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 this episode, discover how setting a standard of distinction can impact a bakery’s identity and product development strategies.
Learn more about this season here, and listen to Troubleshooting Innovation on Apple, Spotify and Google.
Joanie Spencer: Hi, Marc and Elana. Thanks for joining me again this week.
Marc Schulman: Thank you, very happy to be back.
Spencer: Last week, we talked about the point when the cheesecake became its own entity beyond a dessert in the restaurant. What was it about the product? When did you know that Eli had something special with this cheesecake?
Marc: I think that first Taste of Chicago, in the lines of excitement, interest and goodwill, I’d say we hit an interesting time in the mid-80s, where supermarkets for the first time were really interested in premium quality foods. There was really a vacuum in the market for super-premium as it applied to cheesecake. I think between the goodwill that Eli had in restaurants, fellow restaurant operators in Chicago, national restaurant chains and then in retail, it really gave us some opportunities to grow the business. I think the great thing about cheesecake and desserts, and this has expanded over that long history, but there are a lot of places where desserts are sold where maybe weren’t sold when we started, consumer direct or other ways.
The number one thing you have to make great product. We are in an industry where every once and a while people become diet-conscious, and no one wants to waste calories today. Everyone has to say, “That cake, that dessert was phenomenal.” We started with the philosophy of always make it great and then really followed our customers, and people came to us. It has been exciting ever since and along the way, we got many more resources, such as product development, commercialization and training, but we never lost the focus on the quality of the product and the importance of each slice.
Spencer: There is a point in the history of how consumers use grocery stores and the onset of the trend of an in-store bakery. An item in a supermarket bakery isn’t less than. There’s no reason why you can’t have a good high-quality product that’s accessible. I feel like Eli’s, coming out of the restaurant and being widely available to consumers, probably played a big role in that.
Marc: Absolutely. We see the term “authenticity” used a lot today, and you see a lot of brands that are made up or maybe it is someone’s grandmother’s recipe, and there’s nothing wrong with that; I think we were very fortunate to have the continuity. We were on a call today talking about Taste of Chicago, which usually is around July 4, but this year is in September. We’ve been at every Taste of Chicago since 1980. You look at the big cakes we’ve made dating back to 1987. It’s just such an amazing history, both in the product side and the range of the products, but also about who and what Eli’s is. I think the fact that Chicago is our home, and we have such a great history of involvement here, has just given us even more scale and support to grow the business.
Elana Schulman: I also think about when my grandfather developed this recipe, he was a real rule-breaker. And it’s a recipe that’s unique to him and to our business, and it is Chicago-style. I feel like that’s important. That wasn’t necessarily a style cheesecake that people were making at home.
Spencer: That is a good segue Elana, because that was my next question. This has a distinction. It has become the Chicago-style of cheesecake, as opposed to say, a New York-style of cheesecake. There are certain products … In fact, in the last issue of Commercial Baking, we featured a bun bakery that is known for the Chicago-style hot dog bun. A person can look at a Chicago-style pizza or a Chicago dog and recognize it as distinctly Chicago. What are the traits of a Chicago-style cheesecake, and specifically Eli’s Cheesecake, that set it apart?
Elana: Chicago-style cheesecake has a few key unique features. First, I would say that traditionally cheesecake is baked in a water bath, and my grandfather did a dry hot bake. So, the batter and crust are going right in the oven. There’s no water, and it is heated at a really high temperature, so you get this beautiful caramelization on the exterior, and then it souffles and you get a rich and creamy texture on the interior.
The other thing that he did was with the crust. Traditionally, you might see more of a graham cracker crust being used, whereas Eli did an all-butter shortbread cookie crust. So, at night at Eli’s, we have an amazing team of cookie bakers that are sheeting shortbread, baking it off and cooling it. Then the batter is deposited in the morning, and the cakes are baked. That product on its own is like its own dessert. It’s just a classic shortbread cookie.
The ingredients are simple in a cheesecake, so it really comes down to the quality of those ingredients. We use slow-cultured cream cheese, slow-cultured sour cream. We use Nielsen-Massey Madagascar Vanilla. That’s another family-owned business from Illinois, and a high-quality vanilla. We call it “liquid gold.” All those elements really create a unique flavor profile. I think our desserts, in general, are very balanced in terms of sweetness. So, the first thing that you get on your palate is not sugar, you’re really tasting all those different elements, the vanilla, the slow-cultured dairy, and obviously sweetness as well, but I would say it’s more of a balanced eating experience.
