Growing Pans

Europane is a neighborhood bakery in Pasadena whose fresh fruit tarts and focaccia have created a fiercely loyal clientele. So when customers urged owner Sumi Chang to add chewy, European-style bread to her shelves, she sensed a business opportunity.

“I know I could sell it. I get a lot of requests,” says the nurse-turned-pastry chef, who has worked for the Four Seasons Hotel and with Nancy Silverton, whose La Brea Bakery introduced Angelenos to crusty, Old World bread a mere eight years ago.

But making those rustic loaves takes a lot more than a bag of flour and a rolling pin. Despite the stories about the amateur bakers who began in their home kitchens, the reality is that it takes about $250,000 to open an artisan bakery today.

That includes as much as $85,000 for a European hearth oven to achieve the chewy texture of today’s increasingly sophisticated bread, for which consumers are willing to pay $3 to $9.50 per loaf.

“The equipment is terribly expensive,” says a wistful Chang, who is seeking investors to expand her pastry shop into a bona fide artisan bread bakery. “But I think there’s a market.”

Industry watchers say Chang is right. Los Angeles may set global trends in culture and film, but it’s behind the curve when it comes to artisan bread baking, which has become a $6-billion-a-year industry nationally as customers turn away from the sliced, packaged white bread of their childhood for the dense, handcrafted loaves known as artisan bread.

Compared with cities such as San Francisco, Seattle, New York and Chicago, all of which have numerous entrenched artisan bakeries, the Los Angeles market is fairly open, says Gina Piccolino, a spokeswoman for the Bread Bakers Guild of America in Pittsburgh.

That’s good news to burned-out neurosurgeons, screenwriters and lawyers looking for a more personally rewarding career. The bad news is that things are getting more competitive as many entrepreneurs go the route of Chang.

“We have five new bakeries a week coming to us, wanting us to stock their products,” says Trisha Colon, food service manager for the Wild Oats Market in Pasadena, who says the figure has doubled since the mid-1990s.

And artisan bakeries are no longer competing solely with one another. Large corporate bakeries and supermarket chains have jumped onto the bandwagon and are building their own artisan bakeries or acquiring existing ones to gain instant penetration into that niche market, says Jim Stitley, editor of Baking Management, a trade journal in Des Plaines, Ill.

“If you’re already shopping at Whole Foods, why should you make another stop if you can already get great fresh bread from us?” asks George Eckrich, a director of baking commissaries for Austin, Texas-based Whole Foods Market Inc., whose 76 stores sell artisan bread under the company’s Bakehouse label.

In addition, several hurdles prevent most neighborhood bakeries from expanding their businesses into regional players. Few artisan bakers, no matter how well-regarded, have the $1 million or so that industry experts say is needed to go regional.

First, there are those expensive ovens--more than one if you intend to bake in quantity. Then you need mixing equipment and other kitchen tools. Throw in payroll, delivery trucks and freezers that enable bakers to par-bake bread, then ship it frozen to stores, and the costs add up.

Some artisan bakers worry about quality control, saying that par-baking and freeze-shipping can’t help but lower quality, since the bread is no longer made by hand that morning in small quantities for local distribution, which, to many, is the essence of an artisan bakery.

“If you’re a purist, you say you can’t do it,” says Piccolino of the Bread Bakers Guild, a trade group devoted to furthering artisan bread traditions. “While par-baking is a trend, it’s not one that a lot of us like to see. If Nancy [Silverton] were to open shops all over, the quality would be a little less.”

But Silverton’s 8-year-old La Brea Bakery is one operation that has made the leap from retail to regional wholesaling and is now a $10-million-a-year business. In 1992, Silverton opened a 20,000-square-foot facility on Washington Boulevard that supplies 350 bakeries, supermarkets and restaurants from San Diego to Santa Barbara with more than 30,000 pounds of bread a day.

Silverton, considered to be among the six most influential bakers in America, is also experimenting with par-baking bread, then flash-freezing it for shipment, which would allow it to be sold nationally, she believes, without diluting quality.

Industry experts, who are watching all these trends closely, say that regardless of how large they grow, small artisan bakers have already revolutionized the industry.

“I’ve never seen small players having such an impact on the industry. It’s a real interesting phenomenon, and it’s changing the face of the whole industry,” says Stitley.

Piccolino says the Bread Bakers Guild, which started in 1993, has seen its national membership explode from 400 to almost 1,400. Modern Baking, a trade publication based in Des Plaines, Ill., estimates that artisan bakeries will grow 30% more this year.

The new National Baking Center at Dunwoody Institute in Minneapolis, which teaches bakers the art and science of European-style breads and pastries, says its classes are always full with amateur bakers as well as industrial supermarket bakers who want to upgrade their bread to compete with the local artisan breads.

Supermarkets such as Whole Foods are opening regional artisan bakeries--known in the bread world as commissaries--at costs of more than $1 million each. In Texas and Colorado, they are also building artisan bakeries inside their retail stores, where customers can watch bakers shape loaves and load them into hearth ovens, then be spurred into purchases as the smell of freshly baked bread wafts through the store.

