Career Switch Was Right Recipe for Creative Croissants Creator
In 1987, an Oak Industries engineer named Sayed Ali was worried enough about his job security that he began looking around for a business to buy, finally leaving his job as head of manufacturing operations to acquire a small bakery operation called The Bake Basket.
Even the irrepressible Ali, a 44-year-old Indian immigrant, would have been hard pressed to predict that, four years after the acquisition, his business would expand from just two stores in the Fashion Valley and Mission Valley Center shopping malls to a 30-location chain stretching from San Diego to Vancouver under the name Creative Croissants.
Ali still owns the original two restaurants but has sold 28 franchises since he received his California license in September, 1988, including 11 this year, despite the recession. He also sells his products to another dozen fast-food bakery outlets as well as wholesale to several other cafeteria customers, including San Diego State University and UC San Diego.
Ali said his success lies in his ability to offer an alternative to the “ham- burgers, french fries and Coke” routine of so many U.S. fast-food consumers. His menu has expanded from simply that of a bake shop offering fruit-filled croissants, pastries and gourmet coffees to a more hearty fare that includes croissants stuffed with turkey and Swiss cheese, freshly made soups and an assortment of salads. His meals typically sell for less than $4.50.
“I wanted to retain the flavor of restaurants at fast food prices,” he said.
Franchising was in Ali’s mind from the start because opening a chain of company-owned restaurants would have cost more money than he could raise. “It would also create management havoc,” he said. “A restaurant is a personal service, and it’s hard to always have good managers at distant locations.”
Ali, who came to the U.S to get an engineering degree from Cal Poly Pomona and an MBA from UCLA, was one of the original six people hired by Oak Industries to start up a state-of-the-art manufacturing facility for satellite cable TV equipment in Carlsbad. Ali joined the Rancho Bernardo-based company as director of quality control and rose to head of manufacturing operations, in charge of 750 workers, he said.
But, as the company faced financial troubles in the early 1980s, Ali had to implement painful, wide-scale layoffs that caused emotions to run high among employees, he said. As head of operations he was required to squeeze his staff from 750 down to 200.
“I saw the cycles of the company, the growth patterns and then the layoffs,” he said, and, after figuring that his days in the business might be numbered, “I thought it would be nice to do something on my own,” he said. “I narrowed it down to the consumer industry and decided food is something people would always buy.”
Ali went back to school for hotel and restaurant classes, devoured trade magazines and attended trade shows to learn as much as he could about the food industry. With family backing and a Small Business Administration loan, Ali purchased his first two Creative Croissants restaurants in 1987.
When he bought the restaurants, the leasing management for the Fashion Valley shopping center asked him what made him think he could succeed in the food business coming from a technical background. Ali said his management skills would make the difference.
“For any successful business, management and motivation of people are the key,” Ali said. Management of costs and quality are also important, he said, but “people are the most important ingredient in the formula.”
There also has to be a single-mindedness toward achieving your business goals, said Ali, who says he does some of his best work in the isolation of long, airplane flights. His decision to franchise was a turning point because it is “a faster way to grow, and it creates visibility for the company,” he said.
There are five Creative Croissant outlets in San Diego County, plus Southern California locations in Sherman Oaks Galleria, Fashion Island in Newport Beach and John Wayne Airport. Franchises are also located in the Broadway Plaza in Walnut Creek near San Francisco and in Ventura and Riverside counties.
Much like better-known chains such as McDonald’s and Carl’s Jr., Ali supplies the franchises with baked goods from his central commissary in National City. In a 4,200-square-foot space filled with freezers, refrigerators, mixers and cutters, Ali employs a third-generation baker and about 18 workers to prepare croissants, muffins, danish, strudel, turnovers and hot-meal croissants, and then trucks the doughs to the franchise locations for final baking.
For more distant locations, the commissary makes a dry batch of its recipes and ships it to local bakeries for preparation or, as with the Vancouver operation, he shares his recipes with the franchise in exchange for additional fees.
Ali sells his franchises for $17,500 each and a 4.5% royalty fee, plus a 2% charge for marketing and advertising services, he said. In a mall location, a potential franchisee needs about $115,000 in capital to get started, he said.
As much as half of Ali’s business is wholesale to such institutions as San Diego State University and UC San Diego. He also sells baked goods to the San Diego Wild Animal Park, San Diego Zoo, Sea World and the San Diego Convention Center.
His early restaurants allowed him to test and expand his menu and learn what locations would work. Although he sold all but the original two as franchises, the restaurants he opened provided needed experience, Ali said.
Despite his success, Ali is cautious about selecting franchisees and the locations of the franchises. He has had only one failure, and that occurred before he began franchising, he said. Although he did not reveal system sales figures, Ali did acknowledge that the recession has hit his operations hard, saying November sales at all locations were off 8% from the same month in 1990.