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Speaker 1: Hello, and welcome to another episode of the All Thoughts podcast.

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Speaker 1: I'm Tracy Alloway and I'm Joe. WI wasn't all Joe.

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Speaker 1: You know we are smack d ab in the middle

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Speaker 1: of the holiday season. That is true. I have a

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Speaker 1: big feeling about this time of year because it's nice

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Speaker 1: to take time off, it's nice to get some breaks.

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Speaker 1: But on the other hand, that means people aren't listening

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Speaker 1: to podcasts as much because of its family so like

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Speaker 1: they're like celebrating the holidays, they're outside, they're like giving gifts,

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Speaker 1: but that's time. That means, uh means fewer listeners. Well,

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Speaker 1: I mean hopefully some people are still listening to podcasts,

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Speaker 1: especially this one. I actually tend to listen to podcasts

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Speaker 1: more around the holidays just because I listened to them

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Speaker 1: while I'm cooking and baking, and Christmas of course is

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Speaker 1: prime baking and cooking season. You know, my wife is

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Speaker 1: baking like two cookies today for like various parties and

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Speaker 1: kids school thing to Saider. I literally just got a

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Speaker 1: text about how time consuming it is. I hope she's

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Speaker 1: listening to odd lots while she's doing that to make

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Speaker 1: the time pass. Okay, Well, this kind of got me thinking,

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Speaker 1: you know, it's the holiday season. Everyone is off baking

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Speaker 1: things or probably buying things for presents, and I really

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Speaker 1: wanted to talk to someone who is in a sort

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Speaker 1: of seasonal retail industry and ask them how they are

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Speaker 1: experiencing the economy right now, because, as we've been discussing

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Speaker 1: for some time, it does feel like we're kind of

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Speaker 1: in this weird environment where there are a lot of

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Speaker 1: concerns about inflation, we still have lingering supply chain constraints,

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Speaker 1: there's a lot of talk about recession. But at the

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Speaker 1: same time, a lot of the hard data that we

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Speaker 1: get is saying that consumer demand is still relatively strong,

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Speaker 1: unemployment is still relatively low. Things are sort of ticking along,

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Speaker 1: and yet a lot of the sentiment surveys seem to

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Speaker 1: indicate something otherwise. So I thought it would be great

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Speaker 1: to speak to a small business owner about what exactly

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Speaker 1: is going on. Let's do it, because baking is, you know,

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Speaker 1: bakery is also one of those things. It's like so

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Speaker 1: you know, it's laborious, it's commodity sensitive, it's rent sensitive,

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Speaker 1: it's there's so many things that sort of come together

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Speaker 1: in a baked goods. Bread, cakes, cookies, So a great

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Speaker 1: way to get a snapshot of what's happening in the

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Speaker 1: economy right now. Yes, it's like we are taking all

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Speaker 1: the ingredients that go into a baking business and dissecting

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Speaker 1: them one by one. Okay, Well, without further ado, we

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Speaker 1: are going to be speaking with Ken Jerish. He is

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Speaker 1: the owner of Jerish Bakery, which is a bakery in

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Speaker 1: the suburbs of Cook County, Chicago, actually where I used

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Speaker 1: to live. Ken, thank you so much for coming on

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Speaker 1: the show. You're welcome, Thanks for having me. So how

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Speaker 1: busy are you around this time of year? Um? Extremely? Um.

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Speaker 1: You know, it starts at Halloween and goes through Thanksgiving

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Speaker 1: and then uh, Christmas or the whole month of December.

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Speaker 1: For us in general, every day is busier than the

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Speaker 1: day before. So we kind of call it a hello,

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Speaker 1: thank miss season, you know, because it's it's busy. And

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Speaker 1: this year, as you kind of indicated in your introduction,

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Speaker 1: there is still a high demand for our product. That's

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Speaker 1: a wonderful thing, you know, so we're pretty much firing

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Speaker 1: on all cylinders as far as the demand goes. Keeping

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Speaker 1: up with it is another challenge. So can you just describe,

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Speaker 1: like how big is your bakery roughly? I know it's

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Speaker 1: been around since On your website, Uh, it looks like

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Speaker 1: there's a bunch of amazing stuff from specialty cakes and

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Speaker 1: wedding cakes and cookies, and it all looks amazing, But like,

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Speaker 1: how big? Just to give us a feel and like,

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Speaker 1: what are your customers and clients like in your geographic reach? Sure?

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Speaker 1: So we are a single location retail bakery. We're located

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Speaker 1: in Oak Grove Village, Illinois. We are immediately adjacent to

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Speaker 1: O'Hare Airport. But what separates our community and our business

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Speaker 1: from the airport is a very large industrial park. I'm

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Speaker 1: told that it's the largest contiguous industrial park in the country.

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Speaker 1: So it does a couple of things that it kind

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Speaker 1: of buffers the noise of the airport from our community,

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Speaker 1: which is a good thing. But we also have a

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Speaker 1: lot of companies who are then also customers, So we

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Speaker 1: do a great deal of retail business, you know, homeowners

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Speaker 1: who just come in and buy stuff for their family,

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Speaker 1: and a lot of company corporate work for meetings and

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Speaker 1: anniversaries and retirements and all that. We have about fifty

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Speaker 1: five full time employee, not full time, but fifty five

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Speaker 1: total employees. About half of those are are full time.

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Speaker 1: This time of year with Christmas, we kind of blossom

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Speaker 1: up to about ninety nine employees seasonal workers who help

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Speaker 1: us pack the thousands of pounds of cookies that we

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Speaker 1: we make this time of year. We've been here for

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Speaker 1: three years. We enjoy a very good reputation. The number

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Speaker 1: of employees we have, and then the size of our

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Speaker 1: physical store is bigger than I would say of the

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Speaker 1: bakeries in the country, but there are certainly much larger

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Speaker 1: baking companies corporations that provide for grocery stores and all

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Speaker 1: that kind of stuff. So we're kind of a small

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Speaker 1: business in the scope of businesses at large, but as

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Speaker 1: far as bakeries were one of the larger ones. So

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Speaker 1: you mentioned that consumer demand was holding up pretty well,

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Speaker 1: but it was a challenge to keep up with it.

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Speaker 1: Can can you expand on that a little bit, like,

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Speaker 1: what are the constraints that you're experiencing at the moment,

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Speaker 1: because you know, one of the things we talked about

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Speaker 1: a lot on the show is everything from supply chain

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Speaker 1: disruptions to higher input prices, to labor shortages, all of that,

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Speaker 1: and it is all of that. So keeping up with it.

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Speaker 1: From a labor standpoint, we are pretty close to where

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Speaker 1: we we should be. Took us, oh jeez, all of

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Speaker 1: this current year to kind of get to the level

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Speaker 1: that we're comfortable with. For production, we're still a little

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Speaker 1: bit short for the store, and whether it's production or

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Speaker 1: people in the store, either one can throttle back the

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Speaker 1: amount of product that we could sell. I mean, if

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Speaker 1: we can make it, but we don't have the people

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Speaker 1: that move it out out the door, that's the problem.

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Speaker 1: And vice versa. If we can't make it, uh, you know,

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Speaker 1: obviously we can't make it with the staff that we

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Speaker 1: do have because they're a little bit less experienced than

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Speaker 1: what we had had. We have reduced some of the

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Speaker 1: varieties of product that we make because I'm not going

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Speaker 1: to waste time making stuff that may or may not sell.

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Speaker 1: I'm going to spend our time making this stuff I

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Speaker 1: know is gonna is gonna sell. Um, so we do that.

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Speaker 1: Cost of labor has definitely increased. We're in Illinois. Chicago

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Speaker 1: went to a fifteen dollar minimum wage two years ago,

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Speaker 1: maybe three at this point, and our governor thought it

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Speaker 1: was a wise idea for the whole state to go

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Speaker 1: to fifteen dollars, which fully takes effect in But when

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Speaker 1: we saw that it became law, we looked at where

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Speaker 1: we were in our employment costs to where we were

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Speaker 1: going to be a number of years in the future.

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Speaker 1: Drew a straight line. I just started increasing prices, you know,

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Speaker 1: four years ago, when it was inevitable. I'm glad we

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Speaker 1: did that because now, in addition to the increased labor

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Speaker 1: cost we're dealing with increased ingredient costs, significantly increased ingredient costs.

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Speaker 1: Back on the labor. We increased our prices, like I said,

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Speaker 1: and I was kind of overcompensating at the at the beginning,

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Speaker 1: but I didn't want to have to raise prices exponentially

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Speaker 1: towards the end as more and more of our people

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Speaker 1: were bumping up against a minimum wage and such as

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Speaker 1: it turned out after the pandemic and there's a labor

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Speaker 1: shortage and blah blah blah. My people wouldn't work unless

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Speaker 1: we paid them more. So, I mean, they didn't go

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Speaker 1: on strike, but if they could have, they may have.

