Magnolia Bakery Doesn't Follow Trends. They'd Rather Set Them.

0:10Hey folks, I'm Ray Latif and you're listening to the number one podcast for the food and beverage industry Taste Radio. This episode features an interview with Bobby Lloyd and Eddie Revis, the CEO and CMO, respectively, of iconic bake shop Magnolia Bakery. If you've ever described Magnolia Bakery's banana pudding as a little slice of heaven, you're not alone. The indulgent dessert is a big reason why customers wait in long lines outside of the company's flagship bake shop in Manhattan. Although While Magnolia wants to make the pudding more accessible, the New York-based company is hampered by the capacity of its 10 U.S.

0:50retail locations and direct consumer business. Its leaders had to get creative, so they made cookies. In March, Magnolia introduced its Banana Pudding Cookies, a line of soft-baked cookies made with real butter, bananas, and chocolate. Available in three flavors, classic vanilla with white chocolate chips, chocolate chunk, and confetti with white chocolate chips, the cookies are individually wrapped and sold in packs of four for$7.99 a box. They're available in retailers across the U.S., including Costco, the Fresh Market, and Harris Teeter. In the following interview, I spoke with Magnolia CEO Bobby Lloyd and CMO Eddie Revis about the decision to create a consumer brand and the patient and thoughtful approach behind its development.

1:36As part of the conversation, they discussed the process for maintaining the consistency and quality that Magnolia is known for, aligning forecasted demand with production and marketing resources, how Magnolia has transcended into a lifestyle brand, and their perspective on collaborations with other companies.

1:56Hey folks, it's Ray with Taste Radio. Right now I'm sitting down with Bobby Lloyd and Eddie Revis, the CEO and CMO, respectively, of Magnolia Bakery. How are you both? Great. Hi, Ray. Nice to see you. Great to see you as well. Eddie, how are you doing? Doing great. Second day of Fancy Foods. We are here at the 2023 Summer Fancy Food Show in New York City, bustling on this Monday morning. It was a little quieter on Sunday, but you guys said you had a good day yesterday on the first day of the show. It was packed yesterday. Yeah. Very busy. Now, when people come to the booth, are they coming there because they know the brand or are they coming there directly for the cookies that you just launched?

2:32Sometimes you get that side look where people discover and see the logo and their eyes pop open like, oh my God, Magnolia Bakery's here. And then others are, ooh, what's that? Okay. I think our favorite experience has also been people coming to the booth saying they've seen the cookies on the floor or somebody told them to come check out the cookies and they walk up with that wide eyed look and they say, I can't believe that these are real. I need a sample. And they take four. Well, these cookies do look pretty amazing. You were so kind to bring some and put them on the table here. This one is the confetti variety made with white chocolate chips.

3:04I have not had this yet. And if I have it, I'm probably going to not be able to continue this interview just because I'm so indulged and delighted by said cookie. So I'm going to hold off on that until a little bit later on. Bobby, you've been with Magnolia Bakery for quite some time, since 2006, correct? Since 2006, yep. There's been quite an evolution of the brand and the company, but it's been gradual and it feels like your growth has been patient and thoughtful in the way that you've grown as a company. Talk to us about the process of how Magnolia has essentially changed. Wow, that's a big one.

3:37We had a slow growth for many years on the retail, our actual bricks and mortar stores and our international presence. But in 2021, we decided we were acquired by somebody as a new investor to come in and launch our CPG product. So it was a slow growth of let's build a team first. It was the most important thing, as well as rebranding. We needed to come up with a new logo that would work for CPG. And then we hired Eddie as our a CMO. We hired a CFO. We really took about a year and a year and a half to build a new website and get the infrastructure built so that we could develop and launch the product properly.

4:14How long was the idea of a packaged brand part of the strategy or part of the mindset of Magnolia? Oh boy, I probably started with the desire to do something back in 2010, maybe before that. But we didn't have the infrastructure. We needed to have a really solid team in place. And we were a small company. We were very scrappy for many years. So we needed to have that investment to get the backbone behind us. You also had a lot on your plate. I mean, you had the bricks and mortar businesses. You started a direct-to-consumer line. When did direct-to-consumer start, by the way? We started that in 2011.

