How I Started A $120K/Month Business Selling Award-Winning Pastries
Hello! Who are you and what business did you start?
Hey everyone! I’m Kyra Bussanich, founder of Kyra’s Bake Shop, an exclusively gluten-free bakery in Portland Oregon. You may have seen us on the Food Network dominating the sweet competition on Cupcake Wars!
Our claim to fame, if you will, is that everything we make is gluten-free, though you would never know it by tasting our products. When I was first developing the recipes, it was very important to me that everything we make and sell is delicious enough to appeal to anyone (and not just those who must eat on a restricted diet). I think this is part of why we continue to be so successful today.
We started the business with a cottage industry certified home kitchen, and following our success, the first time on Cupcake Wars we were able to expand to a tiny little brick and mortar. It wasn’t long until we outgrew that location, and now we have a 3,500 square foot flagship bakeshop/cafe and we just opened our second location (an urban outpost) in downtown Portland. Looking back over the years, I am still shocked to see our revenue growth.
While some months are definitely busier than others (Hello Thanksgiving!), our monthly average revenue from the flagship store is $120,000 (the second location hasn’t quite been open a month yet, so it’s still too new to factor those sales in). Let me tell you, you have to sell a LOT of cupcakes and cinnamon rolls to earn that kind of revenue!
What's your backstory and how did you come up with the idea?
Before I went to pastry school, I had a very uncreative and unfulfilling job, but I didn’t know what I was “supposed” to do with my life. Added to that sense of directionless was the fact that I had been increasingly ill for nearly a decade. I wondered who would even hire me, and felt like I should just be grateful to have a job that was flexible and allowed me to work from home when I needed it.
As my health got worse, the thought of a career that would fulfill me became more and more distant, and I found myself in and out of the hospital, doing chemotox infusions every six weeks, and more days than not, curled up on the couch in the fetal position in pain. I had been diagnosed with Crohn’s Disease but none of the medications seemed to help, not even the steroids that caused me to gain 18 pounds in a week so that my skin felt stretched like an overripe grape that was about to burst.
It wasn’t until my gastroenterologist wanted to remove the most diseased portions of my intestinal tract that I considered going gluten-free in order to reduce the inflammation in my body so that perhaps I would finally respond to the medications.
Eating gluten-free at the time was not easy nor delicious like it is today. I felt like my tastebuds were being punished, but I also felt miraculously better, which kept me on the path. Once my health started stabilizing, I began to think about what I could do for a career that might be challenging and fulfilling
One day, my husband was reading aloud Steve Jobs’ commencement address to Stanford University, and in it, Jobs said (and I’m paraphrasing here), “You need to love what you do for a living because you spend way too much time doing it to feel uninspired by your work.” The statement was an emotional sucker-punch to my gut and I started crying uncontrollably. My husband wiped away my tears and said, “without thinking about your answer, what’s the first thing that comes to mind for what you’d want to do if you were graduating today?”
I blurted out, “I’d go to pastry school,” and then clapped my hands over my mouth because I was truly unprepared to blurt that out and it surprised me.
If you want to grow beyond your own personal capabilities, you need to take a global view of your business, and focus where you are most effective, and hire people who are better than you to do the tasks where you don’t excel.
At the time, the thought of going to pastry school, and creating foods I could never taste with ingredients I shouldn’t even touch, felt daunting. Not to mention that my husband was finishing up his doctorate at the time, and it was my salary that was paying the mortgage and putting food on the table.
Less optimistic friends thought I was nuts to think about trading all that in for more student loans for schooling that would get me a minimum wage-paying job after I completed the program, but for me, it wasn’t about the money; it was about the chance to feed people, and make their day a little brighter.
Take us through the process of designing, prototyping, and manufacturing your first product.
When I first started getting acquainted with gluten-free ingredients in the kitchen, I was massively disappointed: the flavors and textures weren’t anything like I was hoping. Instead of delicious gluten-free pasties, I was creating hard biscuits and dense cakes that could be used as doorstops. Not to mention that the flavors all tasted...off. I remember at the time I had read a blog post from someone who said that we couldn’t expect a gluten-free cake to taste like a “real” cake, and I remember thinking that that was a cop-out.
There’s no reason a cake made with alternative grains couldn’t test as good or better than a “regular” cake.
