Welcome to Season 12 of the Troubleshooting Innovation podcast. Joanie Spencer, editor-in-chief for Commercial Baking, is spending this season with Tony Martin, president of Martin’s Famous Pastry Shoppe. They’re exploring how this company has grown from a family-owned brand into a national icon. Sponsored by AMF Bakery Systems.

In the fourth episode, we hear how Tony’s family has passed down its values for generations, from supporting non-profits in its local communities to providing workers with benefits like a wellness program, profit sharing and more.

Learn more about this season here, and tune into Troubleshooting Innovation on Apple or Spotify.

Joanie Spencer: Hi Tony, thanks for joining me again this week.

Tony Martin: Glad to be here.

Spencer: Okay, I am having a blast getting to know you and getting to know Martin’s from a ton of different perspectives, and this has been really educational. So, I am just thrilled to have this time with you this month. We’re going to talk about culture, and I think that this is something that Martin’s does really well, so I’ve got a lot of questions for you, so put your seatbelt on.

Martin: Sounds good.

Spencer: All right, so we’ve talked a lot about your view of the company through the lens of a family member, the lens of a baker and the lens of a leader. But when you think about culture, what does culture for Martin’s look like today, as opposed to when you were first getting started?

Martin: I think it’s interesting as a small company, of course, you work with ownership, you work with leadership directly. You know, there’s not many rungs from the entry-level to the president of a company, and so I think you kind of catch the culture much easier in that type of environment. Then when you get a little bit larger … I don’t know everybody’s name anymore. I’d love to, but at this point, you know, we have to figure out, “How do we capture the culture that we have intentionally wanted to present?” We want to make sure that it gets all the way to the bottom, to the top.

So, several years ago, we put a team together to talk about this subject: How do we intentionally share the values that we feel are important for our workforce and to all of our members? So, we sat down, and we strategically developed cultural value statements that we feel like were historical and that we wanted to present this legacy going forward. And so we wrote a couple of them, and I’m going to share a couple of them with you.

We want a person of integrity and respect. And what does that look like? Treat people the same way that you want to be treated, be transparent, identify and eliminate unethical habits. We want you to be a communicator on a unified team. These are all fancy, right? But we want to improve communication channels. We want you to be a contributor to the culture, so rigorously dedicated to extraordinary quality and customer service. Again, we’re only quality; we’re only good service. Otherwise, we don’t exist. We want you to be a proactive thinker, somebody who embraces a mindset of thorough and planning continuous improvement. We want you to be an ambassador for Martin’s. So what does that mean? Hey, when you’re having a picnic with family members, grab some of the product, take it with you and talk about the positives. And if you have somebody you think will be a good employee, tell them about your job and see if they might want to work there as well. So being an ambassador is so important, especially to a small company. We’re word of mouth, and we want to present who we are to people from top to bottom and have a consistent message.

So, we want to be very transparent. In every generation, we want to basically not have those changes that could happen to a larger company. We want to keep acting like we’re a small company. You have to be very intentional to do that.

Spencer: So, I’ve worked for large companies that weren’t always large companies, and I’ve heard stories throughout my life about big companies that are still trying to act like a small company. And so, there is sort of that bridge that you cross, and it’s a hard bridge to cross when you still want to sort of maintain those values, but you cannot function like a small company once you get past a certain point when it’s just in theory.

So, I love that you write down those values. And it made me curious, the list that you just read me, how does that align with what you saw when you were still just a grandson and just a son and not part of the company yet?

Martin: Well, I would say, it’s very similar, right? We believe that you should treat others the way you want to be treated, and we all felt that inherently when you’re a small company and how you’re treating people. So, we want to make sure that we define what that means so that the next generation isn’t trying to interpret, “What do you mean by that? What does it look like?” and so that we can analyze that.

I mean, even today, we had meetings that basically talked about, “How do we handle absenteeism? How do you handle the hard parts of your job? Do you have a black-and-white rule? Are there circumstances that need to be evaluated each time? How does that work in discrimination?” I mean, these are hard things that you go through. When you’re a small company, hey, you know everybody. You know such and such … you know your wife’s sick or ill, and you deal with it differently. When you’re a large company, some of those things you’re not aware of. And so you try to treat people all the same, so that you’re fair, but then ultimately that becomes a problem.

When I was first here, you’d have people hard up, and they would say, “Hey, could I have some money? I need to pay off my car, or the bank’s going to take my car.” At a big company, that’s a harder thing to do, but principle-based, you want to provide the same type of environment. So, some things are hard, but at the end of the day, you want to be able to take care of your people, because without your people, you really don’t have a business. And so, there’s that balancing act there.

Spencer: I think it adds another layer of complexity when, you know, we talked last week a little bit about how it’s now sort of an employee’s market. It’s post-COVID and the benefits that people had to keep them safe changed their perspective on their expectations for their workplace, and that just sort of adds a layer of complexity to those demands.

Martin: What we do from day one, we bring people in, and we talk about what we call the pyramid of success, and I talked about the attributes of that success. But we want to be, first and foremost, an employer of choice, because we know employees today, as you put it, it’s low unemployment. They have choices, and so you want to make sure that you’re one of those that they like. We also want to be a supplier and a provider of choice.

So those customers out there, like the large grocery stores and foodservice people, there’s lots of opportunities and lots of choices out there. So, we want to be one of those that top of the list; we want to be chosen. You need to be an investment of choice. The investors, not just us as owners, but every employee here is an investor, because we share in profit sharing, we share in opportunities for healthcare, and if we can provide as good or better healthcare, we want to share that with them. And then, most importantly to the family, is we want to be a God-honoring company so that we are living what we believe.

Spencer: I know that that is such an important part of your family, and I was just going to ask you: What are some of the specific Martin family values that translate into the company culture, and why are those values important, not only to the company, but to you as a leader and as the third generation?

Martin: Like I said the other day, we feel like we’re stewards of the business, and the business is made up of … every employee we have here is an investor in this business. We like to give back to the community. We try to make sure that we give more than 10 percent of our income away to nonprofits, because we feel like that’s what we’re called to do. And there are, you know, local community events and things like that that we participate in to try to, I guess, be seen in the community, that we are available for employment, as well as giving back to the community as best we know how.

For our employees, we like to make sure that, obviously, they have competitive wages, because we feel that’s important. You need to be fair to everybody. We do have a 401(k), we do profit sharing. A lot of companies do this, but we want to make sure that we do it right. We also put in, a few years ago, a wellness program. We have a company called We Care that actually has a doctor’s office with doctors and nurses that are within walking distance of our facility that they can participate in for no copay. So, this is a way they can have healthcare, plus their families. We provide basically all their medication other than, let’s say, narcotics at this facility for free. So, we want them to participate in that, because we feel like, if you have a healthy work environment or healthy worker, they’re obviously going to be happier, they’re going to be more productive, and they live a happier life. And that’s what this is all about.

We actually also provide a chaplain service. They walk around the facilities, meet the folks at lunch, and they actually kind of, you know, just, “Hey, how are you doing?” And it’s amazing how … everybody goes through rough times in life, and they may have a death in the family, they may have a wedding, and they will tap these folks, and they’ll come and participate in the funeral or a wedding, and those kinds of things. So, they’ve become folks that they really rely on. They basically just walk around and help them on a daily basis on, “Hey, how’s life? What can I do for you? How can I help you?”

Spencer: You know, I have to say, just personally, my father passed away in the early 2000s and the person who was in charge of the profit center where I was working came to my father’s funeral. I had a lot of coworkers who came to my father’s funeral, but you know, the woman at the very top came to my father’s funeral and she took communion, and I remember that moment just hitting me so deeply that she cared enough about me to come take communion at my father’s funeral. It did something for me, and not just made me want to work harder, it really gave me some loyalty to that job, but it also made me feel very safe. It made me feel seen and cared about.

I’ve since moved on, obviously, but it was a moment that changed me. And so, just on a personal level, I can tell you as an employee that to have someone reach out like that, it does make a difference. It really does. And of course, there’s research that says when you care about your employees and when they are healthy and have access to health care, there’s a tangible ROI when they don’t miss work and things like that, but just on a basic human level, it changes a person, and it makes their life a little bit better, especially in hard times.

Martin: I totally agree. When you go through a health event or a family member gets really sick, it puts everything in perspective. What’s important in life instantly. The things that you thought were important are not important. The things that you didn’t think were important … all of a sudden, it’s very important.

Spencer: Yes, and to know that you have an employer who sees that … it makes you feel a part of something, and not something that you want to walk away from, but something you want to grow with.

Martin: That’s our hope. We just want to treat people the way we would like to be treated.

Spencer: Absolutely, I think you’re doing a really great job at it, too.

So, I want to shift gears a little bit. We touched on this a couple of times a couple weeks ago. As a multi-generation, family-owned business, Martin’s really does emphasize that leadership positions are earned and not just inherited, and I did notice that you use the word “earn” more than once. Can you elaborate on your personal experience in earning your positions and then how that has impacted expectations that you have for your children or anyone in the next generation of the Martin family?

Martin: When I started at Martin’s, I started as their pilot, as well as learning the business in different areas. I think earning the position was to learn and understand from a company that didn’t have a lot of computerization … needed it, and so basically, one chunk at a time, we worked through the whole company, and I would say, earned the respect of each department as we installed software and also helped them manage their systems through that process.

You know, there are many late nights, and it wasn’t one of those things where you were going home at 4 p.m. and everyone else was staying late. You were part of the process of making this work or fail, and we had failures, and you learn from your mistakes, and you do something else.

As it relates to other parts of our business and other family members, we’ve all kind of earned our strikes. We worked in different areas, and kind of worked our way up and until we earned a position of authority or managerial, presidents or vice presidents, those kinds of things. The next generation, of course, we’re a little bit more sophisticated than we were, so there’s a little bit more that’s documented. We have a process in place, and we want them to understand their role in the business. I have one family member who’s considering going on to law school, so I think their hope is someday to maybe rejoin the company in that type of capacity. But again, I think you learn as you go. There’s no perfect solution, and I have seen it work different ways, at different companies and family businesses. But, at the end of the day, I think it works best if you’ve earned your position, and you live the job, too. You don’t just tell people what to do, you do it as well.

Spencer: Right. I agree with that. I do have a friend who, she is president of a local business here, and it’s a family-owned business. She knew at a very young age, high school, maybe even younger, that she would eventually be in a position of leadership in the company. So, she went to college to get a business degree, and she said, “I knew that that’s where I was going to end up, but I never wanted anyone in the company to look at me as though it was given to me. I had to do everything that I needed to do to earn that position, so that the company would look at me as a person who earned that position, and not just someone with that last name.”

So, I always admire those who earn their position, and I like seeing the evolution of the expectations that you have for the next generation. And I think that that’s a reason why there are four generations of Martins in the company. So that’s really cool. And you can tell Emily that her blog post had a big impact on me.

Martin: I will definitely do that.

Spencer: So, I want to keep talking about this sort of generational topic. We’ve talked about this labor crisis. Prior to COVID, it was boomers versus millennials, and we Gen Xers were just sort of sitting back watching the battle. But there really was this different mentality, and it’s the old school way of just rolling up your sleeves and wanting nothing more than the pride of a hard day’s work, especially when in a manufacturing environment. Younger generations don’t have that mentality. They don’t subscribe to that.

As someone who has been in your family business for three generations, how have you seen that mentality evolve? What did that look like? Where did it start shifting?

Martin: Yeah, I would say we definitely saw a shift, like you mentioned, prior to COVID, where ­— we’ll call it the newest generation — were entering the workforce. Again, I came out of the IT side, so I would think it was even exaggerated in that field, but there was an expectation that they should have accelerated growth in their in their job and their responsibilities. No longer was it, “I earned my spot; five years later, maybe then I’d become a supervisor or become a project manager.” There was an expectation that, after a year or two, I would like to see, “What roles of responsibility can I have now?”

So, we’ve wrestled with that, and it’s been a little bit tough, because, like we say all the time, somebody has to take the garbage out, and nobody wants to take the garbage out. So, you have to figure out, is that a shared responsibility? Can you create levels within the company? We do that with our manufacturing maintenance folks … that’s one of the hardest areas to hire into. But we created levels. So, level one, you’re off the street, you really don’t know much, you’re maybe a good mechanic, but you don’t know our equipment. So, we actually created tests internally so that you could go to level one, two, three and four. And then, of course, we had compensation packages that aligned with that, so that we could, obviously, pay them more when they were more skilled.

So, we’ve done that with the maintenance folks. We’ve done that with our IT group. The more that you know about our systems, the bigger salary you can have. I would also say it was a cultural change. It’s not all bad for society. We learned through COVID that people all of a sudden started enjoying being home with their family, and so they wanted to spend more time with their family. Personal time became more of a priority than a bigger paycheck, let’s say it that way. So, we’ve had to adjust and understand that their priorities have changed, and to be successful, we have to kind of ride that carefully.

We can’t have everybody working from home. Doesn’t work in all jobs. You can’t have your bakery employees working from home. It just doesn’t work. But there are different jobs that you can provide an opportunity for that. Of course, during COVID, we did that as much as we could in order to provide a safe work environment. The cultural change in that becomes a challenge, because your head count can go up and your productivity may not. So again, I think it’s been a societal change that there’s just a general acceptance that we’re not quite as efficient as a country as we were. But I keep telling everybody, we don’t know where we should land. I said, “Well, after five or six years post-COVID, the companies who survive will have chosen the right path, and the ones that are struggling didn’t.” So, we don’t know who they are at this point.

Spencer: Yep, very true.

Martin: We’re getting close.

Spencer: You know, I do think — and you’ve touched on it in that response — it’s different for manufacturing. These new needs and demands that workers have, just like you said, you can’t work in a bakery from home. But there’s also this need for more of the softer side of life, I guess. That culture plays a central role, and that’s this idea of needing purpose and this sense of belonging. How do you see those kinds of needs fitting into a manufacturing setting? What advice would you give other bakeries if they want to be the ones in a couple of years when the dust settles that they’re still here?

