Coffee and bakery form natural synergy

As Americans continue to feed their java fix, bakery operators are brewing new sales opportunities.

How much do Americans crave coffee? If a recent survey by Dunkin’ Donuts is any indication, they would rather give up sex (25 percent) than their daily cup of java (19 percent). America’s infatuation with the bean isn’t surprising news to Dunkin’ or to a number of other bakery product retailers across the country.

According to the Specialty Coffee Association of America (SCAA), about 56 percent of American adults consume specialty coffee on a daily basis. The Long Beach, Calif.-based trade organization defines specialty as “coffee that has no defects and has distinctive flavor in the cup.” Only 9 percent consumed specialty coffee daily in 1999. The bottom line in terms of daily consumption is a grand total of more than 300 million cups of coffee a day.

But it’s not just the big guys who benefit from consumers’ bond with the brew. Tom Ivory, owner of Baker Street Bread Co., an artisan bakery in the Chestnut Hill suburb of Philadelphia, reports coffee sales of about $50,000 from a 15-sq.-ft., self-serve station. Even more, he estimates that he sells an additional $50,000 worth of bakery products to those coffee drinkers.

Coffee and bakery routine

“Many customers establish a daily routine of stopping in for their cup of coffee, some more than once a day,” Ivory explains. “And when they come in to get their coffee, they usually end up buying a muffin, cookie or loaf of bread.”

Even with a Starbuck’s right across the street, Dinkel’s Bakery in Chicago has not felt the need to expand into espresso or take the leap into lattes. In fact, says Eric Dinkel, manager of the more than 40-year-old bakery that has consistently maintained a modest menu of regular, French roast, decaf and one flavored selection per day, the java juggernaut has not had much of an impact on his operation’s coffee sales since it moved in about 10 years ago.

“The other day my dad (third-generation owner Norm Dinkel) was saying that my grandfather would have thought it was crazy for a bakery to sell coffee,” Eric notes. “Now customers who come in to buy a donut expect to be able to buy a cup of coffee to go with it.

”Kate LaPoint, owner of To The Point Business Imaging, a Seattle-based firm specializing in marketing and public relations for the specialty coffee industry says that customers expect the coffee they purchase at bakeries to be on par with the quality of the other products available there.

“Customers are much happier when they can find the best cup of coffee at the same place where they can find the best donut, muffin or pastry,” LaPoint says. “And the quality of the one category of products reinforces the perception of quality of the other.

”While coffee isn’t the biggest seller on the menu at Bear Rock Café, it has definitely played a big part in establishing the upscale image of the 38-unit restaurant chain, says Deneen Nethercutt, vice president of marketing for the Cary, N.C.-based company.

“It is also a great source of incremental sales without requiring any additional labor,” Nethercutt notes.

In addition to four different blends of drip coffee, which are brewed fresh hourly, Bear Rock offers a full line of espresso and cappuccino drinks. Most popular is the Bear Latte, a signature sipper made with espresso, steamed milk, honey, vanilla, spice and a crown of whipped cream.

Coffee also perks up pastry sales during off-peak late morning, afternoon and evening day-parts at Bear Rock, Nethercutt says. The company is currently working on a line of iced specialty coffee beverages for introduction in the spring.

To satisfy his customers’ cravings for espresso-based drinks, Raul Porto, owner of Porto’s Bakery in Glendale, Calif., added them to his regular coffee menu about seven years ago. But it wasn’t until he moved his brews from a station in the corner to a dedicated coffee bar with expanded seating, its own signage and trained hat-and-scarf-clad baristas that his beverage sales doubled and bakery products began to move at an accelerated rate.

Hired a beverage manager

Based on this success, Porto is putting coffee “center stage” at his newly opened second location in Glendale. He also hired a beverage manager specifically to handle the coffee operations at both stores.

Rick Boone, owner of Rick’s Bakery in Fayetteville, Ark., also discovered the importance of proper positioning when he invested somewhere between $35,000 and $40,000 into a 12-sq.-ft. coffee bar. Customers loved the coffee, he says, but didn’t like waiting on one side of the L-shaped building for their barista-made beverages, then having to wait in a second line across the store for their bakery products.