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Speaker 1: So I had to increase our wages. In our business,

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Speaker 1: we are close to labor not quite it's like forty five,

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Speaker 1: but in round numbers, it's so people start making more

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Speaker 1: money and impacts our bottom line significantly. You throw on

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Speaker 1: top of that the significant increases for for our goods,

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Speaker 1: and we do deal in commodities. We're buying flour, sugar, butter,

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Speaker 1: shortening all that kind of thing and making it into

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Speaker 1: bakery products. We are not buying you know, prepackaged ho

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Speaker 1: hoes and that kind of stuff. We are manufacturer of

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Speaker 1: of bakery goods. So when you hear about the cost

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Speaker 1: of you know, flour going up significantly, or the cost

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Speaker 1: of eggs, is every consumer has experienced going up at

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Speaker 1: times that we're experiencing that exact thing, for instance, our

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Speaker 1: cost for eggs. And this is kind of since two

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Speaker 1: thousand was a banner year. It's a great year for

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Speaker 1: selling stuff right here, for making profits. So since then,

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Speaker 1: like eggs have gone up between depending on what type

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Speaker 1: of eggs you buy. That's huge because we use a

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Speaker 1: lot of eggs. Sugar has gone up, like um butter

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Speaker 1: has gone up. My supplier told me forty pcent. It

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Speaker 1: feels a lot more than that, but um chocolate has

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Speaker 1: gone everything, everything has just gone up. And then in

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Speaker 1: addition to that, you mentioned supply chain issues. It's huge.

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Speaker 1: For a time, we couldn't get certain ingredients, or we

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Speaker 1: perceived that some ingredients were going to be a little

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Speaker 1: bit short. So I've had to stockpile coco powder for

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Speaker 1: a while, couldn't get it. Fortunately I got enough from

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Speaker 1: a couple of different sources and we made it through.

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Speaker 1: Now our suppliers have plenty of cocoa powder, but just

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Speaker 1: today they don't have one of our shortenings that we use.

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Speaker 1: I don't think that's necessarily a production problem. It's probably

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Speaker 1: more of a distribution problem from the manufacturer to our distributor.

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Speaker 1: But you know, needless to say, I'm scrambling to then

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Speaker 1: figure out a substitution. It's all of the labor costs

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Speaker 1: of labor costs of ingredients, and then getting what we

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Speaker 1: need when we need it. I have so many I

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Speaker 1: have like a million questions now after that, just on

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Speaker 1: every different facet. But first another sort of like I

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Speaker 1: guess semi big picture question, which is, and it's pretty

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Speaker 1: important for macro stuff and the FED and everyone else,

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Speaker 1: for all of the issues and the rising egg and

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Speaker 1: coffee prices and the rise and labor costs, etcetera, how

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Speaker 1: would you compare conditions now and the challenge of operation

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Speaker 1: to say, either the start of the year or last

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Speaker 1: holiday season left what did you call it, hollow, A

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Speaker 1: hollow thinking hollow fatmos. I really like that. So in

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Speaker 1: terms of like the various shortages and inflation, has there

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Speaker 1: been some easing since the last Hall of fank miss season.

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Speaker 1: Oddly enough, when the pandemic first hit, some of our

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Speaker 1: prices actually went down because there was a glut of

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Speaker 1: let's say, eggs and milk product on the market, so

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Speaker 1: that was kind of weird. But then the following season,

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Speaker 1: you know, which was last year. Then by then the

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Speaker 1: prices had mostly increased to about where they're at now,

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Speaker 1: at least ingredient prices, and they've just stayed high. They

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Speaker 1: haven't come back down. So from a cost standpoint, other

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Speaker 1: than labor, labor just keeps going up. Uh, the ingredients

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Speaker 1: were we've stabled at just you know, overall painful, but

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Speaker 1: at least they don't appear they're not increasing as greatly

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Speaker 1: as rapidly as they had. The prices always fluctuate, but

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Speaker 1: they're they're stable at just exceedingly high. So one thing

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Speaker 1: I always wonder about, you know, when we talk about

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Speaker 1: inflation and we talk about higher input costs like ingredients,

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Speaker 1: like labor and wages, how do you actually make the

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Speaker 1: decision about raising the prices of your own goods? So

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Speaker 1: you know, if if the price of eggs goes up,

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Speaker 1: do you immediately pass that cost onto consumers or do

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Speaker 1: you sometimes wait a bit and eat some of that

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Speaker 1: higher expense yourself. Just walk us through the process of

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Speaker 1: deciding how much of this you actually pass on to

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Speaker 1: your customers. Sure, so if you look at it historically, um,

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Speaker 1: you know, back ten fifteen years ago, if there was

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Speaker 1: a run on flower and there actually was some kind

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Speaker 1: of a commodity thing I rye flower, rye flower tripled

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Speaker 1: and price and it made national news. It really didn't

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Speaker 1: affect our bottom line. It was one ingredient for one

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Speaker 1: product that we make. We honestly don't make a whole

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Speaker 1: bunch of it, So we really didn't go out of

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Speaker 1: our way to increase prices. We may have just because

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Speaker 1: we tend to increase our prices once a year anyhow,

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Speaker 1: but we would take those kind of opportunities and whether

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Speaker 1: it's rye flower or bird flu that impacts eggs when

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Speaker 1: it makes national news, just running a business, it's an

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Speaker 1: opportunity to increase the prices without getting a whole bunch

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Speaker 1: of complaining from the customers. It's not that we're out

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Speaker 1: there price gouging, but you know, timing can be everything.

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Speaker 1: But that's when one commodity eggs or flour or sugar

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Speaker 1: is going up and everything else is staying the same,

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Speaker 1: that's then an opportunity to work the timing to increase prices. Currently, though,

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Speaker 1: we have to raise our prices. If we don't raise

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Speaker 1: our prices, we're going out of business. And for us,

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Speaker 1: like I said, we're fifty labor, so as labor goes up,

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Speaker 1: I'm raising prices immediately. As some of our ingredients fluctuate, um,

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Speaker 1: I'm usually absorbing most of them. But when we have

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Speaker 1: the level of increases that we have here, and so

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Speaker 1: for me, on a product, the ingredients itself might be

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Speaker 1: so on a loaf of bread, if flower doubles increase,

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Speaker 1: my cost is by by three or five, five cents

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Speaker 1: or something that doesn't bother me. But when every ingredient

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Speaker 1: in that loaf of bread goes up, either you or whatever,

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Speaker 1: now we're talking some real increases bread for us. It's

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Speaker 1: kind of a lousy example, but cookies and cakes that

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Speaker 1: use the higher priced items like the eggs that have

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Speaker 1: gone up, um, the flower that's gone up, the sugar

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Speaker 1: that's gone up, every ingredient has gone up, plus the labor.

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Speaker 1: I'm increasing my prices and I you know, I use

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Speaker 1: math to do it. I you know, look at what

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Speaker 1: my costs are. What percentage of that increase is going

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Speaker 1: to you know, filter down to the bottom line. I

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Speaker 1: have to put in all the overhead and all that

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Speaker 1: some of that has gone up. Insurance is certainly never

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Speaker 1: going down. And we come up with an increase. And

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Speaker 1: what we've done this year, you know, going back to

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Speaker 1: the end of we have increased our prices three times.

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Speaker 1: Each time it's been around four and a half to

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Speaker 1: five five and a half percent. So if you look

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Speaker 1: compared to a year ago, we've gone up about We've

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Speaker 1: never done that before. I mean maybe my dad did

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Speaker 1: back in the seventies when inflation was going nuts. But

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Speaker 1: for us in the recent our recent history, you know,

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Speaker 1: we we tend to increase our prices five percent at

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Speaker 1: a time, and then it's a question of how often

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Speaker 1: we have to do that in the course of the year.

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Speaker 1: And we hate raising prices it's a lot of work

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Speaker 1: for us. We have all sorts of price tax to

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Speaker 1: change and signage and websites and all sorts of stuff,

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Speaker 1: so it's it's not a trivial exercise. But if we

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Speaker 1: don't raise our prices, we become a charitable organization and

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Speaker 1: I can't operate that way. So this actually leads into

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Speaker 1: something else I was wondering, But when you raise prices,

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Speaker 1: do you notice is there a subsequent drop in sales?

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Speaker 1: Or how does it work with baked goods, like how

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Speaker 1: price sensitive are consumers of cookies and cakes and bread? Historically?

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Speaker 1: The answer your question is, yes, we raise prices, customers

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Speaker 1: either by less or come in less frequently. This time around,

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Speaker 1: since everything is going up, we haven't really seen a

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Speaker 1: huge drop off in that demand. Also haven't got a

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Speaker 1: lot of griping, or at least I haven't. Maybe my

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Speaker 1: store staff is, but I haven't gotten much pushed back.

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Speaker 1: And when you're dealing with a holiday season, people are

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Speaker 1: having twenty or thirty people over, they're going to spend

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Speaker 1: the money. Now, what we have seen is some of

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Speaker 1: our higher ticket items, so are decorated cakes, we're not

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Speaker 1: making nearly as many as we used to and when

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Speaker 1: we do, instead of making you a half sheet or

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Speaker 1: a full sheet, we're making eight inch nine inch cakes.