Martin: So, we try to start off by reinforcing the fact that we are a small business or a small family group. And how do you do that? When we onboard, we actually created — we mentioned this a couple weeks ago — the original bakery, which was a garage, and we actually bought it, brought it on-site and set it up just like the old bakery was. And so, one of the first things that we do when onboarding is we actually give them a tour of this. We call it the Golden Roll Museum. We have little oven in there, a little proof box, and all the places. It’s laid out just like we would have done, made the donuts and all those things. And then we have some videos of the old way of making product we have here and through the years. We actually have one of the original cars that we used to transport products to market. We want them to understand where we came from, and that if you forget where you came from, you’re bound to make mistakes going forward.

So, we start out the first week doing that. And then, of course, we reinforce this is what it means to work in a bakery. Because we want people to, frankly, decide the first couple days, is this what I want to do? Because there’s nothing worse than having somebody stay a few weeks and then quit. We would rather them know upfront, “Hey, this is what it’s like.” We try not to paint a glorious picture. It’s hard work, and some days it can be hot. Our bakery is air-conditioned, which does make it not so hot like when I worked over there, you know, we didn’t have air conditioning. We had to walk uphill, both ways.

Spencer: In the snow!

Martin: In the snow, right? So anyway, we try to onboard that and be very intentional about our culture, who we are, who we want to be, and then we try to reinforce that.

Spencer: That’s really amazing. And thinking … I just have to laugh, because it’s air-conditioned, but there’s still a giant oven.

Martin: Yes, correct.

Spencer: So, it’s not quite as hot, but it’s still hot. But I do like what you said, that you’d rather know up front, and I can only imagine that you get probably one reaction or another when people are able to experience where Martin’s came from and where it started. And it’s either, like you said, “This is where I want to be.” or “How could someone have done that? This is not for me. I was just here to collect a paycheck. I’m going to go to the convenience store down the street and work the cash register.”

Martin: Right. Yeah, very much so. I mean, obviously there’s a lot of standing around in a bakery, especially an automated bakery, so they don’t necessarily know what they’re in for until they actually come the first week and observe.

One of the first things we do is we take them on a walk through the bakery and observe, “Hey, this is where you’ll be working.” And some, you know, gravitate to the fact that, like, “Yeah, I don’t think that’s for me.” And that’s okay. We’d rather know that up front.

Spencer: This is an area that ABA is actually working on as part of its new strategic plan. So, I’m curious, Tony, as a board member, can you sort of elaborate for me a little bit on what ABA can accomplish with this goal of bakery being a destination workplace, and how that goal aligns with Martin’s culture?

Martin: Yeah, you know, destination workplace … It means to us that it’s going to be easier to find employees who want a career in baking. And I think at this point, a lot of folks don’t know what a career in baking could look like or should look like. Everybody feels that they don’t know much about a job until they’ve actually experienced it. So, I think ABA is working hard to find partners that will basically expose what it’s like and how you start in baking and where you can end up. And make it a more desirable job preference for folks.

We’re trying to do it as well, even at a local level, working with our vocational technology schools and trying to make sure that they understand that you don’t necessarily have to go to college if you don’t want to, and you can actually career in something and be a professional, albeit in the bakery, as a supervisor on the line or a manager. We want it to be like a destination workforce, somebody that really is starting out in life. “Hey, I want to be a baker,” or “I want to work in a production facility,” because there’s so many benefits to it versus other jobs.

A lot of jobs, you know, you take home with you, but if you work in a bakery, in manufacturing, a lot of times when your shift’s over, you can go home. You can spend it with your family. You can spend a weekend, or whatever days off, and you don’t have to necessarily worry about what’s happening back at work. There’s a lot of benefits to some aspects of it. We know a lot of people do just come to work to collect the paycheck, and that’s okay. You know, if you’re really good at what you do and you care about what you’re doing when you’re there, you can sign off when you leave and you hang it up. The rest of us have to take a phone and be available for emergency calls and things like that. So anyway, I just think that the ABA getting behind it and trying to help educate the general public on what it means to work in a bakery can do nothing but help our ability to find good resources who want to work in the bakeries.

Spencer: You know, I agree, and I would even go so far as to say there is this trend — and I think it’s simmering just below the surface — that conversations are starting to happen about trades. I am seeing out there, just these conversations doing the math of a starting salary for a trade versus the amount of investment in education to get to that starting salary. These conversations are starting to emerge, and so good on ABA for getting in front of this and really starting to participate in these conversations now, because I do predict that there will be momentum on this in the next five years or so.

Martin: I totally agree with you. The debt they’re coming out of school with and being able to find good jobs is becoming a reality that wasn’t necessarily good ROI. So, trying to figure out how to get around that … and some people actually like to work with their hands, and they don’t want to sit behind a computer. So, I think for a little while, we felt like in the future, everybody was going to sit behind a computer, and that’s not going to be the case.

Spencer: That’s right. Culture doesn’t necessarily mean what’s going on on the bakery floor, even inside the walls of the company. Community involvement — you’ve mentioned it a couple of times over the past few weeks — plays a big role for Martin’s. Can you sort of talk about what some of the most important community causes are for the company and for you personally?

Martin: Yeah, as a family and family business, we donate over 10 percent to philanthropic organizations, which can be anywhere from the Red Cross to different places like that. We also support a number of Christian organizations in the area. We support some colleges in the local area. We try to help fund them, some schools, some Head Start programs and things like that locally.

But from a community standpoint, like I said earlier, we participate in some of the local fairs. We have a food stand where we provide all the bread and rolls, and that’s able to help organizations that are trying to raise money for their organizations. So, whether it’s a girls club or the Boy Scouts, if they need product, we give them the product, and they make sandwiches, and they sell those sandwiches. So, it’s a way for them to leverage their labor and make money for their group. And that’s a good way to do it; it’s a partnership.

Spencer: Yeah, I really like that. It gives them the autonomy to earn their fundraising through a gift that you give them. I like that a lot.

So, I just have one more question for you this week, and that is: What is the key to translating corporate responsibility — we could say that’s the company — into its culture, which would be the workforce. How do you make what’s important to you and what’s important to Martin’s, important to all of your associates?

Martin: That’s a very good question. We try really hard on this subject. We actually measure each year. We do the Best Places to Work survey, and what we learned from that is what we’re doing well, what we need to do better, and then we make modifications to what we do.

But one of the things we do, was to create a spring and fall profit sharing, which was a shorter time fence, so that everybody would look at it the same way to say, “Hey, we’re all benefiting. Hey, we’re having to work extra hours, even if your salary, and how do I benefit from that?” Well, we have a profit sharing that goes along with that. So, one: profits. If your profits are up, obviously we’re efficient. If the profits are down, we’re not so efficient.

We do regular, what we call State of Affair meetings. We meet with our employees regularly and tell them, “Hey, this is how we’re doing. This is what our plans are in the near future.” We share with them some of the stories from our customers to try to get them on board, because they may not know what countries we serve or what states we serve, who our customers are, because they’re, you know, maybe in Chambersburg or Valdosta. So, again, we meet with all of them on a regular basis.

We also write what we call the MMM, or the Martin’s Management Minute. Every two weeks, a little blurb goes out, and we put this in the lunchrooms. Again, it’s just a microcosm of what’s happening right now and what we’re excited about and what’s coming about.

We believe in six-month reviews with our employees. That’s hard when you’re when you have as much going on as we do, but we’re trying to meet with them on a regular basis, tell them again what’s going well. You know, what do you want to do in your life? Where do you see yourself in six months or a year or two years? So, try to have some idea of what kind of career path they’re looking for. So, we try to keep that regularly updated. And then again, I mentioned the annual survey, which is basically reinforcing what we’re doing well and what we can do better.

Spencer: That’s awesome. So that’s going to wrap up this week, and it just leaves us one more topic for next week, our last episode, and I’m excited that it follows this episode; I think they kind of go hand in hand. But we’re going to talk about marketing.

And you did mention … I think it was last week you mentioned talking about Martin’s growth and that a lot of it was grassroots and it was without marketing, but now you’re sort of this national icon, and you’ve got a super cool mascot that I cannot wait to learn about. So, for now, I’m going to say thank you for another exciting conversation, Tony, and thank you for your time and your insight.

Martin: Well, I appreciate being here and all these good questions. Hopefully other people can learn from them.

Spencer: I think they will. All right, I’ll see you next week.

Martin: All right. Thank you.

Welcome to Season 12 of the Troubleshooting Innovation podcast. Joanie Spencer, editor-in-chief for Commercial Baking, is spending this season with Tony Martin, president of Martin’s Famous Pastry Shoppe. They’re exploring how this company has grown from a family-owned brand into a national icon. Sponsored by AMF Bakery Systems.

In the third episode, we hear Tony’s perspectives on scaling the business through acquisitions and facility expansions, and how rapid technology advances have impacted equipment and operational needs.

Learn more about this season here, and tune into Troubleshooting Innovation on Apple or Spotify.

Joanie Spencer: Hi Tony, thanks for joining me again this week.

Tony Martin: It’s good to be here.

Spencer: So, we’ve had a couple of really good discussions, and I’ve learned a lot. Last week, we talked a lot about product development for this amazing, unique product that you sell in a traditional market.

This week, I want to talk about the operational side of that, especially in terms of how Martin’s has grown over the years. So, I thought the best starting point would be to revisit that evolution of growth for Martin’s, but this time I want to talk about it more from your perspective.

So, first question: What was your role in the company when the brand started really taking off and distribution began to expand?

Martin: Okay, sure. I would say our product really took off in the late ’80s. I was still pretty young — I was still in high school — and I saw the business grow and participate in new cities each year. We tried to grow in connected cities; it’s kind of hard to leapfrog. We’re in the northeast and it’s pretty condensed, city to city, so we started in Allentown, went to Philadelphia, New Jersey, New York. By the mid-’90s we were north to, probably, the Boston-area. We were headed south at the same time, but we didn’t go west very much. Primarily because in this country, people move north and south, they don’t move east and west. So, we found it was harder to introduce our product into areas where there weren’t at least some people who were familiar with us. So, we basically went north and south. We went south all the way to Norfolk, and then we just kind of grew in those areas for many years.

When I joined the company in ’95, we were starting to think about how we could strategically serve our northeast market who happen to live in Florida. So, one of the things that I actually did was … I did a couple of MBA programs at that point and I was starting to figure out if we could leverage … again, we were mostly a roll producer; at that time, we didn’t have any bread … How could we leverage our extra capacity in the wintertime that we were using almost too much in the summertime? And we thought, “Well, let’s get a market in Florida to help offset that.”

 About that time, we had some distributors who we worked with in New York who had moved to Florida, and they kind of started asking questions like, “Hey, your product’s not down here. We think it would do well, any considerations moving to Florida?” So, we worked on that for several years, and I’d say by ’98 or ’99 we had started thinking about transporting it down there. So, we did that, and we did for many years, until about 2007 when we built a facility in Georgia to basically serve that Florida market.

Again, because the name recognition was pretty strong down there, that market grew pretty quickly. That was one of the things that really helped us grow down there was name recognition. So we learned from that going east and west was going to be a little tougher. I can’t remember what year it was, probably in 2014 we started serving Chicago, and that was a large market for us, but that’s been a little bit more tough, because, again, the name recognition is not there. People don’t tend to move east and west.

Spencer: That’s really interesting — the power of name recognition. You know, I’ve also talked to some bakers who are more mid-size, who said that getting in with the right distributor was really the hinge that turned their business towards growth. Getting with that distributor who said, “Hey, you can sell this in Florida,” … was that a big moment for you?

Martin: Yeah, absolutely. We got with a strong distributor in South Florida who actually was a direct distributor of ours when he lived on Long Island himself. He owned a few routes. So, when he moved to Florida, he started another business down there and was really looking to provide our product to the big stores down there, like Publix and Winn-Dixie and all those. So, he was excited when we said yes, and again, no overnight success. It took him several years in order to grow that business. You typically don’t get into the largest customer day one. You always have to start with Customer B and C, perform well in there, and then Customer A goes, “Well, I guess I’ll take you, too.”

We did everything word of mouth, and that’s basically how we’ve always grown. We didn’t necessarily go with a mass marketing campaign like some maybe larger manufacturers do. So, again, we have to kind of earn our way. In some ways, that’s the best way, because they’re the same customers who keep you in the store. If you buy your way in, you can go out pretty quick as well. We survive off customer demand, and we know that. It’s all about the bun, and it’s the quality that keeps you in.

Spencer: Okay, so then, how did you all know it was time to expand operationally? Like, how did you know, aside from the geography and the growth in that geography, how did you know, “Okay, we’re ready to invest in opening the bakery in Georgia?”

Martin: So, each time we’ve had an opportunity to expand, we have outstripped our capacity. And again, we’re a bun producer, so there’s three or four major holidays in the summertime that were really difficult for us to provide enough product for the customer. You know, you do the typical manufacturing, you back schedule. So, we would make ahead a few days, try to hold on to that product and then ship it out all at one time.

At that point, we weren’t freezing products. That wasn’t even an option. So, as we hit those demand capacity issues, we’d plan a year ahead, because it takes about a year, a year and a half, to put a new building up or add another line. We had to do it strategically and, inevitably, every time we’d add a line, we’d have a downturn in sales, or, you’d have an Atkins or something like that hit the market and really hurt demand for a while. And of course, you scratch your head thinking, “Did you do the right thing?” In the end, it was always good because it gave us an opportunity to breathe a little bit, do a little more training.

So, what happened in the mid-2000s … we were shipping a lot down to Florida. We looked at the cost of transportation and felt, “Okay, right now is the right time to do it. We have to either divest of that business down there, or take on the debt in order to basically put a new plant in.” And as an entrepreneurial family, you bet the farm every once in a while. You hope to get to some point that that’s not the case, but it’s risk and reward. So, if you risk it, and it works out, great, but the opposite can happen as well.

We always try to make the right decisions, and we pray hard about it and figure out what we think is the best, and then use the best wisdom available.

Spencer: When you say that it’s either divest or go all in … I mean, talk about a hard decision that you cannot take lightly.

