WEBVTT - What a Bakery Can Tell Us About the Economy Right Now 0:00:10.080 --> 0:00:13.480 Hello, and welcome to another episode of the All Thoughts podcast. 0:00:13.560 --> 0:00:16.400 I'm Tracy Alloway and I'm Joe. WI wasn't all Joe. 0:00:16.480 --> 0:00:19.080 You know we are smack d ab in the middle 0:00:19.200 --> 0:00:22.520 of the holiday season. That is true. I have a 0:00:22.560 --> 0:00:24.480 big feeling about this time of year because it's nice 0:00:24.480 --> 0:00:26.720 to take time off, it's nice to get some breaks. 0:00:27.040 --> 0:00:29.240 But on the other hand, that means people aren't listening 0:00:29.240 --> 0:00:31.880 to podcasts as much because of its family so like 0:00:32.040 --> 0:00:35.600 they're like celebrating the holidays, they're outside, they're like giving gifts, 0:00:35.640 --> 0:00:38.600 but that's time. That means, uh means fewer listeners. Well, 0:00:38.640 --> 0:00:41.280 I mean hopefully some people are still listening to podcasts, 0:00:41.360 --> 0:00:44.320 especially this one. I actually tend to listen to podcasts 0:00:44.400 --> 0:00:47.800 more around the holidays just because I listened to them 0:00:47.800 --> 0:00:51.519 while I'm cooking and baking, and Christmas of course is 0:00:51.600 --> 0:00:55.400 prime baking and cooking season. You know, my wife is 0:00:55.440 --> 0:00:58.960 baking like two cookies today for like various parties and 0:00:59.040 --> 0:01:01.240 kids school thing to Saider. I literally just got a 0:01:01.240 --> 0:01:04.120 text about how time consuming it is. I hope she's 0:01:04.160 --> 0:01:06.800 listening to odd lots while she's doing that to make 0:01:06.840 --> 0:01:11.000 the time pass. Okay, Well, this kind of got me thinking, 0:01:11.040 --> 0:01:13.759 you know, it's the holiday season. Everyone is off baking 0:01:13.800 --> 0:01:18.240 things or probably buying things for presents, and I really 0:01:18.240 --> 0:01:21.199 wanted to talk to someone who is in a sort 0:01:21.200 --> 0:01:26.000 of seasonal retail industry and ask them how they are 0:01:26.120 --> 0:01:29.720 experiencing the economy right now, because, as we've been discussing 0:01:29.760 --> 0:01:32.440 for some time, it does feel like we're kind of 0:01:32.480 --> 0:01:35.280 in this weird environment where there are a lot of 0:01:35.280 --> 0:01:39.360 concerns about inflation, we still have lingering supply chain constraints, 0:01:39.520 --> 0:01:42.920 there's a lot of talk about recession. But at the 0:01:42.959 --> 0:01:45.720 same time, a lot of the hard data that we 0:01:45.840 --> 0:01:49.160 get is saying that consumer demand is still relatively strong, 0:01:49.400 --> 0:01:53.120 unemployment is still relatively low. Things are sort of ticking along, 0:01:53.600 --> 0:01:56.600 and yet a lot of the sentiment surveys seem to 0:01:56.640 --> 0:01:59.600 indicate something otherwise. So I thought it would be great 0:01:59.640 --> 0:02:02.800 to speak to a small business owner about what exactly 0:02:02.880 --> 0:02:05.360 is going on. Let's do it, because baking is, you know, 0:02:05.440 --> 0:02:07.840 bakery is also one of those things. It's like so 0:02:08.000 --> 0:02:12.400 you know, it's laborious, it's commodity sensitive, it's rent sensitive, 0:02:12.440 --> 0:02:15.400 it's there's so many things that sort of come together 0:02:15.639 --> 0:02:19.320 in a baked goods. Bread, cakes, cookies, So a great 0:02:19.320 --> 0:02:21.440 way to get a snapshot of what's happening in the 0:02:21.440 --> 0:02:24.160 economy right now. Yes, it's like we are taking all 0:02:24.240 --> 0:02:28.080 the ingredients that go into a baking business and dissecting 0:02:28.120 --> 0:02:31.280 them one by one. Okay, Well, without further ado, we 0:02:31.320 --> 0:02:33.799 are going to be speaking with Ken Jerish. He is 0:02:33.840 --> 0:02:36.960 the owner of Jerish Bakery, which is a bakery in 0:02:37.200 --> 0:02:40.520 the suburbs of Cook County, Chicago, actually where I used 0:02:40.560 --> 0:02:43.120 to live. Ken, thank you so much for coming on 0:02:43.160 --> 0:02:46.640 the show. You're welcome, Thanks for having me. So how 0:02:46.720 --> 0:02:52.000 busy are you around this time of year? Um? Extremely? Um. 0:02:52.080 --> 0:02:55.519 You know, it starts at Halloween and goes through Thanksgiving 0:02:55.639 --> 0:02:59.000 and then uh, Christmas or the whole month of December. 