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Speaker 1: So they're still buying stuff, but smaller sizes. I don't

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Speaker 1: know that that's strictly because of our inflationary time right now,

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Speaker 1: We in the industry, at least in the Chicago area,

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Speaker 1: have tended to see a drop in decorated cakes period,

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Speaker 1: mostly because the kids don't want kids. People who are

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Speaker 1: in their twenties and thirties don't want to buy the

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Speaker 1: same things for their kids that they got from people

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Speaker 1: our age, you know, when they were kids and stuff,

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Speaker 1: so you know, they want ice cream cakes, so they

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Speaker 1: do experiential things instead of having a birthday cake at home.

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Speaker 1: So we're seeing a different cultural shift there too. But

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Speaker 1: one other aspect that I think you touched on too,

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Speaker 1: and I've had this conversation with my accountant over the years.

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Speaker 1: He feels, and I have to agree that bakeries are

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Speaker 1: somewhat recession proof. I'm not sure if we're inflation proof,

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Speaker 1: but recession proof in that to some extent, people still

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Speaker 1: have to eat. Now you don't have to have a

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Speaker 1: bomb bot or a cookie or anything like that, but

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Speaker 1: people do like to indulge. They are not going to

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Speaker 1: skip their kid's birthday party. And businesses are still going

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Speaker 1: to celebrate retirements. They are still going to have Christmas parties.

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Speaker 1: It's just a matter of you know, when economy is good,

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Speaker 1: a large corporation might have a Christmas party at the Marriott.

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Speaker 1: If the economy is a little soft, well, they have

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Speaker 1: it catered and the caterers buy stuff from us. If

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Speaker 1: it's a little softer yet, they skip the cater but

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Speaker 1: they're still getting cookies and cakes from us. So in

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Speaker 1: a sense, we're still kind of making a lot of

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Speaker 1: the same stuff, just selling it to different people depending

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Speaker 1: on how the economy is going. I want to go

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Speaker 1: back to something, but mainly because if I don't go

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Speaker 1: back to it now, I'm going to forget. And there's

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Speaker 1: something really interesting that you said, but can you talk

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Speaker 1: a little bit more about the experience level of your

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Speaker 1: employee base and your ability to be productive? And you

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Speaker 1: pointed out how with the less experience employee base, you've

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Speaker 1: narrowed the range of things that you can make. Talk

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Speaker 1: to us a little bit about like experience productivity and

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Speaker 1: what that means in terms of your ability to produce goods.

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Speaker 1: We've actually been blessed. I think we historically have had

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Speaker 1: a lot of people, many of our employees who had

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Speaker 1: been with us for ten years, fifteen, thirty years. We

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Speaker 1: have just a handful who have been with us for

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Speaker 1: or over close one guys over forty years. We've had

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Speaker 1: a number of people who left, not because of the

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Speaker 1: pandemic or anything. They were they kind of aged out,

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Speaker 1: it was just time. We have had a hard time

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Speaker 1: hiring people who they themselves have ten or twelve or

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Speaker 1: fifteen year is of experience. So we've been getting people

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Speaker 1: with less experience, maybe right out of school, and so

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Speaker 1: we are training them for how we like them to

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Speaker 1: make our our product. So things just don't get done

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Speaker 1: quite as fast. We don't have the institutional memory because

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Speaker 1: they weren't working for us at the time, so it

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Speaker 1: just takes a little bit longer. Now one would think

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Speaker 1: that we would be paying them a little bit less

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Speaker 1: because they're less experience, but that's where this whole minimum

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Speaker 1: wage thing kind of throw that out the window too.

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Speaker 1: The new employees are coming in with reasonable skills, and

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Speaker 1: we tend to hire slow. When we get a decent person,

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Speaker 1: they're still fairly productive but we just had to make

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Speaker 1: decisions of you, we're not going to teach them to

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Speaker 1: make that because maybe it was kind of a slower

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Speaker 1: moving item, or it's just too time consuming, and so

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Speaker 1: we just said skip it. Where COVID played into that

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Speaker 1: is we wanted to get people customers in and out

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Speaker 1: of our store more quickly. Consumers didn't want to be

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Speaker 1: lingering in a crowd of people breathing on each other

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Speaker 1: and stuff. So we eliminated variety and things that were

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Speaker 1: a little bit more time consuming to pack, or we

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Speaker 1: pre packed them to get customers in and out quicker.

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Speaker 1: So by looking at items that could physically be sold

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Speaker 1: to customers quicker. If something wasn't one of those, we

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Speaker 1: just got rid of it. And probably a good thing

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Speaker 1: to do now that COVID is kind of not an

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Speaker 1: issue anymore. They're still not coming back. I mean, you know,

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Speaker 1: we're just not bringing those products back. We're kind of

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Speaker 1: happy we got rid of them, some of them. You know,

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Speaker 1: you mentioned packaging there, and this reminds me of something

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Speaker 1: I heard from a fairly high level economists. But they

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Speaker 1: were talking about maybe one of the underappreciated aspects of

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Speaker 1: food inflation at the moment was from packaging materials, so

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Speaker 1: cardboard and plastic and thing like that, and everyone was

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00:22:01,119 --> 00:22:04,520
Speaker 1: talking about the higher costs of ingredients, but actually it

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00:22:04,640 --> 00:22:06,840
Speaker 1: was a lot of the packaging that had gone up.

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Speaker 1: Is that something that you've noticed Absolutely anything we would

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Speaker 1: put in, like plastic clamshells, those who have gone up.

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Speaker 1: I think I had some numbers on that we're seeing

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Speaker 1: between forty and increase in the packaging. And you know

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Speaker 1: that may not sound a lot when you're talking about

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Speaker 1: a plastic container that you know just cost a few

377
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Speaker 1: pennies literally, you know, went from five cents to seven

378
00:22:33,359 --> 00:22:36,280
Speaker 1: cents or something like that, But when you're buying cases

379
00:22:36,280 --> 00:22:40,439
Speaker 1: of these things, well that adds up real fast. Again

380
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Speaker 1: with supply chain issues in packaging. If we were using

381
00:22:44,720 --> 00:22:48,160
Speaker 1: a package container that is kind of an odd size,

382
00:22:48,680 --> 00:22:52,000
Speaker 1: those got discontinued and so you know, we can no

383
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Speaker 1: longer get some of the sizes that we want. For us,

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Speaker 1: we had bags, wax bags you put bread in our

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Speaker 1: coffee cakes that since I was a kid, We've had

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00:23:01,880 --> 00:23:04,360
Speaker 1: those things printed with our logo, our name and all

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Speaker 1: that stuff. It gives credibility to us as a business.

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Speaker 1: We can't get those anymore. The bag manufacturers are prioritizing

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00:23:13,680 --> 00:23:19,240
Speaker 1: large chains like Jimmy John's, McDonald's or whoever where they

390
00:23:19,240 --> 00:23:22,960
Speaker 1: are under contract to provide those printed bags and nose sizes,

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Speaker 1: and if they don't, they lose money, uh, you know,

392
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Speaker 1: penalized and such. So we as the little guys. If

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Speaker 1: we can't buy half a million printed bags at a time,

394
00:23:33,600 --> 00:23:37,080
Speaker 1: we're not getting those print printed bags. So at this point,

395
00:23:37,119 --> 00:23:42,000
Speaker 1: all of our bags are playing unprinted bags, and people

396
00:23:42,040 --> 00:23:44,200
Speaker 1: walk out of our store it looks like they got

397
00:23:44,240 --> 00:23:47,120
Speaker 1: their stuff from a food truck. Our boxes were still

398
00:23:47,160 --> 00:23:50,679
Speaker 1: able to get those printed for the most part, but yeah,

399
00:23:50,440 --> 00:23:53,240
Speaker 1: the bags have you know, they're just kind of playing.

400
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Speaker 1: So again, that's and that's because the manufacturers are having

401
00:23:57,040 --> 00:24:00,359
Speaker 1: trouble keeping people working. Sometimes it's a matter of trouble

402
00:24:00,400 --> 00:24:04,000
Speaker 1: getting the actual paper good the product to make the bags.

403
00:24:04,320 --> 00:24:07,440
Speaker 1: And that's because the people you know, in Seattle or

404
00:24:07,440 --> 00:24:10,920
Speaker 1: wherever they're you know, producing these paper they can't get

405
00:24:10,920 --> 00:24:13,640
Speaker 1: the people to work out there. So it's it's definitely

406
00:24:13,960 --> 00:24:16,800
Speaker 1: a domino effect on that. I did get word from

407
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Speaker 1: one of our suppliers that maybe the first quarter of

408
00:24:19,720 --> 00:24:24,400
Speaker 1: twenty three we may be able to purchase printed bags

409
00:24:24,440 --> 00:24:27,040
Speaker 1: in the quantities that makes sense for us. I can't,

410
00:24:27,680 --> 00:24:30,119
Speaker 1: you know, I get twenty five thousand or fifty thousand

411
00:24:30,200 --> 00:24:33,440
Speaker 1: at a time that lasts six months to twelve months,

412
00:24:33,480 --> 00:24:36,320
Speaker 1: for us to get a quantity of bags that lasts

413
00:24:36,359 --> 00:24:39,600
Speaker 1: much longer than that, our suppliers don't want to warehouse them,

414
00:24:39,720 --> 00:24:42,320
Speaker 1: and I can't afford to buy that man either. It

415
00:24:42,400 --> 00:24:45,520
Speaker 1: just doesn't make sense. So actually this sort of brings