Martin: Yeah, family businesses make that determination often, especially if you’re growing. If you’ve been in business for a long time and you have pretty flat growth, perhaps you can pay as you go, but when you’re growing quickly, you know you get in the cash crunch because you need to grow quickly. You have to buy new equipment, new machinery, new buildings and invest in the future. So, it’s constantly reinvesting into the business.

Spencer: Okay, I need to go back, if we’re doing this chronologically. I want to talk about the Valley Pride acquisition. That happened in the ’90s, and that’s what really brought you into the potato bread market, as opposed to rolls, right?

Martin: That’s correct. We did not have any bread at all from the mid-’80s up until about ’95. Again, we were a roll producer, and we saw what had happened in the market when there was a bread producer producing what they called potato bread. It was different than ours. So, we felt that we needed to get to the market first.

We found a local company, a local family business, that was looking to divest. It was called Valley Pride, which was about 15 miles up the road in Shippensburg, PA. We bought them and quickly started making bread at that facility. We shipped it to Chambersburg, put it on our trucks, and then we distributed it up and down through our current market. That went very well; the potato bread was very well accepted.

It took a number of years, but it wasn’t long until it was the number one bread single SKU in New York City. So that was a combination of … We knew that that product was going to be a winner, and then we stayed with that product alone for quite some time. Then as we needed some diversity and to get a little bit more shelf space, we added whole wheat bread. My dad wanted a whole wheat product that his grandkids would eat. It was a health benefit with the fiber and all that. So, our whole wheat is actually what we call a ‘soft whole wheat.’ We were one of the first ones to use white whole wheat. It was a product that … it’s actually what I eat every day for breakfast, because it’s healthier and it tastes good. Then later on, just a few years ago, we added butter bread to our mix.

Spencer: You’re making me hungry!

So, I’m trying to think about this operationally. When you had the Valley Pride acquisition, did you take on a facility, or did you just start producing that bread in your current facility?

Martin: At the time, our facility did not have room to add an additional line, nor did we know if it was going to really take off or not. So, we purchased their facility, we allowed them to finish their operations, and then we started basically using that facility, I’d say, for three-fourths of the day, and then they eventually shut down completely on their side over a couple months. So, we produced there for, I don’t know how many years we were there, probably five years.

Spencer: Were there any sort of operational lessons that you learned from that acquisition that you carried with you when you opened the facility in Georgia?

Martin: Well, I would say we learned … we were kind of ‘cookie cuttering’ each line from a machine standpoint, whatever our folks were familiar with, from an oven to baggers to the conveyor lines to the mixers … We basically took what was working and snapshotted it down and laid it in. We found actually that getting all the software … because we were highly automated … so all of our PLCs talked with one another, and that allowed us to basically bring it up much faster. We originally thought it was going to take about two and a half years to get our Valdosta facility up and running; we were able to do that in just a little over a year. It was really quick, faster than most of our engineers said we could do it, but we knew we needed to do it quickly.

Spencer: Well, yeah, especially when you’re producing rolls and buns, and there’s a season. It’s ‘bun season.’ Bun season stops for no one!

Martin: That’s true. With big holiday weekends, you can’t miss the boat. If you miss it today, you don’t make it up tomorrow,

Spencer: Right? So, I’ve kind of bounced around on the timeline, but I want to come back to present day. You’re growing again, and you’ve got this major expansion happening in Chambersburg. Congratulations on that.

Martin: Thank you.

Spencer: So as this expansion has gotten underway, how did you apply the lessons that you learned in Georgia? Because you expanded that one, so you’ve been through growth in that one. What did you learn from opening that facility and expanding that facility that you’re applying to the project you’re in now?

Martin: I would hope to say that, you know, we learned from our mistakes. It had been probably seven or eight years since we had had a gap in a new line. So, in that amount of time, most of our current vendors and equipment had lapsed. In other words, some of those companies had gone out of business. Some had decided to retire. So, we had a lot less options to do what we had done prior.

And technology has changed a lot. We had moved from one PLC vendor to a new PLC vendor. So, when we opened up in 2016 or 2017 in Valdosta, we made a lot of mistakes. The production line really struggled for a while, and we’re getting through all those issues now. But what we did when we came to Chambersburg, we said, lessons learned. So, whatever we did right down there, repeat. Whatever we need to do better, fix. And so that’s what our folks have done. And we were able to bring this one up, we started producing about a month ago, and our yields are much better than any of our other lines at this point, so we’re starting to add more production shifts to it, and it’s making more items and things like that.

So again, lessons learned. We’ve strategically corrected those errors, and now we’re going to repeat what we’ve learned and what’s done well and go back to the other line and fix it so that it also runs well.

Spencer: Okay, so it’s kind of a continuous cycle. I mean, I guess that’s why they call it continuous improvement, right?

Martin: Correct. Yeah, iterative. I would say we do a lot of iterative things here. You put it in place to see how it works. It doesn’t work, you change it, you do it again and do it again until you eventually, hopefully, get to the point where you’re satisfied with the yield and, of course, the throughput.

Spencer: So, equipment is built to last decades sometimes, and, like you said, the equipment sometimes will outlast the company that manufactured it. And now we have rapid technological advances. Those two don’t always jive together: Equipment that lasts, but technology that is outpacing it. How do you find that balance? And then on top of that, how have those changes impacted your equipment and operational needs today versus five or 10 years ago?

Martin: Yeah, historically, back in the day when you had contacts and other types of big switches to make machines run, things were on pulleys, and they were on a certain speed. Then as technology has advanced, and you put a PLC in there, which is smart, you put servo drives so that you have a lot more variability where you can change your speeds and all that. It all works well until the technology sunsets.

We’ve been facing that today with some of our older equipment. When we put the original equipment in, we had big contacts, and all that worked well. And then we put a Modicon PLC system in that is now aged out and all that equipment is not replaceable. So, now we’re in the process of upgrading all the logic computers that run the machine to an Allen-Bradley version.

So, it probably takes seven or eight years, but at that point, you really have to strongly think about upgrading your technology stack on your equipment, or it becomes very difficult to get spare equipment. So, you end up looking on eBay and wherever you can find the different pieces of hardware and software and control boards to make things work. You know, obviously we know the rapid change is getting even quicker. We ran equipment that was made in the ’70s without any problem up into the ’90s, but now equipment that you installed in the early 2000s you really have to be very conscious of keeping spare equipment available, because if it goes out, you don’t call the manufacturer, because he may not be in business; they may not be able to provide those pieces of hardware.

So yeah, it’s a very interesting process that we are living in. Manufacturers are going to have to face that over the next few years: How are you going to deal with aging equipment? The other thing we learned was we highly automated and made everything talk together, which sounds great on paper, but we found that, from a networking standpoint and all that, we may have made things too interconnected, and it was causing an issue, so we’ve decoupled some of the of the intelligence. It’s still very automated, and we can extract all the data and the set points through our manufacturing PLC systems, but we’re not quite as reliant on each other as they originally were.

Spencer: What are some of those drawbacks of over-communication between machines?

Martin: Well, it’s an odd thing. If you have a failure in one area, it could potentially take down the whole line. That’s what we’ve found. If you have a, let’s say it’s a network issue or you have a network glitch that we experience on the internet, and you can’t get on or whatever, in the PLC world on the floor, there could be intercommunication requirements that, “Hey, I can’t work unless I know I hear from you, Mr. PLC number two.” And it can’t talk. So, when it can’t talk, it doesn’t start.

In this facility in Chambersburg, we’re highly automated on the distribution side. We have an ASRS (advanced storage and retrieval system) at the pallet level, and we have a pick system that can get down to the eaches of each tray. It’s a fantastic system. Our order fulfillment has never been more accurate with less labor and issues with repetitive motion, you know, concerns with their bodies. It’s been a great addition, except when that automation goes down, and then we’ve never had more late departures, because maybe you lost 50% of your throughput. Again, it’s a two-edged sword. The technology has been good, but we’ve learned a lot through the process.

Spencer: I, too, am a product of the ’80s, and so everything that you’re saying just makes me think of that movie War Games.

Martin: There’s a lot of that here. Hopefully we’re not at war, but sometimes, you know, we’re trying to figure out how to get stuff back up and running quickly, and it causes a lot of tension to your workforce, and so you have to be cognizant of cut off times and how you do things. One of our benefits to our distribution network is that we can take last-minute order changes right up until that truck is ready to leave, and we want to maintain that flexibility.

Spencer: Yeah, that’s awesome, and that’s really just an important insight to understand what the drawbacks are, because it does make life easier, but it doesn’t do life for you. There’s still an element of responsibility that the operation has, from a human being level and a strategic level to make sure that everything’s working properly.

So, the Valdosta expansion happened pre-COVID and pre-supply chain disruption. You said, “Allen-Bradley,” and I was a little triggered. How did major events like COVID and the supply chain disruption impact your expansion strategy at Chambersburg? Because it sounds like the timing probably might not have been ideal, at least from a strategic standpoint.

Martin: Yeah, the COVID, you know, phenomenon … I think all manufacturers were in an unknown state of what was going to happen. From the time that the schools were called off and you weren’t supposed to send anybody to work, everybody was supposed to stay home. And yet we knew, as an industry, frankly, that people still needed to eat. How were those two things going to be compatible with one another? So, we had enough raw materials, and, you know, bags, things like that, available for us, to hold us through the first couple of weeks. And that was key, because if you were just-in-time, you were just out of business, because at that point, you weren’t going to get resupplied.

So, we worked hard with our suppliers in order to make sure that, “What are you guys going to do in supply chain? Are you going to have the bags available?” And we worked really hard with them, because they had a couple weeks maybe on hand of our product. In some cases, we actually sent our trucks up to their manufacturing facilities to pick it up, because they weren’t able to get truck deliveries. So yeah, everyone worked very hard, because all of a sudden, no one was eating out. Everyone was buying from the grocery store. Every grocery store was wiped out. So, the minute you decided what to put in there, it was literally gone in a few hours.

These would be things that we will tell our great-grandchildren, that you know you couldn’t believe the things that we all lived through. But it was good for our industry, frankly, because I think we were able to reintroduce a product that I think some people had forgotten about: Bread.

Spencer: True.

Martin: It was the staple that they felt comfortable with. It was comfort food at that point, too. I think that a lot of good, frankly, for our industry, because people, for the first time in a long time, I won’t say, “were forced to eat it,” because there really wasn’t anything to eat, and we were able to produce enough extra to maybe pick up some new customers. That was one of the things that we weren’t sure about.

Everybody in the industry, you know … is tapped out most of the time. You know, 95 percent capacity, there’s not a lot of room for growth where, because we’re a roll producer, in the summertime, we’re at those numbers, but in the wintertime, we weren’t. So, all of a sudden, we had extra capacity all year round, and we were able to provide something that was available to the customer that wasn’t before and pick up new customers. So, it was good. It was a good thing for us.

Spencer: So then after that, we went through a couple of years, really, of the supply chain disruption. I don’t think we’re completely out of the woods there, as far as lead times as well. So, when you were project planning for the Chambersburg expansion, where did that sit in your mindset? Did you plan for, “Okay, if we have another national crisis, we need to have our lines able to do this”? And did it impact your project planning as far as lead times and when you would be able to start up?

Martin: I’m not sure we would have changed our capacity numbers depending on that, but I would say for sure it affected our weeks-on-hand of raw materials, which then obviously translates into more space. So we put more racking up, we store more available on hand quickly, so that if there is a pinch in a couple weeks and you’re not going to get a load of something, you still have enough to ride through. So we’re fortunate to have enough local extra warehouse capacity in the area that if … and that’s what we did do, we brought some extra different raw ingredients in, put them in warehouse so that we had more weeks on hand.

 What some of the suppliers were doing is they would give one of their key customers a run, and then they would delay you, and then they would give you … and so you had to have enough extra to ride through a couple bumps. And that’s what we did. And we’re still doing it, right? I can’t think of any examples off the top of my head right now, but there were some odd and high-tech pieces where, you know, a particular cable, which was made of all places like Ukraine, and then during the war, that caused, obviously, a supply chain issue.

Spencer: Yeah, and you know in 20 — I would say 2021, 2022 — every conversation revolved around, “Well, if we can’t get this one piece of technology, then all this is is a big metal box, and I can’t do anything with it.”

Martin: Yeah, one of the things I say is, during the COVID phenomenon, one of the things that we were struggling with was actually competing with the government. And what I mean by that is for workers. Because I think the government was trying to do what was right for the people, but with all the incentives to stay home and not work, it really changed the dynamics of available workforce.

Now it’s been tough, and I think … you talk about a supply chain issue; it’s still a supply chain issue, but it’s the human aspect of it. People have not returned to where they were prior. In some cases, maybe it’s better for society, but it’s still something we have to deal with as manufacturers is trying to be able to find enough resources who want to work our type of jobs and with the schedules that we typically have, it’s just been a challenge. It’s gotten better the last six to nine months, but prior to that, for a couple years, it was really, really tight.

Spencer: Would you say being able to alleviate the lack of workforce, is that a big priority for you when you’re thinking about who you’re choosing for, say, an equipment supplier partner?

Martin: It obviously goes through your mind of, “How can you do more with the same?” And so yeah, I mean, through automation, we haven’t added AGVs and things like that to our strategy, but we’re thinking about it because we’re trying to figure out how can we continue to expand without the pressure of trying to find enough extra workforce to do what needs to be done?

So, yeah, it’s definitely something that is a consideration of automation. We have automatic palletizers and things like that. So, you coined it well. It’s trying to find the right manufacturer who will stand behind their equipment and automate it and then support it.

Spencer: Yeah. I mean, we talked in that first episode that you’re really an early adopter, and you’ve leaned into technology really well. So, when you think about this most recent expansion in Chambersburg and thinking about the future, what are your goals for this expansion? How do you see more capacity supporting your current demand, but also taking Martin’s into the future?

Martin: Well, we’re obviously trying to solidify what equipment is working well for us, and then we will use that, hopefully, in a future expansion and be able to, again, cookie cutter, take your programs and things like that that are been written and working well, so that you can expedite an expansion and not have to deal with software rewrites and new opportunities that end up being very time consuming to troubleshoot.