4:51Okay. So you already had quite a bit on your plate. And international. We have international presence with over 30 stores internationally. Wow. Yeah. Okay. Okay. And are they all company owned or are they franchised out? They are franchises. Okay. So when it comes to the timing of the launch of the CPG brand or the CPG line, Eddie, clearly you have a huge hand in directing what it should look like and how it should be rolled out. The biggest learning and my favorite thing about it has been how intimate the process has been with the company. Like Bobby said, it's been around for 27, almost 30 years now.

5:25and being able to sit with Bobby and the team and watch products get cooked in the test kitchen, have that small table discussion is unlike any other company that I've worked at when you're developing a food product. And I think what we really wanted to do is make sure that it was true to the ethos and the DNA of the brand that's been around and the equity and the IP that's been built. And so that process was really new for me, but also really exciting because coming from bigger food or big food, it's very systematic and it's very much a supply chain of, we did our part, now you do your part. And I think developing this, because we had a lot of ups and downs in the process of 18 months, working with co-manufacturers and co-packers and the process that we went through.

6:01But the best part was just how intimate and involved the whole team was in developing the packaging and developing the flavor profiles and developing the product. It was really, really a great experience that is going to be hard to replicate, I think. You most recently came from Chobani. What lessons did you take from Chobani in being able to lay the groundwork for the CPG brand? I think going back to something that Bobby said was we took our time with this. And that was a big lesson was we didn't want to rush into, you know, we have a great product. Let's get it to shelf as fast as we can. We wanted to make sure that the category is ready for us, that our brand was ready, that our formulation and our team was ready.

6:37And that's a really big learning, I think, not just from Chobani, but any small startup or emerging brand that's coming into grocery is if we got the right pieces in place and we got the right relationships in place and we got the right teams in place first. the launch just was the launch. And I think we all experienced it when we brought this to market in March. We all said, oh, we've been working on this for 18 months already. This doesn't feel new. This just feels like the next step in the journey. So that's probably the biggest lesson is just the amount of patience that we had and the amount of time and communication that the team had throughout the development.

7:07We are meeting twice a week, sometimes three times a week on this, on top of the retail business, on top of the international, on top of franchising, on top of opening two new stores over that time period. So it was a really exciting lesson to learn. But something that was important was the patience that we had. You've been busy, but at least you have cookies, right? At least we have cookies. Bobby, I'm curious, though. I mean, when you launch the cookies or when you're thinking about creating a cookie line, a package cookie line, why not license the brand and have someone else do it? Ooh, control, control, control.

7:36So I am a baker. Besides the CEO hat, I'm a CBO. And so to me, it was incredibly important. The chief baking officer. Yes. It was incredibly important to create a product that, as Eddie said, matched the ethos of our bricks and mortar stores, baked from scratch feel, made with real butter, made with real chocolate. We wanted to own the process. Okay. So having said that, you're still co-manufacturing or having your products made by someone else. When you were thinking about doing self-production versus co-man, what was that discussion like? The inability to produce the product ourselves is at scale.

8:07We just can't. So we don't have the equipment or the ability to have a factory to build it ourselves. So finding someone that could do it and match the quality that we need, find somebody willing to take the product that I'm handing them that we built in our, in our literally in my kitchen sits right outside my office, about 10 feet from my desk. So I created a product in-house benchmark product, and then finding a company that would work with us to bring it to the best quality possible. Well, that's kind of a scary proposition because Magnolia is known for its quality. You're known for your consistency.

8:39And so saying we're going to hand it off to somebody else to make the product, you have to have a ton of trust in that company. How do you develop trust with the Coman? Well, it's also knowing your guardrails, right? So I'm not going to accept an inferior product. So if somebody's doing an R &D product for us and testing the version that I made, we're going to control it and not go to the next step until we approve the exact flavor profile, the texture, making sure that it's ready to market. You talked about scale and trying to find someone that can help you build the CPG line at scale. But how do you forecast demand for a product like this?

