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 last episode of the season, we’re looking at the future — how Eli’s is innovating as a trailblazer in a mature industry and with a classic product.
Learn more about this season here, and listen to Troubleshooting Innovation on Apple, Spotify and Google.
Joanie Spencer: Hi, Marc and Elana. I’m so happy to talk to you both.
Elana Schulman: We’re sad this is the last one.
Spencer: It really has been a lot of fun. I’ve really enjoyed this journey through the past, present, and, now, future of Eli’s. We closed the last episode by talking about the expansions and some of the lessons that you’re going to apply in the future, so I want to cap that off. We spent a lot of time reflecting on the pandemic and having a major project like this impact perspectives. We talked about what would have happened if the bakery had expanded five years ago, before the pandemic. What do your priorities look like now, versus what they would have five years ago?
Marc Schulman: The fundamentals are really the same. We’ve really moved our business, as much as possible, away from being transactional with customers and turned that into long-term relationships. So, you’re thinking ahead, you’re planning, you’re giving the quality, but you’re just more conscious about where we are and where we want to go.
It makes work a lot more exciting because you are planning for the future. But when you’re in any business, certainly a bakery business, you have so many different functions, skill sets, product development, marketing, operations and sales. How are you able to take advantage of that? That’s really the skill set because if you’re not focused as an organization, you’re really leaving a lot of opportunity on the table. I’d say we’re trying to really focus on ourselves in that way.
It’s like building this building. We used bricks; it was more efficient. You can’t build a big business with lots of little bricks. You can have a lot of customers, but you have to say, “Hey, where are we going to be a subject matter expert? Where do we have an opportunity to take that category and develop the product?”
I think we’re a little more thoughtful. Certainly, having Elana here has been extremely beneficial because she brings skill sets that I don’t have. Also, when you have the passion of being Eli’s granddaughter, and you’re really thinking about the future and what we do, we have a lot of people to take on the ride with us. We’ve been successful because of the people to date. We want to grow more team members for the future. I think we’re very optimistic, but those fundamental Eli’s values, such as “Treat the other as you’re the other” and “Charity will never bust you.” Those still drive our business, those haven’t changed. I think that’s important for all of us.
Spencer: How do you apply those fundamentals? Treat the other as if you were the other, and charity will never break you. How do you see those threading through decisions that you make operationally as you plan this expansion?
Marc: I think the expansion is to complement what we do. I’ve been in bakeries after they’ve closed when they failed, sold or got out of business. I have walked around and seen the calendar from six months ago, the coffee cups, but there are no people. So, the lifeblood of the business is the people who make it possible.
We want a better, nicer environment. We want to spread out in our plans as an innovation education center. We really can have our home — expanded locker rooms would be nice for our people. There’s capital spending to do it and it is significant, but we don’t want to work for our facility. That’s one of my father’s other basic values: ”Own our own real estate.” As a restauranteur, he didn’t have that opportunity. The fact that we own the building, we can improve it … We’re going to be a better company and the expanded facility is going to help us do it, but the facility isn’t going to do the heavy lifting.
Spencer: Right. I think that you do have something special in that it’s not that you are investing in this facility, expanding the capabilities and the fundamental values. They’re interwoven together.
Marc: Oh, absolutely. One of the exciting things about Elana joining the business was our associates can see a multigenerational family commitment to the business.
If the goal was suddenly to build this expansion, and it is going to change everything and make things totally different … but we don’t do things that way. We’re proud to make everything in Chicago. This is a great location, we’re 20 minutes east of O’Hare. One nice thing about Chicago being in the middle of the country is we can ship things efficiently to the East and West Coasts or ship things to ports to go overseas.
Years ago, our real estate adviser said, “Don’t fall in love with your real estate,” but we did with this location. It gives us the opportunity to tell our story better. That’s all good, but if we don’t live up to Eli’s values, and to start thinking differently about people, that would be a sad day, so I don’t see that happening.
Spencer: I think that’s a good reminder to people in the industry that investments and values could run parallel, but they should intertwine.
Marc: Businesses take many forms. There’s startups, strategics, global companies and more. The good news for us, and what we think of as our lane of business is, that have exceptional product development skills, great skills in food safety, and quality and commercialization. But it is all very personal. So, if a customer has an issue or opportunity, good or bad, we’re there to deal with it that day. I think that response is something that all our customers, from a small chain to an individual restaurateur to the largest retailers and foodservice chains in the country, they really like that. We feel we’re in a really good space, and I think we just got to really work hard to live up to a reputation.