So again, I think we have plans in the future, if we outstrip our capacity, what we’re going to do next, and then we have one plan for after that. And then if our Texas area is doing pretty well, at some point, we’ll maybe have a Texas plant. So we’re just trying to prepare ourselves by having the right people, getting enough extra people trained, so that if we’re going to do an expansion, there’s always some folks who want to move up in management, take on a new opportunity and plant. Those are the kind of things we’re strategically planning for in the future, but only God knows what happens in the future.

Spencer: Right. If 2020 taught us anything, it taught us that, right?

Martin: That’s for sure.

Spencer: Well, you know, you read my mind. I was going to ask you if you could predict that you might have a third facility. So, I guess it’s a “never say never” kind of scenario, right?

Martin: Correct. We never say never. We had one slated on paper in the future, but frankly, with the efficiencies that we’ve gained with our current plant and things like that, we kind of took it off right now. But that doesn’t mean it’s not going to come back if, if you get rapid growth in a particular area that you want to support.

Spencer: All right. Cool. Well, Tony, that’s everything for this week, and talking about operational considerations that come with growth. And this was such a cool conversation. Thank you so much for walking me through what this trajectory looked like for Martin’s from inside the facilities. It was really fun. I appreciate it.

Martin: Thank you. Thanks for asking good questions.

Spencer: Thank you. So next week we are going to have — I think it’s going to be a really interesting one — and that is how to build a corporate culture that lasts through generations. So I’m excited for next week, but once again, thanks for your time this week, Tony.

Martin: You’re very welcome. Thank you.

Welcome to Season 12 of the Troubleshooting Innovation podcast. Joanie Spencer, editor-in-chief for Commercial Baking, is spending this season with Tony Martin, president of Martin’s Famous Pastry Shoppe. They’re exploring how this company has grown from a family-owned brand into a national icon. Sponsored by AMF Bakery Systems.

In our second episode, Tony talks about the unique taste and texture of potato-based products, and how Martin’s takes different approaches to product innovation when working with foodservice vs. retail.

Learn more about this season here, and tune into Troubleshooting Innovation on Apple or Spotify.

Joanie Spencer: Hi Tony. Thanks so much for joining me again this week.

Tony Martin: I’m glad to be here, thank you.

Spencer: Okay, so I absolutely had a blast with you last week getting to know the bakery and the family behind it. So, I’m ready to talk about product innovation. We talked about it a little bit last week, so I want to start out by just revisiting a very simple question: Why potato bread? And thank you.

Martin: Well, you’re welcome, and we love our fans out there for sure.

Potato bread is a niche item. When we started making potato bread, I think there were very few places in America you could actually buy potato bread if it wasn’t from, let’s say, a farmers market in Lancaster County, or someplace where the Amish or somebody was making the item.

It’s a family recipe that my grandparents started with many years ago. I think the story is that my grandmother actually was cleaning homes for a family, and one of the family members had a recipe for potato bread. She got that recipe, and she made it a few times, and, on the side business where they were going to market, they decided to try to make that product. It kind of took off. In the old days, it was a way to stretch your flour. You actually made it in the old days with mashed potatoes. You would take your potatoes, mash them up, put some flour in it, put your yeast in it and you would have a raised product.

That’s not the way we make it today. We make it with dry potatoes, more like you would with mashed potatoes today. You get the dry potatoes, you add the water and mix it all together. That’s how we make ours today, just like every other batch, except we add potato flour to it. The potato flour helps hold some of the moisture in the product. It’s a very moist product, so it has as a lot of keeping quality because of that. It holds on to it. The other ingredients we have in there just go along with that.

We choose to use very high-quality ingredients, including, of course, a high-protein flour, as you would for most hard rolls and things like that. But they get hard, and ours stay soft. That’s where some of the uniqueness comes from. Potato bread and potato rolls, of course, have the same dough structure, just different shapes and sizes. Because of that, the crust on the bread is smaller in comparison to the roll, so it just gives you a different bite and feel. But our product, you know, you could put peanut butter and jelly on it and it doesn’t rip through. It’s just one of the differentiators. But yet, it doesn’t stick to the roof of your mouth. It has a different feel and bite with a slight sweetness to it. We use cane sugar. We always have. We’ve never used anything other than that. So again, it’s just very high-quality ingredients that makes the product very unique.

Spencer: You’re right, and it’s just something that’s experientially different; It’s a different experience than just your regular type of white bread or wheat bread or your typical dinner role. It just brings something a little bit more special, where, like I said, my sister brought potato bread home from Rosie’s Bakery and Deli, and it was just like, “Wait, this is different.” It just has that next level to it.

When you think about a product that’s just a little bit different and has that different experience, even by this much, what drives product innovation? Where would the inspiration come from?

Martin: Well, some of the inspiration came from our customers. We have a new saying that we feel like we’ve actually heard from our customers that it’s all about the bun. We’ve actually sat down with a number of our large customers, particularly the foodservice folks, who have been very, very successful, and they’ve told us that it’s all about the bun.

The product innovation side of it comes from, “Hey, we’d like to have a bigger hamburger than will fit your current 3.5-inch roll.” So, we decided to try a 4-inch roll. And then we had opened a couple places in Texas, and they said, “Well, that’s not big enough. That’s a slider. We need a real roll.” So, we actually made a 5-inch roll. We’ve had a number of customers that put a half a pound of hamburger in a roll. So that caused us to innovate and have to basically upsize everything. So, that’s what we did. We’ve kind of followed our customers’ lead and where they wanted to go. Whether it’s top-sliced rolls, which we call long rolls, that they obviously make a lobster roll or some other ways of using the product.

We’ve innovated within our niche so that we can produce it in a high-quality way, it’s very predictable, and we can get something to our customers that’s somewhat unique for them.

Spencer: So yeah, I mean, you’re in both spaces. You’re in CPG, with the Martin’s brand, obviously, and then you’re working, of course, with foodservice operators, and those require very different types of innovation.

So, on the foodservice side, what’s the ratio between, “I need a bun that’s going to do X or to carry X,” versus the products that you already have that inspire chefs to create a cool kind of sandwich or different kind of burger, based on what you offer?

Martin: I would say it’s been equal over the last 10 years in the areas where we’ve innovated. We did not have swirl product 10 years ago, so we decided to add swirl product. One of the reasons why was because we thought we could produce a product that was of superior quality. It would stay fresh longer. But it’s hard to really break into a particular line or niche.

Let me give you an example: We wanted to make bread, but we didn’t have any bread lines. And because we saw folks making potato bread in the early days, and we did not have potato bread, our customers, or potential customers, were tasting what they thought of as potato bread from a competitor, and it didn’t necessarily go well for the competitor, and they stopped making the product. Now we have a customer base that says, “Well, I know what potato bread tastes like. I don’t think I want it.” So, we found out we needed to get to the market first, because we needed to introduce our customer, who currently likes our potato rolls, to try our potato bread. We quickly found a local bakery that wanted to sell them, so we bought them and basically started making potato bread. I believe that was like 1995 or 1996. That gave us a quick inroad to making potato bread before we could build a building and put an oven in.

So again, customers, and competitors in some regard, force you to innovate so that you can become better and then produce a product that meets their needs. So, both sides … we’re mostly retail and we’re fairly new in the foodservice. But again, it’s a different animal. You’re right. We’re making fresh-to-order products, and we have a very short shelf life on our fresh side, so you have to be really serious about changing an item on that side, because you don’t want to have a lot of changeovers. You have a lot of production line time, and it can become very inefficient quickly.

On the foodservice side, you can afford to do it a little bit because you make longer runs and you can ship bigger orders. So, it’s a totally different animal that we’re learning to understand.

Spencer: From a product innovation standpoint, or product development standpoint, as opposed to the operational side, how do those two worlds kind of coexist, the foodservice product development and the CPG product development?

Martin: Well, we’re a small company, so it’s basically one team, but we kind of divide our time between the two as we’re trying to figure out where our energies need to be put. With the foodservice side, it’s an innovation for us to freeze product, so that has given us a different option for producing longer and more efficient runs than on the fresh retail side. So again, it’s a dynamic that we use the same lines in the same facilities, but with the ultimate end result of where the product goes and how it has to be maintained is very different.

Foodservice has longer lead times, larger orders and fewer of them. And the other side is like herding cats. I mean, it’s trying to get everything in the right order at the right time and not having any breakdowns. Getting it to market in time is a challenge.

Spencer: I am really curious about the cinnamon swirl bread. I have not had the privilege of trying it. I’m very curious about it and dying to try it. What did that sort of ideation process look like?

Martin: Yeah, well, it was actually my brother’s idea to try to bring back a little of the nostalgia of Martin’s Famous Pastry Shoppe, which nobody really knows who that company was. They know us as Martin’s potato rolls. So we tried to figure out if we could stretch outside that zone a little bit and go back to a swirl product. We ended up with three items. We have one that has raisins in it and it’s really interesting from a marketing standpoint. I mean, we originally didn’t have a purple bag, and it didn’t sell very well, but you change the color of the bag and all of a sudden you start selling a little bit more. Well, why? Because the market sees it as a purple bag. And now we’ve come out with a maple sugar swirl. It’s kind of a brownish color with the maple theme and all that. That’s selling really well as a French toast product. That’s my favorite, frankly. When I’m making food for breakfast for my family, maybe on a Saturday morning, that’s their go-to. They want French toast, and so I’ll make French toast out of that.

So that was kind of a throwback, if you want to think of it that way. We’re trying to expand our market a little bit into that area. And then we’ve had a number of foodservice retailers take that product into different ways of using the product in a hotel setting or something like that for morning breakfasts or just different ways. You try to market it to those folks as a little bit of a wider offering than what we had in our narrow niche. So we’re learning; we’re new with this.

Spencer: It’s a fourth-generation company, but innovation is new. You have to be new at it. And if you’re not willing to go outside the boundaries of what you’re used to, you’re not going to move forward, right?

Martin: Well, absolutely, and we have a motto: If you do tomorrow what you did today, you’re going to be behind.

Spencer: Oh, I like that.

Martin: Yeah, you have to do it better.

Spencer: I like that a lot. So obviously, you’re known for your potato-based products, but don’t you also make traditional products as well?

Martin: We do. We have what we call white dough. We have some product that does not have the potato flour in it. One of the primary reasons we have that product – it does sell pretty well, even in markets where you have potato bread — is because in a new market, like I said before, people may have said they tried a potato product and didn’t like it or didn’t find it particularly different. So, our white dough product actually takes off first in a new market.

It’s interesting … In Texas, our hoagie role is actually our number one item and we’ve been there for a year and a half in some markets, two years in others. But over time, and it’s happened in every market that we’ve gone into, eventually the potato product takes over. And so, we have the white dough. It does differentiate. There may be somebody who says, “Well, I don’t particularly like the potato flavor. What else do you have?” So, we have a white dough, hoagie sub roll and we also have what we call Big Marty, which is a white bun, but it has more sesame seeds on it than you’ve ever seen on any sesame seed product. So, those who don’t like sesame seeds, obviously don’t care for it. The ones who like it, you can toast it. That’s one of my favorite products we make, that you can put a big hunk of Vidalia onion in it, or something like that, and mayonnaise, and it’s just really good. Put that together.

Spencer: I am on board; 100 percent, I’m on board. You know, people are funny – consumers – they’re funny because they want to try new things, but not that new. Like, “I’ll branch out, but I’m not going to branch out that far.”

So, do you think that having that more traditional offering kind of helps people take those baby steps toward trying something new, like potato bread, and then discovering that they might actually like it?

Martin: Absolutely. And you have to earn their trust. If they taste it and they like it, and it’s, “Oh, well, hey, I see they make this other product,” and they try that, and then they gravitate to that … I would say our big Marty is very differentiated from the standpoint of the sesame seeds, but it is a white roll. And so, when they finally get to try the potato bread or potato roll, it’s just a little bit more unique. It has that unique savory, sweet flavor. It’s not super sweet. Doesn’t not exist, it’s there. It’s savory. It kind of adds to whatever you put in, kind of enhances it.

So, Shake Shack has really taken us around the country, following their success. In fact, I ate at Shake Shack today; it was fantastic. Then there’s other customers who are really taking off and growing very quickly. They really do feel like the bun has something to do with success. So, we’re trying to keep it exactly the way they want it to help them out.

Spencer: Yeah, for sure. And, you know, I did get to sort of name-drop – I have a 14-year-old son, and he actually has a pretty sophisticated palette. He’s closer to a foodie than most 14-year-olds, and so he loves Shake Shack. We got Shake Shack a couple of weeks ago, and I was like, “The next season of my podcast I’m talking to the baker who makes buns for Shake Shack.” And he was like, “Oh, seriously? That’s so cool.”

So, congratulations on the success that you’ve had, and I know we’re going to dabble in some of that conversation with the success that you’ve had with Shake Shack, but I do agree with you, and I do think that the bun makes a big difference in selling a burger. I’ve done it – I’ll pass or play on a menu item based on what type of bun is on the burger or bread on the sandwich.

Martin: Yeah, some of the competitors we have, I know I’ve heard them say things like, “The bun is just the thing that keeps your fingers clean.” And I love that – they can say that all day long, because we don’t want to be that person. We want to make a product that enhances the item that they’re going to be buying or making their sandwich special.

Spencer: So, we have the people who, and again, just calling on my 14-year-old, I know he’s said it, even though he is a little bit more sophisticated in what he’s willing to eat or try, but he has said it, and people say, “Oh, I don’t like that.” Well, have you had it before? “No, but I just know I won’t like it.” It’s just kind of a go-to, the fear of the unknown, I guess, and trying something new. But then you have this contingent such as myself: I have my personal memories of my experience with potato bread. And there are people who, once they try it, they love it.

What is it, do you think, about this type of bread that evokes a response from consumers? And then ultimately, that loyalty. How do you work that into your product development?

Martin: That’s a great question. And you know, in some ways, I’d like to be able to be able to figure it out so I could bottle it. We know we have that almost visceral response from people that they really do love our product. It almost makes us uneasy, to be honest, when I go to these food shows and they run up to us and say, “Oh, I love your product so much.” And at that point, you’re happy and you’re like, “What am I doing to deserve this?” and all that.