416
00:24:45,880 --> 00:24:48,919
Speaker 1: me back to another thing I wanted to touch on

417
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Speaker 1: before I forget. You mentioned that with some of the

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Speaker 1: raw materials you bought, you sort of like scrambled and

419
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Speaker 1: maybe overcompensated in your purchase. I think you mentioned cocoa

420
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Speaker 1: powder is one that you felt like you had to

421
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Speaker 1: stock pile. And that's sort of like been a theme

422
00:25:01,840 --> 00:25:04,199
Speaker 1: we've you know, cross industries and this idea of like

423
00:25:04,520 --> 00:25:06,800
Speaker 1: the bull whip effect and there's a shortage of some

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Speaker 1: good and then everyone puts in a ton of orders

425
00:25:09,680 --> 00:25:12,920
Speaker 1: and then suddenly it turns into some glut because people

426
00:25:12,960 --> 00:25:15,600
Speaker 1: are trying to compensate for shortage and suddenly have you

427
00:25:15,680 --> 00:25:18,920
Speaker 1: seen that are there any categories in which either you've

428
00:25:18,960 --> 00:25:22,680
Speaker 1: been stuck, you know, sort of over inventoryd or where

429
00:25:22,760 --> 00:25:25,480
Speaker 1: you've seen a shortage turned into a glut and prices

430
00:25:25,480 --> 00:25:29,919
Speaker 1: have dropped a lot as sort of that cycle plays out. Okay,

431
00:25:29,920 --> 00:25:33,439
Speaker 1: so I've not seen the prices dropped because of the glut.

432
00:25:33,920 --> 00:25:38,160
Speaker 1: They're still elevated. Yes, I have probably been one who

433
00:25:38,520 --> 00:25:40,439
Speaker 1: and coco powder was one of I took it when

434
00:25:40,480 --> 00:25:43,120
Speaker 1: I could. Uh, and now it's not a big deal.

435
00:25:43,560 --> 00:25:47,199
Speaker 1: Some of our starches corn starch, I have stockpiled on that.

436
00:25:47,760 --> 00:25:50,320
Speaker 1: None of it's going to go to waste. Um, but

437
00:25:50,840 --> 00:25:54,840
Speaker 1: we still can't get some varieties of corn starch in

438
00:25:54,920 --> 00:25:58,919
Speaker 1: a in a food manufacturing facility like ours. It's not

439
00:25:59,000 --> 00:26:02,159
Speaker 1: just corn starts a whole a bunch of different types

440
00:26:02,160 --> 00:26:05,199
Speaker 1: of starches that we use. So I have stockpiled on

441
00:26:05,280 --> 00:26:07,720
Speaker 1: some of them. I've actually sold a bag or two

442
00:26:07,800 --> 00:26:11,800
Speaker 1: to other bakery owners who could not get them, possibly

443
00:26:11,840 --> 00:26:15,200
Speaker 1: because I did. I mean, you know that is a concern.

444
00:26:15,720 --> 00:26:17,440
Speaker 1: You know, we need to get what we need to get.

445
00:26:17,720 --> 00:26:20,320
Speaker 1: We also don't want to be hogs about it. So

446
00:26:20,440 --> 00:26:26,280
Speaker 1: to compensate when maybe I have overpurchased, I am accommodating,

447
00:26:26,440 --> 00:26:28,639
Speaker 1: you know, the needs of some other bakery owners in

448
00:26:28,680 --> 00:26:32,520
Speaker 1: the area by selling them a bag or two, and

449
00:26:32,560 --> 00:26:35,280
Speaker 1: they're doing the same thing. And we've we've traded ingredients

450
00:26:35,320 --> 00:26:38,880
Speaker 1: back and forth, so it gets to be a supply thing.

451
00:26:39,560 --> 00:26:44,480
Speaker 1: And in our industry and particularly business our size, we

452
00:26:44,840 --> 00:26:47,600
Speaker 1: kind of work on a just in time inventory system.

453
00:26:47,640 --> 00:26:49,720
Speaker 1: We don't call it that, but when you're dealing with

454
00:26:49,800 --> 00:26:52,840
Speaker 1: eggs and stuff that that that are perishable, you have

455
00:26:53,000 --> 00:26:55,440
Speaker 1: to do it that way. And because I'm in the

456
00:26:55,520 --> 00:26:59,080
Speaker 1: Chicago metropolitan area, I can get pretty much everything I

457
00:26:59,160 --> 00:27:02,040
Speaker 1: need every week, so I don't have to have a

458
00:27:02,040 --> 00:27:05,359
Speaker 1: warehouse to store all my ingredients. I just have a

459
00:27:05,400 --> 00:27:08,040
Speaker 1: back portion of the of the bakery. And because I

460
00:27:08,080 --> 00:27:11,320
Speaker 1: can get it once a week, it works well. So

461
00:27:12,560 --> 00:27:16,439
Speaker 1: we have had to change from a just in time

462
00:27:16,520 --> 00:27:21,879
Speaker 1: to a just in case inventory system. And I won't

463
00:27:22,200 --> 00:27:24,439
Speaker 1: say that I originated that phrase. I actually got that

464
00:27:24,600 --> 00:27:27,080
Speaker 1: from a seven hour I went to in at a

465
00:27:27,080 --> 00:27:30,520
Speaker 1: baker's convention this past September, and the guy presenting was

466
00:27:30,600 --> 00:27:32,879
Speaker 1: from a company called group O Bimbo. They are the

467
00:27:33,440 --> 00:27:37,080
Speaker 1: largest bakery in Mexico and the United States, third in

468
00:27:37,119 --> 00:27:40,320
Speaker 1: Europe or something. They supply a lot of grocery stores

469
00:27:40,320 --> 00:27:43,800
Speaker 1: and such. They're facing the same problems we are, and

470
00:27:43,840 --> 00:27:46,080
Speaker 1: he too, said that they are doing a just in

471
00:27:46,200 --> 00:27:49,119
Speaker 1: case inventory as as opposed to a just in time

472
00:27:49,440 --> 00:27:52,600
Speaker 1: and one of the people in the audience said, well, hey,

473
00:27:53,040 --> 00:27:55,680
Speaker 1: you know, if you're getting it just in case, I'm

474
00:27:55,680 --> 00:27:58,560
Speaker 1: screwed because now I can't get you at all. He

475
00:27:58,600 --> 00:28:02,720
Speaker 1: didn't deny that, but yeah, we all recognize that, you know,

476
00:28:02,760 --> 00:28:05,639
Speaker 1: we have to do it. Oddly enough, he told a

477
00:28:05,680 --> 00:28:08,600
Speaker 1: story about gelatine. They were having a hard time getting

478
00:28:08,640 --> 00:28:12,720
Speaker 1: gelatine in Mexico and it's like, well, why can't we

479
00:28:12,760 --> 00:28:16,520
Speaker 1: get gut gelatine while they're not slaughtering as many hogs. Well,

480
00:28:16,520 --> 00:28:19,640
Speaker 1: they're not slaughtering as many hogs because they don't need

481
00:28:19,680 --> 00:28:22,919
Speaker 1: as many hides from the hogs that they use to

482
00:28:23,000 --> 00:28:26,359
Speaker 1: make cars, and they don't need as many highs making

483
00:28:26,359 --> 00:28:29,200
Speaker 1: as many cars. Why aren't they making as many cars

484
00:28:29,280 --> 00:28:34,720
Speaker 1: because they can't get the chips from Taiwan. Yeah, this circle,

485
00:28:35,320 --> 00:28:40,120
Speaker 1: this chip shortage is turning into a bake good shortage. Well,

486
00:28:40,480 --> 00:28:43,080
Speaker 1: and then he finished that with saying, one of the

487
00:28:43,120 --> 00:28:46,600
Speaker 1: biggest users in the world of gelatine is the company

488
00:28:46,600 --> 00:28:49,280
Speaker 1: that makes Gumi bears. So you know, it turns out

489
00:28:49,320 --> 00:28:52,880
Speaker 1: that you can't buy Gumi bears because you can't buy

490
00:28:52,960 --> 00:28:56,760
Speaker 1: chips from Taiwan, and so you know the main thing there.

491
00:28:56,760 --> 00:28:59,800
Speaker 1: It's not just a supply chain, it's really a supply web,

492
00:29:00,320 --> 00:29:05,200
Speaker 1: and we are worldwide. We are so intertwined, and you

493
00:29:05,360 --> 00:29:10,320
Speaker 1: just can't imagine the domino effect that one industry has

494
00:29:10,400 --> 00:29:14,360
Speaker 1: on the other. Yeah, these kind of relationships I find

495
00:29:14,560 --> 00:29:18,080
Speaker 1: absolutely fascinating. And I remember, I remember there was one

496
00:29:18,160 --> 00:29:20,200
Speaker 1: instance from two thousand eight, and I think I wrote

497
00:29:20,200 --> 00:29:22,560
Speaker 1: about it briefly, but it was that there was a

498
00:29:22,640 --> 00:29:28,040
Speaker 1: milk shortage because there wasn't as much sawdust being produced

499
00:29:28,120 --> 00:29:31,480
Speaker 1: because people stopped building houses after the housing bubble burst.