Spencer: So, let’s talk about that reputation in terms of product development. The Schulman’s are a family of innovators. I think that is probably one of the biggest takeaways from this month. How do you keep coming up with such cool products? Where do these ideas come from? How is that driving the future? What kind of pressure comes with being super innovative? Especially knowing that you’re Eli Schulman’s granddaughter.
Elana: I am just so proud to be Eli’s granddaughter. I never actually got to meet him. He died two years before I was born, but I feel his energy all the time. I really have a passion for hospitality, restaurants and taking care of people. It’s really wonderful that we can apply all of those things to Eli’s and can create this world that is a really wonderful place to innovate in and to work in.
Then in terms of coming up with ideas, we’ve just always been eaters. My grandfather was a total self-taught cook. He would go and eat something and say, “I think I can make this better,” and then he would go back in the kitchen and make it. We just love eating. It has always been such a joyful part of our childhood and growing up in the restaurant. I was always just excited when I was in the kitchen. I was an eight-year-old watching the Food Network and was just obsessed with that world. I think that because we as a family and as a business just have so much fun, literally talking about food, and what we’re excited to eat and flavors we’re excited about, it’s a very natural process.
I am so fortunate that I get to collaborate with our R&D team. Diana Moles, our senior VP of innovation, leads that team and has been Eli’s for 37 years. But we just have a very similar palette. I think when we come together, it’s like creative problem solving, such as let’s try this format or let’s make this tweak. It is just a nice back-and-forth. I’m so grateful for relationships like that because I think that’s when innovation is at its best.
Spencer: When we did the live podcast at ASB BakingTECH, I kept hinting at wanting a dinner invitation to your house. It just seems like fun and product development go hand in hand, like it’s just part of your essence. What does it look like when you are having those official meetings? Do you have scheduled product development meetings? Do you get together once a week or once a month? Or is it just more that you tell each other when you see a really cool thing?
Marc: It’s really all the above. I think a story we take a lot of pride in is that last year, Mayor Lightfoot gave an award, a Medal of Honor, for the city of Chicago. That award was given to a number of individuals and given to Eli’s Cheesecake. It was given because of our work with refugees and donating cakes during COVID. At that ceremony at the Chicago Cultural Center, we were sitting next to Nick Cave and Bob Faust. Nick Cave is a famous artist who was opening this huge show at the Museum of Contemporary Art, and Maureen, my wife and our publicist, said “Hey, Nick and Bob, maybe we can do something together?” And they said, “Yes, sounds good.” Their energy matched our energy. Maureen and Diana developed these amazing custom Cutie [cheesecake bites] with spectacular packaging and symbols from the show representing love and peace. It really was a beautiful product. We did it for mail order with a donation to their foundation. It was so out of the box. We didn’t do it because we were going to sell so many. We did it because it was fun to work with Bob Faust.
Elana: We believed in Nick Cave’s message. That’s when we say that we say cheesecake is the ultimate canvas. You can do anything with it and desserts in general. And so yeah, that’s been a lot of fun.
And then the other thing is, I love it when you can create new things from places that were unexpected or past experiences. This year, I collaborated with a good friend of mine, Natasha Pickowicz, who’s a James Beard nominated pastry chef, and she just came out with her debut cookbook, More Than Cake. We did this amazing cheesecake, olive oil cake hybrid collaboration for mail order.
It is so great because it’s someone that I worked with when I was a video producer in New York. It’s always nice to see where different parts of your life and career can intersect at Eli’s and for anyone. I really do believe that the more diverse your path is and the more variety of experiences you have plays a huge role in innovation.
Spencer: Before I came into this industry 15 years ago, I don’t think that I would have imagined cheesecake as a canvas for creativity. I mean Eli’s is known not only for the quality of your products but also for the role you play in the Chicago community, doing cool fundraisers and having this innovative product development that is specific to an event or a cause.
In fact, I remember when we launched our website, commercialbaking.com, one of Eli’s initiatives was one of the very first stories on our website. I think it was a Valentine’s Day promotion that Eli’s was sharing the love and donating proceeds with online purchases. You have tapped into so many of these opportunities with a lot of cause and reason behind it. Why do you think it’s important for a baking company to innovate in this way?
Marc: Every company must find its own personality and insert a reason to be. We obviously have heritage that goes back to 1940 from my father growing up in Chicago, and the beliefs that Maureen and I have, that Elana and her sisters have, and all the people we work with at Eli’s. Yes, we make delicious desserts, but look at the impact that we can have and the opportunity to do the right thing.
