What a Bakery Can Tell Us About the Economy Right Now

but that's time. That means, uh means fewer listeners. Well, I mean hopefully some people are still listening to podcasts, especially this one. I actually tend to listen to podcasts more around the holidays just because I listened to them while I'm cooking and baking, and Christmas of course is prime baking and cooking season. You know, my wife is baking like two cookies today for like various parties and kids school thing to Saider. I literally just got a

text about how time consuming it is. I hope she's listening to odd lots while she's doing that to make the time pass. Okay, Well, this kind of got me thinking,

you know, it's the holiday season. Everyone is off baking things or probably buying things for presents, and I really wanted to talk to someone who is in a sort of seasonal retail industry and ask them how they are experiencing the economy right now, because, as we've been discussing for some time, it does feel like we're kind of in this weird environment where there are a lot of concerns about inflation, we still have lingering supply chain constraints,

there's a lot of talk about recession. But at the same time, a lot of the hard data that we get is saying that consumer demand is still relatively strong, unemployment is still relatively low. Things are sort of ticking along, and yet a lot of the sentiment surveys seem to indicate something otherwise. So I thought it would be great to speak to a small business owner about what exactly is going on. Let's do it, because baking is, you know,

bakery is also one of those things. It's like so you know, it's laborious, it's commodity sensitive, it's rent sensitive, it's there's so many things that sort of come together in a baked goods. Bread, cakes, cookies, So a great way to get a snapshot of what's happening in the economy right now. Yes, it's like we are taking all the ingredients that go into a baking business and dissecting them one by one. Okay, Well, without further ado, we

are going to be speaking with Ken Jerish. He is the owner of Jerish Bakery, which is a bakery in the suburbs of Cook County, Chicago, actually where I used to live. Ken, thank you so much for coming on the show. You're welcome, Thanks for having me. So how busy are you around this time of year? Um? Extremely? Um. You know, it starts at Halloween and goes through Thanksgiving and then uh, Christmas or the whole month of December. For us in general, every day is busier than the

day before. So we kind of call it a hello, thank miss season, you know, because it's it's busy. And this year, as you kind of indicated in your introduction, there is still a high demand for our product. That's a wonderful thing, you know, so we're pretty much firing on all cylinders as far as the demand goes. Keeping up with it is another challenge. So can you just describe,

like how big is your bakery roughly? I know it's been around since On your website, Uh, it looks like there's a bunch of amazing stuff from specialty cakes and wedding cakes and cookies, and it all looks amazing, But like, how big? Just to give us a feel and like, what are your customers and clients like in your geographic reach? Sure? So we are a single location retail bakery. We're located in Oak Grove Village, Illinois. We are immediately adjacent to

O'Hare Airport. But what separates our community and our business from the airport is a very large industrial park. I'm told that it's the largest contiguous industrial park in the country. So it does a couple of things that it kind of buffers the noise of the airport from our community,

which is a good thing. But we also have a lot of companies who are then also customers, So we do a great deal of retail business, you know, homeowners who just come in and buy stuff for their family, and a lot of company corporate work for meetings and anniversaries and retirements and all that. We have about fifty five full time employee, not full time, but fifty five total employees. About half of those are are full time.

This time of year with Christmas, we kind of blossom up to about ninety nine employees seasonal workers who help us pack the thousands of pounds of cookies that we we make this time of year. We've been here for three years. We enjoy a very good reputation. The number of employees we have, and then the size of our physical store is bigger than I would say of the bakeries in the country, but there are certainly much larger baking companies corporations that provide for grocery stores and all

that kind of stuff. So we're kind of a small business in the scope of businesses at large, but as far as bakeries were one of the larger ones. So you mentioned that consumer demand was holding up pretty well, but it was a challenge to keep up with it.

Can can you expand on that a little bit, like, what are the constraints that you're experiencing at the moment, because you know, one of the things we talked about a lot on the show is everything from supply chain disruptions to higher input prices, to labor shortages, all of that, and it is all of that. So keeping up with it. From a labor standpoint, we are pretty close to where we we should be. Took us, oh jeez, all of this current year to kind of get to the level

that we're comfortable with. For production, we're still a little bit short for the store, and whether it's production or people in the store, either one can throttle back the amount of product that we could sell. I mean, if we can make it, but we don't have the people that move it out out the door, that's the problem. And vice versa. If we can't make it, uh, you know, obviously we can't make it with the staff that we do have because they're a little bit less experienced than

what we had had. We have reduced some of the varieties of product that we make because I'm not going to waste time making stuff that may or may not sell. I'm going to spend our time making this stuff I know is gonna is gonna sell. Um, so we do that.