Combining the two components didn’t help much either as core pastry and donut sales were slowed up as employees tried to juggle the jobs of making espresso drinks with filling bakery product orders. Changing to a centrally-located self-serve air pot system has solved Boone’s problem and boosted coffee sales. However, he’s still not ready to totally abandon the idea of baristas.

“I really feel that there’s a place for barista-made coffee drinks in this bakery; we just have to work at becoming more efficient to make it work,” he says.

Offering flavor shots

For Dunkin’, flavor customization is the next frontier. Last spring, the company launched “Flavorology,” a new program that allows customers to mix and match up to three of nine sugar-free “flavor shots” (options range from caramel to blueberry to marshmallow) to create their own signature hot or iced beverages. The result of two years of testing, flavor shots make it possible for the company to offer more coffee and hot chocolate variations without having to brew or hold a separate pot of coffee for each one.

“Because we only have to brew two types of coffee–regular and decaf–we have less waste even though we’re offering more flavors,” says Dunkin’s Ellen Rogers, manager of coffee excellence.

When it comes to coffee, today’s consumers are thirsty for quantity as well as quality. At Rick’s Bakery, Boone says that a growing number of customers are requesting coffee in one-, three- and five-gallon containers. To accommodate these volume orders without slowing down by-the-cup sales, the bakery is adding a six-gallon quick-brew station.

Last year, Dinkel’s also added a 10-cup cardboard container with a thermal plastic pouch to its coffee options for customers who want to tote the bakery’s brew to office meetings. Ivory is considering adding a 20-oz. cup for serious aficionados.

Maintaining maximum freshness throughout the day is probably the biggest challenge for bakeries with coffee service, Dinkel says. To make sure every customer gets a hot, fresh cup, the bakery downsized from a large 30-cup container with spigots to small air pots that can be refilled more frequently with minimal waste.

“The only downside I can see with coffee service is not doing it,” Porto says. “I wish the rest of our business was that easy.”

Measuring IQ Points by the Cupful of Coffee

Does it feel as if caffeine makes you more clever, upbeat and alert? Maybe that's because it does!

Sitting in Small World Coffee, the place in Princeton, N.J., where locals go when they want to avoid the sterile trendiness of Starbucks, just around the corner. The place is packed with students and professors. Nobel prizewinners drop in frequently (John Nash, the mathematician hero of A Beautiful Mind, is a regular). The question of whether caffeine makes you smarter. And without a latte—with three shots of espresso today instead of the regular two—I wouldn't feel equal to the task. Experience tells me that a strong dose of caffeine inevitably makes me more alert, focused, quick-witted, clever. As far as I'm concerned, the case is already closed.

That's a purely subjective assessment, but placebo-controlled laboratory experiments say exactly the same thing. Just last month Austrian scientists reported on a study showing that the equivalent of two cups of coffee boosts short-term memory significantly. And that's just the latest in a long line of tests proving that caffeine can enhance mental performance.

Indeed, there has been lots of surprisingly good news in general about caffeine and coffee. You would naturally assume that an addictive drug like caffeine—the most widely consumed psychoactive drug on the planet—must surely be bad for you, and initial studies suggested it might lead to bladder cancer, high blood pressure and other ills. More recent research has not only refuted most of those claims but also come up with some significant benefits. Caffeine appears to have some protective effect against liver damage, Parkinson's disease, diabetes, Alzheimer's, gallstones, depression and maybe even some forms of cancer. The only proven medical downside appears to be a temporary elevation in blood pressure, which is a problem only if you already suffer from hypertension. Some studies have also suggested a higher risk of miscarriage in pregnant women and of benign breast cysts, but those results are highly controversial.

While most of the findings about the effects of caffeine remain open to further testing, caffeine's boosting your brainpower has been proved beyond any reasonable doubt "As a research psychologist," says Harris Lieberman, who works in the Military Nutrition Division of the U.S. Army Research Institute of Environmental Medicine in Natick, Mass., "I use the word intelligence as an inherent trait, something permanently part of your makeup." Caffeine can't change that, Lieberman says. But what it can do, he says, is heighten your mental performance. If you're well rested, it tends to improve rudimentary brain functions, like keeping your attention focused on boring, repetitive tasks for long periods. "It also tends to improve mood," he says, "and makes people feel more energetic, generally better overall." Observes Dr. Peter Martin, professor of psychiatry and pharmacology and director of the Addiction Center at Vanderbilt University: "Attention and mood are both elements of how we focus our intellectual resources on a problem at hand."