It could be as simple as giving desserts to a charity, groups, advocacy for Chicago High School for Agriculture Sciences or people with disabilities. What an opportunity that we get. The question would always be, “Why not?” If you just come together and the goal is to make a lot of cheesecake and make a lot of money … Of course, we need money or else we won’t be around, but it can’t be the factor. Sometimes you meet people whose goal is to get in, build it up and sell it, and sometimes they’re serial entrepreneurs. There are people in our industry who’ve been very successful in doing that.
But our view is that we have this amazing heritage, and we use all these resources. When anyone goes into business will understand that when you meet individuals who start a food company, you go through the questions, “Do you know your cost structure? Where are you going to make the product? How are you going to distribute it? What’s the distributor margin going to be? Oh, you’re going to sell it to a retailer? What are they going to charge? Oh, you’re selling the retail? Are you going to be SQF certified?” All those things.
When we’re in meetings, and people mention how we have done so great and all the achievements, I always say “Yeah, but this is my parent’s achievement.” It’s what they spent all those years in the restaurant working to achieve. Yes, we took advantage of it, and Elana will certainly take it further, but we had a whole lot going for us. As I say, the exciting thing is Eli was just such a great figure and a great host. When you’re telling the story, you’re always going to somebody, “Hey, you know, do something that’s fun. Do something that’s authentic. Do something where you could work with nice people. Do something where you can make a difference.”
As you and Elana said a few minutes ago, the canvas is cheesecake. It’s just great to work with,but it took a whole lot to get it there and it took a whole lot by a whole lot of people.
We’ve been blessed at Eli’s to work with individuals for 20, 30, 37 years, and in many cases now working with their children. We have many third-generation individuals in the business. The food and baking world is a great place to do it, and it’s a great place to do it in Chicago.
Spencer: Absolutely. I am backtracking a little bit when you said you got that advice from your realtor who said, “Don’t fall in love with your location.” That realtor didn’t know that there was going to be supply chain disruption, and you are going to have access to ports.
Marc: Well, interestingly, he did agree. I think you’re correct because of what he said up until maybe two or three years ago, he said “I can get you a building in the suburbs. I can get you this rent.” I can do it. What I think happened is nationally — in large part because the logistics — industrial buildings have been the best part of the market. Suddenly the building is so valuable, he goes “You have to add on here.” So, he came around. And we love Chicago and the location.
When we opened this facility, we had Mayor Daley, Governor Edgar, President Stroger. We’re looking forward to recreating it with Mayor Johnson, Governor Pritzker, Lieutenant Governor Stratton and President Preckwinkle. So, hopefully, as they say and see Eli’s Cheesecake is Chicago’s most famous dessert and a symbol of the city. And it is with all their support that we have been able to grow to this point, and that we’re going to make this addition and the other work, we’re going to do that much better for Chicago.
Spencer: I want to ask you one thing as far as growth and creating growth opportunities. What about partnerships or relationships with your suppliers? This is a people-driven company. What are your expectations in how you choose suppliers, in terms of the relationship? How much weight do you put on the relationship? How much do you lean on your suppliers for product development? Or Elana when you’re coming up with a new variety, and figuring out if it is viable, how do you look at your supplier partners, not just your ingredients supplier partners, but the equipment and the machinability of a new idea?
Elana: If I’ve learned one thing in my time at Eli’s, it’s that relationships are everything. I think there were times when we would not have made it through without those relationships. I think especially with equipment suppliers, there were also times when we had a line of equipment that was busy for a while and was a platform that was doing well. Then maybe it died down for a little bit, but then it came back. But when it came back, we needed to refurbish the equipment, or we needed to add on parts to get what we needed. And without having those relationships, we wouldn’t be able to do it.
When you think about relationships that date back 30 years, one thing that I am very passionate about is our archive. My family has always been photographers and scrapbook makers, capturing things that date back to the early 1900s. But I’ve been looking at a lot of photos from the original Daikon Street facility, and when we first moved in here. The pictures are from 40 years ago, and you can see the same equipment suppliers. There are people at those businesses that we’ve been working with since that time. Having that historical knowledge and working relationship between both parties is just invaluable.
Spencer: I agree. I think it’s a hallmark of this industry. I’ve been doing baking industry media for about 15 years, and I started on the retail side. I remember when I came over to the commercial side of the baking industry, I had the same stereotype in my mind that the typical consumer has of big food, that it’s going to be a bunch of big companies and no one really knows each other. And it’s cold and impersonal … and it’s the opposite. Relationships really are everything in this industry.
Elana: Absolutely. I think even with customer relationships people move on to different places. I think that’s been valuable to us, too. An opportunity might come up with one customer and then that person then leaves to go to another business and then a new opportunity pops up. It’s interesting to track the development of products and product lines and then track certain people in relationships and how those evolve over time.