9:19How do you anticipate what could come in terms of consumer interest and retailer demand? And how do you plan for that? I think being a 27-year-old company with a combination of D2C and bricks and mortar stores, we've had a sense of what our consumer base really likes and how broad we are. We have a lot of data. we're able to look at data and Eddie can add to this as well that looking at what sells in other cookie brands where does it sit on the shelf what can we expect to have in the market to kind of form what our volume will be we definitely took a lot of the experience that the company had at the home office level and brought it into the CPG development and we also as Bobby said we were so intimately involved with the development of this cookie and the samples and every step along the way.

10:03It wasn't so much a handoff as it was a very collaborative process. I made Bobby get on a lot of flights. And we did a lot of trips to different places. But I think the forecasting and demand really helped. It came from us. We also brought our sales partnership on very early, well before the cookie was ready. And we were seeding samples with them. And we were having early conversations with their team and doing early presentations so that we had a really good sense of what our strategy for the rollout and what our strategy for year one was going to look like. And it's been successful. And so we haven't been surprised yet.

10:32Dre, our head of supply chain, hasn't been shocked yet by anything that's happened. So I think we've done a pretty good job. You know, surprises in your supply chain can be the worst kind of surprises. Especially when we came knocking with Costco. What did the data tell you about the potential consumer for this line? What did you want to know before you started the process of creating this cookie? Eddie, why don't you take that one? I can take that one. I think the first piece of data that we took as a company was Bobby's intuition. That was sort of data point number one. And we kept that at the core of everything.

11:02Even when we developed surveys, we were doing quantitative analysis, we were doing focus groups. We sort of always kept that truth because with us, it's data informed, not data driven. And so as we were doing our quantitative surveys, we were doing very scrappy. We're working with online partners like a SurveyMonkey to survey grocery shoppers nationwide. The data started to tell us that one, we have this really joyful indulger who's shopping the store, typically a mom or typically the head of household of a family. What she's looking for is something indulgent, something delicious. It's kind of one of those headwinds coming out of COVID that that's what they want more of.

11:32We saw an opportunity in the market and through our data that if we came in and we talked about everything that's great about the product, it's real butter, it's real banana, it's real chocolate. Those are new things for the cookie category that have sort of disappeared in a way to make room for the keto and the gluten-free and the sugar-free. And I think going back to that, Bob always pushed us. She said, we are a bakery first. And so we would never put a sugar-free cookie out there. We would never take the butter out of the baking. And so decisions like that, the data helped reinforce those decisions and helped reinforce why we were doing those and really helped shape this joyful indulger who's shopping for something delicious.

12:07She wants a great cookie. We also did focus groups where we put the product in front of consumers and had them do some sensory testing and had them do some packaging testing. And we use that data too, not to tell us what to do, but to validate the decisions we're already making. And so all those studies and all those pieces are really helpful. And we did it incredibly scrappy. We aren't a big brand. We don't have a huge research team. We don't have tons of data. We don't have tons of budget to spend on it. But we were able to be really resourceful in how we asked the questions and did the analysis internally.

12:34I have to be that jerk who asks, okay, well, this all sounds well and good. But I'm looking at your cookie now, and it says naturally and artificially flavored. Now, for someone who's been in the food and beverage industry for a while, I always heard that artificial flavors are bad. but they can make things taste really, really good. Talk about that decision to go with both natural and artificial flavors and why it mattered to the end product. For that one, we again stayed really true to the types of ingredients and pieces that consumers love and that they would find in their pantry at home. And so we wanted to create an accessible cookie, something that of course tasted good, but there are a few key ingredients in our product where it just made sense to go with the one that consumers would be familiar with and would really deliver on that indulgence that they want to see.

13:17But again, most of the prioritization for us came from that real butter, real banana, real sugar to give that texture, to give that quality, to give that taste. There's just a couple of elements in it that, again, it's what the home baker or what that someone would find in their pantry at home. It definitely impacts your retail strategy as well, though. So you can't go into a Whole Foods with this product. You can't go into a fresh market or a Sprouts. So how do you think about retail, given the ingredients and given the cookie that you currently have? Well, we are in the fresh market. You are in the Fresh Market.