“It’s fun, and it’s theater,” says Eckrich, who says Whole Foods has built a regional artisan bakery in San Fernando to supply Bakehouse bread to its Southern California stores.

Eckrich’s approach is typical of the changes occurring today in the artisan bread business. A baker by trade, he started subleasing space from Whole Foods 15 years ago to sell his own artisan bread called Dutch Regal.

Five years ago, Whole Foods bought into his business so it could compete with local artisan bakers by stocking its own rustic bread, which it christened Bakehouse. Now Bakehouse accounts for the majority of bread sales at Whole Foods stores. In Texas, Bakehouse has captured 80% of sales.

“We’ve jumped on this trend, and we’re doing it in every city,” Eckrich says. “A lot of people think of me as being predatory, but we do it for market share. We still carry other brands, which I think is crazy. Why would you invest in a bakery and then sell and promote the product and have your own product in competition with theirs?” he says.

In line with corporate strategy, Bakehouse usually undercuts its local competitors by several dollars a loaf and is more prominently displayed. In the Glendale Whole Foods store, for instance, an elaborate bread counter tempts customers with dozens of Bakehouse varieties from red pepper to sourdough.

It isn’t until customers round the corner into the deli that they see a lone rack of competing artisan bread from a bakery called Buona Forchetta.

The move has left some small artisan bakeries reeling.

“We were very badly hurt when Whole Foods, which was our best customer, became our ferocious competitor,” says Don Carlos Dunaway, who with his wife, Suzanne, owns Buona Forchetta in West Los Angeles.

Suzanne started baking rosemary focaccia in her kitchen in 1993, convinced her burned-out Hollywood producer-screenwriter husband to join her in business, and was soon turning out 1,000 loaves a week, which she convinced local markets to stock.

Using only organic flour, Buona Forchetta carved out a niche for itself with Roman dipping cookies called tozzetti and Italian-style baguettes called filoncini that come in kalamata olive, rosemary and hazelnut sage, to name a few. With a more delicate crust than La Brea’s, Buona Forchetta’s loaves are baked in convection ovens that cost only $40,000, about half of European hearth ovens.

By 1995, business was spilling out of the house, so the couple sunk $120,000 into equipment, more staff and a 2,300-square-foot commercial facility in West Los Angeles that now produces as many as 2,500 loaves each weekend.

“It was hell, but we were in the black from the day we opened our doors because we were already selling to the chains,” says Don, who counts Bristol Foods, Gelsons and Whole Foods among his clients. The Dunaways don’t want to discuss their profits, but Don says that by next year, he hopes to make as much as he did during his best years in Hollywood.

Buona Forchetta is also moving into restaurant sales, which the Dunaways see as a growth area, especially as some of his chain clients cut back. “If you’re making a traditional French artisan bread, you’re vulnerable. If you’re making a La Brea clone, I’d be scared to death,” he says.

Still, they come. Doug Levi of historic Capitol Milling, which was founded in 1831 in downtown Los Angeles and has been run by the same family for 114 years, says he gets weekly calls from prospective artisan bakers who want to know what kind of flour he can provide.

Capitol, which has a stellar reputation throughout the close-knit artisan bakery world, can mill just about any type of specialty flour a customer wants and has clients as varied as La Brea Bakery, tortilla and Chinese noodle factories and Ralphs Grocery Co.--a customer for more than 100 years.

Unlike the big commercial bread makers such as Ralphs, artisan bakers say they are drawn to their profession by a love of dough. The money’s not bad, either. Flour, yeast and water are inexpensive ingredients. And once you’ve recouped the initial investment from baking equipment and stabilized your payroll costs, profit margins can be high.

“Whereas with restaurants, if you reach 10% you’re happy, with baking, you’re looking at 20% to 30% profit margins if you bake around-the-clock,” says Karen Salk, a partner in Breadworks, an artisan bakery in the Fairfax District.

Salk should know. The idea for a bakery came when she and Tony di Lembo ran a Third Street restaurant called Indigo that baked its own rosemary bread in double-deck pizza ovens. So many customers clamored for the bread that the pair opened their own bakery with a $170,000 investment.

After running two retail bakeries in Santa Monica and Larchmont, Breadworks made a strategic business decision to focus on wholesale. It now provides breads to 50 clients that include Sony Studios, the J. Paul Getty Museum, Pavilions and Trader Joe’s, for whom it bakes hot dog and hamburger buns.

Indeed, many artisan bakeries see growth not in expanding out of Southern California, but rather in selling new products to a wider variety of clients--such as restaurants, businesses and corporate dining rooms.

“We’ll never be a mass bread,” says Don Dunaway of Buona Forchetta.

“We talk about franchising, but we’re not sure you can replicate the product without the control. Ultimately, we want to do something we’re proud of.”

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* STARTING A BAKERY: You need a niche and a plan if you want to make some bread, Karen E. Klein writes. D6