Cost of labor has definitely increased. We're in Illinois. Chicago went to a fifteen dollar minimum wage two years ago, maybe three at this point, and our governor thought it was a wise idea for the whole state to go to fifteen dollars, which fully takes effect in But when we saw that it became law, we looked at where we were in our employment costs to where we were going to be a number of years in the future. Drew a straight line. I just started increasing prices, you know,

four years ago, when it was inevitable. I'm glad we did that because now, in addition to the increased labor cost we're dealing with increased ingredient costs, significantly increased ingredient costs.

Back on the labor. We increased our prices, like I said, and I was kind of overcompensating at the at the beginning, but I didn't want to have to raise prices exponentially towards the end as more and more of our people were bumping up against a minimum wage and such as it turned out after the pandemic and there's a labor shortage and blah blah blah. My people wouldn't work unless we paid them more. So, I mean, they didn't go on strike, but if they could have, they may have.

So I had to increase our wages. In our business, we are close to labor not quite it's like forty five, but in round numbers, it's so people start making more money and impacts our bottom line significantly. You throw on top of that the significant increases for for our goods, and we do deal in commodities. We're buying flour, sugar, butter, shortening all that kind of thing and making it into bakery products. We are not buying you know, prepackaged ho

hoes and that kind of stuff. We are manufacturer of of bakery goods. So when you hear about the cost of you know, flour going up significantly, or the cost of eggs, is every consumer has experienced going up at times that we're experiencing that exact thing, for instance, our cost for eggs. And this is kind of since two thousand was a banner year. It's a great year for selling stuff right here, for making profits. So since then, like eggs have gone up between depending on what type

of eggs you buy. That's huge because we use a lot of eggs. Sugar has gone up, like um butter has gone up. My supplier told me forty pcent. It feels a lot more than that, but um chocolate has gone everything, everything has just gone up. And then in addition to that, you mentioned supply chain issues. It's huge. For a time, we couldn't get certain ingredients, or we perceived that some ingredients were going to be a little bit short. So I've had to stockpile coco powder for

a while, couldn't get it. Fortunately I got enough from a couple of different sources and we made it through. Now our suppliers have plenty of cocoa powder, but just today they don't have one of our shortenings that we use. I don't think that's necessarily a production problem. It's probably more of a distribution problem from the manufacturer to our distributor. But you know, needless to say, I'm scrambling to then

figure out a substitution. It's all of the labor costs of labor costs of ingredients, and then getting what we need when we need it. I have so many I have like a million questions now after that, just on

every different facet. But first another sort of like I guess semi big picture question, which is, and it's pretty important for macro stuff and the FED and everyone else, for all of the issues and the rising egg and coffee prices and the rise and labor costs, etcetera, how would you compare conditions now and the challenge of operation to say, either the start of the year or last holiday season left what did you call it, hollow, A

hollow thinking hollow fatmos. I really like that. So in terms of like the various shortages and inflation, has there been some easing since the last Hall of fank miss season. Oddly enough, when the pandemic first hit, some of our prices actually went down because there was a glut of let's say, eggs and milk product on the market, so that was kind of weird. But then the following season, you know, which was last year. Then by then the prices had mostly increased to about where they're at now,

at least ingredient prices, and they've just stayed high. They haven't come back down. So from a cost standpoint, other than labor, labor just keeps going up. Uh, the ingredients were we've stabled at just you know, overall painful, but at least they don't appear they're not increasing as greatly as rapidly as they had. The prices always fluctuate, but

they're they're stable at just exceedingly high. So one thing I always wonder about, you know, when we talk about inflation and we talk about higher input costs like ingredients, like labor and wages, how do you actually make the decision about raising the prices of your own goods? So you know, if if the price of eggs goes up, do you immediately pass that cost onto consumers or do you sometimes wait a bit and eat some of that

