Alvarado Street Bakery Operations Management

HISTORY

Alvarado Street Bakery, located in Petaluma California, is a small family owned business. When doing my research and trying to find companies that fit the small to medium businesses, two business stood out to me. Radio Flyer and Alvarado St. Bakery came to mind. Both businesses run small, the biggest at one-hundred twenty-one employees, really spoke to me. Radio Flyer, a Chicago based company was one that I was leaning towards because it’s a small local business that not a lot of people know of and its super close to my house. But in the mix of trying to see other examples of small businesses I stumbled across Alvarado St. Bakery and I immediately started to do my research. Alvarado St. Bakery, founded in 1978, is a small hippie and organic bakery in the Bay Area. We all know that the term organic has recently become a huge phenomenon, and everyone wanted to be one. Alvarado, you can say, are pioneers in being one of the bakeries at the time to use the word organic and still be opened to the day. In the 1970s the word organic or organic products weren’t things that people knew about or sought after. But Alvarado St. Bakery fought for what they believed in and their customers love them for it. Now their business, rather small, has expanded themselves into the shelves and you can purchase them fresh or frozen. The bakery’s rapid growth and dedication to organic ingredients had led them to ship out over forty million loaves of bread each day from their solar-powered bakery and one of their popular loafs is the flour-less sprouted wheat breads that they produced. Alvarado St. Bakery, for over thirty-five years has been a leader in producing these healthy, organic breads. In these thirty-five years, they have been able to push these products, not only through the United States but to other countries such as Mexico, Japan, Singapore, Kuwait, Puerto Rico, the British Virgin Islands and the Bahamas. Being able to ship to these different parts of the world and still being a small business is such an amazing thing simply because it is thought that if you are a small business, the biggest accomplishment that someone can have would be that they are able to ship throughout the US. But by them expanding to the different parts of the world, we, as entrepreneurs can see that anything is possible if you put your mind to it and are dedicated to your work.

BUSINESS

Alvarado Street started off as a small group of worker owners who come to a unanimous agreement when it comes to decision making. As the company grew, they involved every worker in their daily decision making and they have come up with a plan to give everyone the right to vote. This structure, the worker-owners elect a board of directors who hire the CEO. The CEO hired other managers and new employees. Once hired, they then become part of the worker-owner structure. In 1992, Alvarado Street experienced some internal difficulties. At Alvarado, they experienced a huge turn-over; nearly all the workers were receiving less competitive wages than other business where offering which made them leave the company. This made the CEO change the salary structure which kept their workers which made Alvarado Street grow and prosper as much as it has today. Although they did find a new salary structure, people still suffered because they were only paid the hours that they had put in and no over time. At the time, average pay was thirty dollars per hour, which was twice the industry norm. As they expanded, not only was the salary changed, Alvarado Street had to hire “specialist” for the specific various fields, such as marketing. These decisions didn’t change the way Alvarado Street felt in the way they wanted to treat their employees, give them a nice life style for working in their business and industry.

TARGET MARKET

Alvarado St. Bakery is well known for being organic. There biggest target market would be not only people who want to eat healthy but people who care about making a bigger impact on the planet. Not only is their mission to produce these amazing products but they also support farming practices that produce sustained soil fertility naturally and avoid the use of toxic farm chemicals. They strive to use as many organically grown ingredients as possible. The reason why they do this is because they want to be able to bring out a healthy product to the world which will enhance how their customers and workers eat while still maintaining a balance in the ecosystem.

PRODUCTS AND SERVICES

Alvarado St. Bakery’s line of flourless, sprouted grain baked goods includes a wide variety of different items, with over fifteen kinds of breads to choose from as well and bagels, pizza breads, rolls, buns, and tortillas which have been all curated under their supervision and added their organic touch. Unlike other baked goods in the market that use regular flour, at Alvarado uses whole, sprouted grains (whole wheat grains which have started to sprout and actually grow) which gives these products a soft and moist bread that also freezes well.

DIAGRAM OF CURRENT OPERATIONS

  This diagram shown above demonstrates what might happen once the people of Alvarado Street Bakery get their merchandise. Even before they get all of their products, there is first the planning of the product. They first have to receive some samples so that they can formulate the different recipes that go into making the breads and bagels. After they plan out the product, they order all of the things that fit together in order to make their products. There biggest advantage is that the farming is organic and doesn’t use any pesticides that might alter the flavor of the products. This advantage helps them get and keep all of their current customers. People are again, looking for ways to eat healthier and would much rather choose Alvarado Street rather than their competition (i.e. Bimbo) After the farming, it is sent back to the warehouse were the employees get to use all of the ingredients and follow the recipe card. After it is completed, they have to run it past an employee who has been assigned to that specific group. That employee does a final inspection and they either lets the bread be packed or it is returned so that the workers can fix the problem. In the packaging, they are correctly labeled in their corresponding packaging. This is possible the second hardest step. This is because there are so many different bags for each different types of bread.