Caffeine's real power kicks in, though, when you're tired. That's of obvious interest to the military, which counts on servicemen and -women to make life-and-death decisions even when they have been in the field without rest for days. "When you're sleep deprived and you take caffeine," says Lieberman, who has carried out extensive tests on Navy SEALS, among others, "pretty much anything you measure will improve: reaction time, vigilance, attention, logical reasoning—most of the complex functions you associate with intelligence. And most Americans are sleep deprived most of the time." Again, caffeine doesn't make you inherently smarter; it just lets you call more effectively on the intelligence you already have.

Precisely how it all works is still being figured out by neuroscientists. What they know is that caffeine binds to receptors that normally accept adenosine, a neurotransmitter that signals brain cells to quiet down their activity. Blocking adenosine staves off sleepiness. The resulting higher level of brain activity puts the nervous system on alert, triggering the release of adrenaline—the probable cause of caffeine's tendency to focus the mind.

Caffeine also triggers the release of dopamine, mostly in the frontal areas of the brain and the anterior cingular cortex, in which the so-called executive functions like attention, task management and concentration are located. This is consistent with what the Austrian scientists reported last month at the Radiological Society of America's annual conference in Chicago. Dr. Florian Koppelstaetter and his colleagues at the Medical University in Innsbruck gave 15 male volunteers 100 mg each of caffeine—about the same amount as in two cups of coffee—and then tested their short-term memory. Not only did the caffeine drinkers perform significantly better than those on placebos (all the subjects were in both the caffeine and the control groups in different rounds of testing), but when the scientists scanned their brains with functional MRIS, the anterior cingular cortex and the frontal lobes lit up with increased activity.

Caffeine is just a single chemical, of course, whereas coffee contains scores of substances. Some of them are antioxidants, which could explain part of its protective effect against disease. Some are psychoactive. "Our research," says Martin, "has focused on some of those other elements, such as chlorogenic acids, which keep adenosine in circulation in the brain longer than normal. That might augment coffee's ability to increase concentration without increasing irritability."

And then there's tea and chocolate, both of which also have caffeine, along with their own mélanges of antioxidants and other chemicals. Teasing out the specific actions of each one and separating them from caffeine's could take years. For the patrons crowding Small World Coffee, all of that is beyond the immediate point, which seems to be nothing more than getting a morning fix of one caffeinated drink or another before setting off to conquer the intellectual challenges waiting at the university just up the street. "A mathematician," the legendary number theorist Paul Erdos used to say, "is a machine for turning coffee into theorems." Organic chemistry, neuroscience, psychology and pretty much universal experience suggest that he probably was on to something.

This story was written by MICHAEL D. LEMONICK and is from TIME

Au Bon Pain management buys out Compass Group

Au Bon Pain, Boston, ramps up its strategy to compete with bakery café giant Panera Bread Co. with a recent buyout by its corporate management and a continued shift to the suburbs rather than downtown locations.

The management of Au Bon Pain completed the buyout of the third-largest bakery café chain in August. Its former parent, London-based Compass Group PLC, still retains a 25 percent stake in the brand.

Au Bon Pain management called the buyout a "mutual decision" and added that the Compass Group reinvested in the brand by remodeling all of the stores. The move allows Compass to return to its core focus, which is primarily on corporate and institutional contract-management accounts.

Au Bon Pain seeks to grow through more franchising and company-owned units. The bakery café chain introduced its new suburban prototype last year in Woburn, Mass., has opened new units in Pembroke, Mass. and Bloominton, Minn., and is scheduled to open another unit soon in Edison, N.J. Au Bon Pain currently has 188 company-owned and franchised locations in the Unites States and $245 million in annual sales last year.

Au Bon Pain is a client we worked with in the past www.capico.net

New deal: Restaurant IPOs are out, private equity is in

Many restaurant companies looking for new ownership, an injection of cash or a strategic partner to spur growth are looking no further than the growing pool of private-equity firms that are busily buying their way into foodservice.