Spencer: I was thinking when you were talking about the slow-cultured dairy, I imagine that really creates a depth of flavor.
Elana: Yes. I would say texturally Chicago-style cheesecake is very different than other styles of cheesecake. It’s rich and creamy, almost like eating ice cream. Whereas other styles are a little heavier, a little denser, a little grittier, and ours is very different in that way.
Spencer: Okay. Marc, when you were talking about hearing from people who remember the first time they tried Eli’s Cheesecake … I think this is a good point to interject and say that I, too, remember the first time I experienced Eli’s Cheesecake, and it truly ruined cheesecake for me. I can’t accept anything else. It’s a very memorable experience to have an Eli’s Cheesecake for the first time.
Marc: We thank you. That is why we have a lot to live up to every day. As we say to our people, the most important cake is the dessert you bake today. It’s a premium product. Our goal is not to make the cheapest. Our goal is to make the best. I think that as the cheesecake has evolved into many flavors, but also so many other desserts, we want to be held to the same standard of quality.
Spencer: Yeah. This is another good segue. Let’s talk about setting standards and being authentic and still innovating. So, Eli’s is known as the standard setter. You defined the Chicago style. But also, as Elana mentioned, Eli was a rule breaker. You have this reputation of doing amazing things and different things with a classic dessert. How have you been able to be so innovative for so many years?
Marc: I think one great thing that we all got from my father is, as foodservice operators, just learn and become as much of a subject matter expert, travel, see opportunities and just give great service. I think the great thing about being a family business is there’s really no limits. People ask, “What’s the goal?” If you’re a publicly traded company or privately equity-owned, sometimes it’s easier.
Our goal is really to be the best at what we do and to use all our resources and all the skills that our long-term associates have. After all that time, you just see the good that we create working together. Our industry was an industry in which at one point, I’d say there was ease of entry. If you had an oven and a pan, you could make cheesecake and desserts. It doesn’t work that way anymore, with all the regulations at the federal level or SQF. We are held to a high standard, but we’ve always wanted to create a culture of quality and food safety.
I think when you have that going for you, it has caused us to innovate the flavors of cheesecake, but also over those years, it has caused us to go into many other categories of desserts, serving the needs of a specific channel, like the airline business. You used your development and your core skill sets, but it was a different shape or a different product that would work for that customer.
Spencer: What is the sweet spot … innovating and coming up with cool new products, a variety of different flavors and getting inventive, while also holding on to your authenticity. What’s the secret?
Marc: I think they really go hand in hand. There have been opportunities where the volume was high, but we didn’t feel it really fit within what we were able to do. Years ago, when we started to sell it at Borders, a book chain, in their cafes. So, suddenly, there were accessory products to the cheesecake they needed. That was a big step along the way.
Cream cheese is clearly a major ingredient, but we work with so many other ingredients and ways to do things. Moreover, sometimes some desserts can be consumed at breakfast. I know we’d like to eat cheesecake around the clock. But I think that the skill sets there are when other brands come to us. Culvers came along and said, “We’d like you to make bite-sized cheesecake pieces.” We had never done it before, but you go, “Hey, that could be good.”
So, you got to listen. I think sometimes a businesses and maybe in the world today, you could say, “We only want to make two things, and we want to have this plant, and we want 10 people working in it. It’s all going to be automated, and every dessert will look the same.” Maybe you change the flavor, but that’s it. That’s not what we’re about. If you come to our bakery, everything other than the tunnel oven is pretty much on wheels. And it’s all about flexibility for the future and for our customers. I think that’s been another defining characteristic.
Elana: I’ve watched this with both of my parents, but they always say yes to everything. They’re very optimistic. They’re big thinkers, very positive. I think that has a huge impact on the culture and the culture of innovation here. So, when an opportunity comes up to maybe think differently about a product line or introduce something new, people get excited by it. We have such a good team of people that we feel like this could be pushing us and our capabilities, but because we have this great team of people, we feel like we can tackle it together. That makes a big difference.
Spencer: Do you think that the fact that you are Eli’s lineage, it enables you to say “yes”, a little bit easier and try different things because you inherently know what authenticity is supposed to be? So, you have that ability to get outside of the box without straying too far from your core?
