Gonnella Baking Company

views updated

Gonnella Baking Company

2006 W. Erie St.
Chicago, Illinois 60612
Telephone: (312) 733-2020
Toll Free: (800) 262-3442
Fax: (312) 733-7670
Web site: http://www.gonnella.com

Private Company
Incorporated: 1886
Employees: 500
Sales: $69 million (2000 est.)
NAIC: 311812 Commercial Bakeries

Gonnella Baking Company is a baker of Italian and French style bread operating primarily in the Chicago area. From fresh bread to frozen dough, Gonnella sells to retailers and restaurants alike through both regional and national distribution. A privately owned family company, Gonnella has built a loyal following in its over 110-year history. It has been ranked as one of the nations top 100 bakeries and produces nearly 1.5 million pounds of bread products per week. Besides Italian bread, the company also makes frozen dough, fresh frozen baked bread, buns, rolls, breadsticks, and bread crumbs.

A Rising Business in the 1880s and 1890s

In a small storefront on south side Chicagos DeKoven Street, Alessandro Gonnella, an immigrant from Barga, Italy, opened his version of the American dreama bakery. Alessandro was a hands-on manager because as the stores only employee he was baker, delivery service, salesperson, and accountant. The business, fed with the yeast of Alessandros dedication, grew and soon allowed his wife, Marianna Marcucci, to join him in the United States from Italy.

In 1896, the business had become so successful that a new locationon Sangamon Street near Ohio Streetwas necessary. Soon, the business required more employees as well and help arrived when more family emigrated from Italy to work in the bakery, namely Alessandros brothers-in-lawLawrence, Nicholas, and Luigi Marcucci.

Building for the Future: 1910s-60s

By 1915, Gonnella Bakery was in need of more space once again and a new plant was built on Erie Street in Chicago. As the company had grown delivery methods had also progressed. Now, delivery wagons drawn by horses were required to make over 200 stops each per day.

Several distribution changes throughout the decades changed the customer base that Gonnella served. While once fresh baked bread delivered to homes constituted the biggest percentage of the business, the climate soon changed. An evolution away from home-delivered sales led to higher volume sales to restaurants and grocery stores.

Delivery was no longer reliant on wagons either; the advent of the automobile gave Gonnella a new distribution method the truck. Soon, Gonnella trucks became a symbol for fresh baked goodness delivered throughout Chicago.

New Products and Challenges in the 1970s

In the early part of the 1970s, a federal investigation looked into antitrust and monopoly complaints regarding Chicagos Italian bakers. Part of the Sherman Act established by Congress on July 2, 1890, antitrust laws were written to protect trade and commerce against unlawful restraints and monopolies. The complaint against Gonnella was initially filed in October 1972 and settled out of court in August 1974. The final judgment decreed that Gonnella Baking, as well as codefendant Turano Baking Co., were not to fix, determine, maintain or stabilize prices, discounts or other terms or conditions for the sale of bread to any third person or divide, allocate or apportion markets, territories or customers, or refrain from soliciting or accepting bread business from customers doing business with any other person engaged in the baking or sale of bread.

With the threat of antitrust legislation behind it, the company moved into the future with new products. Gonnella introduced frozen bread dough in the mid-1970s. These ready-to-bake products allowed the company to sell to grocery stores and restaurants in a larger geographical area. The frozen dough, when shipped to restaurants and groceries, was thawed and baked on location to give more consumers access to fresh-baked bread. The Gonnella trucks were no longer confined to Chicago but were dispatched throughout Illinois and in surrounding states.

Building in the 1980s

In 1980, Gonnella Bakery purchased a plant in Schaumburg, Illinois, to produce frozen dough. The increased manufacturing space and capabilities extended the reach of the bakery into supermarkets, delis, and restaurants in 35 states.

As the company prepared for its 100-year anniversary in 1986, it also began plans to market its fresh frozen bread products nationally. Part of that decision was based on demand from consumers for Gonnella bread in a larger geographic area. We get calls for bread from Arizona, Florida, places like that, said Louis Marcucci, Gonnella president in Crains Chicago Business. But we dont ship fresh bread any farther than Indiana. In 1986, the companys revenues were $26 million with profits estimated at $700,000.

Frozen Products Bringing Growth in Early 1990s

The names of some of the employees at Gonnella in the late 20th century were remarkably similar to those who worked in the business over 100 years earlier. In fact, 33 members of the Gonnella and Marcucci families, descendants of the first owners of the business, worked for the company throughout the 1990s.

In 1990, Gonnellas rivalry with Turano Baking hit a new level when both bakeries introduced new products aimed at serving a larger market area. While Turano introduced dry pasta and frozen cannoli, Gonnella introduced a new line of frozen garlic bread.

Sales were estimated at $32 million in a November 12, 1990 article in Crains Chicago Business with rival Turano ringing up sales of $26 million. Frozen bread accounted for one third of Gonnellas sales, which allowed the company to sell to an area of more than 35 states.

In 1994 Gonnella made the decision to outsource its delivery. President Robert A. Gonnella said, We serve over 4,000 restaurants a day and another 500 institutional customers and retailers.