Apparently fast fading are the days of hasty initial public stock offerings — especially for midsize restaurant companies — as the public market today poses steep regulatory hurdles and costly barriers to entry. Also a factor in the rise of private-equity allies is the fact that IPOs offer no guarantee that they'll raise the volume of funds anticipated, expert sources indicate. They also point out that the equities market has not been especially kind to restaurant companies of late.
For example, two of the three restaurant stocks that went public last year are currently trading well below their initial offering price.

Yet private-equity firms possess obviously deep pockets and are willing to pay high multiples-of-earnings prices for the right investment, according to numerous sources. Last month, for example, a deal was reached to sell Dunkin' Brands for $2.43 billion to a consortium of three private-equity companies, which agreed to pay what insiders indicated was a price perhaps double a typical earnings multiple. And as of presstime, Quiznos Masters LLC reportedly was looking for a buyer for the Quiznos Sub sandwich chain franchisor that was willing to pay about $2 billion.

Dunkin's acquisition by Bain Capital Partners, Thomas H. Lee Partners and The Carlyle Group is considered among the largest in foodservice history.

"There is massive capital overhang right now," said Jack McCarthy, managing director and co-head of the transaction advisory group at Alvarez & Marsal, a professional-services firm based in New York. "There is a load of capital to be invested, and the private-equity funds need to put their money to work. It's the largest amount of capital out there in a long while."

Indeed, private-equity firms bought almost a third of the restaurant companies that changed hands during the first nine months of 2005, according to J.H. Chapman Group, an investment banking firm based in Chicago. Of the deals closed from Jan. 1 through Sept. 30, 21 involved equity firms, compared with 12 in the same period in 2004. That 75-percent increase was recorded despite a 13-percent drop in the overall number of acquisitions, according to Chapman.
What's more, the value of those restaurant transactions is growing ever larger. From last January through October, the total value of the 45 restaurant transactions whose terms were disclosed reached $1.71 billion, up from a total disclosed value of $517 million in all of 2003, according to research from FTI Capital Advisors LLC, a boutique investment bank that works with middle-market companies. FTI Capital is a wholly owned subsidiary of FTI Consulting Inc. of Annapolis, Md.

"In the simplest of terms, money is chasing opportunity," said Raymond Zale, a senior managing director and head of the restaurant practice at FTI Capital Advisors.

Still, Zale cautioned restaurant operators to understand that multibillion-dollar deals are not the norm in the restaurant industry. The majority of restaurant companies are middle-market companies with market capitalizations less than $1 billion, or small-cap companies, with estimated values between $250 million and $500 million, he explained. Most private-equity firms attempt to keep the purchase price at a low multiple to the company's earnings before interest, taxes, depreciation and amortization, or EBITDA.

"The mantra of a strategic restaurant buyer is never pay more than five or six times EBITDA," Zale said, "unless there is outstanding growth potential."

In the Dunkin' Brands deal, for example, the purchase price was almost 12 times EBITDA, according to Sandra Horbach, managing director of The Carlyle Group's consumer retail team, and that premium was based at least partly on the company's growth prospects.

Carlyle was "buying a quality business with great growth opportunities," she said. "You have to pay for it. … The purchase price was driven by market dynamics."

Indeed, some sources say Quiznos — a brand not nearly as time-tested as those in the Dunkin' stable — could fetch the floated asking price of $2 billion simply because of the state of the market. The 4,000-unit chain does boast impressive growth trends, including a 25-percent annual jump in systemwide sales in fiscal 2004 on an increased new-restaurant count of almost 35 percent.

"On the tail end of other large transactions, why wouldn't a seller or a seller's adviser announce a premium number and let the market determine the price?" Zale asked by way of suggesting one strategy for optimizing spin-off proceeds.

But mergers and acquisitions are not all about high finance. Restaurant operators, particularly chains' senior management teams, are just as involved in an auction or a private-equity exchange as the company's investment bankers or consultants.

Jon Luther, chief executive of Canton, Mass.-based Dunkin' Brands, said he was in Paris immediately after the company's owner, Pernod Ricard, had disclosed it was looking to divest the foodservice division of Allied Domecq, Dunkin's former parent company, which was acquired by Pernod for its spirits holdings.

"They had decided on an auction process," Luther said, "which is a bad term, although sometimes it feels like that. We participated in the process of evaluating all potential bidders and providing them with our good story."