0:02:59.040 --> 0:03:03.480 For us in general, every day is busier than the 0:03:03.560 --> 0:03:06.400 day before. So we kind of call it a hello, 0:03:06.480 --> 0:03:09.919 thank miss season, you know, because it's it's busy. And 0:03:10.040 --> 0:03:13.679 this year, as you kind of indicated in your introduction, 0:03:14.080 --> 0:03:17.560 there is still a high demand for our product. That's 0:03:17.600 --> 0:03:21.200 a wonderful thing, you know, so we're pretty much firing 0:03:21.200 --> 0:03:24.919 on all cylinders as far as the demand goes. Keeping 0:03:25.000 --> 0:03:29.000 up with it is another challenge. So can you just describe, 0:03:29.040 --> 0:03:31.240 like how big is your bakery roughly? I know it's 0:03:31.240 --> 0:03:35.600 been around since On your website, Uh, it looks like 0:03:35.640 --> 0:03:38.080 there's a bunch of amazing stuff from specialty cakes and 0:03:38.120 --> 0:03:41.800 wedding cakes and cookies, and it all looks amazing, But like, 0:03:41.840 --> 0:03:43.680 how big? Just to give us a feel and like, 0:03:44.040 --> 0:03:48.120 what are your customers and clients like in your geographic reach? Sure? 0:03:48.680 --> 0:03:52.880 So we are a single location retail bakery. We're located 0:03:52.920 --> 0:03:55.880 in Oak Grove Village, Illinois. We are immediately adjacent to 0:03:56.000 --> 0:04:01.040 O'Hare Airport. But what separates our community and our business 0:04:01.600 --> 0:04:05.240 from the airport is a very large industrial park. I'm 0:04:05.240 --> 0:04:09.800 told that it's the largest contiguous industrial park in the country. 0:04:10.320 --> 0:04:12.320 So it does a couple of things that it kind 0:04:12.320 --> 0:04:15.120 of buffers the noise of the airport from our community, 0:04:15.160 --> 0:04:17.440 which is a good thing. But we also have a 0:04:17.440 --> 0:04:21.400 lot of companies who are then also customers, So we 0:04:21.520 --> 0:04:25.520 do a great deal of retail business, you know, homeowners 0:04:25.560 --> 0:04:27.480 who just come in and buy stuff for their family, 0:04:27.960 --> 0:04:33.000 and a lot of company corporate work for meetings and 0:04:33.120 --> 0:04:38.120 anniversaries and retirements and all that. We have about fifty 0:04:38.160 --> 0:04:41.279 five full time employee, not full time, but fifty five 0:04:41.279 --> 0:04:43.919 total employees. About half of those are are full time. 0:04:44.440 --> 0:04:47.880 This time of year with Christmas, we kind of blossom 0:04:48.000 --> 0:04:53.200 up to about ninety nine employees seasonal workers who help 0:04:53.320 --> 0:04:56.919 us pack the thousands of pounds of cookies that we 0:04:56.920 --> 0:04:59.520 we make this time of year. We've been here for 0:05:00.279 --> 0:05:04.880 three years. We enjoy a very good reputation. The number 0:05:04.880 --> 0:05:07.040 of employees we have, and then the size of our 0:05:07.440 --> 0:05:12.520 physical store is bigger than I would say of the 0:05:12.560 --> 0:05:17.240 bakeries in the country, but there are certainly much larger 0:05:17.520 --> 0:05:21.800 baking companies corporations that provide for grocery stores and all 0:05:21.800 --> 0:05:24.440 that kind of stuff. So we're kind of a small 0:05:24.520 --> 0:05:27.680 business in the scope of businesses at large, but as 0:05:27.720 --> 0:05:31.159 far as bakeries were one of the larger ones. So 0:05:31.440 --> 0:05:34.680 you mentioned that consumer demand was holding up pretty well, 0:05:34.720 --> 0:05:37.640 but it was a challenge to keep up with it. 0:05:37.720 --> 0:05:39.960 Can can you expand on that a little bit, like, 0:05:40.040 --> 0:05:43.400 what are the constraints that you're experiencing at the moment, 0:05:43.440 --> 0:05:45.719 because you know, one of the things we talked about 0:05:45.760 --> 0:05:48.600 a lot on the show is everything