And I know the only thing we can go back to this: It’s the product quality, it’s the consistency, again, it’s the high-quality ingredients. It’s an enhancer. It’s not like MSG, but it just enhances the taste of what you’re eating. And if you toast it, you get a slightly different experience. You can take our hamburger bun and throw it on a grill and toast it on the side before you put your hamburger in, and you get a different experience than if you don’t. If you put ham and cheese in it, it’s just different. So, it just has different appeal to different people for different reasons, and we feel very blessed.

Spencer: Do you take that into consideration when you are doing product development, specifically, I would say, with a foodservice customer? Do you ask them those types of questions, like, “Is this something that you’re going to want to toast the bun for certain menu items?”

Martin: Yeah, absolutely.

Spencer: And take that into consideration for what you’re selling them.

Martin: Yeah, so our product, it doesn’t fit everybody or what they want. You know, I went to a couple of hamburger places that wanted to stack four or five hamburgers on top of our roll, and our roll won’t stand up to that. It’s soft, so it kind of smashed everything down at the bottom. It had too much oil and juice in it. So, perhaps a much harder brioche roll would be a better roll for that. That’s not what we make.

We’re upfront with our customers. If they’re having some concern, we’ll say it’s not a good fit for the sandwich you’re looking for. But, if it’s close, and we think we can say, “Hey, you know, some of our other customers have had success by taking that roll and toasting it hard so that it can withstand a little bit more of the juiciness of that burger and also the wrinkling on top.”

You’ll get a lot of chefs that want a good look to the point where they’re not as concerned about the taste, they want the look. And our product doesn’t always look perfect. Sometimes it’s kind of wrinkly on top because it holds all the moisture in, and it’s difficult to get a perfect skin all the time. Though, most of the time it does look really nice, but once in a while it doesn’t.

So again, you can toast it, and that’s a way to make that product withstand a little bit more. And some people put a little bit of a paper towel around it, which kind of steams the product inside, and that will make the product kind of softer. So yeah, we work with chefs, and we kind of give them ideas on ways of handling our product, and of course, we also take feedback from them. If they say it’s too soft, we’ll look back at the recipe and try to maybe make the product a little bit firmer, stand up to a little bit more, we’ll call it, abuse, and a little bit more juice, that kind of thing.

Spencer: It’s interesting, just talking about the look. My assumption would have been that it would work better to not look perfect on a restaurant plate, because it makes it look more like it was crafted by hand right there, like it gives it a more realistic look. I don’t know. I feel that’s just my opinion as a consumer, that’s what I would go for.

Martin: We would agree with that. In fact, we’ve had a couple of our distributors say to their customers, “Well, if it’s not wrinkly, it’s not good.” It gives it a more home-cooked look, you know. It’s more homely. I don’t know, it has that feel-good feel to it. It’s not the perfect cardboard type roll.

Spencer: Yeah, and because, just knowing what I know from being in this industry, when I eat at a restaurant and the server says, “All of our breads are made in house; everything’s made from scratch. Our desserts are made in-house.” I’m always like, “Really? I don’t know. Is it really? What do you consider made in house? Because I have a feeling maybe you got a dough ball or something you know …” Just because I know what I know, if something actually looks flawed, I personally would be more apt to think it was handcrafted.

Martin: That’s a good point. I’ll have to make sure I talk to our marketers about that and use that.

Spencer: There you go. Feel free, feel free. Okay, so I have one more for you for today regarding product development, and I’m trying to ask this without sounding like I’m asking you to divulge any trade secrets or, you know, any proprietary information. But I am really interested in your experience and your perspective since you do make potato-based rolls and regular wheat-based products. What are the specific considerations that come with formulating a potato-based dough versus a more traditional bread product?

So just top-level stuff, like temperature considerations, or thinking about the machinability, because I just would guess that potato-based dough is going to machine in a very different way than a traditional product, or even water absorption. What are some of those considerations that you all have to think about on a daily basis?

Martin: I would say it probably models very close to traditional items. The potato flour definitely causes more water absorption, so you have to up your water to account for that dry matter, and we use the high-protein flour, so that also helps hold moisture.

Everything we put into it makes the product, I want to say, last longer and taste better. We use high-protein flour. We also use low-fat, dry milk, which we always have. That’s an item or an ingredient that we use in our product that would have been in the old recipes. You know, you would have used milk for your water, because we use dry milk today, so we use water and we use dry milk, just like the potatoes of many years ago.

So, those ingredients together … of course, it would machine slightly differently than without those items. Again, it helps that product stay fresher. In fact, we find the frozen product thawed is actually almost better for foodservice than our fresh because it’s a little tougher. It’s gone through a freeze-and-thaw process, and actually can handle a juicy burger, perhaps better than a very fresh, very soft roll. So again, it’s enhanced characteristics of our product that actually has benefited our customers.

Spencer: Okay, that makes sense. I mean, it goes through an extra workout, and extra workouts make you stronger, right?

Martin: That’s right, exactly.

Spencer: That’s so interesting. I’m going to ask you one last question, kind of to piggyback on that. How do those considerations affect the ways that you can develop new products? Going back to thinking about the swirl bread.

Martin: We look at opportunities in the market that we feel like we have a product that could be well accepted. We came out with our newest, innovative product which was … we made dinner rolls, potato dinner rolls for years, and we sold a lot of them, but we noticed that the consumer palate had changed and looked for more of a sweet type of roll. So, we modified our recipe a few years ago in order to go that direction. And so far, it seems to be paying off. The customers definitely are looking for that product.

We try to follow the consumer trends and look for what worked in the past, and then we give it an opportunity to work in the future. If it doesn’t work, you know, we zig and we zag. We came out with it, and the product looked the same as before, and it wasn’t selling. So, we looked at, “Oh, why is it not selling? Well, maybe it’s the look.” So, we took the double stack and we went to a single stack, and so it looked wider, and it made the product more visible to the customer. Perhaps that made the difference. But all of a sudden, sales started increasing. Like you said before, the customer is unique. We don’t really know exactly why or what’s going to work, but you just keep trying things until it does, you try to understand it and then you try to give them more of it.

Spencer: So, your product innovation, I think it’s fair to say, has led to the growth that you’ve been experiencing. Quality, of course, the quality of your product is how you have made this name for yourself, and then being able to innovate on that quality and that trust is really leading to growth. Is that fair to say?

Martin: Absolutely, if it wasn’t for the quality … you know, obviously we feel blessed about this comment, but we rub elbows with a lot of large competitors, large customers, and in quiet rooms, they all look at us and go, “We love your product. We buy your product when we’re having a cookout.”

So, we know that we’re providing a product that people like, and again, we’re small. If it wasn’t for the product and the attitude towards it, we would not be in business, because we’re just not that smart. We feel blessed that we make a product that they love.

Spencer: Well, that is very modest and humble of you, and I’m not surprised that you would respond in that way. But in talking about that growth, that is a good segue to what we’re going to talk about next week, and that is the operational considerations that come with that growth, because Martin’s has come a long way since the ’50s, since a one-car garage.

So, I’m excited to talk next week about looking at innovation from an operational perspective. But for this week, I just want to thank you for another interesting conversation, Tony. This was educational, and it was really fun, and I just truly enjoy talking to you

Martin: Well, thank you. I enjoyed it, and I’m looking forward to the next discussion.

Welcome to Season 12 of the Troubleshooting Innovation podcast. Joanie Spencer, editor-in-chief for Commercial Baking, is spending this season with Tony Martin, president of Martin’s Famous Pastry Shoppe. They’re exploring how this company has grown from a family-owned brand into a national icon. Sponsored by AMF Bakery Systems.

In the first episode, we dive into the history of the company, starting with Tony’s grandparents baking out of a one-car garage in the ’50s. You’ll also hear about Tony’s winding career path, from pilot to president, as the third generation of leadership in a four-generation company.

Learn more about this season here, and tune into Troubleshooting Innovation on Apple or Spotify.

Joanie Spencer: Hi Tony. Thank you so much for joining me this season.

Tony Martin: I’m so glad to be here.

Spencer: This is really exciting. I have to tell you, I love potato rolls. I’m just going to open with that. Potato bread is the best bread, I love it.

Martin: We’re so glad to hear that.

Spencer: I’m just thrilled. I’m absolutely thrilled to take our audience through the journey of how Martin’s started as this really small family bakery with a really special product, and now you’re not only nationally known, you are really kind of known around the world. You’re selling in a lot of countries, so this is very exciting to share with our listeners how you can start out small and become something really, really big.

So, let’s just dive in and start with a quick history of the company. It started with your grandparents in a one-car garage in the ’50s. How did this bakery go from that to a restaurant to truck routes and then commercial production?

Martin: Yeah, it’s an interesting story. Obviously, it’s my family’s story. My great-grandfather, one generation beyond my grandfather, was in the baking business. My grandfather married my grandmother and started working for him, and there were already three siblings in the business. They came to him and said, “Hey, the business isn’t big enough for all of us, so you can rent our bakery in the evening, and you can sell the products that you make, as long as it’s outside our territory.”

So we were in Chambersburg, and he sold in that market and a couple of surrounding towns. He had to go one town beyond where they were and he started that business back in the ’50s. When it grew just a little bit bigger than what they could handle, he actually turned his garage, like you said, into a bakery, which was behind his house. That started in the late ’50s and early ’60s, and it did really well.

The name was Martin’s Famous Pastry Shoppe, and they made dozens and dozens of different items in those days. They sold in markets probably 50 miles, 75 miles away from our home base. That’s kind of how it all started.

Then he went from there into a slightly larger bakery on Route 30 in Chambersburg and also opened up a restaurant, a small pastry shop, out front with the bakery in the back. It was somewhat vertically integrated when it came to making everything and selling it out front, and also keeping the markets.

From there, my dad started working for his father in the mid-’60s but soon left that business and went to work for his father-in-law, who had a potato chip business selling those potato chips in the local grocery stores. My father learned from that business how to sell retail through a wholesale distribution model. He took that knowledge and joined his father in the mid-’70s, they incorporated and started peddling the potato rolls to all of these different grocery stores that would take them.

The business was very small, so it was just a few to begin with, but it grew to the point where it went really well and they had to keep expanding and expanding and expanding.

So, pretty amazing story. When you’re a small business, you just do what it takes to get the product out the door, find good employees who help you get there, and it’s an overnight success, as they say. But there’s no such thing as overnight success. It’s hard work.

Spencer: Oh, that’s interesting to me, because I knew that there was this agreement that you wouldn’t sell within Chambersburg, but I didn’t realize that it was a family agreement.

So, the family history goes back even further, and then to know that your father worked for his father-in-law, this is a true family business in a way that navigated around what could have been a lot of drama. It sounds like it was very amicable and good business practice.

Martin: Yeah, and an interesting story, too, is there’s even a little bit of a twist here. My grandparents, on both sides of my family, went to the same markets and they stood side by side, so that’s how my parents met.

Spencer: That is awesome.

Martin: They had a love for music. My mom played the organ and my father liked to sing. They had this traveling and singing thing that they did for a little while together. So yeah, it’s all in the family.

Spencer: That takes friendly competition to a whole different level. So, like you said, this business could have gone in so many different directions. How did your family know that potato rolls were going to be the way to go, and how did the restaurant play into that?

Martin: That’s a great question. When my father and grandfather joined the businesses together, my grandfather basically ran the bakery but also the restaurant. At that point, they were probably close to having 300 different items they sold.

One time, my grandfather went on vacation, and my dad was looking at the books and figured out they were really only making money on nine different categories of items. So, he cut the entire product line.

He did one of those things where you cut out a bunch of your products and whatever was left over was basically the nine items we make today. We brought the rest of the stuff in, and they continued to sell that in the pastry shop and the markets, but we no longer produced it.

That was a big change for our business. My grandfather wasn’t necessarily on board with it, but it was the right thing to do, and that proved to be true as we were able to focus on just the potato rolls and start automating that process with new equipment.

We purchased a little more land around town, built another bakery and dedicated that bakery to just potato rolls. So, we made potato rolls and a couple of other different items that were not potato but were all basically around the shape of a long roll, a hot dog roll, a sub roll, that kind of thing.

Spencer: So, in large commercial bakeries now, we see SKU rationalization, and you’re right, it is such a hard decision. I know bakers put their hearts and their souls into what they make, whether they’re a small shop on the corner, a retail shop or a large operation producing at scale. So, it’s great to hear that that hard decision was a strategic one, and obviously, it’s one that’s paid off for your family and for your company.

Martin: No salesman ever likes to actually cut an item out that he’s selling, right? So, it’s a hard decision that the boss has to make sometimes that it’s right for the whole organization in order to be able to focus on that. So yeah, we did that in the late ’70s.

Spencer: Well, I opened the conversation with my love of potato bread, and so I’m grateful for that.

The next thing we’re going to talk about is you and kind of your path. But, I do want to tell you that my sister is three years older than me, and when she was in high school, her first job was at a retail bakery. It was Rosie’s, was the name of the bakery, and they made all different kinds of products. She came home from her first day with all these baked goods, and she was like, “This is the coolest thing about the job. Everything’s fresh, so at the end of the day, we just have to take everything home.” So, that was the first time that I experienced potato bread. From then on, I was always like, “Will you bring some potato bread home, please?”

That’s always stuck with me. That was my first experience; I didn’t know bread could taste that good. So, I have a personal memory, and my emotions tied to it, so I’ll probably bring that up later in some of our conversations, but I want to get back to you. I want to hear about, in this family business, what did your path look like? How old were you when you first started working in the bakery? And when did you know, “This is what I’m going to do?”

Martin: Great question. So, when you’re in a family business, you’re kind of always at work. Your dad brings work home, mentally and physically sometimes, and frankly, it wasn’t many years ago that there weren’t quite as many rules around child labor and things like that. So, we were more involved with going to work, maybe on a Saturday or perhaps on an evening after school. We would get involved.

I would go in and help clean things like the bread trays or organize things. That was at 10 years old. We were riding in delivery vans. He would have to make a special delivery from our place, maybe an hour or two away, and so we would go along.