Spencer: That is an interesting way to describe it.
Marc: What has happened with the supply chain disruptions is that we had a lot of commodities where you could always get it, and there was no issue. But we had more instances where suppliers said, “I’m getting out of the business. I can’t supply you.”
I had a call with the CEO of a big chocolate brand discussing that we placed an order, they accepted it, and then they rejected it. He said, “Well you know we’re having problems maintaining our equipment and people don’t want to work for us.”
If I said that to our customers, they wouldn’t buy from us again. So, we found another supplier. I think what goes around comes around. We’ve had a lot of other suppliers stand up within shelf-life and starches. All these very important components go into a dessert. You really learn who’s there to help. In the food industry, there are some exceptional partners and then there are companies that if they have the capacity, they’ll sell it to you, but they’re not going to do anything to help you.
Spencer: Yeah. It’s important to be able to make those distinctions and relationships are the best tools for that.
Okay, we’re nearing the end of our time. I have a couple of questions left. So, we’re looking at a family of innovators. One of the closing thoughts would be, what does the future look like? Marc, you’ve beautifully carried on your father’s legacy. As you look at the path ahead, what would you say are your hopes and dreams for the future now that Elana is here, and she’s carrying the torch?
Marc: I think that she has a good experience. You should do it because you want to do it, not because it’s your name or someone else. The questions should be “Are you having a great experience? Do like the people you work with?” Clearly, we’re at a point in our career where we’ve had individuals retire. That’s something that’s hard to deal with. But are we developing new leaders? How are we taking advantage of always re-energizing our business? I got the benefits from my parents, and I hope Elana gets the benefit of all the work that’s gone into it … stability and opportunity
But the fact is that many years from now, we will still be telling the story of Eli, and what was done in the first cake. Soon it’ll be Chicago’s 200th birthday, or whatever the events are that we’re continuing to do. But as Eli said, “On the menu, we’ll serve good food always.” I think we have got to keep our values very focused and basic.
Spencer: Elana, what’s your vision for the future? After these five weeks together, when I look at your role in this and I think of the company, I have this vision of a family homestead, an historic home that has had families living in it for generations. You give that house updates, you paint it, you buy new furniture, but you always want to keep the foundational, historical features. If you look at it through that lens, how do you see taking this family bakery into the future?
Elana: That’s a beautiful way of putting it. I really like that. For me, it is about making sure that the people are always number one and that we’re always investing in people and giving back to the community, while at the same time making these amazing desserts. It is what we’re doing now. I think there are obviously all different ways to approach that, but what drives me in business is that I have the ability to craft this world that I think is an ideal place to work in. It is not always perfect, and we can always do better. But I think that you don’t always have control of what’s going on around you in the world, but we have control of what’s going on at Eli’s.
I think a lot about sustainability, but not just from an environmental side of things. Sustainability in the sense of how can you create a work culture that is an environment that’s good for people and their mental health, that people feel like they can bring their best selves to work, that they can be creative, and that they are in a safe space to take risks? Those are just things that I think about all the time.
Do I have the answers now of necessarily how you do all of that? No, but I think that I’m really focused now on just taking in as much as I can, learning as much as I can about the business and really thinking about developing that next generation of leaders. That is why we’ve been so successful, because my dad has just done such a great job of developing people, really getting them on Team Eli’s, making them see the vision and getting people excited. He energizes people, and that’s something that I am really in awe of every day and something that I want to make sure that I bring into my chapter of the business.
Spencer: I absolutely love that. One parting thought that I want to share … we talked about it at IBIE last year and then during BakingTECH’s live podcast, I said Elana I just have to say “I love your dad.” And you said, “I love him, too.” I think that is the essence of Marc Schulman and the legacy that is Eli’s. There is just a lot of love and cheesecake with this family bakery.
Marc: We agree.
Spencer: Well, I cannot wait to see what the future holds for Eli’s. I also can’t wait to see what the next gigantic cheesecake is going to be and how you celebrate, and just how the industry is impacted by the good work that you do through your cheesecake business.
Elana: Thank you so much, Joanie. This has been an incredible five weeks, and we’re so honored that you would take this time to get to know our story. We learned so much from you.
Spencer: Well, thank you.
Marc: We look forward to you visiting us and right after we cut the ribbon or maybe for the ribbon cutting. Thank you so much.
Spencer: Yes. And thank you for allowing me the privilege of sharing your story with our industry. It’s a wonderful story, and you are a wonderful family. I appreciate your time, your thoughtfulness and everything that you do for your company and the industry. So, thank you, guys.
