It would be natural for a company that's more than 100-years old to resist changing with the times, but Orlando Baking does not hold true to that philosophy. This bakery, founded 136 years ago by Giustino Orlando in Castel Di Sangro, Italy, celebrated its 100 year anniversary of baking in Cleveland in 2004. Although members of Orlando's fourth generation still hold executive positions, members of the fifth generation have joined its ranks at different levels throughout the organization and are “looking to go forward,” says John Anthony Orlando, executive vice president, operations.

While Orlando Baking's latest generation isn't the first to encounter change, it has probably seen and will inevitably work through some of the most significant challenges of its company's long history. Many of these changes have been induced by macro-economic factors affecting the bakery's target market. The local economy, the foodservice market and consumer buying behavior, among others, have impacted the company's own micro-economic business approach.

While once solely a fresh business for its region, the company eventually entered the par- and finished- baked frozen market. Today, almost 50 percent of its sales are in the frozen business. Its product mix has changed significantly, with its biggest growth potential in the frozen area for national foodservice accounts.

Looking back

(From left) Deli Italian breads; the bakery’s signature ciabatta bread; Orlando’s fifth generation (from left) Nick Orlando, Jr., vice president, sales; John C. Orlando, Jr., Esq., general counsel/plant operations; John Anthony Orlando, executive vice president, operations; Daniel Holan, vice president, administration; and Chris Orlando, inventory reconciliation manager.

Photos by Lisa DeJong

Orlando Baking's current production facility, built in 1979, is the company's fourth location in its 104-year history in the Cleveland area. The city of Cleveland sold the company the land for $1 as part of a redevelopment zone. Although it had been in East Cleveland since its inception, Orlando considered moving to the suburbs, but the city wanted the bakery to remain within its borders and added further enticement with the redevelopment zone incentive.

With the company's longstanding presence in Cleveland, the city has seen its share of change, but only recently have these changes so dramatically impacted Orlando's business strategy. “We've always been big proponents of Cleveland,” says Daniel Holan, vice president, administration, one of 30 family members affiliated with the bakery that employs about 350 people.

“All of our family is from the area, which is a positive thing, but the local population has been dwindling, which has forced us to go outside our market. Our business, market and demographic customer base have changed. Even our competition has changed.”

Orlando Baking has two business channels — one is the fresh, daily delivery to local operators and the other frozen. Aside from the manufacturing plant, the company has warehouses in Columbus and Youngstown, Ohio. Four or five years ago, it shipped north to Michigan, west to Toledo and south to Dayton and Cincinnati. At that time, the company had more than 100 routes. Today, it has 65 routes. In the past year, the bakery eliminated its Pittsburgh route.

“There's still a population in those areas, but the cost to produce and get the products there, inherent labor costs and benefits, and other associated costs have forced us to reanalyze what we're doing,” Holan says. “We haven't totally pulled out of those markets, but instead found different distributors to handle our products. We were able to maintain 80 percent of the accounts that we had there.”

A local economic downturn means less manufacturing, a dwindling population and fewer people dining out. Those who do dine out are not necessarily dining at local independent restaurants, which were at one time Orlando's principal customer base for its fresh business, but are instead going to the chain restaurants. “So, the whole market has changed and the customer base has changed for us, too,” Holan says.

Even its competition has changed. Orlando Baking used to compete against regional bakeries. Now, more of its competition comes from major food distributors.

Looking forward

While such market shifts might seem ominous for Orlando Baking, they have actually opened new opportunities for the company. A variety of economic and market forces have affected how the bakery does business. The company has responded to these changes by reallocating its product mix to address a strategy of growth in other areas of the market that offer more potential.

About 75 percent of Orlando's business is supplying the foodservice market. “Restaurants started accepting more frozen products as chains started developing because they wanted a more consistent product,” John Anthony says. “A lot of times some of the frozen product is better than fresh because they're baking it off and they handle it directly. We were losing business in frozen, so that's really what pushed us to go there.”

Orlando will continue to pursue and build its fresh route business, but it sees the greatest growth potential in the frozen area for regional and national restaurant chains. In the old days, restaurants would buy from their local bakery. Even if the restaurant had locations throughout multiple states, it would source locally. Today, the competition is on a national level, notes Nick Orlando, Jr., vice president, sales. Competition may even go beyond U.S. borders if the dollar's value favors Canadian goods, making it cheaper for Canadian companies to export their products to the United States than it is for U.S. companies to ship their goods throughout the States.

The sales process also has changed. Salespeople no longer knock on a potential customer's door with fresh samples, expecting new business to start the next day. The process has become far more lengthy and complicated. A chain restaurant's local manager doesn't have the authority to accept new business that way. Approval has to come from the chain's buyer, who typically handles specific product categories, John Anthony notes.

“The trend now in foodservice is in consistency, not only in product, but in pricing,” Nick, Jr. adds. “It's easier for the purchaser of a restaurant chain to buy from one bakery than from 10 or 15 bakeries, and to get one price across the country. That's the growth in foodservice, so that's what we see in our business.”