from supply chain 0:05:48.720 --> 0:05:54.160 disruptions to higher input prices, to labor shortages, all of that, 0:05:54.920 --> 0:05:57.599 and it is all of that. So keeping up with it. 0:05:58.000 --> 0:06:01.600 From a labor standpoint, we are pretty close to where 0:06:01.640 --> 0:06:04.960 we we should be. Took us, oh jeez, all of 0:06:05.839 --> 0:06:09.120 this current year to kind of get to the level 0:06:09.240 --> 0:06:12.080 that we're comfortable with. For production, we're still a little 0:06:12.080 --> 0:06:15.640 bit short for the store, and whether it's production or 0:06:16.240 --> 0:06:20.360 people in the store, either one can throttle back the 0:06:20.800 --> 0:06:22.919 amount of product that we could sell. I mean, if 0:06:22.960 --> 0:06:24.440 we can make it, but we don't have the people 0:06:24.480 --> 0:06:27.039 that move it out out the door, that's the problem. 0:06:27.120 --> 0:06:29.640 And vice versa. If we can't make it, uh, you know, 0:06:29.680 --> 0:06:32.080 obviously we can't make it with the staff that we 0:06:32.120 --> 0:06:34.800 do have because they're a little bit less experienced than 0:06:34.839 --> 0:06:38.880 what we had had. We have reduced some of the 0:06:38.960 --> 0:06:41.919 varieties of product that we make because I'm not going 0:06:42.000 --> 0:06:44.480 to waste time making stuff that may or may not sell. 0:06:44.520 --> 0:06:46.919 I'm going to spend our time making this stuff I 0:06:46.960 --> 0:06:49.880 know is gonna is gonna sell. Um, so we do that. 0:06:50.279 --> 0:06:55.600 Cost of labor has definitely increased. We're in Illinois. Chicago 0:06:55.680 --> 0:06:58.400 went to a fifteen dollar minimum wage two years ago, 0:06:58.440 --> 0:07:02.039 maybe three at this point, and our governor thought it 0:07:02.080 --> 0:07:03.800 was a wise idea for the whole state to go 0:07:03.880 --> 0:07:08.920 to fifteen dollars, which fully takes effect in But when 0:07:08.920 --> 0:07:13.480 we saw that it became law, we looked at where 0:07:13.520 --> 0:07:16.240 we were in our employment costs to where we were 0:07:16.240 --> 0:07:18.600 going to be a number of years in the future. 0:07:19.320 --> 0:07:22.120 Drew a straight line. I just started increasing prices, you know, 0:07:22.160 --> 0:07:25.520 four years ago, when it was inevitable. I'm glad we 0:07:25.560 --> 0:07:28.960 did that because now, in addition to the increased labor 0:07:29.080 --> 0:07:35.600 cost we're dealing with increased ingredient costs, significantly increased ingredient costs. 0:07:36.000 --> 0:07:39.800 Back on the labor. We increased our prices, like I said, 0:07:40.320 --> 0:07:43.680 and I was kind of overcompensating at the at the beginning, 0:07:44.000 --> 0:07:46.880 but I didn't want to have to raise prices exponentially 0:07:47.080 --> 0:07:49.160 towards the end as more and more of our people 0:07:49.280 --> 0:07:53.200 were bumping up against a minimum wage and such as 0:07:53.200 --> 0:07:56.280 it turned out after the pandemic and there's a labor 0:07:56.320 --> 0:07:59.680 shortage and blah blah blah. My people wouldn't work unless 0:07:59.680 --> 0:08:02.040 we paid them more. So, I mean, they didn't go 0:08:02.040 --> 0:08:04.200 on strike, but if they could have, they may have. 0:08:04.800 --> 0:08:08.960 So I had to increase our wages. In our business, 0:08:09.040 --> 0:08:13.640 we are close to labor not quite it's like forty five, 0:08:13.720 --> 0:08:17.080 but in round numbers, it's so people start making more 0:08:17.120 --> 0:08:20.200 money and impacts our bottom line significantly. You throw on 0:08:20.280 --> 0:08:25.200 top of that the significant increases for for our goods, 0:08:25.320 --> 0:08:29.040 and we do deal in commodities. We're buying flour, sugar, butter, 0:08:29.160 --> 0:08:31.160 shortening all that kind of thing and making it into 0:08:31.200 --> 0:08:35.200 bakery products. We are not buying you know, prepackaged ho 0:08:35.200 --> 0:08:39.040 hoes and that kind of stuff. We are manufacturer of 0:08:39.040 --> 0:08:42.640 of bakery goods. So when you hear about the cost 