WEBVTT - Building a Cake Empire From Scratch

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Bloomberg

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<v Speaker 1>Quick Takes Tim Stinovic on Bloomberg Radio. So cakes, cupcakes, cookies, bars,

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<v Speaker 1>pots and putting. Susie Cakes is celebrating its sweet sixteen

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<v Speaker 1>and if you're from California, or perhaps you've been to

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<v Speaker 1>Texas or California recently, you might have seen as Susie

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<v Speaker 1>Cakes in the flesh Well. Susie Sarah Susan Sarach is

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<v Speaker 1>the founder and CEO of Susie Cake. She joined us

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<v Speaker 1>on the phone from Los Angeles. Susan, how are you.

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<v Speaker 1>I'm great, Thank you for having me on today. Well,

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<v Speaker 1>it's good to have you with us. Can you take

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<v Speaker 1>us Yeah, that's true, take us into the origin story here,

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<v Speaker 1>because you've got a pretty great beginning, taking the ingredients

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<v Speaker 1>of taking the recipes from your grandmother's and building a

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<v Speaker 1>really what's become an empire. Thank you for mad Yes.

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<v Speaker 1>I grew up in Chicago and both of my grandmother's

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<v Speaker 1>mildren and Madeline lived across the alleys from each other.

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<v Speaker 1>So while I was growing up, we always had some

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<v Speaker 1>great desserts around the house. And fast forward, I went

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<v Speaker 1>to um Hospitality School for college and then worked in

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<v Speaker 1>the hospitality industry about fifteen years. While I was in

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<v Speaker 1>food and beverage and hotels and restaurants, I noticed a

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<v Speaker 1>lot of women leaving the business because it was difficult

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<v Speaker 1>to um have a family or have a life outside

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<v Speaker 1>of work working seven. So I grew up a business

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<v Speaker 1>model predicated on women. Have women having careers in hospitality

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<v Speaker 1>without having to sacrifice other areas of their life. Combine

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<v Speaker 1>with these amazing three by five d and recipe cards

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<v Speaker 1>I had from my grandmother's You know, my my mom

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<v Speaker 1>still has those recipe cards from her mom. We share them.

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<v Speaker 1>We actually we kind of memiograph now and share them

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<v Speaker 1>to the family. They're valuable, so don't lose them. So

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<v Speaker 1>let's talk about your business. So I think about sixteen

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<v Speaker 1>years in you have made it through the financial crisis,

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<v Speaker 1>the pandemic, and then today's supply chain stresses and more,

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<v Speaker 1>and also and in vironment that continues to be disrupted,

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<v Speaker 1>in innovation, whether it's in the food space, how we work,

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<v Speaker 1>who's working. We think about diversity inclusions. So talk to

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<v Speaker 1>us about kind of that progression. That's a long time

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<v Speaker 1>to be running a business. How do you think about it?

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<v Speaker 1>Today and how you run it it is um You know,

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<v Speaker 1>one thing I've always been is very true to what

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<v Speaker 1>our core mission is, which is connecting through celebration and

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<v Speaker 1>not trying to be all things to all people and

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<v Speaker 1>just being very good at what you do. And so

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<v Speaker 1>what I have focused on since to day one was

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<v Speaker 1>creating the highest quality scratch made products combined with the

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<v Speaker 1>highest level of guest service to all of our guests,

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<v Speaker 1>and being very straightforward and open about what we're doing.

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<v Speaker 1>Our kitchens are open, we use high quality ingredients. We

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<v Speaker 1>don't sacrifice on that. And I think as troubling and

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<v Speaker 1>up and down as the economy has been and times are,

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<v Speaker 1>people really want to celebrate now more than ever. But

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<v Speaker 1>you always want to celebrate, right, and so to be

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<v Speaker 1>able to bring that joy to people and bring your

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<v Speaker 1>mindset to a simpler time. A lot of people tell

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<v Speaker 1>me our cakes you're buying them of their childhood or

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<v Speaker 1>you know, when when life was easier. And so I

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<v Speaker 1>think that Susy Cakes has really tribd over the past

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<v Speaker 1>sixteen years because as life gets more complicated and people are,

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<v Speaker 1>you know, on their devices more and more, this premise

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<v Speaker 1>of connecting through celebration with human beings face to face

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<v Speaker 1>and sharing a cake and celebrating somebody has really resonated well, Susan.

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<v Speaker 1>One area of life that has become increasingly complicated in

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<v Speaker 1>recent years has been the labor market. And it's something

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<v Speaker 1>that we talked about with companies big and small. I mean,

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<v Speaker 1>we're in the midst of earning season right now, and

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<v Speaker 1>there's you know, not an earning it is called that

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<v Speaker 1>happens without commentary about attracting and retaining talent right now.

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<v Speaker 1>How's it going for you at your locations throughout California

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<v Speaker 1>and Texas? Are you having a hard time keeping employees?