There initially were about 40 to 50 potential bidders for the franchisor of Dunkin' Donuts, Baskin-Robbins and Togo's, Luther said. Of that number, 23 actually turned in bids. Dunkin' and Pernod, who worked with JPMorgan as their adviser, narrowed that bidding field down to "eight or nine" finalists, he indicated. Dunkin' gave in-depth presentations to each of the finalists, and they had 30 days to place a final offer.

"It was an interesting couple of weeks," Luther recalled.

Of the four finalists, all were pairs of investors made up of at least one private-equity firm. Kohlberg Kravis Roberts & Co. teamed up with Trimaran Capital Partners, owners of the Charlie Brown's steakhouse chain and recent buyer of El Pollo Loco Inc. Providence Equity Partners teamed with Dunkin's and Pernod's advisor, JP Morgan, while Triarc Cos. Inc., parent company of the Arby's chain, partnered with Apollo Management LP.

Other than Carlyle's Horbach, no representatives of any of the finalists could be reached for comment

Luther said he would have been comfortable working with any of the groups. In addition to his work on the acquisition, Luther and his senior-management "go-to" team were able to leave the day-to-day operations of running the franchisor's three chains to other capable leaders, he said.
"All of the officers got a message when this process began," Luther said. " 'Listen, you're great leaders, don't take your eye off the ball,' and they didn't. They continued to deliver. … It really was a model on how to get through this."

Joe Stein, chief financial officer of Irvine, Calif.-based El Pollo Loco, said it is imperative for any restaurant company that's up for sale to limit the impact an auction could have on the chain's operations. Trimaran closed on its $415 million acquisition of the grilled-chicken chain in November.

"It can be a very lengthy process, so it is best to limit the amount of people involved," he said. "The primary heavy lifting is done by the finance team, legal and, obviously, the chief executive."

In El Pollo Loco's case, according to Stein, the company's former owner, American Securities Capital, had invested in the company for a while and was looking for a return when it felt the time was right, he said.

"Private-equity groups have a life cycle to their funds, and they will require a return at a certain time," Stein said. "Management saw a good market in 2005. There is a lot of money out there right now."

Much as with Dunkin' Brands, there was an auction process for El Pollo Loco, during which a group of bidders emerged before the decision was made to go with Trimaran, mainly because of its experience in the restaurant industry, Stein explained. "The key for us was to find another great partner to help management get to the next level," he said.

Neither Luther nor Stein would comment on any pending exit strategies for their respective private-equity owners. While they both said it was too early to consider just how the buyers would extract their ultimate return on investment, sources familiar with the inner workings of mergers and acquisitions said that most deals do not close until numerous ROI strategies are calculated.

Still, the ups and downs of the market could determine whether Dunkin' and El Pollo Loco float public stock, conduct another sale with private-equity players or get sold to a strategic buyer.

"The market will dictate the exit strategy," Stein said. "There is a lot of money in private equity right now, but if the IPO market is hot, you never know."

French Giant Sells Dunkin' Donuts

Finally now owned by an American company
Capico International developed the coffee for them in the Middle East.

link for story


Michael Vale, 83; Starred in 100-Plus Commercials for Dunkin' Donuts

It was great run and it was the beginning of some great commercials!

read link on the obit!

Krispy Kreme terminates license of largest franchisee

Just a matter of time when they file for bankruptcy

Krispy Kreme Doughnuts Inc. said Thursday it has terminated the license of its largest franchise operator, which means it can no longer sell doughnuts under the famous brand name.

Krispy Kreme said Los Angeles-based Great Circle Family Foods LLC, which operates 28 Krispy Kreme locations in Southern California, has not paid required royalties and fees.

"As a result of the termination, effective immediately, Great Circle Family Foods can no longer legally operate these stores as Krispy Kreme outlets and is required to remove Krispy Kreme signs and symbols within 30 days," said Krispy Kreme spokeswoman Laura Smith.

"The bottom line is while the company would have liked to resolve this issue in another way, Great Circle is in default of their franchise agreement and has refused to cure that default," she said.

Smith declined to say how long Krispy Kreme and Great Circle had discussed the lack of franchise payments before the licenses were terminated.

Krispy Kreme, which is the only supplier of doughnut mix and other supplies to its stores, has stopped shipping materials to Great Circle, which said in a statement it would fight the cutoff in court.

