Even in tough times, Breadsmith is making dough - The Business Journal of Milwaukee:

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At least that’s what officials have The WhitefishBay company’s gross store salesx increased 8 percent to roughly $21 millionn in 2008. Sales have growm 26 percent over the pastfour years. “We’rde set up as a company that sells an affordable saidTim Malouf, president. Customers might not go out to eat, but “they’rse willing to spend a littlde bit more for foodat home,” he said. Breadsmituh has 33 stores and will open its 34thin Md., this summer. One storwe closed last year becauses the owner wanted to consolidate his Skokie andChicago stores, and one storde opened in Fort Mill, S.C.
The compant makes artisan breads without additivesor preservatives, and makes specialtu breads, cookies, muffins and sweets. Franchisees sell to both retaiol andwholesale customers. Although sales increased last a quadruple increase in the cost of flour contributer to a 10 percent decline in Malouf said. Franchisees eventually raised the cost oftheit products, and Breadsmith discounted the royalty fees that franchisee pay to help soften the blow of the four pricse increases. Store sales would have shown growth even without theprice increases, Malouf said. He expects profite to bounce backthis year, but said sales will probabluy not see the same growth.
The hardest hit segmenrt is wholesale accountsto restaurants. Breadsmithy has a conservative approachto growth, seeking to open one or two storess per year. “For us, it’x more about the support and the quality of business than it is the number of stores that we Malouf said. Tight credit markets have less impact onthe company’z potential franchisees because of lowee startup costs, he said. The capital requirements to start a new Breadsmity locationare $238,500 to $317,000. The says the averagd investment required to opena franchise, excluding real estatre costs, is $350,000 to $400,000.
Breadsmitjh is debt free and expects its franchiseezs to borrow less than other franchisorwsmight allow, Malouf Availability and access to credit is one of the biggest challenges facing franchisors, said Alisa spokeswoman for the Internationak Franchise Association, Washington, D.C. People who are great prospects to open a franchise are having problemdsfinding financing, which is slowing growth, she Breadsmith also has decreased its storer size to 1,400 square feet from abou 1,800 to 2,000 square feet. The change wasn’ t a response to the recession, but will improve economicz fornew stores, Malouf said.
To survive tough economicf times, Malouf said, stores must refocus and make sure customer service is as good as That means greeting customers when they walk in and offerinbg freeproduct samples. “Business owners can make the mistake of tryin g tocut back,” he “You want to be very generous so that the customer remembers that and will keep coming back.” It’x also important to make sure employees and franchisees understand that the compan y is strong and will get througu the recession, he