500
00:29:31,720 --> 00:29:35,160
Speaker 1: And it turns out that cows like to sleep in sawdust,

501
00:29:35,240 --> 00:29:39,040
Speaker 1: and if they're not sleeping comfortably, they produce less milk.

502
00:29:39,240 --> 00:29:41,080
Speaker 1: So these are the types of things that I think

503
00:29:41,120 --> 00:29:44,760
Speaker 1: you only realize once you start to have these types

504
00:29:44,800 --> 00:29:48,440
Speaker 1: of disruptions. Yeah, anyway, I wanted to ask about one

505
00:29:48,600 --> 00:29:52,240
Speaker 1: one other big input, presumably into the bakery business, but

506
00:29:52,360 --> 00:29:56,560
Speaker 1: that's energy prices. Have you been affected at all by

507
00:29:56,960 --> 00:30:01,240
Speaker 1: higher gas or electricity prices as a something that that's

508
00:30:01,280 --> 00:30:06,479
Speaker 1: impacting you, not directly. I contracted both our natural gas

509
00:30:06,600 --> 00:30:10,400
Speaker 1: and our electricity either during the very beginnings of the

510
00:30:10,440 --> 00:30:14,160
Speaker 1: COVID thing or just before. So I've I've got a

511
00:30:14,160 --> 00:30:17,960
Speaker 1: pretty decent rate per kill a lot our and our

512
00:30:18,040 --> 00:30:23,360
Speaker 1: gas has been tolerable. Now the distribution charges you know,

513
00:30:23,520 --> 00:30:25,680
Speaker 1: comment and night Corps seem to figure out ways to

514
00:30:25,720 --> 00:30:28,440
Speaker 1: increase that, but that has been probably one of the

515
00:30:28,480 --> 00:30:33,040
Speaker 1: more stable inputs into our business. What about transportation, I

516
00:30:33,040 --> 00:30:37,080
Speaker 1: imagine deliveries and stuff like that in terms of not

517
00:30:37,200 --> 00:30:39,240
Speaker 1: just in terms of your receipt of them, but also

518
00:30:39,320 --> 00:30:43,320
Speaker 1: your ability to deliver to corporate clients, etcetera. We talk

519
00:30:43,360 --> 00:30:45,760
Speaker 1: a lot about sort of like long haul trucking, but

520
00:30:45,840 --> 00:30:49,840
Speaker 1: what about local deliveries things like that. Um, yeah, huge

521
00:30:49,880 --> 00:30:53,959
Speaker 1: impact on that we do deliver. We have some, as

522
00:30:54,000 --> 00:30:57,000
Speaker 1: I mentioned earlier, corporations in the area that get cakes

523
00:30:57,000 --> 00:30:59,960
Speaker 1: and stuff for meetings, and so we have a new

524
00:31:00,000 --> 00:31:05,000
Speaker 1: every van drives around. Oh man, my my gasoline expenses

525
00:31:05,080 --> 00:31:09,560
Speaker 1: have for sure doubled, uh sometimes worse. At the same time,

526
00:31:09,640 --> 00:31:13,080
Speaker 1: we got rid of our really small delivery van, which

527
00:31:13,120 --> 00:31:15,280
Speaker 1: was like what they call it transit connects, so it's

528
00:31:15,280 --> 00:31:18,000
Speaker 1: those little boxes that drive around and we have more

529
00:31:18,040 --> 00:31:20,479
Speaker 1: of a full size van, not one of those you know,

530
00:31:20,800 --> 00:31:23,200
Speaker 1: U haul rental van type things, but you know, the

531
00:31:23,280 --> 00:31:25,240
Speaker 1: kind of van you can put seats in and you know,

532
00:31:25,520 --> 00:31:29,400
Speaker 1: go for a drive, But my gas usage increased just

533
00:31:29,480 --> 00:31:32,080
Speaker 1: because in the mile doesn't is is great on that.

534
00:31:32,240 --> 00:31:36,040
Speaker 1: So the two combined have been really big, you know,

535
00:31:36,120 --> 00:31:41,640
Speaker 1: in and of itself percentagewise, huge increase. Bottom line, it's

536
00:31:41,680 --> 00:31:44,400
Speaker 1: not a major component of our business, so it's more

537
00:31:44,440 --> 00:31:48,280
Speaker 1: of an annoyance than it is a price increased driver.

538
00:31:48,800 --> 00:31:52,480
Speaker 1: Another thing, while we're just sort of talking about random components,

539
00:31:52,720 --> 00:31:56,480
Speaker 1: what about equipment in the kitchen? And I'm sure stuff

540
00:31:56,520 --> 00:32:00,680
Speaker 1: breaks down, you know, everyone has ovens and dishwashers and

541
00:32:00,680 --> 00:32:03,480
Speaker 1: everything that breaks down and being able to get people

542
00:32:03,600 --> 00:32:06,320
Speaker 1: either out to service it or replacement parts. What's been

543
00:32:06,360 --> 00:32:08,400
Speaker 1: your experience with that and is that getting any better?

544
00:32:09,000 --> 00:32:12,520
Speaker 1: So I'm knocking on would as I speak, Um, so far,

545
00:32:12,680 --> 00:32:16,360
Speaker 1: so good. But yeah, that is a concern because you

546
00:32:16,400 --> 00:32:20,720
Speaker 1: could have a piece of equipment that doesn't work and

547
00:32:20,800 --> 00:32:24,360
Speaker 1: you can't get that one little you know, a part,

548
00:32:24,840 --> 00:32:28,360
Speaker 1: but without it, you're you're out of luck. And like

549
00:32:28,400 --> 00:32:30,719
Speaker 1: I said, knock on wood, we have been fortunate on

550
00:32:30,760 --> 00:32:33,520
Speaker 1: that and getting service people out so far has not

551
00:32:33,680 --> 00:32:54,160
Speaker 1: been a major major problem. You know, earlier, when we

552
00:32:54,160 --> 00:32:57,400
Speaker 1: were talking about pricing, you spoke about how when when

553
00:32:57,400 --> 00:32:59,959
Speaker 1: there's a big event in the news, like a supply

554
00:33:00,000 --> 00:33:03,600
Speaker 1: eye shortage or maybe just generalized inflation, it sort of

555
00:33:03,680 --> 00:33:08,240
Speaker 1: gives you cover to raise prices. Can I just ask,

556
00:33:08,400 --> 00:33:13,200
Speaker 1: does that same dynamic happen with your employees and wages?

557
00:33:13,280 --> 00:33:16,240
Speaker 1: Like if everyone is talking about how inflation the cost

558
00:33:16,280 --> 00:33:18,560
Speaker 1: of living is going up, do you have more people

559
00:33:18,560 --> 00:33:21,280
Speaker 1: who come asking you for wage adjustments or cost of

560
00:33:21,320 --> 00:33:25,200
Speaker 1: living adjustments? Yeah? I haven't thought about that way, but yeah,

561
00:33:25,240 --> 00:33:28,400
Speaker 1: and when it whether it's really cost of living that

562
00:33:28,480 --> 00:33:32,040
Speaker 1: people are feeling their money isn't stretching us far, or

563
00:33:32,280 --> 00:33:35,120
Speaker 1: if it's more of hey, my buddy just got a job,

564
00:33:35,520 --> 00:33:38,680
Speaker 1: you know, and he's getting fifteen or sixteen and I'm

565
00:33:38,680 --> 00:33:42,120
Speaker 1: working here at thirteen. You know, I want more money

566
00:33:42,400 --> 00:33:45,000
Speaker 1: or I'll just go get my job at the factory.

567
00:33:45,240 --> 00:33:49,200
Speaker 1: And uh so it's more of a competition for employees.

568
00:33:49,240 --> 00:33:52,800
Speaker 1: And that's what we were dealing with more recently, you know,

569
00:33:52,840 --> 00:33:57,440
Speaker 1: supply and demand. There was you know, a slow down

570
00:33:57,440 --> 00:34:00,720
Speaker 1: into the supply of labor so that the man went higher.

571
00:34:00,800 --> 00:34:03,320
Speaker 1: People like us, we're willing to pay more and we

572
00:34:03,400 --> 00:34:06,360
Speaker 1: have been but so is everybody else. I don't know

573
00:34:06,440 --> 00:34:10,560
Speaker 1: that my employees are necessarily feeling the pinch of inflation

574
00:34:10,800 --> 00:34:14,160
Speaker 1: and relating that to Hey, I need more money compared

575
00:34:14,200 --> 00:34:17,359
Speaker 1: to my buddy just got a better job. Why can't

576
00:34:17,400 --> 00:34:21,200
Speaker 1: I get paid more? Other non wage things that you

577
00:34:21,280 --> 00:34:25,920
Speaker 1: have done to compete for labor? Do people get free cookies? Sorry,

578
00:34:25,960 --> 00:34:27,840
Speaker 1: I had to ask you. We've always had that policy

579
00:34:27,880 --> 00:34:31,880
Speaker 1: and pretty much people you know, can sample our goods

580
00:34:32,320 --> 00:34:34,719
Speaker 1: throughout the day, with the reason it's not a really

581
00:34:34,719 --> 00:34:36,839
Speaker 1: good idea to take a piece out of a decorated cake.

