Michael’s Cookies formulates with many fillers including chips, fruits and nuts.

The bakery packages its frozen, pre-portioned cookies in two-piece corrugated packages with layers of cookies separated by parchment paper.

Ritz Carlton. Hyatt. Marriott. Sheraton. Fairmont. All hotels, all instantly recognizable to most people. Michael’s Cookies—not exactly a household name.

However, this San Diego-based bakery supplies some of the most upscale hotels in North America with a comprehensive line of gourmet cookies, earning the bakery the simple but appropriate name: the “Hotel Cookie.”

At first, this name aptly applied to the bakery, as its sales mainly consisted of hotel chains. Today, however, the bakery is broadening its reach to additional foodservice outlets, in-store bakeries, supermarkets and superstores. The bakery’s growing reach is attributable to its strong management team, impeccable quality and simple, but effective manufacturing operations.

Michael and Lyndall Radeczki founded Michael’s Cookies. Michael is a Vienna, Austria-born pastry chef who spent the first half of his career traveling the world, serving as a pastry chef in upscale hotels. He eventually relocated to San Diego, where he and Lyndall founded Michael’s Cookies in 1987.

“A lot of pastry chefs go from working in hotels to supplying hotels,” Michael Radeczki says. “Pastry chefs realize the efficiency benefits of incorporating frozen or manufactured gourmet products into the hotel’s kitchen. They also realize the greater potential of being one of the chefs who create these products. So these chefs, including myself, go into the manufacturing business to sell their products back to hotels.”

This obviously gives entrepreneurs such as Radeczki a leg up on the competition. Radeczki parlayed this knowledge into a successful startup bakery, and a 2003 infusion of new resources in the form of new ownership has positioned the bakery for increased growth and opportunities.

In 2003, an ownership group purchased a large stake in Michael’s Cookies, with Radeczki retaining the remainder of the company. Radeczki remains as important as ever to the future success of the bakery. He develops all of the company’s products and has helped the bakery break into foreign markets in Asia.

“The intent of the new ownership group was that nothing would change,” says Scott Summeril, Michael’s Cookies’ chief financial officer. “Michael had a great idea and still has complete control over the product.”

Although the product has remained the same, the new ownership group’s experience has had a significant change in sales. Since taking over a little more than three years ago, the new ownership group has doubled the bakery’s sales and expanded its reach into new distribution channels.

The complete package
The success of Michael’s Cookies is due to Michael’s cookies. Radeczki’s approach to research and development is fairly straightforward: keep it simple. The company’s cookies have few ingredients, but the ones that are used are of the highest quality.

“Whatever you put into a product is what you get out,” Radeczki says. “If I use real vanilla, the cookie will taste better, so I buy the best ingredients I can find.”

As a small, niche bakery, this approach to formulation is easy to justify. However, as most bakeries grow, sacrifices often are made to balance quality with price and manufacturing considerations.

In its quick rise to a formidable cookie manufacturer, Michael’s Cookies has not had to compromise on quality. “Twenty years later, we still buy the same chocolate and sugar,” Radeczki says.

Just as important as the ingredients in the cookie is the presentation of the cookie. As a trained pastry chef, Radeczki’s attention to presentation is as intense as taste and mouthfeel.

Michael’s Cookies have a distinct look, Summeril says. “It’s a thicker cookie with artful cracking on top and beautiful coloring,” Summeril says. The cookies also are chock full of visible fillers such as chips, fruits and nuts.

The traditional cookie flavors account for a large majority of the company’s sales: Chocolate Chip, Peanut Chip, Oatmeal Raisin and White Chocolate Macadamia Nut are the biggest sellers. However, new product innovations in the last two years have generated excitement and opportunities.

Specialty cookies
Beyond its line of traditional cookies, Michael’s Cookies has experienced an impressive formulation streak, developing new cookies that conform to today’s consumer preferences. In October 2005, the company converted its entire line to trans-fat free cookies, not because of impending regulations, Summeril says, but because the company wanted its customers to have a more healthful cookie.

