Fleeing war-torn Vietnam, facing rough seas, pirates and capsized boats along the way before landing in a refugee camp, the story of the Ly family and the success of Sugar Bowl Bakery is a testament in perseverance, ambition and sound business sense.
After the fall of Saigon, the five Ly brothers realized they needed to leave the country with their families. In 1978, they boarded a small boat and set off. After six nights at sea, including three run-ins with pirates, the family landed in Malaysia and were placed in a Red Cross refugee camp where some remained for 9 months and others for as long as 24 months.
Bit by bit, the family emigrated to California, with everyone ultimately reuniting in San Francisco where they found jobs and began saving. In 1984, the family pooled its money and purchased a small doughnut shop called Sugar Bowl Bakery. That initial investment went on to become a business manufacturing a line of desserts at two 55,000-square-foot manufacturing facilities that are delivered to retailers like Costco, Safeway, Kroger and others across the United States.
From Doughnuts to Food Service to High Volume Manufacturing
As part of the purchase of the original Sugar Bowl Bakery, the sellers taught the Lys how to make the shop’s doughnuts, muffins and croissants. Led by Andrew Ly, whose ambition and drive helped him to learn English and graduate from San Francisco State University with a degree in accounting, the business began to expand, selling pastries to 7-Eleven and other doughnut shops in the Bay Area.
Later, when Andrew Ly began meeting with hotel managers, convention center staff and universities that were looking to outsource their bakery operations, he saw an opportunity and created a food service division, ultimately becoming the largest food service provider in the Bay Area, serving some of the hot new startups at the time like Google and Yahoo.
Years later, another opportunity came when a team of Costco buyers in the Bay Area came for a visit to Sugar Bowl Bakery. As they were walking through the processing area, they noticed a multi-layered Puff Dough Cookie. It was made with the highest quality with all butter and folded with more than 300 layers of doughs. Soon, Sugar Bowl Bakery named that cookie Palmier and was distributing to Costco stores across the US. The shift from food service to manufacturing a significant amount of a single product at scale, helped propel the business further.
Delivering at Scale
“It was a big change moving from food service to high volume manufacturing for retail,” said Michael Ly, general manager and vice president of Sugar Bowl Bakery. “In food service locally, a big customer might want 1,000 brownie bites an order. With Costco you might have to make 600,000 brownie bites consistently every week. It’s a much different business, a different level of scale.”
After Costco came other big accounts like Safeway, regional grocery chains, as well as other national retailers like Kroger and Walmart, requiring Sugar Bowl Bakery to expand beyond its initial commissary at multiple plants in San Francisco to its state-of-the-art manufacturing facilities in Hayward. Today it manufactures a couple million items a day, baking Madeleines, Brownie Bites, Palmiers, Duet Bites and Apple Fritters.
“Our go to market was to make much higher quality cookies in big volumes and sell them at a great value due to our ability to lower our manufacturing cost. We bought ingredients at high volume to receive good pricing” Ly said. “Consumers now buy our high-quality baked goods from retailers and get much greater value than what they’d get at a cafe. When we were in food service locally, we had more than 750 items, but it was very hard to scale due to complexity. We changed our business model to focus on just a few items at the lowest cost. We knew by doing that we could dominate our category. We have become the leader of high-quality bite-sized baked goods in the supermarket bakery perimeter area”
Sugar Bowl Bakery’s strategy paid off with each iteration of the company, achieving double digit growth for many years straight.
Moving from Navision to NetSuite
Amidst that growth, executives realized that the existing Microsoft NAV system the company was running was not going to be able to keep up due to the software’s complexity. A client server-based system, NAV required an in-house IT team to manage the system and, even then, frequently caused errors that were hard to fix. Additionally, because the company had done extensive customizations, it was reluctant to undergo upgrades that would require more resources and disrupt the business.
After an evaluation of SAP Business One, Sugar Bowl Bakery implemented NetSuite in 2013 due in large part to its cloud-based architecture and its simplicity.
“We knew we wanted to keep scaling and didn’t want the complexity of anything including the servers to be a bottleneck,” Ly said. “We didn’t want the ERP system to hold us back.”
With a modern, stable, cloud-based system, Sugar Bowl Bakery had unified, real-time insights into its business. It was able to transition from lot-based accounting to standard-based accounting, allowing company leadership to see, in real time, how the business is performing in detail.
In January of 2018, Sugar Bowl Bakery, one of NetSuite’s early food manufacturing clients, implemented the Advanced Manufacturing module.
“We have a lot of discipline on the manufacturing floor now,” Ly said. “Now we’re really into a stage where we can do continuous improvement and analysis related to KPIs to control cost on the manufacturing floor.”
With NetSuite as its system of record, delivering insights and shop floor discipline, Sugar Bowl Bakery is poised to expand further as it evaluates new manufacturing facilities to serve its East Coast customers and reduce costs.
Learn more about NetSuite software for food and beverage manufacturers.