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Subject: New Bread Bakeries On the Rise; Marvelous Market Stirs Up Businesses<By
Date: Mon, 23 Nov 92 09:54:16 EST
Message-ID: <26.1992Nov23.095416@AmeriCast.com>

New Bread Bakeries On the Rise; Marvelous Market Stirs Up
Businesses<By Margaret K. Webb=Washington Post Staff Writer=

 Once upon a time there was a town called Washington and it had
no good bread. Powerful people who passed through the town of
marble and grass knew this was so, and lamented it, but were
powerless to change it.

 Then one day a tiny bakery opened with a new kind of bread to
sell, and it was marvelous. Those who lived nearby struggled to
keep the store as their secret, but their efforts failed and soon
lines stretched out the door. The little store baked and baked
and baked.

 There was good bread in Washington  ...  and everyone ate happi-
ly ever after.

 It was like a fairy tale when Marvelous Market opened in
Northwest Washington in July 1990. The store's crusty, chewy
bread was an instant success and produced bread-hungry hordes
that shocked everyone - including the bakery, which was so
overwhelmed that it resorted to rationing loaves, two per person,
just to have enough to go around.

 Articles about Marvelous Market appeared in a number of local
and national publications. Even when the publicity died down the
crowds continued, and bread began to look like more than a great
dinner party gift - it began to look like a business opportunity
for other would-be bakers.  Marvelous Market brought to Washing-
ton a European-style bread that had been available in California
and New York since the mid-1980s. The bread is not made with com-
mercial yeast, but with a naturally fermented flour and water
mixture called a starter, or levain. Compared with yeast, natural
starters require more time to mature - each loaf must rise for up
to 20 hours, which brings out the natural wheat flavor in the
flour, and then is baked in a special oven.

 These breads are finicky, though, and a quick change in tempera-
ture or a humid day can change or even ruin a whole batch.

 When it works, the end product is bread with a denser, chewier
texture and an earthy, hard crust.

 Predictably, there's a lot more of this hearth-baked bread
available  now than when Marvelous Market opened: About 10 bak-
eries in the area and two in Baltimore offer it in a variety of
shapes, sizes and flavors; some older bakeries have added it to
their product lines; and several new bakeries are about to open.

 There also are stores ready to capitalize on the growing market
for bread even if they don't make their own. Dean and Deluca, the
New York-based giant of gourmet food stores, will open here in
December. It will sell bread from local bakeries and restaurants
as well as from out-of-town bakeries "that are dying to sell in
Washington," owner Joel Dean said.

 Even some restaurants are rising to the occasion: Red Sage sells
the bread from its restaurant on 14th Street NW; Roberto Donna,
the celebrated chef of Galileo in Washington, soon will open a
tiny bread store across the street from his restaurant on 21st
Street NW; and a famous Los Angeles chef, Michel Richard, is
planning to open a bread bakery in Georgetown in January.  Other
kinds of gourmet breads also are gaining in popularity, such as
traditional yeast breads with unusual flavorings, including jala-
peno peppers or sun-dried tomatoes.

 "I'm sure it'll be just like France or Italy eventually, with a
bread store on every corner," said an optimistic Gene Gaithright,
a former baker for Marvelous Market who soon will open a bread
bakery in Old Town Alexandria. "And then the prices will come
down, and some will make it and some won't."

A Costly Business<For all its popularity, nobody is getting rich
off bread. At least not yet.

 The labor-intensive business takes a long time to learn and a
significant investment. The ovens alone can cost up to $100,000
and the total cost to build a levain bread bakery often ap-
proaches  a half-million dollars.

 After payroll, insurance, equipment maintenance, delivery, mark-
eting and many other costs, such a bakery would be lucky to reach
a 5  percent profit margin, said Lou Statzer,  owner of Uptown
Bakers. It opened in Washington a few months after Marvelous
Market and has only just become profitable.

 The recession probably fueled at least some of the expansion in
this market because bread baking is known as a very stable busi-
ness, said Statzer, a former real estate developer who started
the bakery to get through tough times.

 But there's a downside to such stability: "When things flourish
again, don't think you're going to sell any more bread," he said.

 The business is seasonal, however, and this holiday season seems
set to get a boost from the election. Statzer and other bakers
said their retail sales have gone up dramatically in the last two
weeks, and some restaurants that serve bread from these local
bakeries are reporting big increases in business.