Unlike some bakeries, which have struggled to reformulate without affecting taste and mouthfeel, Radeczki says the cookie’s reformulation was simple, and the trans-free cookies taste better than the originals.

Formulating a 100% whole grain cookie was much more difficult for Radeczki, but the results were similar. “It was very difficult, but in the end, customers say it actually tastes better than our traditional cookies.”

The whole grain line of cookies was launched earlier this year in two varieties: Chunky Chocolate and Oatmeal Cinnamon Raisin. The company also produces a wheat-free Macaroon that uses potato flour and is sold at Disneyland. This product was launched earlier this year.

Despite the company’s foray into more healthful cookies, quality is still the No. 1 priority, and Radeczki scoffs at the notion that healthful products cannot taste as good as traditional gourmet products.

“The reason why a lot of bakeries cannot produce healthful products that also taste good is because chemists are doing all of the work,” Radeczki says. “Bakers should be developing these products, not chemists. Bakers know what products should taste like.”

Effective operations
The company bakes its cookies in a small but efficient plant in San Diego county. The bakery’s automated production line outputs as much as 19,000 lbs. of dough per day. The company mixes dough with a nitrogen-cooled horizontal mixer. The company’s use of a two-stage mix cycle and nitrogen cooling ensures that the dough maintains a temperature between 45° F and 48° F.

After mixing, dough is deposited into a trough and conveyed to the cookie portioner’s hopper. The 16-in. line processes about 30,000 cookies an hour and uses both wire and blade cutters. After portioning, cookies traverse through a nitrogen tunnel freezer set at -200° F.

Michael’s Cookies packages its frozen, pre-portioned cookies in a two-piece corrugated package with layers of cookies separated by parchment paper. “A chef doesn’t always want to use a whole case, so we designed a box with a lid that can be opened easily and put back in the freezer,” Summeril says. “We’re not just dumping cookies in a box.”

After packaging, boxes of cookies are transferred to the company’s new freezer. The company distributes frozen cookies through a comprehensive network of 160 distributors nationwide.

The company recently broke into international distribution with a shipment of cookies to Hong Kong. Summeril says the Asian market is lucrative and profitable.

Challenges and opportunities
Expanding its reach overseas is one of Michael’s Cookies many goals in 2006. To keep up with its expected sales growth, the company is installing a second automated production line that will more than double capacity. In addition, the company is working with copackers to handle certain business segments, such as fundraising.

The company also plans to start building a Michael’s Cookies brand through specialty stores. In addition, the company plans to launch a new line of cookies under the Bonzer’s brand name.

“Bonzer’s is a fun line brand that is targeted to new channels with a different buyer and end user,” Summeril says. “It will allow us to participate in some business where price is a larger issue. The brand and its products will be ‘backed-by-the-chef,’ Michael, and also strive to offer a healthier-alternative product.”

Price is always an issue when manufacturing gourmet cookies with the best ingredients available, but Michael’s Cookies has thrived due to its high quality and innovative products.

“We are the highest quality cookie on the market and we will not compromise our product,” Summeril says. “With quality, though, comes a slightly higher price tag, but consumers tastes are changing, and they are willing to pay more for a quality product.”

By not compromising on quality and always staying ahead of product trends, Michael’s Cookies has built an impressive business in the last two decades. Plans to expand capacity and fill out its line with branded products should arm the bakery with the necessary tools to succeed for another 20 years.

Company Profile Michael’s Cookies Headquarters: San Diego Product line: A complete line of trans-fat free gourmet cookies, including traditional whole grain, sugar-free and gluten-free varieties. Markets served: Upscale hotels, foodservice outlets, supermarkets, superstores and specialty stores. Key personnel: Michael Radeczki, founder; Don Cooksey, chief executive officer; Scott Summeril, chief financial officer.