higher expense yourself. Just walk us through the process of deciding how much of this you actually pass on to your customers. Sure, so if you look at it historically, um, you know, back ten fifteen years ago, if there was a run on flower and there actually was some kind of a commodity thing I rye flower, rye flower tripled and price and it made national news. It really didn't affect our bottom line. It was one ingredient for one

product that we make. We honestly don't make a whole bunch of it, So we really didn't go out of our way to increase prices. We may have just because we tend to increase our prices once a year anyhow, but we would take those kind of opportunities and whether it's rye flower or bird flu that impacts eggs when it makes national news, just running a business, it's an opportunity to increase the prices without getting a whole bunch

of complaining from the customers. It's not that we're out there price gouging, but you know, timing can be everything. But that's when one commodity eggs or flour or sugar is going up and everything else is staying the same, that's then an opportunity to work the timing to increase prices. Currently, though, we have to raise our prices. If we don't raise our prices, we're going out of business. And for us, like I said, we're fifty labor, so as labor goes up,

I'm raising prices immediately. As some of our ingredients fluctuate, um, I'm usually absorbing most of them. But when we have the level of increases that we have here, and so for me, on a product, the ingredients itself might be so on a loaf of bread, if flower doubles increase, my cost is by by three or five, five cents or something that doesn't bother me. But when every ingredient in that loaf of bread goes up, either you or whatever,

now we're talking some real increases bread for us. It's kind of a lousy example, but cookies and cakes that use the higher priced items like the eggs that have gone up, um, the flower that's gone up, the sugar that's gone up, every ingredient has gone up, plus the labor. I'm increasing my prices and I you know, I use math to do it. I you know, look at what my costs are. What percentage of that increase is going

to you know, filter down to the bottom line. I have to put in all the overhead and all that some of that has gone up. Insurance is certainly never going down. And we come up with an increase. And what we've done this year, you know, going back to the end of we have increased our prices three times. Each time it's been around four and a half to five five and a half percent. So if you look compared to a year ago, we've gone up about We've never done that before. I mean maybe my dad did

back in the seventies when inflation was going nuts. But for us in the recent our recent history, you know, we we tend to increase our prices five percent at a time, and then it's a question of how often we have to do that in the course of the year. And we hate raising prices it's a lot of work for us. We have all sorts of price tax to change and signage and websites and all sorts of stuff,

so it's it's not a trivial exercise. But if we don't raise our prices, we become a charitable organization and I can't operate that way. So this actually leads into something else I was wondering, But when you raise prices, do you notice is there a subsequent drop in sales? Or how does it work with baked goods, like how price sensitive are consumers of cookies and cakes and bread? Historically? The answer your question is, yes, we raise prices, customers

either by less or come in less frequently. This time around, since everything is going up, we haven't really seen a huge drop off in that demand. Also haven't got a lot of griping, or at least I haven't. Maybe my store staff is, but I haven't gotten much pushed back. And when you're dealing with a holiday season, people are having twenty or thirty people over, they're going to spend

the money. Now, what we have seen is some of our higher ticket items, so are decorated cakes, we're not making nearly as many as we used to and when we do, instead of making you a half sheet or a full sheet, we're making eight inch nine inch cakes. So they're still buying stuff, but smaller sizes. I don't know that that's strictly because of our inflationary time right now, We in the industry, at least in the Chicago area, have tended to see a drop in decorated cakes period,

mostly because the kids don't want kids. People who are in their twenties and thirties don't want to buy the same things for their kids that they got from people our age, you know, when they were kids and stuff, so you know, they want ice cream cakes, so they do experiential things instead of having a birthday cake at home. So we're seeing a different cultural shift there too. But one other aspect that I think you touched on too, and I've had this conversation with my accountant over the years.

He feels, and I have to agree that bakeries are somewhat recession proof. I'm not sure if we're inflation proof, but recession proof in that to some extent, people still have to eat. Now you don't have to have a bomb bot or a cookie or anything like that, but people do like to indulge. They are not going to skip their kid's birthday party. And businesses are still going to celebrate retirements. They are still going to have Christmas parties.