The decision was a difficult one, as the Gonnella trucks were not only part of the Chicago landscape but a part of Gonnella heritage as well. One of the ways my grandfather used to measure the success of his business was by the number of trucks we owned, said Gonnella. One of the most emotional decisions that I ever had to make in business was outsourcing our trucks.

The change, however, was the right thing for the business, noted Gonnella. We were trying to be experts in everything. Were not in the transportation business, were in the business of baking.

The following year, Crains Chicago Business reported that half of Gonnellas estimated $41 million in revenues were from frozen dough sold to grocery stores. No matter how fast or good you are, you cant bake (bread) and get it on the shelf within an hour. In-store bakeries can, said President Robert Gonnella, explaining the popularity of the frozen dough being sold to grocery store chains.

As the demand for fresh food rose, Gonnella found more customers for its frozen dough in the grocery businesssuch as Jewel Food Stores and Dominicks Finer Foods, Inc. Varieties of frozen dough included Italian, wheat, white, and French.

Creating Opportunity: 2000 and Beyond

In 1999 Gonnella Baking was listed as one of the largest privately held companies in Chicago, according to Crains Chicago Business. Crains estimated revenues at $84.4 million, and the company had 330 employees. For 2000, sales dropped to $69 million but the number of employees increased to 500. Lou Gonnella was president and CEO of the company; George Marcucci served as CFO.

In 2000, Gonnella was selected as the official hot dog bun supplier at Wrigley Field. Wrigley Field was renowned as the home ballpark of Major League Baseballs Chicago Cubs. We view this as a great opportunity to put a greater focus on our hot dog bun business at the retail level. Gonnella has been in business for 114 years and is as much a part of Chicago as the Cubs. Given the appeal of Wrigley Field and its audience demographics, we think we have a winning program for the 2000 baseball season, said Tom Marcucci, vice-president of sales and marketing, in a company press release.

Company Perspectives:

Our mission, which springs from our family tradition, is to provide our customers with bakery products of the highest quality combined with a special standard of service. At Gonnella, outstanding breads are only part of our story. Ask any of our clients why they choose Gonnella and youll understand that the Gonnella name is a name built on service. We were founded on the credo that offering superior service by focusing on the customers needs is what sets one company apart from another. Today, over a century later, we still remain true in every sense of the word to our founding mission. Every one of our employees from our president to our receptionist will go out of their way to deliver on our promise of customer satisfaction. Whether its making sure that the special order called in is delivered fresh and on-time, helping you iron out a difficult technical issue, choosing the right mix of products for your operation, or a friendly greeting when you call, we always put our customers first. Put simply, when you deal with Gonnella youre guaranteed to have the best service possible.

The company found additional promotional opportunities in the form of signage with the Wrigley Field contract and agreed to sponsor This Week in Cubs History on the marquee. Paul Gonnella, director of sales said, the Gonnella name is well recognized in the Chicago area and we believe this arrangement will help our business regionally. We are prepared to increase our market share by dedicating our South Side facility exclusively for the increased production of pan breads, including hot dog buns.

Also, in 2000 the company launched a web site at www.gonnella.com. The web site offered everything from product lists and distributor information to recipes from the Gonnella cookbook.

What started as a storefront bakery producing a few hundred loaves of bread a week had grown into a thriving manufacturing company with three plants producing more than 1.5 million pounds of bread products each week. Two plants in Chicago and one in Illinois as well as two additional sales/distribution offices in Indianapolis and Wisconsin employed a total of 500 people. Gonnella distributed to an area of 35 states, stretching from coast to coast. The company enjoyed the distinction of being listed several times on Bakery Production and Marketing Magazines list of the nations top 100 bakeries.

Principal Competitors

The Earthgrains Company; Heinemanns Bakeries; Interstate Bakeries Corporation.

Key Dates:

Alessandro Gonnella opens the Gonnella Bakery.
The bakery moves to a larger location.
The plant which would later become the corporate headquarters is built.
Gonnella enters the frozen dough market.
Gonnella reaches out-of-court settlement in federal antitrust case.
Gonnella purchases plant in Schaumburg, Illinois.
The company begins distributing fresh frozen bread products nationally.
Gonnella outsources bread delivery after more than a century of maintaining its own distribution vehicles.
Company is selected as the official hot dog bun supplier to Wrigley Field, home of the Chicago Cubs.

Further Reading

Anderson, Veronica, Consumers Fresh Demand Stirs the Pot for Food Firms; As Some Frozen Sales Cool, Processors Scramble, Crains Chicago Business, September 11, 1995.

Baker Decides to Leave the Driving to the Pros, Food Logistics, January/February 1998.

Cleaver, Joanne, Gonnella Reaches for Slice of Fresh-Frozen Bread Market, Crains Chicago Business, March 24, 1986, p. 49.

Crown, Judith, Breaking with Bread; Rival Italian Bakers Seek Dough in Pasta, Frozen Foods, Crains Chicago Business, November 12, 1990, p. 19.

Mikus, Kim, Gonnella Hits Home Run with Cubs; Chicago Daily Herald, April 13, 2000, p. 1.

Melissa Rigney Baxter