582
00:34:37,280 --> 00:34:39,759
Speaker 1: Customer gets kind of ticked off at that. But we

583
00:34:39,840 --> 00:34:42,480
Speaker 1: have a fairly generous policy. I mean, we figure you

584
00:34:42,480 --> 00:34:45,360
Speaker 1: can only eat so much after a while, you're just gonna,

585
00:34:45,719 --> 00:34:48,560
Speaker 1: you know, either explode or pass out. So yeah, we

586
00:34:48,560 --> 00:34:52,240
Speaker 1: we we do have that. We also have a profit

587
00:34:52,320 --> 00:34:55,640
Speaker 1: sharing program. Now that's you know, it does cost money.

588
00:34:55,719 --> 00:35:00,279
Speaker 1: It's not a direct wage at the employee sees, but

589
00:35:00,440 --> 00:35:03,800
Speaker 1: it's definitely an expense for us, you know, sick days

590
00:35:03,880 --> 00:35:09,280
Speaker 1: and vacation and all that. But as of lately, we've

591
00:35:09,320 --> 00:35:12,600
Speaker 1: had those for for decades. But lately, no, I don't

592
00:35:12,640 --> 00:35:16,600
Speaker 1: think we've had any non monetary type of incentive to

593
00:35:17,280 --> 00:35:21,399
Speaker 1: stay around. So there's been a lot of talk about

594
00:35:21,160 --> 00:35:25,360
Speaker 1: a looming recession as the Federal Reserve raises interest rates,

595
00:35:25,560 --> 00:35:29,040
Speaker 1: And I'm wondering, like, do you get a sense on

596
00:35:29,080 --> 00:35:32,040
Speaker 1: the ground in a bakery business of you know, an

597
00:35:32,040 --> 00:35:37,640
Speaker 1: impending downturn in customer demand? And then secondly, what would

598
00:35:37,920 --> 00:35:43,280
Speaker 1: a generalized economic recession actually look like for a business

599
00:35:43,719 --> 00:35:47,720
Speaker 1: like a bakery. So as we speak today the middle

600
00:35:47,719 --> 00:35:53,000
Speaker 1: of a holiday season, we're just we're busy. January will

601
00:35:53,040 --> 00:35:58,920
Speaker 1: be the telltale sign of what either almost buyers remorse

602
00:35:58,960 --> 00:36:01,239
Speaker 1: in a sense as people start getting their credit card

603
00:36:01,239 --> 00:36:05,080
Speaker 1: bills and all that hits. January is always slow. People

604
00:36:05,080 --> 00:36:08,399
Speaker 1: are tired of eating. But there's slow and there's dead.

605
00:36:08,920 --> 00:36:12,759
Speaker 1: We expect slow this year. It could be dead. But

606
00:36:12,880 --> 00:36:16,240
Speaker 1: like I said earlier, we we've just found that people

607
00:36:16,640 --> 00:36:20,279
Speaker 1: still want to treat themselves and we we continue to

608
00:36:20,360 --> 00:36:24,640
Speaker 1: do okay even in a recession. I mean, I hear

609
00:36:24,680 --> 00:36:27,960
Speaker 1: the same fears of recession because of the radio station

610
00:36:28,040 --> 00:36:31,759
Speaker 1: I listened to. It's hard for me to quantify that

611
00:36:32,120 --> 00:36:36,120
Speaker 1: as as we're experiencing it. It's more what I'll see

612
00:36:36,160 --> 00:36:38,000
Speaker 1: at the end of the year, the end of the quarter,

613
00:36:38,520 --> 00:36:41,319
Speaker 1: comparing it to previous ones. That's, you know, holy cow

614
00:36:41,440 --> 00:36:44,640
Speaker 1: it you know it was not busy, felt busy, but

615
00:36:44,760 --> 00:36:48,600
Speaker 1: it wasn't. I'd love to say we're definitely recession proof,

616
00:36:48,600 --> 00:36:54,080
Speaker 1: and I believe we are definitely recession resistant. And another

617
00:36:54,160 --> 00:36:57,040
Speaker 1: thing that I've noticed is that we are Our business

618
00:36:57,280 --> 00:37:02,279
Speaker 1: is excruciatingly steady throughout any kind of a year. We

619
00:37:02,480 --> 00:37:07,120
Speaker 1: can advertise, we promote, we do things on Facebook or whatever,

620
00:37:07,960 --> 00:37:11,240
Speaker 1: and business just kind of plugs a lot. People pretty

621
00:37:11,320 --> 00:37:14,799
Speaker 1: much ignore our advertising. I think, I don't know, but

622
00:37:14,880 --> 00:37:17,920
Speaker 1: you still advertise. Why why do you still advertise if

623
00:37:17,920 --> 00:37:20,600
Speaker 1: you can't really tell a difference from it. That's a

624
00:37:20,600 --> 00:37:23,240
Speaker 1: good question. But I don't do it in newspapers anymore,

625
00:37:23,239 --> 00:37:25,279
Speaker 1: and I don't do in yellow pages if anyone even

626
00:37:25,320 --> 00:37:28,000
Speaker 1: knows what the yellow page is. So we we've shifted

627
00:37:28,040 --> 00:37:32,000
Speaker 1: how we advertise. But the point being, you run promotions,

628
00:37:32,040 --> 00:37:35,080
Speaker 1: even if it's in store promotions, you know, it doesn't

629
00:37:35,080 --> 00:37:38,560
Speaker 1: necessarily set the world on fire, at least in our industry.

630
00:37:38,800 --> 00:37:40,839
Speaker 1: And again, like I said earlier, you can only our

631
00:37:41,120 --> 00:37:45,600
Speaker 1: customers can also only eat so much, even if something's

632
00:37:45,640 --> 00:37:48,160
Speaker 1: on a two for one special. It's like, well, I

633
00:37:48,239 --> 00:37:51,239
Speaker 1: live by myself, I can only eat one. Buying two

634
00:37:51,239 --> 00:37:53,080
Speaker 1: of them and having one to throw out doesn't make

635
00:37:53,120 --> 00:37:56,240
Speaker 1: any sense either. Ken you've never had me as a customer,

636
00:37:57,000 --> 00:38:00,360
Speaker 1: I guarantee you I could eat all of everything. Anyway,

637
00:38:00,400 --> 00:38:03,160
Speaker 1: go ahead, I guess I have a long way of saying,

638
00:38:03,360 --> 00:38:09,000
Speaker 1: we'll see it in just my employees getting done at

639
00:38:09,040 --> 00:38:11,719
Speaker 1: eleven o'clock in the morning having started at you know,

640
00:38:12,000 --> 00:38:14,920
Speaker 1: four thirty or five, instead of getting done at one

641
00:38:14,960 --> 00:38:17,760
Speaker 1: thirty or two in the afternoon on Friday. Let's say

642
00:38:17,960 --> 00:38:21,200
Speaker 1: that's kind of a measure of of just slow down

643
00:38:21,239 --> 00:38:24,160
Speaker 1: and work again. If that happens in January, it's normal.

644
00:38:24,520 --> 00:38:28,120
Speaker 1: If that happens in March, when we've got possibly a

645
00:38:28,200 --> 00:38:30,520
Speaker 1: Punsky Day, I won't even tell you what that is,

646
00:38:30,760 --> 00:38:33,880
Speaker 1: but we've got St. Patrick's Day, We've got Pie Day

647
00:38:33,880 --> 00:38:36,800
Speaker 1: that's a big one, possibly Easter, and we got Eastern

648
00:38:37,080 --> 00:38:39,799
Speaker 1: in either March or April. You know, if we're not

649
00:38:39,920 --> 00:38:42,560
Speaker 1: working hard at that time of the year, then we're

650
00:38:42,600 --> 00:38:45,880
Speaker 1: definitely in a recession. We did your care Pulaski Day.

651
00:38:45,920 --> 00:38:47,720
Speaker 1: I remember that day. I went to school in Illinois

652
00:38:47,760 --> 00:38:55,440
Speaker 1: for a while. Well day, Um, yeah, it's Polish. It's

653
00:38:55,440 --> 00:38:58,520
Speaker 1: big in Chicago. It's big in Detroit, and you know,

654
00:38:58,560 --> 00:39:01,640
Speaker 1: we sell tens of thousands of those things, and it's

655
00:39:01,640 --> 00:39:03,719
Speaker 1: it's a wonderful day because I remember we used to

656
00:39:03,760 --> 00:39:05,879
Speaker 1: get off for Pulaski Day, which is also in March.