It's just a matter of you know, when economy is good, a large corporation might have a Christmas party at the Marriott. If the economy is a little soft, well, they have it catered and the caterers buy stuff from us. If it's a little softer yet, they skip the cater but they're still getting cookies and cakes from us. So in a sense, we're still kind of making a lot of the same stuff, just selling it to different people depending

on how the economy is going. I want to go back to something, but mainly because if I don't go back to it now, I'm going to forget. And there's something really interesting that you said, but can you talk a little bit more about the experience level of your employee base and your ability to be productive? And you pointed out how with the less experience employee base, you've

narrowed the range of things that you can make. Talk to us a little bit about like experience productivity and what that means in terms of your ability to produce goods. We've actually been blessed. I think we historically have had a lot of people, many of our employees who had been with us for ten years, fifteen, thirty years. We have just a handful who have been with us for or over close one guys over forty years. We've had a number of people who left, not because of the

pandemic or anything. They were they kind of aged out, it was just time. We have had a hard time hiring people who they themselves have ten or twelve or fifteen year is of experience. So we've been getting people with less experience, maybe right out of school, and so we are training them for how we like them to make our our product. So things just don't get done quite as fast. We don't have the institutional memory because they weren't working for us at the time, so it

just takes a little bit longer. Now one would think that we would be paying them a little bit less because they're less experience, but that's where this whole minimum wage thing kind of throw that out the window too. The new employees are coming in with reasonable skills, and

we tend to hire slow. When we get a decent person, they're still fairly productive but we just had to make decisions of you, we're not going to teach them to make that because maybe it was kind of a slower moving item, or it's just too time consuming, and so we just said skip it. Where COVID played into that is we wanted to get people customers in and out of our store more quickly. Consumers didn't want to be lingering in a crowd of people breathing on each other

and stuff. So we eliminated variety and things that were a little bit more time consuming to pack, or we pre packed them to get customers in and out quicker. So by looking at items that could physically be sold to customers quicker. If something wasn't one of those, we just got rid of it. And probably a good thing to do now that COVID is kind of not an issue anymore. They're still not coming back. I mean, you know, we're just not bringing those products back. We're kind of

happy we got rid of them, some of them. You know, you mentioned packaging there, and this reminds me of something I heard from a fairly high level economists. But they were talking about maybe one of the underappreciated aspects of food inflation at the moment was from packaging materials, so cardboard and plastic and thing like that, and everyone was talking about the higher costs of ingredients, but actually it was a lot of the packaging that had gone up.

Is that something that you've noticed Absolutely anything we would put in, like plastic clamshells, those who have gone up. I think I had some numbers on that we're seeing between forty and increase in the packaging. And you know that may not sound a lot when you're talking about a plastic container that you know just cost a few pennies literally, you know, went from five cents to seven cents or something like that, But when you're buying cases of these things, well that adds up real fast. Again

with supply chain issues in packaging. If we were using a package container that is kind of an odd size, those got discontinued and so you know, we can no longer get some of the sizes that we want. For us, we had bags, wax bags you put bread in our coffee cakes that since I was a kid, We've had those things printed with our logo, our name and all that stuff. It gives credibility to us as a business.

We can't get those anymore. The bag manufacturers are prioritizing large chains like Jimmy John's, McDonald's or whoever where they are under contract to provide those printed bags and nose sizes, and if they don't, they lose money, uh, you know, penalized and such. So we as the little guys. If we can't buy half a million printed bags at a time,

we're not getting those print printed bags. So at this point, all of our bags are playing unprinted bags, and people walk out of our store it looks like they got their stuff from a food truck. Our boxes were still able to get those printed for the most part, but yeah, the bags have you know, they're just kind of playing. So again, that's and that's because the manufacturers are having

trouble keeping people working. Sometimes it's a matter of trouble getting the actual paper good the product to make the bags. And that's because the people you know, in Seattle or wherever they're you know, producing these paper they can't get the people to work out there. So it's it's definitely a domino effect on that. I did get word from one of our suppliers that maybe the first quarter of twenty three we may be able to purchase printed bags

in the quantities that makes sense for us. I can't, you know, I get twenty five thousand or fifty thousand at a time that lasts six months to twelve months, for us to get a quantity of bags that lasts much longer than that, our suppliers don't want to warehouse them, and I can't afford to buy that man either. It just doesn't make sense. So actually this sort of brings me back to another thing I wanted to touch on