Marc: I think the fact that we can do what we want to do, when we want to do it, and still believe in who we are, is very important. I’ve been in meetings, or you can talk to people in the investment community, and it’s like, “What’s that big thing that’s going to make your brand huge?”
A lot of times, for capital, people think you need to raise a lot of money, but you need to give these huge estimates of the potential. So, we’re more conservative that way, but it also depends on who the customer is. We’ve found over the years that our business has gone from being very transactional to having a much more relationship. And so, if you’re working with longtime customer partners, you’re much more willing to say, “Okay, we’ll take that step out, because they know us for our quality and it’s going to be worthwhile to make the investment.” Then if we do make the investment in that new product, then we have an opportunity to sell it in another different form to other customers. So, they kind of go together.
You also must be careful on a timely basis. Sometimes you are working on 10 major projects, and you might have to say, the 11th and the 12th might have to wait a little while because you could overload the people in your system. So, you must be reasonable as well.
Elana: I think the other interesting thing is, I’ve heard this term come up recently a lot, “neo-nostalgia.” I feel like that is that sweet spot for us, where we have this product that we’ve made for a long time and it’s part of the heritage of our brand, but also, we really think about innovation a lot, but innovation in an accessible way. I think that it’s a lot of fun to play around with a format that maybe someone knows, but a new and exciting flavor or a flavor that they’re familiar with but presented in a new way. That’s where I get excited, and I feel like we have a lot of people in the building that are interested in pushing and trying different formats, but maybe using some of the elements of products we’ve been doing for 43 years. It’s a great combination.
Spencer: So that’s like the cuties.
Elana: Yes. We also launched a product called Pie in the Sky, which launched on United. That was a mini chocolate chip cookie pie filled with chocolate ganache warmed on board. We had made mini pies, but more traditional pie fillings, and then that came around and kind of went away. Then it was like, “Hey, why don’t we try a new take on a chocolate chip cookie.” That’s everyone’s favorite classic dessert, but it’s presented in this new format that someone maybe hasn’t had.
That’s where I feel like, you can be so creative when you have multiple restrictions or you have this piece of equipment, what can you do with it? Someone might think that there’s not a lot you can do, but when you get people around the table to really think about, is there another application that we’re not thinking of? Is there a new dessert format? So many ideas come from that process.
Spencer: I completely hear what you’re saying, because I do have this belief that if you understand what the rules are, and you understand the parameters, that gives you so much freedom to bend the rules or get creative inside of those parameters. Because you know where you’re supposed to be going.
Elana: Exactly.
Spencer: I want to talk about quality for a minute. It’s something that you both have mentioned several times, and it’s Eli’s heritage. I’ve heard stories of Eli back in the day walking through the plant and doing a literal white glove test. Is that true?
Elana: Diana Moles, our senior VP of innovation, started at Eli’s when she was 18. She always tells me this story that she was at the bakery, and they were doing Turtle that day, and Eli showed up. He was coming from the restaurant, and he said, “What’s the weight of pecans you’re putting on that cake?” She said a number, and then the person next to her said, “That’s not right.” Eli knew exactly what the bottom line should be. He had his eye on every part of the operation. You can tell a good restauranteur by that. They see everything that’s going on at every time.
Marc: One of Elana’s favorite movies is Casino … Eli was like Sam Rothstein. Growing up in the restaurant business and watching Eli who did it all … the meat, the quality of the liver, his produce. Actually, cheesecake came around, because he couldn’t find a dessert that he was proud to serve at his restaurant.
I think our menu at Eli’s the Place for Steak said, “Always good food.” I think that really has been drilled in our heads for a long time. If you stand for quality and don’t cut corners … We’ve seen things where other brands in the industry are saying, “Now using real cream cheese or real vanilla!” Well, what were they using before?”Then the other thing is, we’re not going to be the cheapest. I think one of the challenges of cheesecake and desserts is that they’re expensive. Chocolate, sour cream, cream cheese and butter are items that certainly are costly. The amazing thing is you see inflation across the board.
At the first Taste of Chicago, we probably sold a slice of cheesecake for $2 or $2.50. Today, you see desserts for $10 or $12 a slice. You see single-serve prices have gone up, but what are the costs? What’s the cost of labor? What’s the cost of cream cheese, or the other things that go with it? I think the good news is customers want quality. Today, individuals will either pay more to get a better product, or they won’t consume the product. We’re going to lose out to someone saying, “I just want it to be the cheapest, most automated way to make the dessert.” That’s just not what we do.