0:08:42.840 --> 0:08:45.920 of you know, flour going up significantly, or the cost 0:08:45.960 --> 0:08:50.800 of eggs, is every consumer has experienced going up at 0:08:50.880 --> 0:08:55.520 times that we're experiencing that exact thing, for instance, our 0:08:56.080 --> 0:08:58.560 cost for eggs. And this is kind of since two 0:08:58.600 --> 0:09:02.360 thousand was a banner year. It's a great year for 0:09:02.400 --> 0:09:06.120 selling stuff right here, for making profits. So since then, 0:09:06.480 --> 0:09:12.959 like eggs have gone up between depending on what type 0:09:12.960 --> 0:09:15.640 of eggs you buy. That's huge because we use a 0:09:15.640 --> 0:09:21.160 lot of eggs. Sugar has gone up, like um butter 0:09:21.440 --> 0:09:24.320 has gone up. My supplier told me forty pcent. It 0:09:24.360 --> 0:09:28.400 feels a lot more than that, but um chocolate has 0:09:28.440 --> 0:09:31.800 gone everything, everything has just gone up. And then in 0:09:31.840 --> 0:09:36.480 addition to that, you mentioned supply chain issues. It's huge. 0:09:36.840 --> 0:09:40.560 For a time, we couldn't get certain ingredients, or we 0:09:40.960 --> 0:09:44.080 perceived that some ingredients were going to be a little 0:09:44.080 --> 0:09:48.680 bit short. So I've had to stockpile coco powder for 0:09:48.720 --> 0:09:52.199 a while, couldn't get it. Fortunately I got enough from 0:09:52.200 --> 0:09:54.840 a couple of different sources and we made it through. 0:09:55.040 --> 0:09:58.520 Now our suppliers have plenty of cocoa powder, but just 0:09:58.640 --> 0:10:02.760 today they don't have one of our shortenings that we use. 0:10:03.160 --> 0:10:06.920 I don't think that's necessarily a production problem. It's probably 0:10:06.920 --> 0:10:10.960 more of a distribution problem from the manufacturer to our distributor. 0:10:11.360 --> 0:10:15.680 But you know, needless to say, I'm scrambling to then 0:10:15.960 --> 0:10:21.040 figure out a substitution. It's all of the labor costs 0:10:21.080 --> 0:10:24.280 of labor costs of ingredients, and then getting what we 0:10:24.320 --> 0:10:26.480 need when we need it. I have so many I 0:10:26.520 --> 0:10:29.480 have like a million questions now after that, just on 0:10:29.559 --> 0:10:32.000 every different facet. But first another sort of like I 0:10:32.000 --> 0:10:35.360 guess semi big picture question, which is, and it's pretty 0:10:35.360 --> 0:10:38.280 important for macro stuff and the FED and everyone else, 0:10:38.760 --> 0:10:41.160 for all of the issues and the rising egg and 0:10:41.240 --> 0:10:44.120 coffee prices and the rise and labor costs, etcetera, how 0:10:44.120 --> 0:10:47.640 would you compare conditions now and the challenge of operation 0:10:47.840 --> 0:10:51.599 to say, either the start of the year or last 0:10:51.840 --> 0:10:54.280 holiday season left what did you call it, hollow, A 0:10:54.960 --> 0:10:58.280 hollow thinking hollow fatmos. I really like that. So in 0:10:58.400 --> 0:11:00.959 terms of like the various shortages and inflation, has there 0:11:00.960 --> 0:11:03.760 been some easing since the last Hall of fank miss season. 0:11:05.040 --> 0:11:07.800 Oddly enough, when the pandemic first hit, some of our 0:11:07.840 --> 0:11:10.840 prices actually went down because there was a glut of 0:11:11.760 --> 0:11:15.160 let's say, eggs and milk product on the market, so 0:11:15.200 --> 0:11:18.560 that was kind of weird. But then the following season, 0:11:18.880 --> 0:11:21.400 you know, which was last year. Then by then the 0:11:21.520 --> 0:11:25.960 prices had mostly increased to about where they're at now, 0:11:26.720 --> 0:11:30.199 at least ingredient prices, and they've just stayed high. They 0:11:30.240 --> 0:11:35.120 haven't come back down. So from a cost standpoint, other 0:11:35.240 --> 0:11:38.440 than labor, labor just keeps going up. Uh, the ingredients 0:11:38.800 --> 0:11:42.440 were we've stabled at just you know, overall painful, but 0:11:42.480 --> 0:11:46.440 at least they don't appear they're not increasing as greatly 0:11:46.760 --> 0:11:50.960 as rapidly as they