before I forget. You mentioned that with some of the raw materials you bought, you sort of like scrambled and maybe overcompensated in your purchase. I think you mentioned cocoa powder is one that you felt like you had to

stock pile. And that's sort of like been a theme we've you know, cross industries and this idea of like the bull whip effect and there's a shortage of some good and then everyone puts in a ton of orders and then suddenly it turns into some glut because people are trying to compensate for shortage and suddenly have you seen that are there any categories in which either you've been stuck, you know, sort of over inventoryd or where you've seen a shortage turned into a glut and prices

have dropped a lot as sort of that cycle plays out. Okay, so I've not seen the prices dropped because of the glut. They're still elevated. Yes, I have probably been one who and coco powder was one of I took it when I could. Uh, and now it's not a big deal. Some of our starches corn starch, I have stockpiled on that. None of it's going to go to waste. Um, but we still can't get some varieties of corn starch in

a in a food manufacturing facility like ours. It's not just corn starts a whole a bunch of different types of starches that we use. So I have stockpiled on some of them. I've actually sold a bag or two to other bakery owners who could not get them, possibly because I did. I mean, you know that is a concern. You know, we need to get what we need to get.

We also don't want to be hogs about it. So to compensate when maybe I have overpurchased, I am accommodating, you know, the needs of some other bakery owners in the area by selling them a bag or two, and they're doing the same thing. And we've we've traded ingredients back and forth, so it gets to be a supply thing. And in our industry and particularly business our size, we kind of work on a just in time inventory system.

We don't call it that, but when you're dealing with eggs and stuff that that that are perishable, you have to do it that way. And because I'm in the Chicago metropolitan area, I can get pretty much everything I need every week, so I don't have to have a warehouse to store all my ingredients. I just have a back portion of the of the bakery. And because I can get it once a week, it works well. So we have had to change from a just in time to a just in case inventory system. And I won't

say that I originated that phrase. I actually got that from a seven hour I went to in at a baker's convention this past September, and the guy presenting was from a company called group O Bimbo. They are the largest bakery in Mexico and the United States, third in Europe or something. They supply a lot of grocery stores

and such. They're facing the same problems we are, and he too, said that they are doing a just in case inventory as as opposed to a just in time and one of the people in the audience said, well, hey, you know, if you're getting it just in case, I'm screwed because now I can't get you at all. He didn't deny that, but yeah, we all recognize that, you know, we have to do it. Oddly enough, he told a

story about gelatine. They were having a hard time getting gelatine in Mexico and it's like, well, why can't we get gut gelatine while they're not slaughtering as many hogs. Well, they're not slaughtering as many hogs because they don't need as many hides from the hogs that they use to make cars, and they don't need as many highs making as many cars. Why aren't they making as many cars because they can't get the chips from Taiwan. Yeah, this circle,

this chip shortage is turning into a bake good shortage. Well, and then he finished that with saying, one of the biggest users in the world of gelatine is the company that makes Gumi bears. So you know, it turns out that you can't buy Gumi bears because you can't buy chips from Taiwan, and so you know the main thing there. It's not just a supply chain, it's really a supply web, and we are worldwide. We are so intertwined, and you just can't imagine the domino effect that one industry has

on the other. Yeah, these kind of relationships I find absolutely fascinating. And I remember, I remember there was one instance from two thousand eight, and I think I wrote about it briefly, but it was that there was a milk shortage because there wasn't as much sawdust being produced because people stopped building houses after the housing bubble burst. And it turns out that cows like to sleep in sawdust, and if they're not sleeping comfortably, they produce less milk.

So these are the types of things that I think you only realize once you start to have these types of disruptions. Yeah, anyway, I wanted to ask about one one other big input, presumably into the bakery business, but that's energy prices. Have you been affected at all by higher gas or electricity prices as a something that that's impacting you, not directly. I contracted both our natural gas and our electricity either during the very beginnings of the

COVID thing or just before. So I've I've got a pretty decent rate per kill a lot our and our gas has been tolerable. Now the distribution charges you know, comment and night Corps seem to figure out ways to increase that, but that has been probably one of the more stable inputs into our business. What about transportation, I imagine deliveries and stuff like that in terms of not just in terms of your receipt of them, but also

your ability to deliver to corporate clients, etcetera. We talk a lot about sort of like long haul trucking, but what about local deliveries things like that. Um, yeah, huge impact on that we do deliver. We have some, as I mentioned earlier, corporations in the area that get cakes and stuff for meetings, and so we have a new every van drives around. Oh man, my my gasoline expenses

have for sure doubled, uh sometimes worse. At the same time, we got rid of our really small delivery van, which was like what they call it transit connects, so it's those little boxes that drive around and we have more of a full size van, not one of those you know, U haul rental van type things, but you know, the kind of van you can put seats in and you know, go for a drive, But my gas usage increased just because in the mile doesn't is is great on that.