 Nevertheless, some wonder if the  demand for gourmet bread may
be just a fad. Gaithright said he looked for a spot in Virginia
to open his bakery because he was worried that Washingtonians can
be fickle and may not go on caring about gourmet bread. At least
he could count on the tourists in Old Town Alexandria, he said.

 Washington  "tends not to be trendy, not to be as easily excit-
able about things," said Alan Borut, a consultant in the food
business. "If a trend catches on, does it stay caught on?"

Initial Hurdles<When Marvelous Market opened, owner Mark Fursten-
berg and baker Gaithright figured the maximum amount of bread
they could produce from their oven in Chevy Chase was 1,200 to
1,500 pounds a day, but soon they were making 2,500 to 3,000
pounds a day. The small staff was exhausted and having trouble
with quality control.

 "We were disappointing so many people every day that I got
scared," Furstenberg said.

 His original plan was to run a neighborhood bakery, but its suc-
cess was causing problems that could sink the venture. He said he
knew he had to do something - and fast.  Furstenberg decided to
open a large warehouse-size bakery in Silver Spring where bread
could be made around the clock with all the equipment necessary
to obtain consistent quality. The start-up costs, financed by
investors and loans, were nearly $1 million.

 Now, with 120 employees and production going at plants in Silver
Spring and Chevy Chase, Marvelous Market bakes 4,000 to 7,000
pounds a day and is just above breaking even financially on sales
of $4 million a year.

 Furstenberg said sometimes he still wonders  if he made the
right decision in expanding, but adds, "The great virtue of what
we've done is that we really have the capacity here to grow chea-
ply."

 And his plan is to grow. Furstenberg's fourth store will open
Wednesday in Great Falls and ultimately he would like to have
about eight stores.

 Meanwhile, Marvelous Market is turning to the wholesale business
to find buyers for all the bread the warehouse is capable of mak-
ing.

 In most ways, the wholesale business is more difficult than re-
tail. A retail bread store only has to please the small number of
people who actually go to the store - and who probably want bread
enough to put up with any of its inherent inconsistencies.

 But in the wholesale business, where a mass audience is served,
consistency and reliability are at a premium. Moreover, because
bread gets stale, it is impossible to have an inventory, so plan-
ning ahead often is not possible. And larger overhead expenses
make the profit margins smaller.

Going Wholesale<"My own experience is that the wholesale side is
entirely different from retail. It's very, very price conscious,"
Borut  said.

 Competition in the wholesale market also is stiffer than in re-
tail. It's one thing to be the neighborhood bakery that people
frequent because it is convenient, Borut said, while it's another
thing entirely to jockey for position in restaurants and stores.
Such buyers in most cases have long-standing relationships with
some of the older bread purveyors such as Breads Unlimited, Ot-
tenbergs and La Marseillaise.

 Marvelous Market, which had to turn away wholesale customers
when it first opened, now will have to compete not only with old-
er businesses, but also with some of the new bread bakers that
have all along  been courting the wholesale market vigorously.

 Bake Aroma of Chantilly, for example, was opened in 1989 strict-
ly as a wholesale operation by  Vie de France Corp.'s two found-
ers, who had sold their stake in the McLean bakery. The bakery
began making only pastries and croissants, but when the founders
saw the success of Marvelous Market and gourmet bread bakeries in
other cities, Bake Aroma began making levain bread in addition to
pastry in spring 1991.

 With an established reputation in the food business, Bake Aroma
had an instant advantage and bread proved a popular enterprise,
said Franz Jaggar, a third partner and co-owner. So Bake Aroma
opened three retail stores called Bakers Place, which recently
have begun to turn a profit.

 Part of Bake Aroma's formula was to keep the wholesale and re-
tail operations separate, Jaggar said, so the wholesale business
wouldn't drain attention from the retail business and vice versa.
The company also wanted the bread sold in the stores to be baked
on site, which most gourmet bread bakers in town agree is impor-
tant.  "People always have a negative image of anything done in a
warehouse," said Gaithright, reflecting on his Marvelous Market
experience. "It may not be justified, but people automatically
assume the quality is going to go down.  People like the feeling
that it's there for them."

 Steve Raab, the owner of Breads Unlimited in Bethesda and the
New York Bakery in Silver Spring, has been baking bread and other
items for years, but the recent increased demand in bread has
given his business a boost. He found running his wholesale busi-
ness out of his Bethesda store became "pure chaos," so last year
he opened a wholesale bakery in Silver Spring.

