Bakery of the Month – Grandma’s Bakery

Grandmas- “How does she do it?”
by David Cargo and Pete Nowicki

David S. Cargo (UMBA’s new Executive Director) and I knew right away when we pulled into Grandma’s parking lot for our UMBA interview with John Lupo, that we were in for a special visit. In Grandma’s parking lot were his new delivery vans, lined up like soldiers, standing proud and showing pictorial graphics of fun statements like “police line-up,” then another had a smiley face with a statement “Have a Crumby Day!” There were two more trucks, all with different unique graphics. It caught my eye, and made me smile – how fun!

We walked in his front door, and the view opened up to show his display case and complete production behind the counters. We could see the cake decorators off to the left working their mastery and magic; in the rear was yeast raised doughnut production, showing the large make-up table, with all the many attachments to make the different varieties.

In view was Grandma’s production, open to the customer’s eye (one of my eyes was focused on their production and the other was watching their great products in their cases), and I was mesmerized. You could feel the pride in Grandma’s employees – what a way to start a visit.

John came up to greet us, and I introduced him to David, and we met John’s wife Deb.

Grandma’s has been in business for 35 years, having started off as a Mister Donut franchise for his first year and a half. In the beginning, his Mister Donut franchise was struggling, and John approached the franchise owners asking for a release from their agreement, and the corporation agreed to release him from their agreement. Grandma’s was born basically overnight.

Currently Grandma’s has two facilities, the main plant of 18,000 sq feet (which John would like to expand further) on Buerkle Dr (just north of hwy 694, near Maplewood Mall), and a smaller retail store in White Bear Lake (a past Wuollet bakery).

David and I listened to John tell us some of his principles of his success, quotes like “listen, make the best,” “ do it right with people,” “ we focus on us, not on our competition,” “ we earn it every day,” “ we compete against ourselves”. In addition John mentioned it is important to listen to what customers say they want to buy and John indicated to make sure you Brand Everything, (John mentioned how he wished he had started branding everything 20 years ago). Put your brand on every box and bag that leaves your store.

John mentioned that his cake business is real strong right now, and credits many of the ‘cake shows’ on television.

I mentioned to John about being sandwiched between a Costco and a Sam’s club, and what does he do differently. Right away he spoke of “We focus on us, not on the competition”, and told us a story of a customer who bought a cake at Sam’s club, and had a decorating problem; they brought the cake to ‘Grandma’s’ to see if it could be repaired and fixed. John fixed the cake at ‘no charge’, making a lasting impression on that ‘big box’ customer, showing that ‘true’ customer service does rule the day.

John mentioned that customers who are shopping for the lowest price are going to be more trouble that they are worth. Focus on delivering consistent quality and value and earn the customer’s loyalty through quality, value and service.

Grandma’s is willing to do custom and especially difficult custom work, which builds loyalty from his customers. It was evident , from his fun statements on his delivery trucks, to the pride in his employees wearing their Grandma’s bakery’ shirts, to his cake decorators who put their skills to work making charismatic cakes that this is a special place to work.

One of the things that Grandma’s does which I thought was unique is that every decorated cake comes with a free cake photo, people who saw pictures of the cake would know where they could get a similar cake, great for getting new customers

We discussed Grandma’s wholesale business (which makes up 75% of his business), and John indicated that he has no contracts, and stated “We earn it every day”. One of his wholesale accounts called and asked for 15,000 decorated, individually packaged cookies with less than 10 days notice after another bakery was unable to come through. His crew went to work, and finished the immense project with a day to spare. His employees made it happen, and Grandma has earned a new customer.

We toured John’s plant and visited his ingredient warehouse, where his aisles all have street signs, one of them is named, well, “Main Street;” the other aisles have unique names as well.

The inventory system has a place for everything, and everything in its place, every rack has labels in place for everything. When the monthly inventory is taken, it only takes ½ hour every month.

John showed us the outside of his holding freezer, where small cut-outs, with magnets on the backs indicate a ‘rack of a certain product’, with names such as ‘choc cake’, ‘white cake’, ‘danish pastry’, ‘cinnamon rolls.’ Every cabinet had a name, and the cut-outs placed on the outside freezer wall served as map for the employees to indicate where they could find specific items, instead of wasting time, digging through the freezer, and making a mess. What a great idea!

We discussed ‘labor’ and John’s eye’s immediately lit up. I could tell immediately that he was handling the number one nemesis, bakery labor. The kanban system gives Grandma’s a lean production scheduling system that triggers the production of something only when a depleted stock requires it. The receipt recipe for creating the item is on the card, so no information has to be looked up before the production staff makes whatever is required. No production manager is required to trigger the necessary work, it just gets done.

Grandma’s has internal goals regarding labor, ingredient cost and overhead.

We discussed ingredient cost, and that he has certain percentage indicators on prodcut cost to mark when it’s time to take a price increase. If the price of an ingredient gets to be exorbitant, that product’s selling point is either increased or they stop making it.

We proceeded through his facility and now we are in his shipping department. Production is closing, shipping now takes over and the employees are filling orders. The packing line has a marked place for every product rack. Every time an order is being filled, the packers can find what they need in the same place every time. This simplifies the package process, the training of the shippers, and minimizes packing time. All these improve productivity. The product was ‘standing tall’ and John gave us the thumbs up to take samples, and both Dave and I had a big smile on our faces. I immediately asked for one of Grandma’s signature items, his apple fritter (large, handmade and looking grand), had to take one of his giant long johns, could not pass up the ‘choc hockey puck’, and John recommended t his ‘raspberry raised glaze donut’, which turned out to be amazing; thank you John!

Certainly some of Grandma’s ‘Best Practices’ could benefit other bakeries as well.

In closing our tour, we asked John about his affiliation with UMBA, and how it has helped his business. Without hesitating, he mentioned that he looks forward to the annual convention, and told us how a UMBA seminar helped them get into the custom cookie business; another seminar benefited his donut line and so forth.

We asked John how UMBA could assist ‘Grandma’s’. He spoke of HR issues (employee handbooks, etc) and OSHA.

John mentioned that the ‘Fed’s’ are demanding HACCP, a program typically designed for much bigger facilities.

We chatted about the changes that have occurred in food manufacturing and what is foreseeable in the future. The bakery owner , in my eyes has one of the toughest businesses to run, with hiring, training, formulating , quality control, marketing, labor control, ingredient control and now throw in some of the new government regulations, EPA regarding oven discharge calculations, OSHA standards and keeping abreast of ‘new standards’ and the list continues. It is a formidable job.

Thank you John for a wonderful visit, and we at UMBA will strive to have answers for your future needs.