So the two combined have been really big, you know, in and of itself percentagewise, huge increase. Bottom line, it's not a major component of our business, so it's more of an annoyance than it is a price increased driver. Another thing, while we're just sort of talking about random components, what about equipment in the kitchen? And I'm sure stuff breaks down, you know, everyone has ovens and dishwashers and everything that breaks down and being able to get people

either out to service it or replacement parts. What's been your experience with that and is that getting any better? So I'm knocking on would as I speak, Um, so far, so good. But yeah, that is a concern because you could have a piece of equipment that doesn't work and you can't get that one little you know, a part, but without it, you're you're out of luck. And like I said, knock on wood, we have been fortunate on that and getting service people out so far has not

been a major major problem. You know, earlier, when we were talking about pricing, you spoke about how when when there's a big event in the news, like a supply eye shortage or maybe just generalized inflation, it sort of gives you cover to raise prices. Can I just ask, does that same dynamic happen with your employees and wages? Like if everyone is talking about how inflation the cost of living is going up, do you have more people who come asking you for wage adjustments or cost of

living adjustments? Yeah? I haven't thought about that way, but yeah, and when it whether it's really cost of living that people are feeling their money isn't stretching us far, or if it's more of hey, my buddy just got a job, you know, and he's getting fifteen or sixteen and I'm working here at thirteen. You know, I want more money or I'll just go get my job at the factory. And uh so it's more of a competition for employees. And that's what we were dealing with more recently, you know,

supply and demand. There was you know, a slow down into the supply of labor so that the man went higher. People like us, we're willing to pay more and we have been but so is everybody else. I don't know that my employees are necessarily feeling the pinch of inflation and relating that to Hey, I need more money compared to my buddy just got a better job. Why can't I get paid more? Other non wage things that you have done to compete for labor? Do people get free cookies? Sorry,

I had to ask you. We've always had that policy and pretty much people you know, can sample our goods throughout the day, with the reason it's not a really good idea to take a piece out of a decorated cake. Customer gets kind of ticked off at that. But we have a fairly generous policy. I mean, we figure you can only eat so much after a while, you're just gonna, you know, either explode or pass out. So yeah, we we we do have that. We also have a profit

sharing program. Now that's you know, it does cost money. It's not a direct wage at the employee sees, but it's definitely an expense for us, you know, sick days and vacation and all that. But as of lately, we've had those for for decades. But lately, no, I don't think we've had any non monetary type of incentive to

stay around. So there's been a lot of talk about a looming recession as the Federal Reserve raises interest rates, And I'm wondering, like, do you get a sense on the ground in a bakery business of you know, an impending downturn in customer demand? And then secondly, what would a generalized economic recession actually look like for a business like a bakery. So as we speak today the middle

of a holiday season, we're just we're busy. January will be the telltale sign of what either almost buyers remorse in a sense as people start getting their credit card bills and all that hits. January is always slow. People are tired of eating. But there's slow and there's dead. We expect slow this year. It could be dead. But like I said earlier, we we've just found that people still want to treat themselves and we we continue to

do okay even in a recession. I mean, I hear the same fears of recession because of the radio station I listened to. It's hard for me to quantify that as as we're experiencing it. It's more what I'll see at the end of the year, the end of the quarter, comparing it to previous ones. That's, you know, holy cow it you know it was not busy, felt busy, but it wasn't. I'd love to say we're definitely recession proof,

and I believe we are definitely recession resistant. And another thing that I've noticed is that we are Our business is excruciatingly steady throughout any kind of a year. We can advertise, we promote, we do things on Facebook or whatever, and business just kind of plugs a lot. People pretty much ignore our advertising. I think, I don't know, but you still advertise. Why why do you still advertise if you can't really tell a difference from it. That's a

