Welcome to Season 8 of the Troubleshooting Innovation podcast. Joanie Spencer, editor-in-chief for Commercial Baking, is spending this season with Marc and Elana Schulman, the second and third generations of leadership at Chicago-based Eli’s Cheesecake. Their conversation explores innovation, growth and longevity through the eyes of a family-owned bakery. Sponsored by Oakes.
In the first episode, learn about the foundation of resilience and reinvention on which founder Eli Schulman built this family legacy.
Learn more about this season here, and listen to Troubleshooting Innovation on Apple, Spotify and Google.
Joanie Spencer: Hi, Marc and Elana. Thanks so much for joining me.
Marc Schulman: Good afternoon. Great to be with you.
Elana Schulman: Thanks for having us. We’re so excited to be here.
Spencer: I just love your story, and I am so grateful for you both to take the time to share these next five weeks with our audience and just learn the history of Eli’s and see where you’re heading into the future. I thought we would just start off with a quick history and take a little walk down memory lane and talk about how Eli Schulman started Eli’s Cheesecake.
Marc: My dad, Eli Schulman, our founder, was a Chicago restaurateur, who had gone into the restaurant business in 1940. He had a wonderful history of operating restaurants in Chicago over the next 50 years. He always had a dream, which was to create a signature dish that he could take outside of the restaurant and sell on a broader basis. So, Eli’s The Place For Steak, was the legacy restaurant where he developed his cheesecake recipe. He was famous for many things such as calves liver, steaks and chopped liver.
We feel very fortunate that he came upon cheesecake because it has so many applications as the basis to take outside the restaurant. So, there was Eli at the age of 70 at the first Taste of Chicago on July 4, 1980, taking his cheesecake for the first time to the public to see and to experience so we always know what our birthdate is. It really created this tremendous foundation for us to grow for the next 43 years.
Spencer: I am familiar with your history, and we got to do a live podcast earlier this year at ASB’s BakingTech, and we had a chuckle over the fact that you could have gone into the liver business. We’re all so grateful that you went the cheesecake route instead, but I don’t think I realized that your dad was 70 when he took his first cheesecake to Taste of Chicago.
Marc: Well, Eli was always a dreamer and I think when you mentioned liver, there was a time we were on vacation and he saw a liver dish on the menu, and he had a vision for what that was. That became Liver Eli, which, before cheesecake, was his most famous creation. But it just shows the creativity of Eli and how he was always thinking about what was next. As a restaurateur, he was way ahead of the curve in saying “How do I take something outside of the restaurant and sell it on a broader basis?”
We talked about resilience and the long term. Certainly selling cheesecake on a national and international basis was much better than operating out of one restaurant during COVID and other times in our history.
Spencer: So, let’s talk about that for a minute … the point when the cheesecake became the product, and not the restaurant. What did that look like?
Marc: I think Eli was always promoting and we were fortunate when Mayor Jane Byrne had the first Taste of Chicago. It was July 4, 1980, and they shut Michigan Avenue down for the day. No one really knew what to expect. There were these huge lines and suddenly a whole new category of people who had never been to Eli’s A Place For Steak had that ability to get the cheesecake.
When I left to practice law, which was a couple of years later, we saw the interest and the opportunities in people loving Eli’s Cheesecake. And I think, with Eli’s history as a host and a celebrity, they really went hand in hand with that ability to say, “Hey, you could experience the best of Eli’s anywhere in the country.” So, we were just fortunate to build upon all that goodwill from the restaurant and with making a really great dessert. In the beginning, it was four flavors of cheesecake. Over the years, we have leveraged that into many categories and other types of desserts that we make today.
Spencer: It’s incredible to think he built this successful restaurant, which was not his first business endeavor, and then at age 70 he had this incredible dessert that he was able to take to Taste of Chicago, and it was gaining all this notoriety. How did that evolve into the need for its own production facility? Had you already come into the business at that point? How did it become, “We have something here that we have to take out of the restaurant and start producing this at scale.”?