"We believe Krispy Kreme is in breach of all of our franchise and other agreements," the statement said.

"Krispy Kreme wants money to which we believe it is not entitled. Their monetary desires and our fight to keep our business will be resolved in court," the statement continued.

Krispy Kreme, which is the target of two federal probes over its finances, has been fighting with Great Circle over its dealings with the franchisee for several months.

Ciabatta Recipe

This is one of our favorite breads that we have used around the world in all Tribeca Cafe's

Ciabatta, an airy, white hearth bread from Italy’s Lake Como region, receives its name from its appearance: the finished loaf, a fat oval, looks like a homely, comfortably broken-in slipper.
Ciabatta embodies the maxim, It takes a slack dough to make light bread: this dough is so slack (wet) that it must be kneaded by machine, not hand.

The texture of this bread is what sets it apart. The interior is soft and porous, with large irregular holes, while the crust is crunchy and crisp, rather than chewy. Serve ciabatta with pasta, where it’s a great sauce-mopper. Or use it to make pan bagna (“bathed bread”), Italy’s famous stuffed sandwich. To make pan bagna, cut the ciabatta in half to make a top and bottom crust. Brush the cut sides with olive oil, layer on meats, cheeses, and vegetables, then wrap the sandwich and weigh it down for several hours before serving.

Makes 2 loaves, 8 servings each

• BIGA (STARTER):
• 1/4 teaspoon instant yeast
• 1/2 cup (4 ounces) water
• 1 1/2 cups (6 1/2 ounces) unbleached all-purpose flour

• DOUGH:
• 1 teaspoon (a very scant 1/2 ounce) instant yeast
• 2 teaspoons (1/8 ounce) nonfat dry milk
• 1 1/2 teaspoons (1/4 ounce) salt
• 3/4 cup plus 3 tablespoons (7 3/4 ounces) water*
• 1 tablespoon (3/4 ounce) olive oil
• 2 cups (8 1/2 ounces) unbleached all-purpose flour

1. TO MAKE THE BIGA: Mix all the ingredients in a medium-sized bowl, cover the bowl, and let it rest for about 12 hours, or overnight.
2. FOR THE DOUGH: Use your fingers to pull the biga into walnut-sized pieces, and place the pieces into the bowl of an electric mixer. Add the yeast, dry milk, salt, water, olive oil, and flour, and beat slowly with a flat beater paddle or beaters for about 3 minutes. Replace the beater paddle with the dough hook(s), increase the speed to medium, and knead for 10 minutes. The dough should be very sticky and slack. Transfer the dough to a lightly greased bowl or dough-rising bucket, cover the bowl or bucket, and let the dough rise for 2 to 3 hours, gently deflating it and turning it over every 45 minutes or so.

3. TO SHAPE THE LOAVES: Transfer the dough to a lightly greased work surface and use a bench knife or dough scraper to divide it in half. Working with one half at a rime, shape the dough into a rough log. Transfer the log to a parchment-lined baking sheet, or one sprinkled with cornmeal or semolina, and flatten it into an irregular 10 x 4-inch oval. Use your fingers - your entire finger, not just the tip - to indent the surface of the dough vigorously and thoroughly Repeat with the remaining piece of dough. Cover the loaves with heavily greased plastic wrap or a proof cover, and set them aside to rise until very puffy, 2 to 3 hours, depending on the warmth of your kitchen.

4. BAKING THE BREAD: Half an hour before you want to bake the bread, preheat the oven to 425 degrees F. Spritz water into the oven with a clean plant mister for about 5 seconds. Place the bread in the oven and spritz water into the oven three more times during the first 10 minutes of baking. Bake the loaves for a total of about 25 minutes, or until they’re a deep golden brown and their interior temperature measures 210 degrees F. Remove the loaves from the pan and return them to the oven. Turn off the oven, crack the door open a couple of inches, and let the loaves cool completely in the oven. Dust the loaves generously with flour.
*Use an additional 2 to 3 tablespoons of water in the winter, or in very dry conditions.

Nutrition information per serving: 1 slice, 51g
103 cal, 1ig fat, 3g protein, 20g complex carbohydrates, lg dietary fiber, 269 mg sodium, 45mg potassium, 2RE vitamin A, 1mg iron, 5mg calcium, 31mg phosphorus

http://www.capico.net