DBi Woodstock, NY: Baking Up Some Artisan Bread Solutions

As many traveled abroad for their May DBi experiences, five MBA2s – Kyle Ashley, Nels Leader, Ian Martin, Michael Morgan and Ari Wolfe – drove just 90 miles north to help Bread Alone, a growing artisan bakery located outside Woodstock, NY, answer a number of questions critical to its continued success.

In short, Bread Alone – one of the founding fathers of the artisan bread movement in the US – faced growing pains:

Could the business afford to invest in the capital-intensive equipment necessary for future growth? What level of operational efficiencies could the business expect to achieve if it made these investments? Would the investments be NPV positive? Short of major expansion, what sort of operational changes could the business make that would most improve the bottom line?

To kick-off the experience, the team met with Bread Alone's President and CEO, Daniel Leader (Nels's father), for an introduction to the business and to assess goals for the DBi experience. From there, the team split the DBi into two parts:

To start, two days analyzing Bread Alone financials and conducting industry research in Stern's breakout rooms; then, a week at Bread Alone's production facility, working in teams to answer critical questions for the business.

During its first two days at Stern, the team created competitive benchmarks from publicly-traded peer companies, assessed the overall financial health of Bread Alone, and completed a preliminary valuation.

The work drew from skills recently learned at Stern – indeed, many of the tasks completed closely mirrored those necessary for the end-of-semester corporate finance project. The team also created work plans for the specific tasks for the week on-site.

With its week at the production facility, the team completed a business valuation, estimated the NPV of plant expansions based on different growth projections and under both lease and buy assumptions, assessed the economics and logistics of introducing new product lines, estimated cost savings from rationalizing distribution channels, and estimated labor savings from select equipment purchases.

For the team, working at Bread Alone was an extremely valuable complement to the first year on campus. The experience demonstrated the practicality and value of many of the tools acquired in the classroom – mainly those gained from Stern's core curriculum. In particularly, work drew heavily from accounting, finance, and operations.

As Ian Martin put things, "In many ways the project was a capstone for our first year at Stern. It cemented key concepts from across the core, allowed us to see how it all fits together and gave us insight into a spectrum of issues that executives face on a daily basis. It was an amazing opportunity to work with Bread Alone and I think we were able to add some value in return."

In addition, the experience highlighted that unique, small business opportunities can be pursued in parallel with more traditional recruiting (members of the team spent their summers with a variety of companies, including Stern lynchpins like American Express and GE Capital).

For the business, the team offered a level of financial acumen and analytical skills that are not available in-house.

Ultimately, the analysis of the expansion contributed to Bread Alone's decision to move forward with investment in a new production facility that will greatly increase its capacity and improve its efficiency. Planning is currently underway, and Bread Alone plans to have the facility operational within approximately the next 18 months.

Bread Alone's products are available throughout the tri-state area, including in NYC at Whole Foods, Fairway Market, Fresh Direct, the Union Square Farmers' Market (Monday, Wednesday, and Friday), and at many other markets and food shops.

For more on Bread Alone visit Breadalone.com.