13:48We are in the Fresh Market. The Fresh Market allows artificial... Okay, interesting. They allow great products on shelf. I did not know that. Listeners, there you go. There you go. You're right. The panel does exclude us from some retailers. They weren't in our initial launch strategy. We came out saying we want a mainline cookie. We want to be in that cookie aisle. Again, we want to be accessible to the shopper who's got a cart full of groceries and headed home for the weekend with their family. We've also done a lot of sampling in these stores that we're in. Market District, Fresh Market, Harris Teeter.

14:15And the feedback we've gotten from consumers, too, is it's not that for a cookie, that's not the most important thing for them. They want the cookie to taste good. They want the cookie to be indulgent. They want the cookie to be like something they could find in a bakery. And so for us, we've also validated the worry that we might have had or that you're expressing about the artificial. And consumers have validated that it gets trumped by the quality of the cookie and who it's coming from. The cookie aisle is pretty packed. And there are definitely different tiers of quality in the cookie aisle.

14:44You have your Chips Ahoy, and then you have your Magnolia Bakery. When you are sitting in that aisle, when you're looking at that opportunity, how do you stand out immediately on shelf? Is it just the name Magnolia Bakery that people have recognized at this point? There's that real butter right at the top, real banana. And the packaging is also different. And it's four individually packed cookies. I think that's very different, the size of the cookie is a two ounce. A lot of times you'll see that kind of cookie packed in multiples in one little sleeve. So this is a premium, as you said. It also helps us with the quality and helps us keep the freshness.

15:17It's a soft-baked cookie. We want it to stay soft-baked. We don't want it to dry out. But we are seeing convenience really rise to the top on this one. They can throw it into a lunch. We have Back to Routine, Back to School coming up. We have a great campaign that's going to be around that. But the individually packed is really attracted both retailers and the shoppers for that convenience. Do consumers immediately make that connection between the Magnolia Bakery and your product? Your cookies, that is. Some do because they know the brand. And our reach is pretty strong. Besides New York City, we have international travelers.

15:49New York City is the hub for everybody to come and visit. Then the top 10 list of stores to visit. So people know our brand really well, plus our D2C. And then there are those that have never heard of it, but are interested, or they may have heard of it, but have never been to a store. And the logo is incredibly cute. So that attracts people to the brand. Yeah, let's talk more about the brand. because it feels like Magnolia Bakery has evolved into something beyond just a food brand. You are, in so many ways, a lifestyle brand that people recognize for its premium, indulgent quality. So when you are thinking about stewardship of Magnolia Bakery and all the heritage that it has, what are some of the things that you are really trying to avoid?

16:31And what are some of the things that you really want to promote about that heritage? Well, the one thing that we're known for around the world is that we are scratch-baked bakeries. So when you think of our bricks and mortar stores, we bake from scratch using real ingredients. And so keeping that ethos into our brand and making sure it translates into the products that we make, that it's real butter, it's real bananas. That was incredibly important to how we grow. I think too, Bobby touched on it, but we'll always be the bakery and that ethos of care to the product and care to the packaging and care for our retailers.

17:02Now, as we launch and scale, we take that same care that we see our bakers and our teams do every day in the bakery for our consumers and for the food. And so that's one thing that I know we're trying really hard not to change is we don't just want to be trendy. We just don't want to be the flash in the pan or the loudest brand showing up on shelf. We spend a lot of time taking the same... We could almost take the training manual that we have for our stores and say, we do the same thing with our retail partners now. We spend time getting to know their business. We spend time getting to know who they are.

17:28We understand the shelf, the category, where does our product fit? And so I think that's a really important factor of the success here is that we We aren't trying to be trendy. We never will be trendy. We always lead the trend, you could say, in that way. But I think that's a really critical part of what we're trying to continue to express as we expand into grocery. We've always maintained a very classic flavor profile in everything that we create. So it's, and speaking to the trendy, we avoid it like the plague. Don't be trendy. And that's why we're 27 years old and still very relevant. We're iconic.