We had four siblings in the family, so I’m sure my mom needed a break, and so I went with him. We had a good time. That’s how you get to know your parents, and you learn to appreciate what you don’t realize at the time: How hard they work. But you look back and you think, “That’s pretty cool.” I had an opportunity to spend a lot of time with my dad.

Early on, he learned to fly as well, so I would fly along with him to different places where we would visit, maybe our customers, our business partners and perhaps a vendor or two in a flour mill or something like that. So, I was able to really participate, because where I saw my career going actually was on the flying side. I wanted to be an airline pilot. I got my license shortly after I was 16. I then went to a school that had an aviation program, and I wanted to play soccer as well, so I tried to join those two things together. So, I ended up going to Ohio State and got my aviation degree. I left there, was able to get a job with American Eagle as a commercial airline pilot.

In the meantime, I got married and we moved away. The thought of coming back to work at Martin’s was really never something that I was expected to do. We really never talked about it as a family. One of the suggestions I would make for family businesses is not to put too much pressure on your family members, let it kind of germinate on its own. I’ve read books both ways. I’ve read them where, you know, you shouldn’t let them get away, because they may not come back. Other ones, you know, don’t pressure them, or they will leave. And so, I was one of those that it was good there wasn’t a lot of pressure.

So, when I left, I decided that I wanted to start a career over there. I got married and we wanted to start a family at some point as well. We thought, “Well, being away from family is really hard when you’re going to start a family.” So, I actually applied for a job back at Martin’s. I sent it to my grandfather as, “Hey, maybe you guys need a pilot.” I was a trained pilot, so I came back and helped them fly back and forth, and we were making trips.

We’re kind of in a rural area, so commercial traffic where we are is a little bit tougher to just jump on an airplane and, you know, go to Chicago or go to different places. So, we use our own aircraft to do that. I volunteered to be their pilot, and so I did that for a while. And in the process of doing that, my father basically didn’t have any strategy. We didn’t have a lot of structure in planning for the next generation. So, I was kind of left to figure out what I needed to do, or what I wanted to do. And that was before the age of a lot of computerization, and we really needed systems in place to better manage our business and know where we were selling it, how much we were selling it for, and whether we were making money in these markets, things like that.

So that’s actually what I did. That was what I did for the first 10 years of my work here. My job was to research and try to automate our systems, from our order to cash systems to our PLC systems in our bakery and try to tie these all together with different databases, come up with data warehouses and all those kinds of things. So not having that as my background in college, I kind of had to learn everything on the fly. That was how I got involved with the business. It was really how I learned about the business and how it actually functions. And by doing that, you really, really get at a very core level of your business and know what is working and what is not working.

Spencer: You always hear those stories of, “I remember taking naps on the sacks of flour, and I was walking through the bakery when I was six years old.” And you can’t really do that anymore, so I always love hearing that nostalgia, but I’m used to hearing, “I got my start in the bakery by driving the route trucks.” You’re the first person who was the company pilot. That is awesome. That is a cool story.

And I do like that you had to be self-taught, teaching yourself the business side early on. And it sounds like you’re somewhat of an early adopter, that you were looking into system integration and automation to streamline the business and be more cost-effective very early on. So that’s very interesting as well.

Martin: Yeah, you know, through the business growth years … we look back at old pictures where, basically in the bakery you dump the dough into a dough trough, and you dump that dough trough onto a big table, and you had, I’ll say, an army of people, cutting that dough into chunks, putting it in round balls and making dough balls out of those. Sometimes it was all manual, then later on, it was slightly automated.

Now, you look at that same process and you realize you have the same amount of people you did back then, but you’re making 100 times more product because of the automation. We would not be in business today, and we know that, without investing and trying to figure out how to create a product that is high quality and also less labor intensive. One, because there’s not that much labor available. We’ve talked about that in our industry, but it’s also tough for work, too. I mean, it was a lot of physical labor. Now it’s mostly monitoring a machine, setting up and making sure that the machine’s doing what it’s supposed to do.

Spencer: That leads me to my next question. So, I know you’ve got the fourth generation working. You’re the third generation, and I kind of like what you said about pursuing your own path and then coming back by your own choice and diving into the business. How do you balance family legacy with being an early adopter and having innovative ideas? Whether it’s in product development, how you distribute, the culture or with machines and automation. We’re going to dive into those specifically as we go along this season. But for now, how do you prioritize that balance between family legacy and innovation as a family member and an executive?

Martin: It’s one of the things that, when you are young, you have all the answers. Then you realize, the more responsibility you get, the more you realize you may not have all those answers. And you need people around you who have done it before. And you try to balance, “Hey, I have an idea,” with “Hey, we tried that one time and it didn’t work,” with “Yes, it didn’t work last time, but this time, we think it might.”

Many companies go through this, you try something, and maybe you spend a lot of time, effort and money around it, and it fails. So, the innovation part, you get kind of shut down. I learned early on that I couldn’t have a great idea and say, “Let’s go do this,” because I would get pushback right away. So, I started saying, “How could I try it? How could I try to make something a micro piece of what we’re doing and could we attempt this little segment? Could we do a trial?”

I started getting a lot more buy-in with that and that proved whether it was a good idea or not. Then if it was innovative and it worked, yeah, we would move that direction, or we would pull back, and we would try something else. I guess the common terminology now is “You shoot bullets before you shoot the cannonball,” and so you try something first in an innovative way.

We also look at different products that we strategize with. We were in the pastry business. We made lots of items. We went scaled down to just a few SKUs, and then we started adding SKUs back as we see, perhaps there’s a customer demand for or we think we can make something that’s of high quality. We would not be in business if it weren’t for our quality. We aren’t the biggest. We’re not going to be able to do it the cheapest. We’re not going to do it necessarily, perhaps better than anybody else. Our secret is basically: Our ingredients are really good quality, so they’re very high-quality items that we put into our product. That makes it kind of special.

Spencer: Okay, that’s really interesting. Every bakery is known for its own thing, and so kind of what you said, if you’re not the cheapest or you’re not fastest – everybody has to be known for one thing, and automation and technology and being innovative can feed any of those. So, it’s really about what you want to be known for and how you want to get there that’s going to drive you in the direction that your company needs to go, right?

Martin: Many years ago, I had somebody a lot bigger than us, tell me, “Hey, we all drive trucks. We all have the same type of equipment, but it’s how you use it, and what quality you end up with. That is what your differentiator is.”

So, we’ve strived to make sure that our quality is number one, which helps us, because we have fewer SKUs to worry about. When you have dozens and dozens of SKUs, it’s really hard to manage, say, the forest for the trees. We have our own challenges because we don’t have a big SKU count, but we’re able to manage that in a different way than other bakers can do.

Spencer: Yeah, and I think that’s an area that we’re going to dive into in later episodes this month. I love your mindset.

There’s something else that I’m curious about as a family business, and that is the dynamic between you and your dad. Because while you’re president, he is still involved with the business as board chair. So can you just kind of share, I mean, you got into it a little bit with ‘shooting bullets before cannons’, which I love. But, what are the benefits and challenges that come with earning a position of leadership and a company where your family is all around? There are benefits to being an executive with your father, but there are also a lot of challenges, I can only imagine. I would not get along with my father in an executive position – I know that to be true. I’d love to just hear your perspective on that.

Martin: It’s obviously something that we work through as a business. Having him here and his wisdom from his past years of experience is enormously important, and we really do value that. Yes, he’s not as involved as much as he used to be. He doesn’t come in quite as much as he used to come in. So, he gets a little bit behind on things that are changing, but he’s kind of our rudder if you want to say it that way, and he’s in the background. He’s just making sure that we as a family are learning from our mistakes, evaluating where we are and making sure we know where we want to be – where we want to go.

So, yeah, we don’t always agree. No family always agrees. I have three other siblings in the business. I’m the oldest. I suppose got here earlier, so I took the responsibility on and I, once in a while, will gleefully say, “Hey, if you guys want to take the presidency, that would be fine. It would be a whole lot less stress on me and our family.” But at this point, they have said, “Hey, no, we love where you are, and we work really well as a family.”

We have good family harmony, and that’s important, that we work well together, and we do, we challenge one another. We have a few type-A personalities around, so we have to apologize once in a while when we get excited. But I don’t think it would work any other way. If we were just kind of laid back and let it happen, I don’t know that we would be where we are.

Spencer: I heard a story from another multi-generation family bakery that ate dinner together frequently, and they had a rule, “We don’t talk about business at the dinner table. When we’re at the dinner table, it’s family, not business.” And I thought that was a great rule to have.

How do you see the business impacting the Martins as a family, like the family dynamic? And vice versa. How does the Martin family dynamic impact the business?

Martin: Our family is very close. We spend a lot of time together in non-business settings. My parents have a small swimming pool, so we will often get together on a Sunday evening as a family and break bread together, have a good time, have some pizza or whatever and let the kids go swimming and those kinds of things.

We occasionally talk business, but we don’t stress about it when we’re together. The business is big enough that we can kind of have our own areas of expertise. And we work well separately and then we come back together. Our management team actually gets together every Friday over a meal and we have a meeting after that. So, we kind of give each other an update on where we are. Half of that group is family and half of it’s not family.

From that perspective, we don’t have any dynamics where it’s a problem. We don’t really avoid problems and challenges, but, again, my dad and my mom are still very much involved with family dynamics. We’re very much in charge of the business and make all the decisions, but we know we can use him as a sounding board. Just works well for us.

Spencer: Really, the Martins have that reputation. Anybody could go look at your website and look through the history, or some of those blog posts and see that family – just your family, how you operate, your values and how you treat each other – is kind of threaded throughout the business. You can see that in several different aspects of the business. How do you think those dynamics have sort of shaped you, not only as a business leader but also as a baker?

Martin: We like to see ourselves as not only a family business but as a business family. We think of business first, as far as here at work, and then we think of family separately. The dynamics of leadership here, you know, you have good people around you, you hire the right people and they help challenge you.

When I was not in senior management, I would send emails and things like that that were not necessarily with the right tone. They were kind of spicy. And I had a challenger here, and he goes, “Hey, listen, I’m not sure I’d send that email like that.” He challenged me back, and I took that to heart, and I learned that it’s better to have friends, business acquaintances and senior managers all together.

What I mean by that is you trust them, you respect them and you want them to challenge you. That’s how you become a better leader. You learn from your mistakes. But if you’re just going to go out that on your own and do it your own way, you know, God bless you. I hope it works for you, but if you don’t have somebody to challenge you, I don’t know how you will get better.

Spencer: Yeah, that’s a really good point. So, then I want to take it just a little bit of a step further and look at it as an even bigger picture.

As a B2B journalist, I’ve never really covered an industry outside of the baking industry, so I don’t know this for sure, but it feels like family businesses and generational businesses are more prevalent here than in other industries.

How do you feel like being part of a family business has impacted your view of the industry, especially as you went into aviation and then came back to the baking industry? How has your role in this business impacted how you view the industry? And then also, specifically as a board member for the American Bakers Association, how is your view impacting how you operate and how you see the industry?

Martin: We’ve always been, and kind of try to act, in a small business role where we don’t really feel necessarily that we have much impact on the industry per se. We have our little niche, you know, we make rolls, and we try to be a mushroom and try to grow in the shadows. Let’s let our product speak for itself, and that’s how we live.

As far as industry goes, my father was on the ABA board prior to me and I saw him participate some, but not in a big way. I felt like, especially during some of the discussions of the Checkoff Program and ways of trying to see what’s happening in the industry, and particularly, I’ll call it fad diets, and how they impacted our industry in general, trying to figure out, “How is our industry playing defense? Do we need to play offense?”

It’s still kind of open to me where the future lies in that area because I feel like we still don’t have a good platform to play offense, per se. GFF (Grain Foods Foundation) is really helping in that area, to help tell the story of the nutritional benefits of our products. And of course, you mentioned our blog and our website, and we’re trying to push it. There are a couple of other companies, I think we’re all trying to push this water balloon or this noodle upstream. We’re trying to figure out how to get the message out that it really is not only a nutritious item, but it’s very cost-effective, it can be comforting and all that wrapped up in one word, “Eat” for people, but I think trying to become a better and bigger part of that.

Now, as far as family businesses go, it is really interesting. I didn’t realize there were so many family businesses in the baking industry when I started. We know that very large companies have grown through acquisition and typically they’re acquiring family businesses. So, there are fewer today than there were in the past. But it’s exciting to see actually, some new bakeries, you know, the startups, and they’re doing well, and so that’s exciting to see new entrants into the category. It’s expanding where we are, as far as what products we’re producing.

So, I think the future looks good, and I love the fact that ABA is taking the role of helping bring that group together, coalescing us and then helping us to tell our story to legislators, where they can have a lot of benefits and perhaps educate the legislators on what we provide to the general public.

Spencer: Yeah, for sure. And you know, I’ve participated in some of those activities, and it really is exciting to witness and take part in those efforts that ABA is doing, and seeing those legislators say, “Oh, I didn’t even think about that.” And kind of seeing that light bulb go off, that’s really something special.

Okay, I want to get a little bit introspective. We talked about your view of the future. Let’s look at your past again and look back on your childhood and your career journey. I’ve read a blog post from Emily, and I believe she’s your daughter, right?

Martin: She is, yes.

Spencer: I really enjoyed reading her perspective of what it’s like growing up as a fourth generation in this business. When you look back on your experience and then see her experience, what are some of the similarities and differences in how you grew up in the business, and how she’s growing up in the business? And do you think that the brand notoriety is impacting that?

Martin: I would say there’s a difference, and yet there’s a similarity.

When I was young, my siblings and I were never expected to work in the bakery, but we needed to earn money like any other kid in the summertime, so we would. From the time that we were in late high school into college age, we worked in the bakery through the summer times. And you mentioned running routes and I did run routes. My brother, for a summer, moved to Boston and he ran a route up there for a couple of months because we were in need. So, we could be tapped to do something.

Well, fast forward to the next generation. We wanted to be more intentional. We actually looked at some other family businesses and what they had done, they were in the fifth-generation business, trying to figure out what worked for them and what didn’t work. So, we actually wrote a family constitution. We have a family training program. We have a family guide that we now meet twice a year as a family to talk to the fourth generation. We actually have our meeting this coming Friday. We’ll sit down and we’ll give them an overview of the business and how we’re doing, almost like a stockholders report from a family member’s perspective.