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<v Speaker 1>Are you having to raise wages and are you seeing

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<v Speaker 1>differences in different areas of the country. Yes, it's been

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<v Speaker 1>very challenging actually in both areas of the country. And UM,

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<v Speaker 1>you know, in order to meet the decreased labor market

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<v Speaker 1>early in we had to quickly alter our business model

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<v Speaker 1>to a fewer days, fewer operating hours per day, and

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<v Speaker 1>fewer product offerings, so we really had to lean heavily

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<v Speaker 1>on technology and UM have a focus on driving more

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<v Speaker 1>sales online. So as a result, we've increased our online

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<v Speaker 1>sales from six per to thirty one percent, which is huge,

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<v Speaker 1>but that allowed us to have um less team members

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<v Speaker 1>in the store taking orders and having an easier production model,

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<v Speaker 1>creating less waste that we actually ended up with a

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<v Speaker 1>more profitable business model really, because I do think about

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<v Speaker 1>like the higher price cost. I mean, are you feeling

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<v Speaker 1>though a little squeeze sometimes right now just because huge

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<v Speaker 1>see huge squeeze, huge squeeze. Um. You know, both our

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<v Speaker 1>cost of goods and cost of labor are up well

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<v Speaker 1>over ten percent, and you know, like most retailers, we've

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<v Speaker 1>had to pass some of that on to guess um.

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<v Speaker 1>But since we've built our reputation as you know, best

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<v Speaker 1>in class and highest quality, we've been able to maintain

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<v Speaker 1>our guest base. One thing I wanted to ask you

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<v Speaker 1>from what I understand in reading in for this UM

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<v Speaker 1>is that you pitched your business for like two years?

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<v Speaker 1>Is that fair? That? Yeah? It was? I yes, I

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<v Speaker 1>would say the better part of eighteen twenty. Was it

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<v Speaker 1>just that? Because we talked about this a lot at

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<v Speaker 1>Bloomberg UM about the ability or inability of women and

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<v Speaker 1>certainly minorities to attract investment dollars? What was it was? It?

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<v Speaker 1>Was it just because did you bootstrap or did you

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<v Speaker 1>get money or like, tell me about it? Very bootstrapped?

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<v Speaker 1>UM three UM. Really, literally everyone who I spoke to

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<v Speaker 1>and showed my business model to said Susie cakes was

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<v Speaker 1>a bad idea. And um even the f b A

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<v Speaker 1>said Susie um baking is a hobby out of business

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<v Speaker 1>and UM it was incredibly frustrating and difficult at times

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<v Speaker 1>to you know, keep going knowing that so many people

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<v Speaker 1>were saying people I respected, we're saying that, UM, it

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<v Speaker 1>was a bad idea and so are really only options

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<v Speaker 1>that we had were bootstrapping and you know, gathering UH

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<v Speaker 1>money from friends and family. Who would you know, at least,

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<v Speaker 1>you know, have a little bit of faith in me,

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<v Speaker 1>UM to get the first door open. What would you

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<v Speaker 1>say to the world at large having seen the business

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<v Speaker 1>that you're building and it sounds like you continue to

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<v Speaker 1>grow um because it does sound like investors, whether it's

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<v Speaker 1>angel investors or an s p A, that there missing

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<v Speaker 1>a huge part of our population. So much of my

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<v Speaker 1>time outside of work is spent on supporting the next

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<v Speaker 1>generation of female entrepreneurs because they are still struggling with

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<v Speaker 1>getting UH funding and UM, you know it needs it

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<v Speaker 1>needs to shift and I don't know what will create

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<v Speaker 1>that shift, but I'm still seeing it sixteen years later. Okay,

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<v Speaker 1>you guys have locations, Susan in Texas and in California,

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<v Speaker 1>but you can actually order online and you do ship nationally,

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<v Speaker 1>so people who don't live in those areas can get

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<v Speaker 1>Susie Cakes. What about expansion in terms of bricks and mortar,

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<v Speaker 1>because on our planning call this morning, we were thinking,

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<v Speaker 1>wait a second, this would work in New York pretty

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<v Speaker 1>well and just have about twenty seconds. Yes, Um, we

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<v Speaker 1>are looking for brick and mortar expansion as well as

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<v Speaker 1>a nation wide shipping. So we're looking to have a

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<v Speaker 1>flagship location in major metropolitan areas and then build out

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<v Speaker 1>the brand name from that and enhance our nation wide shipping.

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<v Speaker 1>Wait you do ship? We start. We just started shipping

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<v Speaker 1>as a new initiative for us. Checking out a carrot

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<v Speaker 1>cake and a flowerless chocolate cake. I am hungry all right, um, Susan,

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<v Speaker 1>good luck, stay in touch, let us know how the

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<v Speaker 1>expansion plans are growing and just running the business. Um.

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<v Speaker 1>So great to catch up with you, um, Susan. Sarah.

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<v Speaker 1>She's the founder and chief executive officer of Susie Cakes,

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<v Speaker 1>joining us on the phone from Alice. I love me

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<v Speaker 1>some flowerless chocolate cake actually for your birthday. Maybe promise

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<v Speaker 1>I'm gonna hold you to it. Okay, mark the date.

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<v Speaker 1>It's July two, all right,