I spent thousands of dollars and hours in the kitchen, familiarizing myself with the alternative grain options, and the best way to combine them for great flavor and texture. I brought cakes and cinnamon rolls and pies and cookies and cheesecakes to every picnic and barbeque and party I attended, and solicited feedback (from people who had no dietary restrictions.) I adapted recipes and made tiny tweaks: a different ratio of starch to whole grain flours. A few more grams of binding agent. An additional egg. I tested and retested recipes.
At the time, I wasn’t even thinking about starting a brick and mortar business; I was solely preoccupied with entertaining guests and feeding people (like my mom and myself) who might not otherwise be able to indulge in any treats beyond fruit.
I created business cards and had my kitchen licensed by the health department, not because I thought this would be a viable business, but because some friends of friends asked me to make their wedding cake, and I thought the cards would lend a sense of legitimacy. I applied for a business license through the Secretary of State for the same reason. Basically, I was pretending to be what I thought a real business was, but I honestly had no clue what I was doing beyond the baking side of things.
Describe the process of launching the business.
Once that first episode of Cupcake Wars aired on the Food Network in 2009, my phone started ringing off the hook. I had thousands of messages from people all over the country, congratulating me, or telling me they were cheering me on, or wanting to share their gluten-free story, or asking to place orders. I still didn’t have a brick and mortar store, but this was my first inkling that I could someday have a successful retail shop.
I applied for bank loans, which were denied to me because I had no real collateral. I sold the diamond out of my wedding ring. I maxed out credit cards and got an angel investment of $62,000 to start the very first iteration of our bakeshop. Nowadays, that sounds like a very inexpensive build-out to me, but at the time, I was terrified that I would be crushed by the weight of that debt.
I made a ton of mistakes in the early days (and heck! I still make mistakes now, as I am constantly learning), but one thing I did right was to write a press release when I was initially on Cupcake Wars and send it to all the local publications, as well as tv media, and nationally-distributed gluten-free magazines. I wrote another press release when I was launching my first store and was amazed by the results. I figured there would be maybe 15 customers to come by that day (all friends and family), but thanks to the press release, I had a line out the door, down the street and curling around the block!
Since launch, what has worked to attract and retain customers?
You can have the best product in the world, but if no one knows about it, then it won’t matter; you won’t make sales and won’t be able to stay in business. Conversely, there are brands out there that have a loyal following and great brand awareness, even if the product isn’t necessarily the best on the market. I would say that making PR a priority is key, right after developing a knockout product, and if you can’t afford to hire someone to do it for you, then learn how to do it yourself.
In the early days of running the bakeshops, I also said yes to everything. I think part of it was me wanting to get the brand out there and build a loyal following.
But you can’t do this indefinitely. Saying yes to everything did get the word out about the bakeshops, but it also meant that I had little control over my schedule, no free time, and no social life. I was exhausted and running ragged and I thought this was how it was “supposed” to be. Eventually, I reached a breaking point and decided that quality of life was more important to me than external measures of success.
Now, I say yes strategically, if it’s something I’m passionate about or excited for, or if I think it will really help the business. I learned that there’s an opportunity cost associated with any course of action; if I’m busy with one job, then I can’t take on another at the same time, so I like to make sure that I feel really good about what I do say yes to.
Another lesson I learned is that, while my goal is for each person we encounter in any day to leave the interaction feeling more buoyant than when they entered, there is no possible way to make everyone happy, no matter what you do. At first, I desperately tried to please everyone, but no matter what I did, someone would get upset.
So I offered 7 flavors of doughnuts a day, and changed those flavors each day? One of those 7 wasn’t triple chocolate, and I was failing that customer.
I had 320 flavors of cupcakes… but when people were placing an order for a dozen, I limited them to either a Baker’s Choice Assortment or 1 flavor? Shame on me. (Yes, these were from REAL emails I received. I think one customer even said, “your pastries may be sweet but your customer service is sh@#”).
Once I let go of the idea of trying to please everyone, I began to focus on only those things that we do exceptionally well and maintaining the quality and service of those items. A deep dive into our net revenue revealed that 40% of our offerings were responsible for 90% of our revenue, so paring down the menu and focusing on those items allowed us to execute them extremely well, as well as cut labor costs by 40% (thereby actually increasing net revenue). But while I was so focused on being reactive to customer requests, I wasn’t able to take this big-picture strategic view of the business.
How are you doing today and what does the future look like?
For the first 7 years of operations, Kyra’s Bake Shop experienced a tremendous increase in gross revenue. By year 4, we were grossing more than half a million dollars. By year 7, we were grossing 1.5 million dollars a year. But when we examined the margins, we realized that our overhead was nearly unbearable. Our labor costs were sitting around 62% (we’ve cut that to 31% now), and our packaging costs were excessively high as well.
