Emerging Concepts | September 2010 | By Judy Kneiszel

House of Bread Bakery Café

West Coast bread concept is expanding its franchising efforts after pushing through the low carb craze.

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Sheila McCann, founder of House of Bread Bakery Café, says foodservice has similarities to her former occupation as a criminal trial attorney.

“You have to give it your undivided attention and always think on your feet,” she says. “Foodservice matches my personality. I like the fast-paced environment and I like people—a trait that helps me treat both customers and employees better.”

The foundation of the business McCann started when she moved from the courthouse to the House of Bread is, of course, bread—from 9-Grain and Garden Herb to Apricot Walnut and Cinnamon Swirl—and it is all made from fresh, organic, stone-milled wheat flour. Several standard breads are available every day for about $5 a loaf, with rotating specials like Apple Cinnamon Swirl selling for up to $6.75 a loaf.

“All bread has five basic ingredients: honey, water, yeast, salt, and flour,” McCann says. “And because bread is mostly flour, the freshness of the flour is key. You have to start with fresh flour, because fresh flour is better for you and makes a tastier bread.”

Fresh flour also makes for high-quality muffins, scones, cookies, and cinnamon rolls at House of Bread. The bread, meanwhile, makes for high-quality sandwiches, which House of Bread sells for about $7.

McCann started House of Bread in San Luis Obispo, California, a city of about 43,000 midway between Los Angeles and San Francisco. The company store there is joined by six franchised locations sprinkled throughout the West in Alaska, California, Nevada, New Mexico, and Utah. McCann says the West is also where the concept is likely to grow during her second attempt at franchising.

After four successful years with one location, House of Bread started franchising in 2000, and by 2003 had 10 locations. The company then ran smack into the low-carb craze, one of a number of factors McCann says caused franchising efforts to drop off and brought the number of stores down to seven by the beginning of 2010. Now, however, she’s tweaked the concept and is ready to grow again. Despite the lingering recession, McCann is hoping to sell six new franchises by the end of the year. 

“We’re really more affected by food trends than economy,” McCann says. “Our in-store retail sales have stabilized through this economy because while a loaf of bread is $5 here, more people are eating at home, and they are more willing to spend a little more on a really good loaf of bread.”

Now McCann is combining that good bread with improved operations and broader offerings that include lunch.

“When I started franchising in 2000, I hired a consultant who just sold franchises and left me to deal with them,” she says. “This time I brought in consultants for operations, not sales.”

House of Bread Bakery Café

Founder: Sheila McCann

HQ: San Luis Obispo, California

Year Started: 1996

Annual Sales: $1.7 million
(for 6 bakeries in 2009) 

Total Units: 7

Franchise Units: 6

www.houseofbread.com

Adding the words Bakery Café to the House of Bread name and making lunch mandatory in all locations were just a few of the changes. Stores are undergoing the remodel required to serve sandwiches, soups, and salads in addition to bread and baked goods. An updated point-of-sale system was incorporated as well, to make stores more efficient.

“Now the walls are covered in pictures of sandwiches,” McCann says of the remodels. “Fast food has taught customers to look in front of them and see pictures. People are very visual. It’s made a big difference.”

Outdoor seating also brings in more customers, she says. “Outdoor seating captures attention even when weather isn’t good,” McCann says. “It changes people’s perception and says ‘food.’ … Umbrellas say ‘food’ whether people end up eating outside or not.”

House of Bread chose Boar’s Head Provisions Co. to provide the meats and cheeses used in its sandwiches. McCann says these meats and cheeses contain no fillers, gluten, artificial colors, or trans fats, making them a good match for the quality of the bread. Sandwich options include a House of Bread Club with turkey, ham, and cheddar; the Cranky Turkey with turkey, dried cranberries, and cream cheese; and a Veggie Delight with avocado slices, cream cheese, artichoke hearts, lettuce, tomato, red onion, olive oil, and balsamic vinegar. 

“We decided if we were going to do lunch we didn’t want to do it half way,” McCann says. “We offer really high-quality sandwiches any time, so a customer can come in at 7 a.m. and get a sandwich to go for lunch.”

McCann says the lunch offerings and the glass display cases that show off bread and baked goods set House of Bread apart from competitor Great Harvest Bread Co. 

On the other hand, simply offering sandwiches does not make House of Bread another Panera Bread, either.

“Panera is a restaurant,” she says. “We’re more grab-and-go. Most of our sales are carryout.”

House of Bread is also no Starbucks with bread—though it does sell coffee.

“We have very good coffee, but at my company location I sold my cappuccino machine,” McCann says. “It’s not our focus. I tried to go after that market, but that was swimming upstream. People come into our stores expecting a good bakery, but they’ll come in carrying Starbucks in a mug.”