good question. But I don't do it in newspapers anymore, and I don't do in yellow pages if anyone even knows what the yellow page is. So we we've shifted how we advertise. But the point being, you run promotions, even if it's in store promotions, you know, it doesn't necessarily set the world on fire, at least in our industry. And again, like I said earlier, you can only our customers can also only eat so much, even if something's on a two for one special. It's like, well, I

live by myself, I can only eat one. Buying two of them and having one to throw out doesn't make any sense either. Ken you've never had me as a customer, I guarantee you I could eat all of everything. Anyway, go ahead, I guess I have a long way of saying, we'll see it in just my employees getting done at eleven o'clock in the morning having started at you know, four thirty or five, instead of getting done at one

thirty or two in the afternoon on Friday. Let's say that's kind of a measure of of just slow down and work again. If that happens in January, it's normal. If that happens in March, when we've got possibly a Punsky Day, I won't even tell you what that is, but we've got St. Patrick's Day, We've got Pie Day that's a big one, possibly Easter, and we got Eastern in either March or April. You know, if we're not working hard at that time of the year, then we're

definitely in a recession. We did your care Pulaski Day. I remember that day. I went to school in Illinois for a while. Well day, Um, yeah, it's Polish. It's big in Chicago. It's big in Detroit, and you know, we sell tens of thousands of those things, and it's it's a wonderful day because I remember we used to get off for Pulaski Day, which is also in March. But yes, maybe that's not as much of it. Maybe that's not as much of a big goods holiday. I

don't know, it is not a big goods holiday. It was great for going on ski trips because Chicago area, we'd all be off and we could take the kids out of school, go to Colorado and you know, on a Monday, which is always what it is, the slopes would be relatively uh unpopulated. But yeah, I got rid of Kasimir Pulaski and I don't know if they got rid of President's Day two. I'm not sure what we get off anymore. I just have one last question, and it actually goes back to this idea of like, you know,

the hoarding question. But you know, during the worst of when it was the most challenging to hire workers, I'm curious whether you saw labor hoarding as a phenomenon where maybe you felt, Okay, we might be overstaffed relative to the amount of demand, but given the difficulty in hiring or competing with the next bakery over for employees, it's

still extent to keep that level. I'm curious if a that was something you experienced and be can you just talk a little bit more, how you know what it looks like December two, which is today that day we're recording and versus say the start of the year, when you know, sort of the quit rate and other measures of labor market intensity seemed to be much higher. So as far as labor hoarding in our industry, and I do hang with several other bakery owners and we are

talking constantly, we were not labor hoarding whatsoever. We were asking each other, Hey, is if something you want to get rid of, you know? And the answer was no, I'm looking to um. So we were just definitely short of bodies. I think most of us are again, like we are closer to being fully staffed comparing today too, when people are work quitting maybe more rapidly. I don't know that we necessarily how people it in per se,

We just lost people for other reasons. Someone we just wanted to pursue other careers or or work for a different type of of bakery and it's still it actually seems like it's been a little bit easier to find employees. And I used indeed two to try and find people. I'm not necessarily promoting it. I'm not dissuading people from using it. It is what it is. I think they advertise on a lot of podcasts. They're going to like that. There's a totally organic mention of them. Yeah, keep going.

But yeah, it worked, but it it was not immediate, and it took many interviews and many many responses of yeah, well, we'll call you back someday to find the people that we're going to be a good fit in our business. Are you advertising for potential employees more in general? Like keep post my job openings. So compared to ten years ago,

we never had to advertise for employees. People would walk in asking if they could, you know, work for us, So compared to that, yeah, we're having to advertise much more. In the store, you know, retail sales clerk really hard to to post a job on. And indeed, for that, because you just got a lot of weird responses. Putting a sign in the window and word of mouth is what has worked best for us for for for the professional staff, for the bakers and the cake decoration we advertise.

