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Wharton Students Help Doughnut Maker Jumpstart Business.
Rick Wilcox figured
his bakery couldn't lose. After all, he'd bought a Chester,
PA., firm — Ann's Doughnuts — that had been in business
for nearly 50 years. "People used to stand in line at 5:30 in
the morning, waiting for them to open the doors," he says.
Sure,
he'd changed the name — to Phatso's Bakery because
he makes cakes, pies and muffins and croissants in addition to hand-cut
doughnuts. But the location, across from the train station in downtown
Chester, hadn't changed, nor had its locally famous recipe for
glazed doughnuts. "Nobody else has our doughnut mix," he
says.
Then the city re-routed the street in front of the bakery, cutting traffic in half. Some customers could no longer reach the store easily, and others had trouble parking. Baked goods, like Starbuck's coffee or McDonald's burgers, depend on ease of access. Make them easy to reach, and people buy lots. Obstruct access, and they don't.
Wilcox found himself scrambling. He started looking for advice on how to rebuild his sales. A recommendation from a local economic development official led him to the Wharton Small Business Development Center, which is part of Wharton Entrepreneurial Programs.
Therese Flaherty, Wharton SBDC's executive director, paid Wilcox a visit in Chester and concluded that he needed a market study so that he could better understand who his customers were and what they wanted and thus attract more. She knew exactly who should do it: A team of Wharton undergraduates taking a class called "Management 100 — Leadership and Communication in Groups."
The spring version of the class is unusual at Wharton in that it's limited to students who have transferred into the School (Freshman take it in the fall). Both versions cover both leadership and team dynamics, teaching theoretical underpinnings and practical applications. But in the spring, for the applied portion, the professors team up with the Wharton SBDC. They split the class into teams of 10 to 12 students, and the teams do market research for Wharton SBDC clients — small businesses in and around Philadelphia.
"We coach the student groups to work as high-performance teams," says Anne Greenhalgh, one of the professors. "The assumption is that they'll do a lot of group work in their academic careers and professional lives. And our hope is they'll have a long-term impact on the growth and bottom line of the businesses they work with."
The team that helped Wilcox — they named themselves PhatPod — met with him multiple times before delivering their report to him at the semester's end. He'd visit campus or they'd travel to Chester to see his bakery, meet his customers and, of course, taste his wares.
Wilcox, for his part, knows baking. He learned to make doughnuts in high school, working at Dunkin Donuts. He thrived there and was offered a chance to attend "Dunkin Donuts University" and become a franchisee but turned it down. Later came a long stint at Pepperidge Farm, which had a commercial bakery in Chester where it made such well-known goodies as Milano cookies and Goldfish crackers. "I loved that job," he says. "I'd still be there if they hadn't moved the plant to Ephrata." After that, he worked at a Chester paper factory but continued to bake at home, making birthday and wedding cakes for friends. When the opportunity to buy Ann's arose, he jumped on it.
Once he became owner, he experimented with all sorts of doughnuts, figuring that customers prized variety. "We had banana cream, peaches and cream, chocolate cream," alongside the more typical varieties such as glazed, chocolate-covered glazed, cake and cream- and jelly-filled. "Sometimes, I'd go crazy and try to fill the whole case up."
When the students did their research, they seized on the variety of inventory. Wilcox, they suggested, might have too much. They had surveyed Phatso's customers as well as folks at two local malls and found that consumers preferred the more conventional flavors. "They said, ‘If it doesn't sell, don't do it,'" Wilcox recalls.
That sounds basic, but it contradicts the instincts of a baker or, for that matter, any kind of cook. Someone who loves to make food wants to provide lots of it. But to thrive as a business, Wilcox's goal had to be to make just enough to carry him to closing time, 1 p.m., each day. Bake more, and doughnuts, cookies and cakes would go to waste — or at least to the day-old shelf. Bake less, and he'd lose potential sales.
The
PhatPod team also pointed out that that Wilcox might explore
wholesaling. He could deliver his baked goods to
other retailers
and even big employers,
especially the ones that have been arriving as Chester
redeveloped its Delaware River waterfront.
Wilcox was already working on that, but with the students' encouragement,
he redoubled his efforts. The students chipped in by handing
out fliers to other local businesses, alerting folks to Phatso's
wholesale capability.
The result has been a partnership with Swiss Farm Stores,
a Delaware
County convenience-store chain. Wilcox provides doughnuts to all 10 of their stores. He says that Swiss Farm is talking about adding 10 more stores and would like him to supply those, too. Grinning widely, he adds that Swiss Farm dropped the doughnuts of a nationally known chain when it decided to carry his.
Not all of the students' suggestions proved workable, of course. PhatPod pointed out that Wilcox might increase revenues if he accepted credit-card payments. But he believed that he couldn't justify the cost in a business where the majority of sales are small ones, and margins are thin. "We have to move a lot of product to be profitable," he says. "And a doughnut and a cup of coffee, people like to pay for that with cash."
Likewise, the students' research
revealed that bagels — something that
Wilcox didn't make — were among the most
popular baked goods at many outlets, especially ones
like Wilcox's that depend on a morning breakfast
rush. Wilcox tried them but found they didn't
sell in his shop.
Even so, Wilcox compliments both the Wharton SBDC
and PhatPod. His business is growing, he says, and
Flaherty
and the
students helped
him.
It didn't hurt, of course, that folks in a local poll have named his doughnuts Delaware County's best for three years running.
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