales at supermarkets is expected to double in next five years – from 5% to 17% by 2025.

“We see ecommerce as the growth driver, moving forward,” Hertel says. “42% of US shoppers now make regular grocery purchases online.”

Just 3 years ago, it was 88% in the store and 2% online only – now it is 14% online only.

And 28% are shopping instore and online - That is the key moving forward, Hertel says.

Other industry experts foresee a similar road ahead.

“Put a seat belt on, as we think about the future,” exclaims Craig Rosenblum, vice president, Center of Excellence, Inmar Intelligence.

Speaking at a recent IDDBA webinar, “Online Grocery Shopping Trends and Impacts for Perishables,” Category Partners president Adam Brohimer points out that ecommerce was on the rise prior to Covid, and now “Covid was like adding rocket fuel to the fire.”

Today, 34% of consumers shop for groceries online, and another 30% are hybrid shoppers – online and instore, he shares. By July 2021, 96% of consumer grocery shoppers still walk through the door. But 23% are online buyers of fresh bakery.