Indulging your sweet tooth
Solid domestic growth and promising international expansion have marked 2019 for Magnolia Bakery, as the New York native is preparing to target new market segments next year
For the CEO of a brand that has received some great publicity from being referenced in a number of US programmes (the most notable of which being Sex and the City) and has become a pop culture favourite, Magnolia Bakery’s Steve Abrams sounds almost too humble and level-headed. It has been another strong year for the bakery, both in its domestic US market and internationally, and yet, Steve does not let himself get carried away. Instead, he believes that the exploration of new market avenues has to continue with the same levels of enthusiasm as has been displayed in the last decade or so, since he bought Magnolia Bakery in 2006.
“We have had an average growth of 9.3 per cent in sales across the board in the US and have nearly doubled our ecommerce sales. In addition, we have moved into wholesale and started working with Amazon Go. From an international standpoint, we have just struck a new deal with a franchisee in India and the opening in Bangalore was a huge success. We are also encouraged by the signs our new Turkish franchisee is showing. They are someone with excellent infrastructure and a very strong position in the market, and we are looking to have new stores in Turkey next year,” Steve begins his overview of the passing 2019.
He is equally as pleased with Magnolia Bakery’s performance in the Middle East, where the company’s partners have opened another three stores – two in Saudi Arabia and one in the UAE, in Abu Dhabi.
“So far, we have worked in some 15 different markets and adapting to each of these, with its own requirements and long-established practices, has posed certain challenges,” Steve says. “On the one hand, what we try to do, is explain to our franchisees that they are buying a brand and this brand stands for something, and has a vision of how its design, operations, and food should look like. On the other hand, we are aware that in order to be relevant in all these markets, there are certain local dishes that have to be on the menu. In all honesty, though, we are looking to keep the local items at five or ten per cent at most, because we do not want to risk turning into something that is no longer the Magnolia Bakery brand.”
Steve already reported that the business has enjoyed a near-ten per cent growth in America over the last 12 months, and he is confident that it will continue to do well, not least because of the sheer size of the sweets sector. “It is a multibillion dollar industry and no player is so big as to dominate the market in a way that hurts the others. We are just focusing on the development of our own products and playing around with various tastes, launching new items all the time.”
He then singles out Magnolia Bakery’s famous banana pudding as one of the best sellers for the company and a product of which multiple variations are constantly being derived. “The reality is that anything we do with a banana pudding nowadays, is driving sales and is in huge demand. In this sense, we may say that it is us leading a trend by taking one product, which we know is especially beloved, and modifying it in different ways. One very good example would be the chocolate hazelnut banana pudding, which has been one of our most popular items as of late.”
Magnolia Bakery’s seasonal items are another regular contributor to the chain’s burgeoning revenue figures. The company’s habit of preparing a calendar for the year ahead with the fruits that are popular at different times of the year, as well as with ideas for cakes and cupcakes that are to be launched around national, cultural, and religious holidays, continuously yields the desired results. “Moreover,” Steve adds, “we sometimes repeat certain well-received products year-on-year, but we are aiming to come up with fresh propositions as often as possible.”
In conclusion, the CEO feels he can cite multiple reasons that justify his expectations for an even more exciting 2020 for Magnolia Bakery. In the first place, he is happy to reveal that the organisation will shortly commence to sell its delightful goods in locations outside of its current stores. “We are willing to move away from the four corners of our stores and into the consumer market a bit more. To this end, we are working on licensing deals, as well as additional opportunities to sell our products in other retailers.
“Last but not least, we view ecommerce as a major opportunity for growth. Initially, we have had to figure out how to freeze our products for shipping and find the appropriate packaging. It was also of great help to us that we worked together with aggregator Goldbelly, in order to bring shipping costs down,” Steve wraps up.