Marc: It took a few years, and then in 1984, we signed the lease on the first bakery that was half a mile south of where we’re located today. And that gave us the ability to grow the business and expand to start recruiting great people, a number of whom have joined us today. And then really getting into the creative side as the needs of our customers evolve. First people knew us for Eli’s Signature Cheesecake, those first four flavors. Over the years, those offerings have evolved in many different directions, in addition to the cheesecake.
Spencer: You all are known for so much beyond just a classic cheesecake dessert. When I was putting the questions together for this episode, I was thinking about what it was like going into that first facility. Technology in the ’80s and in the ’90s, when you went into your next facility, looked a lot different than it does today. It made me think of watching an action movie that is 10 or 15 years old, and the CGI and the special effects that we thought were so groundbreaking when the movie first came out, we look back on it now and we’re like, “Wow, there wasn’t much there.” Can you reflect on what was so groundbreaking at that time?
Marc: It is so interesting about bakeries and bakery equipment; all our new equipment has computers that work off networks and technology. But at the same time, we have equipment here that’s over 40 years old and it really does the job. The depositors have certainly evolved and gotten bigger and incorporated more technology, the same thing in mixing ovens.
When we went into our first facility, it was a bakery and commissary for ARA, and there were revolving ovens in that facility, more of a pizza-type oven. So those were the first ovens that we used. We later added rack ovens to that bakery, and then when we moved to our current facility in 1996, we went with a tunnel oven and more rack ovens.
Certainly, a big thing in our business is how you cut the desserts, and cutting equipment technology has evolved in ways we are able to do it more efficiently. And then you get into all the packaging equipment, which produces a faster, better packaged and individually wrapped product that we didn’t do before.
I think the good news is in our industry, there are great resources to help guide us. As we have now finished our expansion, looking at additional capital, the good news about bakery equipment is that it has a fairly long life. We’ve even sold off equipment that’s 20 years old and received significant prices. So, people still saw the value of that equipment for the future.
Spencer: Wow, that’s awesome. I just imagine paying it forward and helping another bakery that might be a smaller operation be able to use tried and true, reliable equipment to help them get started when they maybe don’t have the capital to invest in modern technology right now.
Marc: Exactly, and I would add that when we did lease our first facility, it had been a bakery before and I mentioned the ovens, but there was a freezer and other pieces of equipment that we were able to use. Because the challenge in any business is how do you take it to scale and how do you grow without either taking on so much debt that you can’t repay it or trying to get investors? I’d say in our business, we’ve always had a facility of innovating, going as quickly as we can, but at the same time, finding the appropriate time. We never tried to bet the store on one product or one idea and we maintained a lot of flexibility as we grew.
Spencer: Just in knowing the whole story, even back further than the restaurant, your dad was very entrepreneurial. But is it fair to say that he was very calculated in the risks that he took? Because it seems like he didn’t try one thing and if he failed to go to another thing. He built on everything that he did in business, is that a safe assumption?
Marc: Absolutely. Eli was a child of the Great Depression and grew up at that time. So, I think you understand the value of goodwill, you understand the importance of taking care of customers and quality. I think he gave those values to us, and those are very important as we work to build the business for the future. My dad would say, “There’s no value that you can put on goodwill in your name.” So, working very hard to maintain that standard of customer response of quality, things that probably a private equity-owned business or a major corporation, wouldn’t have the personal approach that Eli had for his customers, or that Elana and I work to maintain today.
Spencer: So, I’m hearing you describe the criteria and priorities that you had when you got that manufacturing facility. But I also heard you when you said you were in the law practice, right?
Marc: Yes.
Spencer: At what point did you come into the family business? And I know for Elana it was the same way, she didn’t start off on the path of the bakery. I want to start with you, Marc. What was that point that you came into the family business and said, “Yes, this is where I need to be.”
