4/25/2018 Croissantonomics - Bakeries

Bakeries
Croissantonomics
Lessons in managing supply and demand for perishable products

Print edition | Business Aug 27th 2015 | NEW YORK

AIRY croissants, rich chocolate-chip biscuits, wedges of succulent cake—the goods

at the City Bakery, in Manhattan, look delicious. Maury Rubin, its founder, studied
in France. But his best creations are distinctly American: pretzel croissants
(surprisingly tasty), and recipes for making money.

Mr Rubin is among those bakers who revere traditional methods but want a fat
profit. However, a good bakery is bad business. Flour is cheap but organic butter,
which makes up half a croissant, is not. Central locations for outlets are expensive
to rent. In all, it costs Mr Rubin $2.60 to make a $3.50 croissant. If he makes 100
and sells 70, he earns $245 but his costs are $260. Since he refuses to sell leftovers
—all goods are sold within a day—he loses money. “Welcome to the bakery
business,” Mr Rubin says.

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The obvious fix is to raise prices. But Mr

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4/25/2018 Croissantonomics - Bakeries

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Britain
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higher margins.

See more Second, use data to cut waste. Mr Rubin

studies sales to discern trends in demand,
then adjusts supply accordingly. There are no brownies or carrot cake on Mondays
or Tuesdays—people don’t buy rich desserts after decadent weekends. He watches
the weather closely, as demand melts in the rain. He keeps an eye on school
calendars, to bake less when children are away. He bakes more after the fasting of
Yom Kippur, when demand from Jewish customers picks up. And each day, after the
breakfast rush, he fine-tunes supply by checking sales every 60-90 minutes. Trays
of pastries are ready to be baked, but nothing goes into the oven until the numbers
are in.

Having no croissants at the end of the day is a sign of success. Late one recent
afternoon, his counter offered trios of fruit on triangles of rice paper, cooked in
sugar. This dessert looks lovely and is cheap to make. But Mr Rubin will sell only a
few, as he makes them expensive: they are there in part to make his counters look
pretty and full, to draw in coffee-drinkers at the end of their working day. Such
strategies have helped the City Bakery survive since 1990. It now has seven smaller
shops in New York and seven outposts in Japan, with plans to open in Dubai.

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