For the people in the store, we're just hope and pray that they come in and generally that has worked. Okay, So I have just one more question. It's an extremely important one. We could talk for easily another few hours, but I know it's your busiest time of the year, so I don't want to take up too much of your time. But very very important question. What's your favorite baked good to eat around the season of how thank miss oh Man? Um? So I have to say, I

mean I like everything, most everything we make. Not so much of a fan of the poppy strip, but um, this time of year for me, one of the best things I take a sample of it every time is something called stolen. Oh stolen. I love stolen. Yeah, and what it's fresh out of the oven, you let it cool down a little bit, and we always have to sample at least one on every batch. You know. I I've acquired a taste for that, And no, I didn't like it as a kid, but I just really enjoy that.

But if you know, if we're not making that, if it's not Christmas time, oh, then I go for a very in cream filled like, all right, Ken, you're making us both very very hungry. It was amazing having you on. Really appreciated getting your perspective and getting to hear you know, how a business owner is actually inter pritting a lot of these big macro economic themes that we talked about on the show a lot. So thank you so much, Thank you, Thanks for having me. Thank you so much.

That was great. So Joe, I love that conversation and there are so many interesting things to pick out of it. But I mean, I guess let's just start with the productivity thing, because you know, not only does it sound like he's struggling to sort of keep up production at pre COVID levels, but also just this idea of consciously cutting back on things that might be more difficult to make just to sort of simplify the overall production process.

That was really interesting. Yeah, that is really interesting. And I know there's we've talked and you know, productivity in general is this interesting question, and well, how how productive can any entity be with a younger, less experienced workforce. Maybe that means productivity is set to improve in the future as less experienced workforce has become more experienced workforces.

That was an interesting thing. I thought the thing about printed bags was interesting and oh, totally bigger companies getting priority specialization and the idea that it's like what you don't want. You could make a bigger order for bags, but then you have to wear house all the bags yourself, and you don't have that space. Obviously. The fact that you know, the chip shortage is now contributed to gummy bear shortage is like one of those sort of classes.

You never know where the semiconductor shortage is going to crop up. Yeah, it's usually where it makes total sense. When did you say, but you have never like sort of like intuitively come to that any other way. Absolutely, Also the inventory point, because this is a big thing. You know, people are wondering to what excents strong consumer demand is people just you know, making up for shortages, and the same thing for businesses. And the idea of

and you know, accumulating big pots of cocoa powder. I thought that was pretty interesting. And also a secondary market in trading coco powder and corn starch and other essential baked goods. I mean, I hadn't thought that that existed, but it makes sense. I want to be a fly on the wall and the you know, the the heads of all these different Chicago bakers get together and they talk about who has extra coco powder, who has a who has an extra baker, and the kitchen is looking

for a different job. So many interesting economic ideas to tease out of there. Yeah. Well, and the one other thing I was thinking about was Ken mentioned that, you know, it's actually difficult to raise prices because you have to change all the labels. You know, you have to go

on the website and change prices. And one thing I've heard that's kind of interesting, and it's just a pet theory at the moment, but you know, with technological advances and with automatic pricing systems for the big business says, you know, for big box chains and things like that, there is this idea that actually it's a lot easier to raise your prices and change them than it has

been in the past. So I've heard people talk about that is like one reason maybe that prices went up so quickly, But I guess it means that prices could go down quickly too. I hadn't realize that. It's very interesting what you said about how in the past sort of big notable disruptions were a good moment to sort of raise prices. Right, So if everyone's talking about you know that it's sort of like the opportunistic or strategic

timing of price increases. And then you think, okay, well, now we have like inflation and so many different things are going up, and this idea that, okay, you can easily raise prices in five percent increments multiple times over and over again, and the fact that no one really seems to push back on it, or at least so far, is pretty notable. Yeah. Absolutely, I guess that's how the happen. You mean chocolate spirals? Right? All right, all right, we should leave it there because I need to go eat

some sort of baked good. All let's leave it there. This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe Why Isn't All? You could follow me on Twitter at the Stalwart. You can follow the Jerosha Bakery. They're on Twitter at Jerosh Bakery, although I think they're more active on Instagram, which makes sense. You can look at all their bake goods at Jerosh Bakery.

Follow our producers Kermen Rodriguez at Kerman Armand and dash Will Bennett at Dashbot and check out all of our podcasts under the handle at podcasts and for more odd Lots content, go to bloomberg dot com slash Oddlods, where we post transcripts, we blog, and we even have a weekly newsletter that Tracy and I write that you should subscribe to. Thanks for listening to