East Balt Commissary

Source: Food and Drink Digital

Date :12/12/2007 11:37:58

Mark Kuchuris explains to Food&Drink Exec how East Balt - a family bakery business from Chicago - has enjoyed a 50 year customer-supplier relationship with McDonalds; customer demand and wheat prices.

Written by Ian Armitage and Produced by Pat Harlow

East Balt Commissary is a dedicated supplier of bread products to McDonald’s, one of the world’s largest fast-food chains, as well as other leading QSR brands. Headquartered in Chicago, the company was founded on a fortuitous meeting between Ray Kroc, the man who made McDonald’s what it is today, and Louis Kuchuris, a local baker and East Balt’s founder. On a simple handshake, the two agreed upon a customer-supplier relationship that still stands today.

East Balt has grown with McDonald’s for the past 50 years and during that time has learned to anticipate and respond to its largest customer’s needs. In recent years however, a few things have changed. McDonald’s has altered its direction. It doesn’t want to carry all the risks associated with a single-tier supplier system and is looking for suppliers to diversify customer profiles. “We are dedicated to serving McDonald’s and about 95 percent of everything we produce worldwide is for them,” explains Mark Kuchuris, Strategy Senior Vice President. “McDonald’s wants us to diversify and my goal is to be 50 percent McDonald’s within the next five years.”

Commitment to McDonald’s

East Balt will be broadening its customer portfolio while continuing it’s commitment to McDonald’s growth and success. But how will it attract potential new customers? Well, that’s a clear strategic vision. Mr. Kuchuris believes new customers will be attracted, amongst other things, to the fact East Balt offers brand protection and has served McDonald’s passionately for the last five decades: “The QSR industry has realise that McDonald’s has one of the best supply chains in the world,” he says. “When they heard that it was allowing its suppliers to look for new business, it wasn’t that hard to convince potential new customers to consider our value to their own supply chain. Actually, it has been a positive experience to be able to show how East Balt can add value to a variety of new potential customers.”

One of the obstacles East Balt faces at present isn’t attracting new customers; the challenge is dealing with overcapacity within the system. “Many QSR brands are so big that they would consume all our capacity,” says Mr. Kuchuris. As a result, the company is looking at investing in expanding capacity, marching into new markets to boost its customer profile. “We are building a new facility in Southern France and are also looking to do something in the former Eastern Block, as well as China. This is in addition to the facilities we have already opened in Johannesburg and Cape Town, South Africa,” he adds.

Offering customers food safety, brand protection and quality, East Balt has a gained solid reputation. It is also renowned for ensuring it fully understands customer processes, enabling them to produce best possible products. “We have an intricate full field service program that enables us to understand how customers work, especially when it comes to our product,” comments Mr. Kuchuris. “We are capable of servicing all possible needs and supply the best possible product. We go out to restaurants on an almost daily basis to ensure that happens.”

Wheat price versus quality

East Balt’s biggest market factors are wheat price and quality. According, to Kuchuris, it is a constant battle to strike a balance between the two. The company works to assure a good price for the end user, but given the current high cost of wheat, that is challenging. “We will never drop our quality standards, but when commodity costs increase we do everything in our power to ensure we pass on minimal cost to customers,” he says.

The food sector never stands still and requires those who operate in the market to be extremely innovative. For instance, food and consumer trends are continually changing. Today, choice is crucial: there must be different tastes, menu flexibility, and all the right sizes to fit every active lifestyle. This means East Balt must push the boundaries, developing new products to cater for these changing needs.

Mr. Kuchuris continues: “For the last 30 years, we focused on what we used to call round and brown – a simple, fast and high quality product. We streamlined our processes to do that, creating the fastest hamburger bun in the market with the best quality and consistency. Today, however, our customers want variety. They are becoming more demanding and we are trying to find very innovative ways to make our production lines cater for a new breed of product, whether it is flat bread, a tortilla or a crusty roll.”

Diversifying the product

In these health conscious times, food retailers and manufacturers are aware of how to important health is. The fact is the consumer demands it, and suppliers must either cater for that need or suffer losses. Mr. Kuchuris explains: “If our customer demands it we need to diversify our product. For example, in Europe McDonald’s wants to be assured everything in their products is suppose to be there, they do not want any additional ingredients added that are not necessary.

The McDonald’s hamburger bun has a sweet taste, which has always been demanded by McDonald’s, this leads to concerns on sugar content, so how do we help them become more health conscious to the consumer? A lot of times it is down to perception, but we still need to meet those demands and we are doing so in a flexible and forward thinking manner.”

This highly successful, yet simple concept is seen as the secret to the company’s continuing success. It is devoted to the products it makes and cares about customers. “Our concept is simple – we are a family business passionate about what we do and the customers we serve. We have also been able to take risks, and have a strong supply chain. We look forward to our continuing relationship with McDonald’s and are excited by what the future will bring, as well as the new relationships we will establish,” he concludes.