One failure reveals a recipe for success
McCANN: Former defense atforney learned the bakery business from scratch.
Photo by Danny Turner
The lessons Sheila McCann (OPM 24, 1996) learned from the surprising failure of her second House of Bread retail bakery turned out to be an essential ingredient in the company’s subsequent success story.
Her first bakery, which opened in San Luis Obispo, California, in 1996, was an instant hit, with its open kitchen where customers could watch bakers in action and smell the intoxicating aromas of breads baking all day long. It offered a simple selection of breads, all made with flour from Montana wheat that was stone ground daily on the spot. The sample board, always filled with fresh bread slices, gave customers the chance to try the regular and seasonal favorites, including Grandma’s White Bread, honey whole wheat, cinnamon swirl, nine-grain, and challah.
McCann, who gave up a career as a criminal defense attorney to live her entrepreneurial dream, had to learn everything about the baking business from scratch.
She worked with an East Coast bakery consultant to get training, recipes, and equipment. With her legal background, HBS credentials, and a solid business plan, McCann easily secured financing, and her House of Bread was soon doing a brisk business.
“Frankly, the first bakery was successful from day one, and I just thought everything was so easy,” says McCann, who also invested heavily in an information system that tied cash register sales to baking schedules and inventory so she would neither overbake nor underbake — both fatal to the bakery business.
But when she opened her second bakery in 1999, she suddenly realized how hard the business could be. The new House of Bread was in Santa Cruz, three hours away. “It had better demographics for the business than the first location,” she says. “It had all the earmarks for a huge success, but it wasn’t.” Why?
“I was an absentee owner,” explains McCann. “I wasn’t networked into the community. In Santa Cruz, nobody knew me. I’d thought it was the great location that would make it successful. I miscalculated my place in the puzzle. It stumbled from day one and finally closed. It was a nightmare.”
McCann can laugh now, but only because she “learned more from that one bakery that failed than from all the others that have since succeeded.” Today, House of Bread has sixteen locations in nine states, with all but the original store operated by franchisees.
Based on her Santa Cruz experience, McCann makes a point of telling her franchise owners that they need to live within a half-hour of the bakery. “In that first year, running a small business is like having a baby. It’s all-consuming. You have to be there.”
Nine years after opening the first location, McCann leaves the baking to her staff while she manages a growing enterprise. “I love people, and franchising is basically about relationships with people,” she explains.
McCann is well on her way to achieving her long-term goal of making House of Bread a household name. The new challenge, she says, is not to grow too fast. The way she sees it, House of Bread, like a good bread dough, would do well to rise slowly.
— Margie Kelley