657
00:39:06,920 --> 00:39:09,279
Speaker 1: But yes, maybe that's not as much of it. Maybe

658
00:39:09,320 --> 00:39:11,200
Speaker 1: that's not as much of a big goods holiday. I

659
00:39:11,239 --> 00:39:13,560
Speaker 1: don't know, it is not a big goods holiday. It

660
00:39:13,640 --> 00:39:17,360
Speaker 1: was great for going on ski trips because Chicago area,

661
00:39:17,440 --> 00:39:19,080
Speaker 1: we'd all be off and we could take the kids

662
00:39:19,080 --> 00:39:22,279
Speaker 1: out of school, go to Colorado and you know, on

663
00:39:22,280 --> 00:39:24,960
Speaker 1: a Monday, which is always what it is, the slopes

664
00:39:25,000 --> 00:39:30,440
Speaker 1: would be relatively uh unpopulated. But yeah, I got rid

665
00:39:30,440 --> 00:39:32,640
Speaker 1: of Kasimir Pulaski and I don't know if they got

666
00:39:32,719 --> 00:39:34,440
Speaker 1: rid of President's Day two. I'm not sure what we

667
00:39:34,480 --> 00:39:37,319
Speaker 1: get off anymore. I just have one last question, and

668
00:39:37,360 --> 00:39:39,319
Speaker 1: it actually goes back to this idea of like, you know,

669
00:39:39,360 --> 00:39:42,680
Speaker 1: the hoarding question. But you know, during the worst of

670
00:39:42,960 --> 00:39:46,480
Speaker 1: when it was the most challenging to hire workers, I'm

671
00:39:46,520 --> 00:39:49,760
Speaker 1: curious whether you saw labor hoarding as a phenomenon where

672
00:39:50,400 --> 00:39:53,680
Speaker 1: maybe you felt, Okay, we might be overstaffed relative to

673
00:39:53,680 --> 00:39:56,360
Speaker 1: the amount of demand, but given the difficulty in hiring

674
00:39:56,440 --> 00:39:59,600
Speaker 1: or competing with the next bakery over for employees, it's

675
00:39:59,600 --> 00:40:02,640
Speaker 1: still extent to keep that level. I'm curious if a

676
00:40:03,000 --> 00:40:05,600
Speaker 1: that was something you experienced and be can you just

677
00:40:05,640 --> 00:40:08,000
Speaker 1: talk a little bit more, how you know what it

678
00:40:08,040 --> 00:40:11,400
Speaker 1: looks like December two, which is today that day we're

679
00:40:11,400 --> 00:40:14,120
Speaker 1: recording and versus say the start of the year, when

680
00:40:14,560 --> 00:40:17,640
Speaker 1: you know, sort of the quit rate and other measures

681
00:40:17,640 --> 00:40:21,000
Speaker 1: of labor market intensity seemed to be much higher. So

682
00:40:21,040 --> 00:40:24,080
Speaker 1: as far as labor hoarding in our industry, and I

683
00:40:24,520 --> 00:40:27,799
Speaker 1: do hang with several other bakery owners and we are

684
00:40:27,880 --> 00:40:32,240
Speaker 1: talking constantly, we were not labor hoarding whatsoever. We were

685
00:40:32,800 --> 00:40:34,560
Speaker 1: asking each other, Hey, is if something you want to

686
00:40:34,560 --> 00:40:37,440
Speaker 1: get rid of, you know? And the answer was no,

687
00:40:37,680 --> 00:40:41,839
Speaker 1: I'm looking to um. So we were just definitely short

688
00:40:41,920 --> 00:40:47,000
Speaker 1: of bodies. I think most of us are again, like

689
00:40:47,080 --> 00:40:51,799
Speaker 1: we are closer to being fully staffed comparing today too,

690
00:40:51,960 --> 00:40:57,239
Speaker 1: when people are work quitting maybe more rapidly. I don't

691
00:40:57,239 --> 00:41:00,880
Speaker 1: know that we necessarily how people it in per se,

692
00:41:01,360 --> 00:41:05,319
Speaker 1: We just lost people for other reasons. Someone we just

693
00:41:05,360 --> 00:41:08,239
Speaker 1: wanted to pursue other careers or or work for a

694
00:41:08,280 --> 00:41:13,879
Speaker 1: different type of of bakery and it's still it actually

695
00:41:13,920 --> 00:41:17,799
Speaker 1: seems like it's been a little bit easier to find employees.

696
00:41:17,800 --> 00:41:23,240
Speaker 1: And I used indeed two to try and find people.

697
00:41:23,960 --> 00:41:27,879
Speaker 1: I'm not necessarily promoting it. I'm not dissuading people from

698
00:41:27,960 --> 00:41:30,120
Speaker 1: using it. It is what it is. I think they

699
00:41:30,160 --> 00:41:32,440
Speaker 1: advertise on a lot of podcasts. They're going to like that.

700
00:41:32,480 --> 00:41:37,759
Speaker 1: There's a totally organic mention of them. Yeah, keep going.

701
00:41:37,880 --> 00:41:42,080
Speaker 1: But yeah, it worked, but it it was not immediate,

702
00:41:42,239 --> 00:41:48,040
Speaker 1: and it took many interviews and many many responses of yeah, well,

703
00:41:48,239 --> 00:41:51,080
Speaker 1: we'll call you back someday to find the people that

704
00:41:51,360 --> 00:41:53,600
Speaker 1: we're going to be a good fit in our business.

705
00:41:53,960 --> 00:41:59,360
Speaker 1: Are you advertising for potential employees more in general? Like

706
00:41:59,440 --> 00:42:02,960
Speaker 1: keep post my job openings. So compared to ten years ago,

707
00:42:03,080 --> 00:42:06,120
Speaker 1: we never had to advertise for employees. People would walk

708
00:42:06,120 --> 00:42:08,759
Speaker 1: in asking if they could, you know, work for us,

709
00:42:09,320 --> 00:42:13,319
Speaker 1: So compared to that, yeah, we're having to advertise much more.

710
00:42:13,920 --> 00:42:18,760
Speaker 1: In the store, you know, retail sales clerk really hard

711
00:42:18,800 --> 00:42:21,120
Speaker 1: to to post a job on. And indeed, for that,

712
00:42:21,160 --> 00:42:24,240
Speaker 1: because you just got a lot of weird responses. Putting

713
00:42:24,239 --> 00:42:26,680
Speaker 1: a sign in the window and word of mouth is

714
00:42:26,719 --> 00:42:29,520
Speaker 1: what has worked best for us for for for the

715
00:42:29,560 --> 00:42:32,840
Speaker 1: professional staff, for the bakers and the cake decoration we advertise.

716
00:42:32,960 --> 00:42:35,799
Speaker 1: For the people in the store, we're just hope and

717
00:42:35,800 --> 00:42:38,919
Speaker 1: pray that they come in and generally that has worked. Okay,

718
00:42:39,040 --> 00:42:42,560
Speaker 1: So I have just one more question. It's an extremely

719
00:42:42,600 --> 00:42:46,040
Speaker 1: important one. We could talk for easily another few hours,

720
00:42:46,080 --> 00:42:47,879
Speaker 1: but I know it's your busiest time of the year,

721
00:42:47,880 --> 00:42:49,080
Speaker 1: so I don't want to take up too much of

722
00:42:49,120 --> 00:42:52,920
Speaker 1: your time. But very very important question. What's your favorite

723
00:42:53,040 --> 00:42:57,600
Speaker 1: baked good to eat around the season of how thank

724
00:42:57,760 --> 00:43:03,480
Speaker 1: miss oh Man? Um? So I have to say, I

725
00:43:03,520 --> 00:43:07,359
Speaker 1: mean I like everything, most everything we make. Not so

726
00:43:07,719 --> 00:43:10,600
Speaker 1: much of a fan of the poppy strip, but um,

727
00:43:10,719 --> 00:43:13,839
Speaker 1: this time of year for me, one of the best

728
00:43:13,840 --> 00:43:16,319
Speaker 1: things I take a sample of it every time is

729
00:43:16,360 --> 00:43:22,040
Speaker 1: something called stolen. Oh stolen. I love stolen. Yeah, and

730
00:43:22,280 --> 00:43:24,759
Speaker 1: what it's fresh out of the oven, you let it

731
00:43:24,760 --> 00:43:27,000
Speaker 1: cool down a little bit, and we always have to

732
00:43:27,040 --> 00:43:29,800
Speaker 1: sample at least one on every batch. You know. I

733
00:43:30,000 --> 00:43:33,319
Speaker 1: I've acquired a taste for that, And no, I didn't

734
00:43:33,360 --> 00:43:37,239
Speaker 1: like it as a kid, but I just really enjoy that.

735
00:43:37,640 --> 00:43:39,239
Speaker 1: But if you know, if we're not making that, if

736
00:43:39,280 --> 00:43:41,719
Speaker 1: it's not Christmas time, oh, then I go for a

737
00:43:42,280 --> 00:43:50,040
Speaker 1: very in cream filled like, all right, Ken, you're making

738
00:43:50,120 --> 00:43:53,719
Speaker 1: us both very very hungry. It was amazing having you on.

739
00:43:53,880 --> 00:43:57,719
Speaker 1: Really appreciated getting your perspective and getting to hear you know,

740
00:43:57,840 --> 00:44:00,640
Speaker 1: how a business owner is actually inter pritting a lot

741
00:44:00,680 --> 00:44:03,680
Speaker 1: of these big macro economic themes that we talked about

742
00:44:03,680 --> 00:44:05,680
Speaker 1: on the show a lot. So thank you so much,

743
00:44:06,040 --> 00:44:08,200
Speaker 1: Thank you, Thanks for having me. Thank you so much.

744
00:44:08,280 --> 00:44:25,360
Speaker 1: That was great. So Joe, I love that conversation and

745
00:44:25,360 --> 00:44:28,799
Speaker 1: there are so many interesting things to pick out of it.