had. The prices always fluctuate, but 0:11:51.080 --> 0:12:11.680 they're they're stable at just exceedingly high. So one thing 0:12:11.920 --> 0:12:14.360 I always wonder about, you know, when we talk about 0:12:14.400 --> 0:12:18.400 inflation and we talk about higher input costs like ingredients, 0:12:18.679 --> 0:12:22.280 like labor and wages, how do you actually make the 0:12:22.320 --> 0:12:27.640 decision about raising the prices of your own goods? So 0:12:27.800 --> 0:12:30.000 you know, if if the price of eggs goes up, 0:12:30.520 --> 0:12:34.480 do you immediately pass that cost onto consumers or do 0:12:34.520 --> 0:12:37.240 you sometimes wait a bit and eat some of that 0:12:37.480 --> 0:12:41.040 higher expense yourself. Just walk us through the process of 0:12:41.120 --> 0:12:44.920 deciding how much of this you actually pass on to 0:12:45.040 --> 0:12:49.640 your customers. Sure, so if you look at it historically, um, 0:12:49.679 --> 0:12:52.400 you know, back ten fifteen years ago, if there was 0:12:52.760 --> 0:12:55.839 a run on flower and there actually was some kind 0:12:55.880 --> 0:12:59.720 of a commodity thing I rye flower, rye flower tripled 0:12:59.720 --> 0:13:03.720 and price and it made national news. It really didn't 0:13:03.720 --> 0:13:06.400 affect our bottom line. It was one ingredient for one 0:13:06.440 --> 0:13:08.440 product that we make. We honestly don't make a whole 0:13:08.480 --> 0:13:13.280 bunch of it, So we really didn't go out of 0:13:13.280 --> 0:13:16.600 our way to increase prices. We may have just because 0:13:16.640 --> 0:13:19.400 we tend to increase our prices once a year anyhow, 0:13:19.840 --> 0:13:23.120 but we would take those kind of opportunities and whether 0:13:23.160 --> 0:13:27.040 it's rye flower or bird flu that impacts eggs when 0:13:27.080 --> 0:13:30.640 it makes national news, just running a business, it's an 0:13:30.640 --> 0:13:34.800 opportunity to increase the prices without getting a whole bunch 0:13:34.800 --> 0:13:37.319 of complaining from the customers. It's not that we're out 0:13:37.320 --> 0:13:40.600 there price gouging, but you know, timing can be everything. 0:13:41.080 --> 0:13:45.960 But that's when one commodity eggs or flour or sugar 0:13:46.480 --> 0:13:48.800 is going up and everything else is staying the same, 0:13:49.360 --> 0:13:55.320 that's then an opportunity to work the timing to increase prices. Currently, though, 0:13:56.040 --> 0:13:58.240 we have to raise our prices. If we don't raise 0:13:58.280 --> 0:14:01.600 our prices, we're going out of business. And for us, 0:14:01.600 --> 0:14:04.480 like I said, we're fifty labor, so as labor goes up, 0:14:04.760 --> 0:14:09.360 I'm raising prices immediately. As some of our ingredients fluctuate, um, 0:14:09.400 --> 0:14:11.840 I'm usually absorbing most of them. But when we have 0:14:11.960 --> 0:14:14.840 the level of increases that we have here, and so 0:14:15.000 --> 0:14:18.000 for me, on a product, the ingredients itself might be 0:14:19.720 --> 0:14:24.640 so on a loaf of bread, if flower doubles increase, 0:14:24.720 --> 0:14:27.560 my cost is by by three or five, five cents 0:14:27.640 --> 0:14:31.600 or something that doesn't bother me. But when every ingredient 0:14:31.840 --> 0:14:37.880 in that loaf of bread goes up, either you or whatever, 0:14:38.520 --> 0:14:42.120 now we're talking some real increases bread for us. It's 0:14:42.160 --> 0:14:45.800 kind of a lousy example, but cookies and cakes that 0:14:45.960 --> 0:14:48.600 use the higher priced items like the eggs that have 0:14:48.640 --> 0:14:53.000 gone up, um, the flower that's gone up, the sugar 0:14:53.040 --> 0:14:56.800 that's gone up, every ingredient has gone up, plus the labor. 0:14:57.280 --> 0:15:00.640 I'm increasing my prices and I you know, I use 0:15:00.760 --> 0:15:02.440 math to do it. I you know, look at what 0:15:02.520 --> 0:15:06.160 my costs are. What percentage of that increase is going 0:15:06.200 --> 0:15:08.880 to you know, filter down to the bottom line. I 0:15:08.960 --> 0:15:10.680 have to put in all the overhead and all that 0:15:10.800 --> 0:15:13.080 some of that has gone up. Insurance is certainly never 0:15:13.120 --> 0:15:17.320 going down. And we come up with an increase. And 0:15:17.360 --> 0:15:21.080 what we've done this year, you know, going back to 0:15:21.520 --> 0:15:26.360 the end of we have increased our prices three times. 