Marc: I left the practice of law full-time in early 1984. Knowing that there was a lot of opportunity, but it’s something that my father, he was busy with the restaurant, wasn’t really in a position to do. As a lawyer, I always had this concern that 40 years after my father died, would I stay a lawyer so no one would know what Eli’s Cheesecake was or had been, or would I go into the restaurant business and pursue that, but no one would be a host like Eli.
Ultimately, the building that Eli’s The Place For Steak was located in, got torn down. So, what would have happened then? I’m pretty fortunate in my career for Elana and I to be able to tell Eli’s story. When I was a lawyer, I represented a lot of family businesses like ours. You would see the great successes or challenges, but the great thing about the family business is that the conclusion is unwritten. You make things happen when you’re a lawyer. It’s much more transactional in terms of representing people. It was great to work with my father for the years I did work with him before he passed away very untimely in 1988. And it’s a lot of fun to be able to tell his story every day with Elana.
Spencer: It feels like in the battle of head versus heart, your heart-led, and it seemed very easy for your head to follow that lead.
Marc: Absolutely. And I think as a lawyer, you learn a lot of technical skills, but you know, the people skills are most important. And the great thing about the food business is everybody loves to talk about food; everybody loves to talk about desserts. And certainly, people love to talk about cheesecake. So, it’s a much more fun way to spend your career.
Spencer: So, Elana, tell me what it was like, from your perspective, just growing up in this foodie family, but also a very entrepreneurial family. Because you didn’t first follow the path into the bakery directly, either. What was it like growing up in the Schulman house where there was steak, liver, cheesecake and ideas?
Elana: It was so much fun. I’m so lucky that I got to experience the steak house for the first 15 years of my life. I think growing up in a restaurant completely shaped my personality and understanding of what it takes to be in that business. I learned how you treat customers and how you treat the people you work with. I think seeing both sides of that transaction and interaction is interesting.
I’ve always said everyone should have a job in a restaurant or working in retail because it makes you a better person. You see how you should treat people and how much work goes into really creating an impactful experience. I grew up in the steak house and would spend summers coming to the bakery. I think just watching my dad manage both parts of the business … he handled it so well and was so present in our lives. But I mean, can you imagine running a commercial bakery during the day, and then you have three kids and a wife, and then at night, you’re going to your restaurant? It’s a wild lifestyle.
I really understood what it meant to work hard and just be so driven. Then at the same time, always be grateful for what you have, be really kind to people and treat people well, that is the most important thing.
I remember driving with my dad. We would drive around the city because my dad is passionate about Chicago architecture and the city itself, and he would just talk to me about business and what’s important. And it was always like, “You do well in business so that you can invest in other people’s lives.” That is what I would say about my childhood in a nutshell. That’s why I really wanted to come into the business.
My dad and I sit here all the time, and we talk about how lucky we are that we get to tell Eli’s story. That has always been what’s been important for me, hearing the story of how my dad really created the cheesecake part of the business. Because that was really the driving factor, that we can continue that family history and tell that story. I always knew I wanted to go into it, but I thought it was important to work for other people.
When I went to school, I was a film major. I think my dad was a little confused by that. It turned out to be a really great time to be a film major because I worked in video production and that hit at this time when every major company wanted video and so I had a lot of great experience working in food video production, in documentary film, and then came back to Eli’s in 2019 and joined full time, and it’s been amazing. I just love being here. I love the energy, and I love the people. I think, as my dad, said it’s a joyful business. We get to bring people together through our cheesecake and be a part of their celebrations and happy moments, and there’s really nothing better than that.
Spencer: That’s a really good point that you both said: This is a very joyful product and all baked goods are joyful. But whereas bread is a staff of life, and it is a necessity, cheesecake and desserts really, in general, is a product that is based on happiness and it caps off a meal. Just when you think everything’s great, you get a piece of cheesecake, and suddenly it’s better. Dessert makes things better. What is that day-to-day like to create happiness? Can you have a bad day when you’re making cheesecake? How do you balance business and seriousness while creating something that you are trying to make people happy by delivering?