One of the things that they’ll see in there is the expectations of a family member. To own stock in this business, we want you to understand what people do to make this business what it is. So, there’s a requirement. You have to work nine weeks in the bakery for at least one summer. You have to work in a myriad of different organizations, whether it’s HR, sales, purchasing or whatever, you have to work so many weeks in each one of those areas in order to qualify to vote your stock someday in the future.

We made that very intentional so they see that perspective. They may or may not like it but now it’s required, so it’s interesting to hear their perspectives. They definitely appreciate it once they leave and actually start their own career. Like many companies, we have asked them to work at least two years at another company in another career path, so that they’re not given a job back here at Martin’s, but they will have earned the respect of others because they’ve gone out and done it on their own.

My siblings and I have all worked somewhere else first and then come back to the business, found our niche and have grown the business in those areas. Now, the business is bigger, so it’ll be a little bit of a longer road for them, but they’ll be expected to come back if they want to, start at an opening position and work their way up through the process.

But yeah, Emily has a lot of perspectives because she did those summer internships. Now one of the things we’ve added here just recently – which is kind of fun because we are working at some international shows now – is if they want to go somewhere in Europe, we will take them on a trip. We’re going to the Paris food show coming up here this fall. Two of my kids are coming along, and we’ll do the stand routine for a couple of days, then we’ll get to tour the city for a little bit and then we’ll come back home. So it’s a way for them to get really involved.

Spencer: Working a trade show booth? That is some good training. That is awesome.

Martin: Absolutely. My son was 19 this year and kind of shy. It was awesome to see him coming out of his shell and talking about our products and our processes to prospective customers in London. It was really cool as a father to step back and observe.

Spencer: That’s amazing. Okay, I’m going to ask you one last question for this episode. Another thing I found when doing my homework on your company, is that Martin’s is sort of touted as living the American dream, and I think this episode really sums that up. This is really, truly what the American dream is about. So, how has the longevity of family ownership and direct involvement in the workforce been part of that dream? How do you see your role in creating the American dream? That’s something truly to be proud of. How do you see that legacy continuing?

Martin: Well, obviously, we’ve been enormously blessed as a family. Yes, it’s hard work, but there’s a lot of folks who have done a lot of hard work, and we’ve been blessed.

My grandparents started in the post-Depression era with not much and then worked hard into that next segment and so forth. I see us being able to continue that dream of rags to riches. It’s the American dream. We’re stewards of this business, as we see it. It’s an entity of itself. We’re a very religious family. We believe that God has helped us through this process, and we kind of give Him all the glory through the process. It’s not us. We’re not geniuses. We just work really hard, and we try to keep what’s first, first.

Spencer: You know, it’s funny that you sort of qualified it with the hard work, and it gave me this thought that people sometimes tend to forget that the American dream isn’t just about the fruits, it’s about the labor. There’s no American dream without putting in the work. And that’s really what the American dream is. It’s putting in the work and seeing it become fruitful.

Martin: It’s having the opportunity to work and taking that opportunity every day and just basically doing the repeat. Like I said before, there’s no such thing as an overnight success. It takes a long time. We live in a great country and have the freedom to explore whatever gift we want to try to give to society, and hopefully, society likes it and continues the growth process. So, we know that we don’t exist if customers aren’t excited about our product, and we call our customers who are so excited ‘raving fans.’ We’re so blessed by getting hundreds of emails every week asking, “Why can’t we get your product? We love your product. Could we have a coupon or two?” It’s from all around the country and now the world. It’s just been an awesome experience.

Spencer: Amazing. Well, I think that is a great note for us to end on for this episode, Tony. Thank you so much for walking us through how Martin’s went from a one-car garage in the ’50s to the brand you are today.

Next week, we’re going to dive deeply into product innovation for this niche item that you have in a staple category. So, I’m excited about that, but this entire season is going to be amazing. We are going to talk about operational considerations that come with the growth that you’ve experienced. We are going to talk about how you build a corporate culture through several generations. We’re going to close out by looking at some really cool, modern marketing strategies that Martin’s has developed.

So I’m thankful for this time with you, and I am just truly excited to spend the next few weeks with you.

Martin: Joanie, it’s been a blast for me, too, and it’s exciting to see where this industry is going.

Welcome to Season 11, Episode 5, of the Troubleshooting Innovation podcast. Joanie Spencer, editor-in-chief for Commercial Baking, is spending this season with Jennifer Steiner Pool, president and creator-in-chief of Steiner’s Baking Co., about how to turn a special family recipe into a commercially viable brand. Sponsored by Puratos.

In our final episode, we look to the future of Steiner’s and talk about portfolio expansion beyond coffee cake.

Learn more about this season here, and tune into Troubleshooting Innovation on Apple or Spotify.

Joanie Spencer: Jennifer, thank you for joining me for week five.

Jennifer Steiner Pool: I can’t believe it’s week five already.

Steiner Pool: I really enjoyed it as well, so thank you so much for inviting us to be on.

Spencer: Of course. Okay, so last week’s discussion was really interesting about marketing for a gluten-free product, and we touched a little bit toward the end of the conversation on the idea of “Does gluten-free equate to better for you”? Which, not necessarily, it all depends, but there’s something else with this “better-for-you,” and it really came out of the pandemic.

People sought comfort in food, and people started really giving themselves permission to indulge, and so there’s this shift of this consumer perception of healthy versus indulgence, and they’re really no longer mutually exclusive.

So, gluten-free aside, how are you seeing this trend of indulgence as part of self-care? Do you think it has staying power? And how do you see Steiner’s products playing into that as a gluten-free product?

Steiner Pool: It’s a great question and an interesting place.

It’s actually a quite a personal issue for me. Over the course of my grownup life, which you could argue maybe I’m not a grown-up yet, I’ve struggled personally with restricting what I eat and the concept of how to be skinny and what is healthy and working out obsessively. That’s just a personal thing that I deal with all the time, so the concept of responsible indulgence is near and dear to my heart and very authentic to the brand and what we are trying to accomplish with our serving sizes.

I think where we’re going — which is a much healthier place — is this idea of moderation. You and I talked a little bit last week about what is actually healthy for each individual is different because we are all dealing with different things, and our bodies don’t all work the same way necessarily. And I think the concept is really this idea of moderation.

It’s not about restricting. I mean, there are probably some things people should not ever be eating and some diagnoses require you not to eat things — such as gluten — then you layer on top of that moderation. So, if you love bread — my mom loves bread — she could eat bread every minute of every day. Now she’s a celiac, right, so it’s frustrating to her. Often the bread she’s eating she feels is disgusting.

If we can’t get Canyon Bakehouse — throwback to last week — she gets very frustrated, but she loves bread. She knows that she just can’t eat bread all the time, right? She has to do it in moderation. And that, I think, is going to become more and more the way in which people allow themselves to enjoy things that aren’t necessarily “healthy” for you.

So, a chocolate fudge brownie — I guess a doctor would say isn’t healthy for you. It is not going to do any harm if you are not allergic or a diabetic. Nothing bad will happen to you, but you probably shouldn’t eat brownies all day every day. What I really want you to do is just have the brownie bite. It is a responsible portion size. It is chock full of real ingredients, and it’s just delicious. And you can feel good about eating it because you’re not over-indulging, and you don’t have to carry the weight of feeling bad about yourself.

I don’t ever want someone to eat something of ours and then sit back and say, “I shouldn’t have eaten that.” So, the way in which I can help a consumer avoid that feeling is by being a responsible manufacturer. Everyone pushed me at the beginning to make our coffee cakes in the jumbo-size muffin portion, which is probably 30% bigger than our current snack-sized coffee cake. And I looked at it and I said, “You know what, I can’t even really eat a whole current size portion that we have. I can’t imagine adding another 30% to this. It doesn’t feel right.”

So that’s authentic to our brand. That is who we are, and I said, “No, we’re not doing that.” In fact, one of the things that we have on our lists to do is to produce our coffee cake bites. So I want to go smaller, and I also think that it’s easier for kids, also. These bite-size are great for kids, and it’s a much more, sort of, transportable indulgence — again, in a proper size.

This concept of moderation is where I go with this balance people have of wanting to indulge, partake in comfort foods, bake for their families. During the pandemic, our flour sales really increased because people were coming back to their roots at home, gathering around the table. That’s an important part of family life, and while we crave convenience, we also crave connection. We learned during the pandemic that we want things that are yummy and make us feel good and give us comfort. But we need to do it responsibly, and we can do both at the same time.

Spencer: Okay, so I was so happy that in your narrative about people wanting you to do the jumbo muffin size to hear you use the word “authentic,” because I was thinking that very word — like, “Wow, this really plays into the authenticity of this brand.” When you said, “I can’t personally imagine eating my coffee cake in a size this big, so I am not going to sell it to my consumers that way,” I don’t think it gets any more authentic than that.

Steiner Pool: And listen, we were really pressured. There’s a lot of pressure because those baking pans are commercially available and easier to get than the ones I need for the size that we produce.

So it was really tempting, right? It was going to be much easier for me to walk into a co-man who had those pans already. It was going to be much easier for me to source and procure those pans, and I said no. And I think, ultimately, the other benefit of it was I didn’t love the price point. When we took the product up to that size, I felt that it made it inaccessible to our consumers at that price. And I think consumers need to feel that products they love are accessible, and what we’ve seen over the past four years, which I’m sure you’re very familiar with, is a decrease in size and an increase in price.

Spencer: How are you reading my mind? Accessibility was the other word that I was thinking about.

Steiner Pool: We wanted the product to be accessible, and so even over this period of inflation, we have not raised our prices.

Spencer: Oh, wow.

Steiner Pool: That means we have taken a little bit of a hit on our margin. However, I think in the long haul, it was the right thing to do for our consumers. They just can’t take another increase. They’ve had enough.

I didn’t want to jump in there. Even when, 18 months ago to almost two years ago, eggs and butter like went through the roof, we didn’t move our pricing.

Spencer: Wow.

Steiner Pool: I just said we’re going weather it, and I can’t do it to them. I can’t. I think that was really important, and whether they noticed or not that we didn’t increase our prices, it’s hard for me to say. What I can say is that I feel good about that.

Spencer: Okay, I want to talk about product development. So, Nancy … aside from being the consumer research lab rat for you, is it fair to say she’s sort of the idea machine?

Steiner Pool: Yeah. Again, we all know what our jobs are. That is not my job. That is her job. Yes.

Spencer: So, can you talk about some of her ideas? I heard something about gluten-free cheesecake.

Steiner Pool: Yes. My mom has a lot of ideas. She wants to put in a new product on the market every week, which I have had to give her the smackdown and say, “We’re not doing that right now. We’re staying focused. Take notes, practice, keep refining your recipe. I’ll get back to you.”

So yes, she has a lot of ideas and so a few different ways in which we want to go. Number one, I think there are some great opportunities for additional flavors in the coffee cakes. We do need to make sure that we always are using real ingredients. For instance, our raspberries are freeze-dried raspberries. I’m thinking maybe a peach. The blackberry could be good. I’m wondering if there’s a maple situation.

So, there’s lots to come on the coffee cake side. Outside of coffee cakes — the brownies and the ginger snaps — the brownies are just emerging as a commercially available SKU for us. And then next will be the ginger snaps. We have a lot of R&D to do just on the mass production side of it. As you know, it needs to be scalable, so I’m really toying with that being a ready-to-bake product versus ready-to-eat.

I love the size of our ginger snaps, and I hate to give that up, so we’re really looking at ways to make it happen. But I am also very conscious, as we just discussed, about price point, and the labor involved does concern me. We have to see if we can get it there. And then outside of that, which is tied to the gingersnaps, is our cheesecake. We have a great partner on Long Island. He reached out to me actually over social media … fabulous guy … and he is a cheesecake guru.

And again, I gave him my rules. There can be no additives or preservatives. With a lot of cheesecakes on the market, you can’t pronounce anything that’s in them, so I said, “This has to be real ingredients if we’re going to do this together.” He is a cheesecake guru. I don’t know anything about cheesecake. I don’t want to know anything about cheesecake except that it’s delicious. I’m not going to make cheesecake, personally. I said, “I’m in it with you. But here’s how it has to happen.”

So, he uses our ginger snaps as the crust, and it is off the charts. The ginger snaps, you know, they have a snap because we use real crystallized ginger that’s chopped up in the cookies, which is part of what makes them so good. And that contrast with the creamy, neutral palette of the cheesecake itself is so good, and we came up with a great size so it’s accessible, responsible.

I actually think even the size we have you would share with a friend. Cheesecake in and of itself is pretty rich, so I can’t wait. This is going to be great. The banana bread is off the charts. We only use real bananas. We don’t use any natural flavorings or imitation flavors or flavor enhancements or any nonsense. It is real bananas in our banana breads. It’s my grandpa’s recipe, but as we discussed, focus is critical.

We have to really be good at what we’re doing now. We have to become a part of the consumer’s home. We have to be wanted, not just known, and with those accomplishments and those milestones, we will have permission to extend the line. It’s capital intensive. As you and I discussed, we don’t have a ton of working capital, so I have to be quite judicious in how we extend the line and move forward.

The first step was being a good listener during Mondelez and pivoting the brand to Steiner’s Baking Co., which then now I have permission to get the brownies on the market, to get the ginger snaps on the market, to push the flour out. It’s all coming to sort of fruition as we look towards the backside of 2024. I can only go as fast as the capital is that I have right, so that’ll get our speed.

Spencer: So then, in terms of that R&D, what does ideation look like in terms of a team or a process? Do you have a dedicated R&D team now? I mean, it used to be just Jen.

Steiner Pool: Well R&D is Nancy.

Spencer: It’s all Nancy.

Steiner Pool: It’s all Nancy. She’s in the kitchen. She’ll call me. I’m like, “Okay, write it down.” I’ve learned so much in the past six years about production lines by working with this gentleman Michael who is brilliant and helps me work through efficiencies on the line and our equipment and labor configurations … I can say to her “Okay, mom, that sounds delicious. You have to figure out how to make it this way.”