 But Uptown Bakers, which also has courted the wholesale market
since it opened, has no problem baking for its wholesale clients
out of its retail store. Statzer planned to market his bread
wholesale all along, and prepared for it when he planned the bak-
ery.

 "We're nowhere near production capacity," he said, even though
the bakery serves 150 restaurants and more than 50 other retail
establishments. On a good weekend day, that amounts to about
3,000 loaves a day.

 In some cases, the head-to-head competition is obvious. For ex-
ample, Larimers supermarket on Connecticut Avenue NW used to have
a Marvelous Market bread sign in the window. When Marvelous Mark-
et opened a store just down the street, it was only a few days
before Larimers was displaying the Uptown Bakers sign instead.
Still, the masters of the local wholesale market are the more es-
tablished bakeries, including Ottenbergs and La Marseillaise,
which supply hotels, airlines and other big customers. These
old-timers find some advantage also in their rolls, an important
commodity in the wholesale business but something the new bread
bakeries have shied away from.

 Statzer said a roll cannot have the texture and crust-to-bread
ratio that makes levain bread so special.  Other bakers agree,
although Bake Aroma is trying to come up with an acceptable roll.

 "Big hotels are still taking the French bread," said Delila
Michel, who runs La Marseillaise French bakery with her husband,
Andre.  "When you have 6,000 people (to serve), the smaller bak-
eries can't do it.  La Marseillaise has in fact lost some busi-
ness to the levain bread in town, Michel said, but it doesn't
worry her because it's mostly for special functions. In some
cases, she said, clients have switched to levain bread, but then
switched back.

Relaxed Retail Market<By contrast, the retail market is much more
relaxed. Bakery owners who have been around for years say the
bread craze has been good for business; likewise the newer bak-
eries are happy to see even more bakeries open because they, too,
think it will be good for business.  Borut said bakeries tend not
to be as competitive on the retail level primarily because they
have a neighborhood focus - people stop in to buy bread for
dinner on their way home from work or whenever it's convenient.
Gourmet bread bakers eventually find a niche in their surrounding
community, which could be very small and still sustain a busi-
ness, he said. That formula means there may never be any real
competition between the retail stores.

 The neighborhood focus also will keep these bakeries from driv-
ing each other out of business and prevent any one company from
becoming dominant, or at least staying that way, Borut said.

 More competition might be found between the small bakeries and
stores such as Sutton Place Gourmet and Dean and Deluca.  When it
invested in ovens and personnel for a different  line of bread,
Sutton Place Gourmet thought its customers would buy bread there
and stop making separate trips to specialty bakeries, said Ann
Brody, senior vice president for Sutton Place.

 Borut thinks some degree of price competition is inevitable on
the retail level, but probably not for the smallest bread stores,
especially the ones that bake in-house. They are seen more as
boutiques than as stores selling a basic food commodity, and
"when you go to a boutique, you do it for reasons other than
price," he said.

 Some bakers disagree.

 "Our prices are probably lower than everybody else's - I cannot
justify a $4 and $5 price for a loaf of bread," said Raab of
Breads Unlimited.  Other bakeries talk about specially milled
flour and hand-formed loaves as reasons for their prices, Raab
said, but added he is "not impressed" with that as an excuse. "I
think it's a lot of hype," he said. "Our flours have just gone up
quite a bit, almost 20  percent, but that doesn't mean we can
pass that cost on to the customer. ... You have to watch your in-
gredients' costs." "We were astounded by the prices people were
charging for bread," Jaggar of Bake Aroma  said. Like Sutton
Place and Red Sage, Jaggar set a maximum of about $4 for a single
loaf of bread, though larger and specialty loaves cost more.
Raab's highest-priced bread is about $2. At Uptown Bakers and
Marvelous Market, standard breads range from $2.50 to $4.50, but
some fruit breads or nut breads go as high as $6.75.

 With or without price competition, Borut thinks Washington
hasn't come "anywhere close to the limit" on people's desire for
fresh bread.

 "What people are beginning to learn is that bread is a very
healthful food, and the new breads here are tastier, they've got
more character, they're more interesting," he said. "I really do
believe the market is large - much bigger than has now been
tapped."endquad09:07 11-232C9999-----

Copyright 1992, The Washington Post.  This story is from the
Washington Post's Capitol Edition On-Line and is not to be ar-
chived or redistributed.

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