0:15:26.440 --> 0:15:28.880 Each time it's been around four and a half to 0:15:29.080 --> 0:15:31.840 five five and a half percent. So if you look 0:15:32.120 --> 0:15:36.160 compared to a year ago, we've gone up about We've 0:15:36.200 --> 0:15:39.480 never done that before. I mean maybe my dad did 0:15:39.480 --> 0:15:42.240 back in the seventies when inflation was going nuts. But 0:15:42.880 --> 0:15:45.840 for us in the recent our recent history, you know, 0:15:45.920 --> 0:15:48.400 we we tend to increase our prices five percent at 0:15:48.320 --> 0:15:51.520 a time, and then it's a question of how often 0:15:51.560 --> 0:15:53.520 we have to do that in the course of the year. 0:15:54.120 --> 0:15:56.640 And we hate raising prices it's a lot of work 0:15:56.680 --> 0:15:58.480 for us. We have all sorts of price tax to 0:15:58.600 --> 0:16:03.280 change and signage and websites and all sorts of stuff, 0:16:03.600 --> 0:16:06.760 so it's it's not a trivial exercise. But if we 0:16:06.880 --> 0:16:11.280 don't raise our prices, we become a charitable organization and 0:16:11.360 --> 0:16:14.240 I can't operate that way. So this actually leads into 0:16:14.280 --> 0:16:17.800 something else I was wondering, But when you raise prices, 0:16:17.960 --> 0:16:22.480 do you notice is there a subsequent drop in sales? 0:16:22.760 --> 0:16:25.240 Or how does it work with baked goods, like how 0:16:25.680 --> 0:16:32.280 price sensitive are consumers of cookies and cakes and bread? Historically? 0:16:32.760 --> 0:16:36.239 The answer your question is, yes, we raise prices, customers 0:16:36.600 --> 0:16:39.880 either by less or come in less frequently. This time around, 0:16:39.960 --> 0:16:43.520 since everything is going up, we haven't really seen a 0:16:43.640 --> 0:16:47.480 huge drop off in that demand. Also haven't got a 0:16:47.480 --> 0:16:49.720 lot of griping, or at least I haven't. Maybe my 0:16:49.800 --> 0:16:53.640 store staff is, but I haven't gotten much pushed back. 0:16:54.120 --> 0:16:58.640 And when you're dealing with a holiday season, people are 0:16:58.680 --> 0:17:01.600 having twenty or thirty people over, they're going to spend 0:17:01.640 --> 0:17:04.879 the money. Now, what we have seen is some of 0:17:04.880 --> 0:17:08.040 our higher ticket items, so are decorated cakes, we're not 0:17:08.119 --> 0:17:10.840 making nearly as many as we used to and when 0:17:10.880 --> 0:17:13.720 we do, instead of making you a half sheet or 0:17:13.720 --> 0:17:17.199 a full sheet, we're making eight inch nine inch cakes. 0:17:17.640 --> 0:17:22.560 So they're still buying stuff, but smaller sizes. I don't 0:17:22.560 --> 0:17:26.720 know that that's strictly because of our inflationary time right now, 0:17:27.520 --> 0:17:29.840 We in the industry, at least in the Chicago area, 0:17:30.000 --> 0:17:33.800 have tended to see a drop in decorated cakes period, 0:17:34.080 --> 0:17:38.280 mostly because the kids don't want kids. People who are 0:17:38.320 --> 0:17:40.879 in their twenties and thirties don't want to buy the 0:17:41.000 --> 0:17:44.760 same things for their kids that they got from people 0:17:44.760 --> 0:17:47.240 our age, you know, when they were kids and stuff, 0:17:47.280 --> 0:17:49.439 so you know, they want ice cream cakes, so they 0:17:49.480 --> 0:17:52.520 do experiential things instead of having a birthday cake at home. 0:17:52.920 --> 0:17:55.960 So we're seeing a different cultural shift there too. But 0:17:56.080 --> 0:17:58.480 one other aspect that I think you touched on too, 0:17:58.800 --> 0:18:01.840 and I've had this conversation with my accountant over the years. 