It took me years to learn how to look at the big picture as more representative of the financial health of the business; while our gross revenue has decreased slightly from our year 7 high, our net revenue has quadrupled.
Through starting the business, have you learned anything particularly helpful or advantageous?
I wish I had made better use of my appearances on Cupcake Wars or at the Golden Globes. I just didn’t know how to fully leverage these opportunities at the time, so they mostly just because stories I can tell at dinner parties.
A lot of my success has been a byproduct of the right time, right product, right message, right place. I was at the very forefront of the gluten-free wave a decade ago, before people knew what being gluten-free means, or which foods contain gluten. I simply had a delicious product that happened to be gluten-free and was spreading an inclusive message, while I educated customers around me.
I opened my first bakeshop in a small suburb of Portland, where there is a high concentration of entrepreneurs who are passionate about supporting other entrepreneurs and have the disposable income to be selective about purchasing quality items. Yes, I did this strategically (and we moved to that community and joined the Chamber of Commerce and went to all the events within the community to get to know people), but it was a gamble.
How was I to know that the lower foot traffic of a more dedicated health-conscious customer base would surpass the higher foot traffic of a less dedicated city location?
These days, social media is king, and content is queen. There are so many amazing tools at our disposal for consistent postings, like Later. Later is an app on mobile or desktop computers that allows you to plan out your social media campaign, schedule posts (and auto-publish to Instagram and Facebook). You can upload all your media, arrange it on the calendar (including day of the week, time of day, what you want to say, and how you want to hashtag it, and even preview how it will look in your Instagram feed (and drag posts around if there is a specific formula that you’re trying to stick to). It even offers analytics so you can measure what is actually gaining traction and what is not.
What platform/tools do you use for your business?
We have tried other point of sale companies but eventually settled on Square, which has worked really nicely for us. Our payroll and worker’s compensation integrates nicely with the easy-to-use and intuitive system, and they even have gift cards, a loyalty program, and newsletters integrated right into their system.
What have been the most influential books, podcasts, or other resources?
I love everything Tony Robbins says. I think his honesty and authenticity combine to make a person approach reactive situations with curiosity rather than judgment or leaping to defensiveness. He once said that people will create roadmaps and act aligned with their core values and that this can be very informative if you can accept it as information to guide you, rather than as a judgment on what you do or how you run your business.
I also adore Simon Sinek’s book, Start with Why. People buy into why a product is offered before they care much about what the product is. This TED talk is a great synopsis of what his book details.
Advice for other entrepreneurs who want to get started or are just starting out?
SO much advice: It’s important to know your product, but also know the market. These are important questions that you should have an idea of the answer to Who is your target demographic? How will you reach them? What are the growth opportunities for your product or service line? Where are your company’s strengths and weaknesses? What current problems do your products or services address, and how are they different from what else is already out on the market? What are your competitive advantages, and how will you distinguish yourself from the market?
And speaking of marketing, I fully believe this to be an important component of a company’s success. I never had an advertising budget set aside, and for our product, we didn’t really need one.
In the first year in business, I tried doing a Groupon and quickly realized that while this wasn’t the best avenue for us to gain loyal customers, it was marketing that broke even.
Cupcake Wars, and local media shows, while highly stressful, we're also valuable marketing tools. Cupcake Wars provided social proof, and we received a ton of other national media (LA Times, Shape Magazine, Food + Wine Magazine, The Today Show online, Huffington Post, The Boston Globe, USA Today and others) that snowballed because we had the clout and credibility from Cupcake Wars.
I always love collaborating with other amazing local brands that share a similar target market. I think this is a great way to foster a sense of community, which is one of the guiding principles of our business.
Above all, keep in mind why you started the business. What was the purpose, and where does that purpose dovetail with a sense of joy for you? Where are the bottlenecks to being more effective or efficient, or profitable, and how can you outsource the tasks not uniquely suited to you.
Just remember: if you want to grow beyond your own personal capabilities, you need to take a global view of your business, and focus where you are most effective, and hire people who are better than you to do the tasks where you don’t excel. Early on, I realized that while I am a spectacular visionary and creative director, I am a middling-to merely adequate operations manager, so as soon as I was able, I hired someone to fulfill that role for me.
Are you looking to hire for certain positions right now?
We are currently hiring bakers and cake decorators, but I’ve been very fortunate to make some great hiring decisions, which means that we have had very low turnover rates, especially compared to industry standards!
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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