July 23, 2007
Potato Bread Baker Rolls South
By Pfoutz, Yvonne
A visitor to Martin's Famous Pastry Shoppe, Inc. might expect display cases of Danish and donuts, but the company's address, 1000 Potato Roll Lane in Chambersburg, identifies its premier product- rolls and breads with potatoes as the special ingredient. And the address for the new satellite bakery, Martin's is building in southern Georgia? Potato Roll Lane, of course.
"In a year, we produce more than 100 million packs of rolls," says Ronald Gipe, Martin's executive vice president for finance and administration.
Martin's is the fifth largest employer in Franklin County, with 550 people at the bakery and at its Gibble's potato chip factory near Greencastle. Martin's purchased Nibble with Gibble's and Kay & Ray's Potato Chips, formerly a Newville, Pa., company, in 1996. Gipe says the potato chips, pretzels and other snack foods are a "small piece of the business but have synergy with our store distribution."
Although consumers can also choose hoagie rolls, white and whole wheat bread, bread stuffing, and several sizes of rolls, Gipe says, "Our most popular products are the sandwich and long rolls. Around the summer holidays-Memorial Day, Fourth of July-we're operating 24/ 7."
The sandwich and long rolls are deliberately not called "hamburger" and "hot dog rolls," to avoid offending the company's large Jewish customer base.
"We're one fortieth the size of our competitors, but we have the number one branded roll in the U.S., and that's with distribution only in the Northeast and in Florida," says Gipe. "In major markets, like New York City, we have a larger roll market share. In Baltimore, for example, one third of the money spent on rolls buys our products.
"In the South and among Hispanic ethnic populations, they love sweet products. We think the Southern palate may be a little more open to our products than the Northeast."
The new 220,000-squarefoot bakery in Valdosta, Ga., which is expected to open in the fourth quarter of 2008, will produce the same potato rolls that have been a staple since Lois and Lloyd Martin started the company in 1957 in a remodeled garage, and sold their baked goods at farmers markets.
In 1966, the Martins expanded into a new facility on Route 30 (now the location of Sunrise Electronics and digitalSunrise) and operated a restaurant as well as the pastry shop selling 260 homemade items, including cakes and sticky buns. In the 1970s, the company moved to Potato Roll Lane and began a building program that created its current 270,000 square feet of production facilities.
"Jim [Lloyd and Lois's son and the current company president] has worked in the business since age 10," says Gipe. "At one time, his delivery route was the York market, where he noticed that people came looking for potato roll products. Jim's vision was to focus on a narrow niche of products-potato rolls-and to automate and distribute through grocery stores."
Ron Gipe holds bag of Martin's potato rolls.
The potato roll recipe, passed down through Lois Martin's Winger family, produces breads and rolls, which the company's Web site describes as having a "sweet, buttery taste, soft texture and distinctive golden color."
"The recipe is a highly guarded secret," says Gipe, "but even if competitors knew the recipe, they wouldn't put in the highest quality raw materials that we do."
The potatoes for the rolls arrive from Idaho as dried flakes rather than raw vegetables, to reduce freight costs. The potato chips are made from a different variety of whole potatoes supplied by East Coast growers, including some from a local producer, Bender's Potatoes in Chambersburg.
"Our raw material costs are higher than our competitors," says Gipe, "but our labor costs are lower. We have a highly automated factory and are constantly making capital investment in the factory. Our production lines-three for rolls, one for bread and one for snack foods-are focused and dedicated.
"Introducing new products is a slow process because of the manufacturing issues-new equipment investment-as well as [retail] shelf space and distribution concerns.
"Ours is a fresh product with a five-day shelf life. Most of our competitors freeze their products but we never do. The rolls we produce today will leave the plant by 5 p.m. today; most will be in the warehouses by 3 a.m. and in the markets tomorrow."
Martin's has 102 trailers and 95 tractors, which drove 7.5 million miles last year, delivering products to 450 independent distributors who stock potato rolls and other Martin's products in grocery stores.
Most of Martin's distribution is from Maine through North Carolina. Another area opened up in Florida, Gipe says, when "a former Martin's distributor in Long Island, who relocated to the Miami area, insisted that our product would do well on the East Coast of Florida. In fact, one in four consumers in Miami, Dade, and Palm County are familiar with our products because they are transplants from the Northeast.
"With 16% of our business in Florida now, we began looking at options for a second plant closer to that market. Key to us in choosing a location was logistics. Valdosta has access to 1-75, which runs north and south, and to I-10, which runs east and west. It's close to our customers in Florida but has a lower cost of going business-insurance, taxes, electricity. And Valdosta has the best water; we made test products from the water supplies of all three cities we were considering."
The Georgia facility, which is expected to employ 100 people, was designed by Chambersburg architect NewcomerAssociates. Chambersburg general contractor Brechbill and Helman Construction Company, Inc. is overseeing the project, although Gipe says the actual construction is being done by a Georgia general contractor.
"Newcomer knows our buildings," says Gipe. "Brechbill and Helman built our first location on Lincoln Way [U.S. 30] and we've never used anyone else."
Building the new factory solves a distribution problem, but other challenges aren't as simple to meet.
"Corn is king now," says Gipe. "Because of the demand for ethanol, farmers are planting more corn and less wheat. With supply and demand, we already have recordbreaking wheat prices. And our costs for wheat gluten and for milk powder are also higher. Milk powder last year was $1.02 a pound; now it's $2.39 a pound.
"Higher energy prices affect more than diesel fuel and propane. Our product bags are made of a resin that is an oil by-product.
"Shelf space is a challenge. Most of our competitors buy it but we refuse to go along with that. We have to win the business so customers will go to the local Publix [a southern grocery chain] or Wal-Mart and say, 'Why can't we get Martin's potato rolls here?'
"Government regulation is also costly. We spent millions of dollars to install and spend hundreds of thousands to maintain equipment to treat all the emissions [byproducts of yeast fermentation] from our ovens.
"Employee retention is 'important. We already have a low turnover, typically 5%, but unemployment in Franklin County is the lowest in the state, 3%.
"But we continue expanding even with the challenge of doing it with private money. This is a family business-Jim's children and grandchildren were at the Valdosta ground-breaking ceremony-so we dream of a national presence with the third generation."
Copyright News for Business, Inc. Jul 2007
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