0:18:02.240 --> 0:18:05.040 He feels, and I have to agree that bakeries are 0:18:05.160 --> 0:18:08.919 somewhat recession proof. I'm not sure if we're inflation proof, 0:18:08.960 --> 0:18:13.400 but recession proof in that to some extent, people still 0:18:13.440 --> 0:18:15.119 have to eat. Now you don't have to have a 0:18:15.160 --> 0:18:18.280 bomb bot or a cookie or anything like that, but 0:18:18.480 --> 0:18:22.320 people do like to indulge. They are not going to 0:18:22.520 --> 0:18:27.320 skip their kid's birthday party. And businesses are still going 0:18:27.359 --> 0:18:31.280 to celebrate retirements. They are still going to have Christmas parties. 0:18:31.480 --> 0:18:34.080 It's just a matter of you know, when economy is good, 0:18:34.119 --> 0:18:37.280 a large corporation might have a Christmas party at the Marriott. 0:18:37.840 --> 0:18:40.439 If the economy is a little soft, well, they have 0:18:40.560 --> 0:18:43.800 it catered and the caterers buy stuff from us. If 0:18:43.800 --> 0:18:46.800 it's a little softer yet, they skip the cater but 0:18:46.840 --> 0:18:49.919 they're still getting cookies and cakes from us. So in 0:18:49.920 --> 0:18:51.720 a sense, we're still kind of making a lot of 0:18:51.760 --> 0:18:55.280 the same stuff, just selling it to different people depending 0:18:55.280 --> 0:18:58.399 on how the economy is going. I want to go 0:18:58.440 --> 0:19:00.520 back to something, but mainly because if I don't go 0:19:00.560 --> 0:19:02.240 back to it now, I'm going to forget. And there's 0:19:02.280 --> 0:19:04.840 something really interesting that you said, but can you talk 0:19:04.880 --> 0:19:09.240 a little bit more about the experience level of your 0:19:09.320 --> 0:19:12.119 employee base and your ability to be productive? And you 0:19:12.119 --> 0:19:14.800 pointed out how with the less experience employee base, you've 0:19:14.880 --> 0:19:17.080 narrowed the range of things that you can make. Talk 0:19:17.119 --> 0:19:21.080 to us a little bit about like experience productivity and 0:19:21.119 --> 0:19:24.240 what that means in terms of your ability to produce goods. 0:19:24.800 --> 0:19:28.760 We've actually been blessed. I think we historically have had 0:19:28.800 --> 0:19:32.120 a lot of people, many of our employees who had 0:19:32.160 --> 0:19:37.680 been with us for ten years, fifteen, thirty years. We 0:19:37.800 --> 0:19:40.639 have just a handful who have been with us for 0:19:42.359 --> 0:19:45.679 or over close one guys over forty years. We've had 0:19:45.680 --> 0:19:48.240 a number of people who left, not because of the 0:19:48.280 --> 0:19:50.720 pandemic or anything. They were they kind of aged out, 0:19:50.760 --> 0:19:53.919 it was just time. We have had a hard time 0:19:54.320 --> 0:19:59.480 hiring people who they themselves have ten or twelve or 0:19:59.480 --> 0:20:02.720 fifteen year is of experience. So we've been getting people 0:20:03.000 --> 0:20:06.200 with less experience, maybe right out of school, and so 0:20:06.720 --> 0:20:09.520 we are training them for how we like them to 0:20:09.640 --> 0:20:13.800 make our our product. So things just don't get done 0:20:13.920 --> 0:20:17.680 quite as fast. We don't have the institutional memory because 0:20:17.720 --> 0:20:20.960 they weren't working for us at the time, so it 0:20:21.119 --> 0:20:24.760 just takes a little bit longer. Now one would think 0:20:24.800 --> 0:20:26.480 that we would be paying them a little bit less 0:20:26.480 --> 0:20:29.119 because they're less experience, but that's where this whole minimum 0:20:29.160 --> 0:20:31.440 wage thing kind of throw that out the window too. 0:20:32.040 --> 0:20:36.320 The new employees are coming in with reasonable skills, and 0:20:36.440 --> 0:20:40.719 we tend to hire slow. When we get a decent person, 0:20:41.040 --> 0:20:44.760 they're still fairly productive but we just had to make 0:20:44.800 --> 0:20:46.879 decisions of you, we're not going to teach them to 0:20:46.920 --> 0:20:49.679 make that because maybe it was kind of a slower 0:20:49.720 --> 0:20:53.400 moving item, or it's just too time consuming, and so 0:20:53.440 --> 0:20:57.080 we just said skip it. Where COVID played into that 0:20:57.680 --> 0:21:00.400 is we wanted to get people customers in and out 0:21:00.440 --> 0:21:03.800 of our store more quickly. Consumers didn't want to be 0:21:03.920 --> 0:21:06.880 lingering in a crowd of people breathing on each other 0:21:06.920 --> 0:21:11.760 and stuff. So we eliminated variety and things that were 0:21:11.760 --> 0:21:14.919 a little bit more time consuming to pack, or we 0:21:15.040 --> 0:21:18.520 pre packed them to get customers in and out quicker. 