Cincinnati’s Servatii Pastry Shop & Deli was poised to become another casualty of the economy in 2008. With expenses rising by the day and customer traffic dwindling, owner Gary Gottenbusch worried about the future of his ten formerly bustling locations.
Coming from a long line of European-style bakers, Gottenbusch was offering a superior product that nonetheless had a high cost in quality materials and time from skilled bakers. He couldn’t reduce his overhead without changing the quality of his business, but customers were trended toward smaller, lower profit items in an effort to balance their own budgets. It was time for the company to make changes that would keep it viable for both the recession and the future.
Gottenbusch knew that he needed expert advice, and he got it through the Manufacturing Extension Partnership, which is a Department of Commerce program that helps small businesses get expert advice from industry specialists. Guided by consultants, Servatii was reinvented with a new, streamlined process and an expanded line of offerings. He began marketing to new niche groups and joined a purchasing association to drive costs down. He even bought a new location, expanding when others were cutting back.
As a result, Servatii has thrived, with sales increasing 15% in a down economy. One key has been the increased focus on specialty goods. Consultants urged Gottenbusch to offer selections that were low cost and not available in other venues. Some of these products, such as the pumpkin pretzel, have become local favorites.
Another part of the expansion has been to area hospitals. Gottenbusch noticed when his children were born that the selection of foods at local hospitals was simple and unappetizing. This opened up a whole new (and relatively captive) market while allowing new customers to try his products. As a result, ten percent of the company’s sales are through a handful of local hospitals.
This led to a few healthy changes as well. Gottenbusch started making all Servatii breads free of trans fats. He switched frying oil to a healthier oil that was trans fat free as well. He also started including more complete nutrition information on all of his products.
Mindful of the recession, Gottenbusch also expanded his line to include smaller, value goods. One of these was a small pretzel with grooves on the side allowing eaters to tear off bites. He also added more bite sized pastries, allowing people to get a luxury food fix for little more than loose change. This led to another now popular product: plates of mixed bite sized pastries. Customers who try and love the mini pastries like being able to purchase and sample a variety of them.
Change is inevitable, and changing with the times is the only way for a business owner to survive the times. Offering new products that cater to modern tastes and attitudes while expanding to new markets—all with the advice of industry experts and branding consultants—is one way to make sure that your business doesn’t become another one of the dismal small business failure statistics.