Spencer: If you think about it from our side, there are the labor costs and the impact of inflation on ingredient costs; there is supply chain disruption that’s impacting the cost of the equipment. There’s so much more that goes into it, but the consumer doesn’t see that. A lot of them don’t care. They don’t need to hear the whole backstory. They want to know, “If I’m paying this much for it, I want it to be worth it.”
Marc: Absolutely. Quality always wins. I think the benefit that we have is doing it for the number of years, having the expertise, having the drive for the future. We see it as being an exciting time. Clearly today, the channels that we sell to all are growing. Some didn’t grow during COVID; others have come back, but we see a lot of demand. Then that inspires us to continue to invest in our people and in our facility.
Spencer: And Eli’s Cheesecake at retail is not cheap, but it’s worth it.
Marc: Thank you. You take it one customer at a time. That’s really the exciting part of having an online presence. When we started, there really was no such thing as overnight shipping or second day. Clearly, over the years people’s comfort in ordering foods direct is just growing. The great news is you can hear us on the air today and get an Eli’s Cheesecake the next day anywhere in the country. If you look at Goldbelly, which is a customer of ours, it takes great regional foods and makes it available across multiple categories. I think consumers are much more demanding and also restaurant operators, they say, “I don’t want a private-label cheesecake, I want Eli’s.”
Spencer: Wow. That’s a good point that sparks a thought for me, and that is your marketing efforts, especially hearing that Goldbelly is a customer. This product really speaks for itself. I mean we opened with the fact that you set the standard for a Chicago style, but how have your marketing efforts helped put Eli’s on the map so that someone can get on Goldbelly’s website and order an Eli’s Cheesecake to be sent to them? I specifically want to call out Maureen’s incredible efforts, because she has done a fantastic job with your publicity. How do those two concepts go hand in hand: the notoriety of the product and your marketing efforts?
Marc: I would say I’m very fortunate to be Eli’s son and to be married to Maureen, our publicist, writer and storyteller, and to have Elana as a daughter. Because this summer, we’ve had an archivist at Eli’s going through our old photos, all these big cakes and celebrities. Eli was just such a character and a host, and that goes back to the ’40s. You think about the photo of Eli with Frank Sinatra and Sammy Davis, Jr. at Eli’s. The Cartier watch that Frank and Barbara Sinatra gave my father that I wear now. Bill Clinton visiting our bakery in 1992, and those inaugural cakes. There are just so many things that have gone on, but the exciting thing is, what Elana said earlier, we probably have never said no. I know we talked earlier about something we did over the summer when NASCAR came to Chicago for the first time, and it was welcomed with this 500-lb. Eli’s Cheesecake.
I think they all add up. Part of it is doing the right thing; part of it is being out there. Then out of it, you get your own style of cheesecake. We’re in an industry where there are some great companies. We have a lot of respect for Junior’s, it’s a great New York-style cheesecake, and the Rosen family has done a great job, and they have their history. And we go ahead and have built on our history. I think the important thing is through all our activities, both in the bakery, community and big cakes, we’re creating history every day. It’s building a far better future.
I don’t think we want to be in a situation where we see big brands say, “We want to do something next month. What can we do?” Then they only do it for a limited amount of time. We talked about Eli’s history, and what we’ve done with events, big cakes and partnerships. It’s just what we do. I don’t think we would ever run our company any differently than we do. So, Eli’s comes off as a great place and that makes our work more fun because we are telling a story, we’re making a difference in the community and we’re working to do the right thing for our people. I think out of it all, you have a path to success for the future.
Spencer: I love that. I do think that you balance that so well. Because it’s one thing to be doing great things, but at the same time, people need to know that you’re doing great things. And I think that you carry that balance quite successfully. So, these are all my questions for this episode.
Next week, though, I want to look a little bit into the day-to-day of how Eli’s Cheesecakes are made in terms of who’s making them. Eli’s is known for some unique and foundational workforce development practices. I’m very excited to dive into these because I think that you and your team have put together something special with how you treat your workforce and how you develop your workers and I think it’s something that our industry could greatly benefit from learning about. So, I can’t wait for next week but for today, thank you so much for joining me.
Elana: Thank you.
Marc: Thank you.
