Since opening its doors in Noting Hill in 2004, Hummingbird Bakery has been taken to the capital's heart, riding the cupcake wave and beyond with their range of US baked goods.
We speak with Founder Tarek Malouf about his plans for the group and opportunities and costs in a post-Brexit world.
QSR: What does Brexit mean to your business?
It’s really too early to tell. However we can see some trends. For instance, aside from butter, milk and eggs, many of our ingredients come from overseas and are priced in US dollars and Euros. As a result of the fall in the pound we expect that our input costs will increase. We will of course look around to find alternatives to these products but overall the trend for us, and indeed for the rest of the market, is for prices to increase.
I think that this change, against a backdrop where food has been cheaper than in previous generations, will be a surprise to the public. People just don’t value the cost attached to food or indeed to labour.
Speaking on the staff side, obviously the effect has the potential to be huge. A large percentage of our staff are from the EU. Without these people we just wouldn’t have a business- we don’t see a lot of UK applications for our jobs. It has changed a little since the recession but not enough to move the needle. This isn’t unique to us- it is industry wide.
I hope the Government realise this. If working in the UK requires anything more complicated than applying online for a visa to say Australia or the US, the UK will grind to a halt.
QSR: What are the biggest challenges facing your business?
1) Rents – they are just too high in London in particular
2) Increased competition. Not necessarily from bakery shops but from food in general since 2004. This means we need to stay on top of our game and ensure that our customers feel valued and come back to try us again and again as we innovate
3) The wage squeeze. We can get around this though
QSR: What are the biggest opportunities for your business?
1) Opening outside of London. There is a lot of opportunity people just aren’t seeing because they are too focused on the capital
2) An increase in website sales. We achieve 1/3 of our web orders without any form of promotion
3) Getting a greater understanding of our customers and their demands. We haven’t done this before, and the potential for data mining our database is huge.
QSR: A lot of companies have launched a product line to augment their product offering. Tell us about yours?
The line started last year when we were approached to do a bakery goods line for Sainsbury’s for the Christmas period. It did really well and from there we decided to expand it to sell via Amazon to get nationwide reach. We’ve augmented the line over time but the products all remain true to our brand ethos, and have a traditional, vintage feel.
That being said, the line is an adjunct to our bread and butter business, which is our bakery products and our stores.
QSR: Tell us about your store footprint and your plans for more outlets?
We currently have 6 stores in and around London. Our newest store is in Richmond and while we’d like to open more stores we haven’t yet for two reasons. First of all, we wanted to make sure that all our processes were down pat before expanding more widely. Specifically we’ve focussed a lot on staff development and empowering each team member to make decisions on the store floor.
Secondly, as is the case for all food retailers, we’ve been looking for the right sites. Commercial rents in some of the areas we’d be keen on opening just don’t make sense. Rent reviews and competition for sites is so extreme we’ve expanded our horizons. You don’t even need to look that far out of London to find areas where the economics start to work again.
QSR: How big do you want to become?
We’re fortunate that people get really excited when we open new stores, which tells us that there is significant demand for us to expand. Within our current structure, we can open 1 – 2 shops a year though I don’t really have my sights set on a specific number of stores for the brand, either in totality, or a yearly target. Given the lead time in finding properties and getting leases signed in the current market I don’t think hard targets make sense.
That being said we’d also be interested in expanding across the UK though that would require us to have regional teams which we don’t have in place.
We’d also look at further international expansion beyond the U.A.E but it would have to be in a market that made sense such as Japan.
So far I’m happy with how we’re trending. I like owning the business myself and don’t want to push expansion via having outside investors either.
QSR: Tell us more about your staff development programme?
Every food and beverage retailer in London has an issue with staff retention. Staff don’t seem to see working in food and beverage stores as a career, and we wanted to change that, or at least develop staff so that they saw working for us as more than just a job. So what we have done is train all our store staff in communications and leadership, and empowered them to take ownership of their store. As we don’t have a development kitchen we also have a production trainer to ensure consistency across our estate. Finally, we also pay above the minimum wage and offer private health insurance to all our staff.
QSR: What are your best sellers?
Our classic red velvet is our best seller, in all its various forms. As a category, cupcakes make up the highest percentage of revenues, however cakes are catching up.
QSR: Tell us about what product innovation you have in the works?
American baking is so varied. It has taken the best from around the world and combined it with different, innovative ingredients. There is a fun spirit to American baking. In the past 4-5 months we’ve invested a lot in our head office, and placed a renewed focus on analysing what works, what doesn’t etc. As a consequence we’ve also been innovating a lot more than in the past. For example we’ve introduced bundt cakes, begun re-introducing our pies and have also introduced new cake flavours. We’ve got a huge bank of around 500 recipes so we’ve really only just begun on the product front.
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