CURRENT OPERATIONAL MANAGEMENT ISSUES

Alvarado St. Bakery sounds like an amazing place to work it. It included many benefits. With those benefits comes the problems. Like many businesses in the US. Alvarado Street suffers from expensive health care and workers’ compensation insurance. Many people also have started to eat at home since money has become tight. One of their key challenges are the other local businesses who has started to sprout. These businesses can include a more local, artisanal bakeries just like Alvarado Street and they will start losing their business. They also face with poor or no clear marketing strategies. Even though they have been in business for such a long time, they haven’t been able to grow. Typically, a business that has been opened for more than forty years, should have more than one hundred twenty-one employees and should be considered a big business. We can compare this to another business which is Whole Foods. Whole Foods started around the same time as Alvarado Street and now Whole Foods is a multinational corporation, having opened stored in different nations around the world. Why hasn’t Alvarado Street reach the same level as Whole Foods? Now is the time for Alvarado Street to expand themselves and possibly take over Whole Foods. We all know that Whole Foods is a huge phenomenon, but with the right marketing strategy, Alvarado will be able to expand themselves. Organic food is at its peak, everyone wants to start to eat healthier, choose the healthier options. Because obesity is at an all-time high people have become more aware of what they put in their bodies that there is no reason for Alvarado Street not to expand to other cities. Marketing themselves is still something that Alvarado Street is still suffering from. The business lacks in people coming in and making purchases and brand awareness. Despite for being in business for such a long time, the business is still only recognized in Petaluma located in California. Petaluma is such a small section in the state and its surprising how more than 80% of the regions in California are not aware of the business (Thistlethwaite & Brown, 2010). Another problem is that business has not hired any marketing team to help promote its products as well as the business overall. In doing further research there is nothing that says that they have qualified marketing managers. The only major information that I found was that they are all split into groups who are responsible for making sure that the products are being delivered to the various outlets or suppliers. Alvarado Street relies on customer feedback and the distribution channels or suppliers to help it promote their products. This strategy seems to have not worked well simply because it’s still recognized as a small company. Alvarado also lacks resources including human resources and financial resources. Having an annual revenue of almost twenty-eight million dollars, the company lacks enough funds to have sales promotion strategies such as employing media and sales persons. Most of the revenue is being used towards operational costs and expenses leaving the business with little to no funds to spend on marketing strategies. The last trend that Alvarado Street is lacking is in keeping up with the trends and technologies being offered by competitors. The company still use basic methods of producing, distributing and marketing its organic breads and bagels. They have been super strict in adding newer technological development and innovations not only in the marketing plan but also in the production process. Even utilizing the cheapest most current social media marketing that many small to medium size enterprises already use, they refuse to take in any part.

RISKS AND OPPORTUNITIES

One of the biggest risks associated with Alvarado Street is that they don’t have a clear management position. The have a CEO and people who are appointed to the group and are the ones that the employee-owner talk to when having difficulty. There is no one else between the CEO and the workers. Without having any clear manager or person in the middle, there is no sense of completion in the job. It seems that anyone can do anything as long as someone who is appointed to them finds what they are doing is correct. Even though having an even plain field sounds like something that is very innovative, but it maybe something that they should think about. There is a reason why not all other business doesn’t follow these steps. That risk is something that they should consider fixing so that they are able to grow as a company and be able to hire more people that will help them expand themselves. They should also focus on expanding their lack of financial resources and adding people to the marketing team. By having these people, they will be able to utilizes their marketing experience to enhance the promotional strategies and use up all of their constraint budget. One of the biggest ways that they can help them improve their business is to promote its products and services and to increase its brand awareness is to have them uses social media platforms to market its products. The ones that they should be using are all of the popular ones: Facebook, Tweeter, Linked In, and having their own blogging spot. By the constant interaction in these platforms, instead of using word of mouth, they will be able to spread faster and get their branding out there so that people can get more familiar with Alvarado Street Bakery and the amazing work they have put in their business. If they follow this, not only will they be able to reach the rest of the people in California but also to reach newer clients in other parts in the US and other parts of the world.

SOURCES

• https://www.alvaradostreetbakery.com/about
• https://www.alvaradostreetbakery.com/bread/green-business
• https://www.alvaradostreetbakery.com/faq
• https://www.alvaradostreetbakery.com/products/
• Thistlethwaite, R., & Brown, M. (2010). Case Study No. 1: Alvarado Street Bakery. Center for Agroecology & Sustainable Food Systems.