0:21:18.880 --> 0:21:23.800 So by looking at items that could physically be sold 0:21:23.800 --> 0:21:27.199 to customers quicker. If something wasn't one of those, we 0:21:27.359 --> 0:21:30.360 just got rid of it. And probably a good thing 0:21:30.400 --> 0:21:33.720 to do now that COVID is kind of not an 0:21:33.720 --> 0:21:37.040 issue anymore. They're still not coming back. I mean, you know, 0:21:37.080 --> 0:21:39.080 we're just not bringing those products back. We're kind of 0:21:39.080 --> 0:21:42.199 happy we got rid of them, some of them. You know, 0:21:42.320 --> 0:21:45.960 you mentioned packaging there, and this reminds me of something 0:21:46.000 --> 0:21:50.560 I heard from a fairly high level economists. But they 0:21:50.600 --> 0:21:53.720 were talking about maybe one of the underappreciated aspects of 0:21:53.720 --> 0:21:58.000 food inflation at the moment was from packaging materials, so 0:21:58.200 --> 0:22:01.080 cardboard and plastic and thing like that, and everyone was 0:22:01.119 --> 0:22:04.520 talking about the higher costs of ingredients, but actually it 0:22:04.640 --> 0:22:06.840 was a lot of the packaging that had gone up. 0:22:06.960 --> 0:22:10.920 Is that something that you've noticed Absolutely anything we would 0:22:10.960 --> 0:22:14.440 put in, like plastic clamshells, those who have gone up. 0:22:15.040 --> 0:22:18.080 I think I had some numbers on that we're seeing 0:22:18.160 --> 0:22:23.879 between forty and increase in the packaging. And you know 0:22:24.040 --> 0:22:26.680 that may not sound a lot when you're talking about 0:22:26.800 --> 0:22:29.520 a plastic container that you know just cost a few 0:22:29.560 --> 0:22:33.240 pennies literally, you know, went from five cents to seven 0:22:33.359 --> 0:22:36.280 cents or something like that, But when you're buying cases 0:22:36.280 --> 0:22:40.439 of these things, well that adds up real fast. Again 0:22:40.480 --> 0:22:44.639 with supply chain issues in packaging. If we were using 0:22:44.720 --> 0:22:48.160 a package container that is kind of an odd size, 0:22:48.680 --> 0:22:52.000 those got discontinued and so you know, we can no 0:22:52.040 --> 0:22:55.080 longer get some of the sizes that we want. For us, 0:22:55.160 --> 0:22:58.440 we had bags, wax bags you put bread in our 0:22:58.480 --> 0:23:01.840 coffee cakes that since I was a kid, We've had 0:23:01.880 --> 0:23:04.360 those things printed with our logo, our name and all 0:23:04.400 --> 0:23:07.080 that stuff. It gives credibility to us as a business. 0:23:07.400 --> 0:23:13.400 We can't get those anymore. The bag manufacturers are prioritizing 0:23:13.680 --> 0:23:19.240 large chains like Jimmy John's, McDonald's or whoever where they 0:23:19.240 --> 0:23:22.960 are under contract to provide those printed bags and nose sizes, 0:23:23.400 --> 0:23:26.399 and if they don't, they lose money, uh, you know, 0:23:26.480 --> 0:23:30.080 penalized and such. So we as the little guys. If 0:23:30.080 --> 0:23:33.119 we can't buy half a million printed bags at a time, 0:23:33.600 --> 0:23:37.080 we're not getting those print printed bags. So at this point, 0:23:37.119 --> 0:23:42.000 all of our bags are playing unprinted bags, and people 0:23:42.040 --> 0:23:44.200 walk out of our store it looks like they got 0:23:44.240 --> 0:23:47.120 their stuff from a food truck. Our boxes were still 0:23:47.160 --> 0:23:50.679 able to get those printed for the most part, but yeah, 0:23:50.440 --> 0:23:53.240 the bags have you know, they're just kind of playing. 0:23:53.400 --> 0:23:57.040 So again, that's and that's because the manufacturers are having 0:23:57.040 --> 0:24:00.359