Elana: That is such a good question. I’m going to let my dad weigh in, too, but I think business is stressful. Manufacturing is really hard. There are just so many factors at play, and things change constantly. But I think it is important to always remind yourself what the goal is. And the goal is to bring joy to people’s lives through desserts. I think it always brings us back to that point.
But I think that you have to remind people of that and remind yourself because I do think that it can get really hard. And I know w’’re going to talk about the pandemic and really challenging times. My dad’s been through far more challenging times than I have in this business. But at the end of the day, you have to really be conscious of that and make sure that everyone on board remembers why you’re doing what you’re doing.
Marc: I would add that the great thing about cheesecake, and we see it in comments on social media, letters or when you meet people and they tell you, “Hey, I’ve had Eli’s cheesecake pumpkin cheesecake on my table at Thanksgiving, Christmas or Easter 30 years.” People tell us, “I was there at the first Taste of Chicago, and when I got a taste I had to go to Eli’s.” It is that involvement that the customer has with the brand.
I think you know, Joanie, my wife, Maureen, who’s our publicist, and was the lead author, and worked with Elana on the second edition of our cookbook, Eli’s Cheesecake Cookbook. You tell the story of our people, the story, the big cakes, we’ve done over the years and how people such as President Obama or President Clinton have interacted with it. So, I think it’s an extremely huge honor to be able to do that and do this in real-time.
A lot of times you’ll hear about a brand, and they’ll say the brand has been around for 100 years. But the last time it was really an independent family business was 60 years ago. They really haven’t done anything unique or novel since. We do work in the community if it’s big cakes or events. I think every day we’re dedicated to creating these great desserts, but also to making a difference. There is a lot at play every day. But that’s the great thing about what the business allows us to do. We have extremely talented people developing the products, making the products and really going to a far bigger scale than we ever thought was possible.
Spencer: That’s something that I think is special about this company: this is a very classic dessert. It’s a very classic product that you’re making, in a very mature industry. However, you know how to innovate and stay relevant and do new things and try new things and as you said, make a difference. You’re doing good in the community as well.
I’m just going to ask you one quick question to close this first episode out, and it’s a bonus question that I didn’t tell I was going to ask. Do you think Eli could have predicted that this is what it would have become?
Marc: Yeah, absolutely. I remember a few months before he died, I’d taken him to the land to show him where we were building. Now, it took us eight years after he had died to make it possible, but he saw it. I also remember we had a leader in the food business who was leading a much larger food company. And Eli said, this was a year before he died, “Hey, you’re going to be there. You can do it.” And I see the goodwill and the values that he created for us. If he came back, he would say, “You should have probably done a few more things.” My father was very easy and the best to work with. But I think he had pretty high standards. I think he would say, “Yeah, this is what I always knew it would be.”
Spencer: That is wonderful. I was really hoping that that was going to be the answer. Marc and Elana, I am so excited to continue this conversation for the next few weeks.
Next week we’ll talk about how Eli’s Cheesecake set the standard for the Chicago-style of cheesecake. And that’s going to take us down the road of product development and a little bit of marketing and how you have to live up to the standard that you set for yourself.
Then over the next few weeks, we’ll also talk a little bit about some of your really cool and unique workforce development programs, and how you interact with the community. We are also going to reflect on what it was like to be a Chicago producer of baked goods during the pandemic and how you’ve overcome that and staged an incredible comeback, and then that’s going to lead us into a view of the future for Eli’s, so this is going to be a great season. And I’m excited to dive into all these topics with you both.
Marc: Thank you.
Elana: We’re so excited. Thank you. This is really special to do this because I learned something new from my dad every time I hear him speak, and it’s really nice that I get to have this also in the podcast and be able to listen to it for years to come. Thanks, Joanie.
Spencer: Thank you so much. And I will talk to you guys next week when we dive into what it’s like to be the standard setter