Whatever those constraints might be, like biscotti. If you talk to a real pastry chef, biscotti, I believe, is like three different turns in the oven. You have to turn them over. I don’t know anything about making biscotti, but I’ve seen my mom do it, and that’s not happening on a production line.

Spencer: Exactly. Not unless you’ve got tons, tons of capital.

Steiner Pool: Yeah, exactly. So, I’ve said, “These are delicious, mom; now make 10,000 of them.” Like, think that way. So that’s how I push her to adjust her recipes. So then what happens? Mike and I look at it, and then we sit with the co-man and he says, “Okay, well, now you have to layer in packaging equipment. You’ve figured out how to make it, but now you have to package it.” And that’s where we bring in the team from the co-manufacturer who has the expertise on getting what I’ll call the “last mile,” right? You have to wrap this thing up and get it ready for transport and that’s where they’re invaluable.

So mom’s starts at the starting line, then Jen and Mike look at her crazy idea and say, “Okay, go fix this,” and then we go to the co-manufacturer and say, “Okay, how many pieces do we make per minute? What’s the packaging solution going to look like?” And then you go from there. All kidding aside, it’s not just Nancy. It’s just that she’s the ignition point, and then we have to work with the rest of the team to get it over the finish line.

Spencer: I’m sure you have either read and/or listened to some of my conversations with contract manufacturers. One point of discussion is that a lot revolves around co-manufacturers. They’re not just plug-and-play anymore.

They are really part of the innovation and coming to their customers with ideas. So, it sounds like you have that relationship with your contract manufacturer as well, where you can really say, “Okay, how can we innovate with the end of the line and get it packaged efficiently?”

Steiner Pool: Listen, they have three generations of experience. They just know so much more than me and my mom could ever hope to learn in a lifetime. We have to collaborate with them, and I would say if you’re an entrepreneur and your co-man is not collaborative, isn’t interested in helping you be better, that’s a red flag.

You don’t want them to “Yes” you to death. You need to trust them, and they need to know that you can hear them because they have to make money, too. They don’t want to be in business with you and not be able to run an efficient organization. You have to be a good client, and you have to be aware of that.

So, when the co-man comes to you and says, “Listen, this particular part of the process is killing us; we have to find a different way to do this,” you can stand by your principles, like for us, “That’s fine, guys, but you can’t add any additives to this, so you got to find another way.” You can still hold on to the principles of what makes your brand authentic as you’ve defined it, but you also have to be flexible, and you have to see that you want to make money, and they want to make money, and they want to make a product efficiently and safely.

You have to let them bring that expertise to the table. And if they’re not offering it up — as I said — you need to stop for a second. Because when you’re in the startup phase, and you’re trying to scale production, there is a feeling of desperation. You are very, very hesitant to consider walking away from your co-man. It’s frightening because the idea of starting over is nauseating, so you want to look for these things upfront in the relationship.

If you come to them, and they say, “Oh yeah, we’ll just make it this way,” there’s no way they don’t have some improvements for you. Either they’re just going to charge you an arm and a leg to do it, perhaps the least efficient way, and they don’t care, or something else is going on there that would make me very hesitant. I don’t know what I don’t know, but I know I don’t know a lot, and if my co-manufacturer doesn’t have anything to say about what I’m doing, that’s a little scary.

Spencer: That’s true. That’s very true. So, what about your ingredient suppliers? Do you take inspiration or troubleshoot ideas with your ingredient suppliers?

Steiner Pool: It depends which ingredients you’re talking about. So for things like butter, eggs … I actually have a dream, which I hope I can make it happen by 2025, to have a pretty sophisticated relationship with Organic Valley.

I’m dying to work with them, and I went to them when we started the company and I said, “I want to source all my eggs, sour cream and butter from you guys.” New York, great principles, clean products, etc., etc., and their MOQs (minimum order quantities) are just, as you can imagine, huge … far surpassing what our current buying capacity is, but they’re there. That is huge for me, so while I can’t take advantage of their exceptional products now, I look at ingredients, as you and I’ve discussed in other episodes, I’ve learned my lesson that not all butters are created equal. Not all sour cream is created equal.

So, if I always go back to what a strategic imperative is, it will help me make good decisions. So, no additives and preservatives help me vet any ingredient that’s coming in from a current supplier. And then, of course, the flour is a whole different thing, but goes back really to the same principle. We have a great relationship with our blender. It’s quite collaborative. And our recipe is very, very simple. And we don’t compromise on anything in that regard.

Spencer: Right. So I wanted to talk about the Steiner’s team. You rely on your suppliers and a contract manufacturer, but do you have plans to build your team?

Steiner Pool: So obviously, working capital continues to be my gate. Of course we need to expand the team, it can’t just be Jen forever, but there are creative ways to do it so that I’m being fiscally responsible. I do have fiduciary responsibility to our investors, and I want to make sure the company remains healthy.

So for instance, sales. We are now working with two fabulous sales ladies out of California. They are amazing. I met them at the Good Food Mercantile trade show in New York last year. And our recent successes … it’s all them. So sales is number one.

Number two will be marketing. I need more support underneath me for the marketing. I can go out there, and maybe you’ve learned over the past five weeks, I can sell ice to Eskimos as they say, but I can’t do it all myself, and we need to be more connected to our consumers on social media. We need to have regular conversations with our wholesale clients, and restaurants, cafes, coffee shop owners. I like to have a relationship with those folks. I’d like them to feel that they’re really taken care of. I can’t do all of that on my own. So that will be the next group of folks that we really need to look at bringing on and enhancing that bench.

And then our 3PL partner, Hall Street, is fabulous. That’s like seven people at my disposal. I love those guys, so I don’t see us hiring full time in that capacity. I think if we needed bench strength there, then we would do it through them. And I think our co-man and my pseudo-director of production are fabulous. They’ll grow with us. They can take three shifts a day. We have a lot of capacity to grow into on the production side. They’re the subject matter experts.

I can’t be good at everything. We need to know what we’re good at. I think Canyon Bakehouse ended up building their own bakery … maybe out in Colorado, I think he did that. That takes a ton of capital, and I and my brother have always said we’re never going to build a bakery. Now, every time I say “never” then something happens, so I do think there’s a lot of value in developing a relationship with a group of people who are really good at what they do. It’s kind of like the flour blenders. Am I really going to get into the blending business? That is a huge lift. I’m not sure it’s the right place to invest. Maybe in three years when we’re an $85 million company. I’m just not sure that’s the right place to focus.

Spencer: I was looking at your website and you do something really cool speaking of sales … you sell direct-to-consumer through your website, but I noticed something very interesting that some of the products have a subscription option. So that is a little bit different. How successful have you been with the subscription option? And then in working with a co-man, how does it impact production? How does that work?

Steiner Pool: So the subscription option is fairly new for us, and it is a direct-to-consumer offering. The reason we did that is because as we start to lean into folks who have celiac disease and are gluten intolerant, we wanted to make it easier for them to purchase.

So imagine as a small brand, we’re driving our penetration into the retail environment, and we’re not yet readily available. Consumers across the country are struggling to have access to our product as we’re growing. So we wanted to make it easy — and back to that word accessible — for our consumers to purchase the product. What that does for us as a business?We can now project better, of course, what the demand is on the consumer side and manufacture and manage storage against those shipping obligations. It also allows us to offer the product at a more accessible price to the consumers who are subscribing, so it’s a win all around.

Ultimately, the company is a business-to-business model. Eighty percent of our revenue will come from our wholesale clients and 20% from direct-to-consumer, so we wanted to design it so that as we grow, it’s easy to service those consumers and it’s easy for them to buy and fall in love with our products. I think ultimately, as we gain awareness within the gluten-free community, they will love that. And we’ve seen that. Those who know about it, love it, and they never ever leave, and that’s great. And we hope to build that business for sure.

And part of where you were also headed with your question that I just want to hit on is I wouldn’t say one-time ordering versus subscription, that one is better than the other. I think the strategic point of view is you have to let consumers shop the way they want to. So you have to give them permission to buy the way that works for them. We all shop on Amazon. You see it on Amazon. Amazon could force everybody into subscriptions because everyone just does what they say, but they don’t. You always have an option, you either one time order, or you subscribe. That is the platform.

So I don’t need to reinvent the strategic wheel. Go out there and look at what the big guys are doing and what’s clearly successful for them. It is because they’re letting consumers shop the way they want to shop. And I also think when you’re looking at the gluten-free community … this thing that I can’t wait to ignite with newly diagnosed and loved ones supporting those that have been newly diagnosed … that’s a one-time order construct. That’s a gift. I don’t think there is just subscription versus one-time ordering; it’s not one or the other. I think you have to have both to be successful. And, in theory, you should be leveraging your one-time order population into a subscription, which is ultimately the best business model; however, you have to know that that’s not going to work for every consumer.

Spencer: Right. So I feel like it plays into this idea of accessibility and providing that comfort and being a resource for someone who is celiac, so it serves them. But then from a marketing perspective … I don’t know because I don’t know anything about back-end details … but does it allow you to collect demographic information or to gauge turnover from one-off-purchase to subscription and figure out the demographics of your most loyal direct-to-consumer shoppers?

Steiner Pool: This is an interesting question. Data right now is such a hot topic, so I must say that we don’t share any of our data with anybody. I do product demos, which are the most valuable thing any brand can do. If you’re not doing them and you own a company, or you’re running a brand, and you’re not out there doing demos, shame on you go do it. Your engagement with consumers and their reaction and the conversation that they have with you, which inevitably happens … sometimes I’m demoing 60 people, and it’s everybody’s coming at me … you still have those little moments with each person.

If you’re really listening, you learn more from that then you would from analyzing the statistics of how many people are 35 and live in California and blah, blah, blah. Now, that may influence your media buy for sure, but I’m never going get the kind of information I get like I get at a demo. So I’ll use the demographic information to influence media buys. I can’t even really use it to influence messaging unless I’m really dialed down into response rates against paid media, but I kind of already know what messaging resonates with the gluten-free community.

And once the product performs in their home, it starts working for itself. We do contests on every box. You can register to win a set of goodies that we do every week, and I’ve learned more from that. So there are ways in which we accumulate data so that we can make smart media decisions, but I often think the psychographic information is the juicier side of it. The demographic information is just the hard facts, but to be known and wanted, you have to understand the psychology, which you don’t get out of the numbers.

Spencer: So you’re a qualitative person like me.

Steiner Pool: I am, yeah.

Spencer: I got my master’s in journalism, and it was all qualitative research. Because if it’s A, B or C, and I’m like, “Well, what if it’s somewhere between A and B, or what if in a certain circumstance, it would be C?” I just always think about the “What if?” around the quantitative. I know the quantitative is important, but my brain functions qualitatively, too.

Steiner Pool: Yeah, I agree. I don’t want to poo-poo the quantitative; it’s just the qualitative is what motivates the brand construct and product development. The quantitative reinforces that the decision is suitable for the business to grow. But you’re not going to figure out that raspberry coffee cakes should be invented from quantitative data, but I can tell you from the quantitative data that they are far surpassing all sales, and now we should look at other flavors.

Spencer: Yeah. Okay. I have one last question to finish out these five weeks. You have dreams to become a household name. So, what are the milestones? What do you see as the milestones that you have to hit in order for Steiner’s to become a household name?

Steiner Pool: I hate to say that it goes back to working capital. I have to be able to invest in the brand. If you build it, they will not come. Okay, just because we’ve created these great products, just because we have a brand that is authentic and solves a problem and is reliable in terms of product quality and consistent food safety, etc. that doesn’t mean people will buy it.

We have to get it out there. We have to do that work, and it’s hard work. It’s capital-intensive work. To achieve this goal, number one, we have to have sales, and our sales velocity right now is mind-boggling. It terrifies me. The ladies out in California are doing a fabulous job, and sales beget sales. We will continue to grow on top of those sales.

We have to invest in that. We have to go out and tell people we are now on these shelves. We have to invite people to try the product. We have to be invited into their homes. And that’s work we have to do, and that’s where I shine, right? That is where I’m ready to do that work. I’m eager to do it. I needed to get manufacturing locked down so I could pivot back to my strength, and that’s where, if I can raise this capital and we can be in a position to spend into the brand, we will become a household name. With the strategic pivot we made because of Mondelez’ influence and our commitment to product and the having the co-man in place, if we now can push into the brand we will be in your freezer soon. We will get there.

Spencer: I just have to say, all the years that you spent watching your mom try to figure out the flour so that she could make Betty’s birthday cake for herself, and you knew and you watched and you waited … this was not a six-month process or an 18-month process or a three- or four-year long process. It was six-plus years or more. And you believed it and you knew it. I have no doubt that you have the wherewithal and the tenacity and the instinct to achieve this goal of becoming a household name. No doubt.

Steiner Pool: From your lips, I mean, I hope everybody can hear you. I’m determined. I think the product speaks for itself. I just have to get it to people. That’s my job. And thank you for the support. Thank you for including us in your podcast journey. And this is a part of the story. Now you’re a part of our family.

I have to say to everyone who either enjoys our products or is a part of our supply chain, you’re a part of our family. Our name is on the box. We take that very seriously. We’re very proud of that. And it’s Grandpa Malcolm Steiner; he is our inspiration. I wish he was here to enjoy it, but I’m sure it’s somehow in the spiritual ether. He knows that we are crushing it, and mom is faithfully carrying on his tradition.

Spencer: And I love, like you said a couple of weeks ago, that if he would have watched your mom do this, he would have said, “This is blasphemous. Get out of my kitchen.” But now I think he would be so proud. I think he would have tried to kick your mom out of his kitchen, but I think he is so proud of Nancy and of you and what you have created with his name, his recipe and something that he loves so dearly.

So, congratulations on all the success that you’ve had thus far. This is such an interesting journey, and it was absolutely an honor to walk through this journey with you and understand what it took you to get to where you are today. Jennifer, this was amazing.

Steiner Pool: Thank you and keep your eyes on us. Much more to come.

Spencer: I absolutely will. You take care, Jennifer.

Steiner Pool: You, too.