746
00:44:28,880 --> 00:44:31,080
Speaker 1: But I mean, I guess let's just start with the

747
00:44:31,120 --> 00:44:35,120
Speaker 1: productivity thing, because you know, not only does it sound

748
00:44:35,160 --> 00:44:39,160
Speaker 1: like he's struggling to sort of keep up production at

749
00:44:39,320 --> 00:44:43,719
Speaker 1: pre COVID levels, but also just this idea of consciously

750
00:44:43,840 --> 00:44:46,960
Speaker 1: cutting back on things that might be more difficult to

751
00:44:47,080 --> 00:44:50,320
Speaker 1: make just to sort of simplify the overall production process.

752
00:44:50,640 --> 00:44:53,719
Speaker 1: That was really interesting. Yeah, that is really interesting. And

753
00:44:53,719 --> 00:44:56,279
Speaker 1: I know there's we've talked and you know, productivity in

754
00:44:56,320 --> 00:45:00,680
Speaker 1: general is this interesting question, and well, how how productive

755
00:45:00,680 --> 00:45:04,000
Speaker 1: can any entity be with a younger, less experienced workforce.

756
00:45:04,680 --> 00:45:07,480
Speaker 1: Maybe that means productivity is set to improve in the

757
00:45:07,520 --> 00:45:11,600
Speaker 1: future as less experienced workforce has become more experienced workforces.

758
00:45:11,920 --> 00:45:14,960
Speaker 1: That was an interesting thing. I thought the thing about

759
00:45:14,960 --> 00:45:19,160
Speaker 1: printed bags was interesting and oh, totally bigger companies getting

760
00:45:19,600 --> 00:45:22,920
Speaker 1: priority specialization and the idea that it's like what you

761
00:45:22,960 --> 00:45:25,120
Speaker 1: don't want. You could make a bigger order for bags,

762
00:45:25,160 --> 00:45:27,120
Speaker 1: but then you have to wear house all the bags yourself,

763
00:45:27,160 --> 00:45:30,600
Speaker 1: and you don't have that space. Obviously. The fact that

764
00:45:30,640 --> 00:45:34,200
Speaker 1: you know, the chip shortage is now contributed to gummy

765
00:45:34,200 --> 00:45:36,400
Speaker 1: bear shortage is like one of those sort of classes.

766
00:45:36,440 --> 00:45:39,360
Speaker 1: You never know where the semiconductor shortage is going to

767
00:45:39,400 --> 00:45:42,680
Speaker 1: crop up. Yeah, it's usually where it makes total sense.

768
00:45:42,680 --> 00:45:44,359
Speaker 1: When did you say, but you have never like sort

769
00:45:44,360 --> 00:45:47,280
Speaker 1: of like intuitively come to that any other way. Absolutely,

770
00:45:47,360 --> 00:45:51,239
Speaker 1: Also the inventory point, because this is a big thing.

771
00:45:51,320 --> 00:45:54,480
Speaker 1: You know, people are wondering to what excents strong consumer

772
00:45:54,520 --> 00:45:57,560
Speaker 1: demand is people just you know, making up for shortages,

773
00:45:57,719 --> 00:45:59,759
Speaker 1: and the same thing for businesses. And the idea of

774
00:46:00,000 --> 00:46:04,840
Speaker 1: and you know, accumulating big pots of cocoa powder. I

775
00:46:04,840 --> 00:46:08,400
Speaker 1: thought that was pretty interesting. And also a secondary market

776
00:46:08,440 --> 00:46:11,920
Speaker 1: in trading coco powder and corn starch and other essential

777
00:46:11,960 --> 00:46:15,200
Speaker 1: baked goods. I mean, I hadn't thought that that existed,

778
00:46:15,239 --> 00:46:16,960
Speaker 1: but it makes sense. I want to be a fly

779
00:46:17,080 --> 00:46:20,560
Speaker 1: on the wall and the you know, the the heads

780
00:46:20,600 --> 00:46:23,080
Speaker 1: of all these different Chicago bakers get together and they

781
00:46:23,080 --> 00:46:26,000
Speaker 1: talk about who has extra coco powder, who has a

782
00:46:26,200 --> 00:46:28,640
Speaker 1: who has an extra baker, and the kitchen is looking

783
00:46:28,680 --> 00:46:33,400
Speaker 1: for a different job. So many interesting economic ideas to

784
00:46:33,400 --> 00:46:36,160
Speaker 1: tease out of there. Yeah. Well, and the one other

785
00:46:36,200 --> 00:46:39,040
Speaker 1: thing I was thinking about was Ken mentioned that, you know,

786
00:46:39,120 --> 00:46:42,960
Speaker 1: it's actually difficult to raise prices because you have to

787
00:46:43,040 --> 00:46:45,279
Speaker 1: change all the labels. You know, you have to go

788
00:46:45,320 --> 00:46:48,320
Speaker 1: on the website and change prices. And one thing I've

789
00:46:48,360 --> 00:46:51,560
Speaker 1: heard that's kind of interesting, and it's just a pet

790
00:46:51,640 --> 00:46:55,520
Speaker 1: theory at the moment, but you know, with technological advances

791
00:46:55,920 --> 00:47:00,320
Speaker 1: and with automatic pricing systems for the big business says,

792
00:47:00,440 --> 00:47:02,759
Speaker 1: you know, for big box chains and things like that,

793
00:47:03,239 --> 00:47:05,880
Speaker 1: there is this idea that actually it's a lot easier

794
00:47:05,920 --> 00:47:09,000
Speaker 1: to raise your prices and change them than it has

795
00:47:09,040 --> 00:47:11,240
Speaker 1: been in the past. So I've heard people talk about

796
00:47:11,280 --> 00:47:14,879
Speaker 1: that is like one reason maybe that prices went up

797
00:47:14,880 --> 00:47:17,080
Speaker 1: so quickly, But I guess it means that prices could

798
00:47:17,120 --> 00:47:20,080
Speaker 1: go down quickly too. I hadn't realize that. It's very

799
00:47:20,080 --> 00:47:23,279
Speaker 1: interesting what you said about how in the past sort

800
00:47:23,320 --> 00:47:28,560
Speaker 1: of big notable disruptions were a good moment to sort

801
00:47:28,600 --> 00:47:31,200
Speaker 1: of raise prices. Right, So if everyone's talking about you

802
00:47:31,200 --> 00:47:34,480
Speaker 1: know that it's sort of like the opportunistic or strategic

803
00:47:34,560 --> 00:47:37,840
Speaker 1: timing of price increases. And then you think, okay, well,

804
00:47:37,880 --> 00:47:40,239
Speaker 1: now we have like inflation and so many different things

805
00:47:40,280 --> 00:47:42,800
Speaker 1: are going up, and this idea that, okay, you can

806
00:47:42,840 --> 00:47:46,480
Speaker 1: easily raise prices in five percent increments multiple times over

807
00:47:46,520 --> 00:47:49,440
Speaker 1: and over again, and the fact that no one really

808
00:47:49,520 --> 00:47:52,239
Speaker 1: seems to push back on it, or at least so far,

809
00:47:52,360 --> 00:47:56,560
Speaker 1: is pretty notable. Yeah. Absolutely, I guess that's how the happen.

810
00:47:58,600 --> 00:48:01,920
Speaker 1: You mean chocolate spirals? Right? All right, all right, we

811
00:48:01,920 --> 00:48:04,680
Speaker 1: should leave it there because I need to go eat

812
00:48:04,880 --> 00:48:06,960
Speaker 1: some sort of baked good. All let's leave it there.

813
00:48:07,320 --> 00:48:10,040
Speaker 1: This has been another episode of the Odd Thoughts podcast.

814
00:48:10,120 --> 00:48:12,520
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at

815
00:48:12,560 --> 00:48:15,160
Speaker 1: Tracy Alloway and I'm Joe Why Isn't All? You could

816
00:48:15,200 --> 00:48:18,240
Speaker 1: follow me on Twitter at the Stalwart. You can follow

817
00:48:18,280 --> 00:48:21,280
Speaker 1: the Jerosha Bakery. They're on Twitter at Jerosh Bakery, although

818
00:48:21,320 --> 00:48:23,719
Speaker 1: I think they're more active on Instagram, which makes sense.

819
00:48:23,719 --> 00:48:26,239
Speaker 1: You can look at all their bake goods at Jerosh Bakery.

820
00:48:26,640 --> 00:48:31,160
Speaker 1: Follow our producers Kermen Rodriguez at Kerman Armand and dash

821
00:48:31,160 --> 00:48:33,920
Speaker 1: Will Bennett at Dashbot and check out all of our

822
00:48:33,960 --> 00:48:38,479
Speaker 1: podcasts under the handle at podcasts and for more odd

823
00:48:38,480 --> 00:48:41,719
Speaker 1: Lots content, go to bloomberg dot com slash Oddlods, where

824
00:48:41,760 --> 00:48:44,440
Speaker 1: we post transcripts, we blog, and we even have a

825
00:48:44,440 --> 00:48:46,960
Speaker 1: weekly newsletter that Tracy and I write that you should

826
00:48:46,960 --> 00:49:05,320
Speaker 1: subscribe to. Thanks for listening to