17:57Yeah. And there have been a lot of iconic restaurant brands that have introduced or launched a CPG line. And some have done it really well. Some have done it not so well. Do you take any cues from seeing all those other brands, those other companies and how they've rolled out a CPG line? Not so much. I don't know if Eddie wants to add to that. Bobby and I spent a lot of time talking about how we want to be and how we want our grocery to look. And I think it goes back to the team. I mean, we are trying to hire a world-class. We are hiring a world-class team. We've brought people on from Kind, from Amheuser-Busch, from PepsiCo.

18:31And so we're really trying to find the best and brightest to come join us and to help build out the grocery business. And that's so important and takes so much time. We try not to think too much about maybe what someone else has done. And our team takes great pride in our product and in the work that they do. So we huddle constantly every week, every few times a week. We're constantly huddling to talk about what direction to take, what should we not do. A lot of opportunity comes our way. We don't have to do all of it. Yeah. So speaking of opportunity, there are a lot of other brands that I'm sure want to be aligned with Magnolia Bakery.

19:04You have aligned with and partnered with a number of lifestyle brands. If I'm looking most recently with Monos, which is the luggage brand, Boy Smells on a new line of candles. In the past, Toola Skincare and Kate Spade. What makes for a great partner? What makes for a sensical alignment with Magnolia Bakery? So I'll add one sentence and I'll let Eddie take it from there. I think it's companies that take great pride in what they do. So if they're an iconic brand, so like Boy Smails, everybody loves Boy Smails. Their product is beautiful. They put a lot of thought into what they do. And so that company aligned with what our company does.

19:43That's really important. Sarah Grambling and I talk a lot about this. She's our VP of PR and partnerships. And her approach is really around finding audiences that should know about our brand or might know about our brand and love it, but don't come to New York or Chicago, LA as frequently as they would like and find ways to bring the best of our brand to them. So Tula Skin Care was a great example of this where we said, what if we did turn banana pudding into a body scrub? Would anybody want that? That sounds so crazy. The way you said that, I was like, would I want that actually? It's a really interesting proposition.

20:17And I remember when we presented it to Bobby, we said, are you sitting down? Okay, let's talk about this one. It might be a little crazy for us. But what it afforded us... I just used it on Saturday again. There we go. It's lovely. It's lovely. And it was so successful. So what we did was we were able to meet Tula's audience, who's this young, influential, emerging audience that should know about Magnolia Bakery. Maybe they do. Maybe they don't. And we were able to partner with them. And so let's bring the iconic sensory experience of banana pudding to someone's shower. Let's sell it through all the Alta's in the country.

20:46Let's sell it out of all the Alta's in the country. We had point of sale displays built in all the stores. We were expanding our brand in new channels. And then I was joking with Sarah. I'm like, any media marketer would kill to have their brand sit in someone's shower for three months and have them look at the logo and smell the brand. And if that doesn't turn someone into coming into the bakery while they're in New York or placing an order online or grabbing the cookies, there's no way to actually connect it, but it's got to be there. And so for us, we look for those brands that have the audience that we're excited about, take great care in their product and can make something really interesting.

21:18And then just something that really breaks through and does it in a really creative way. And so the team does a great job in not only planning those partnerships, but also launching them with the teams that we work with. I wonder if you could determine whether or not you're getting more sales in the morning when people are using the banana pudding bricks and then they're just like, oh my gosh, yes. For some reason, I really want to make an order and place an order at Manoli Bakery. And it all happens at like, I don't know, 8.30 a.m. in the morning. We'll see. Now that the Boy Smell's candle is burning in people's homes and apartments all day, we'll see if that evens out.

21:50But I mean, even when we come to shows like this, people come up to Bobby and I all the time and say, are you selling the candle here? Do you have the body wash? We're looking for the luggage. Yeah. Wow. We had a few people come by yesterday and said, I saw the candle. Someone was asking for the luggage, really? Oh, my gosh. Come on now. It's because we have team members wearing it here, too. Oh, I see. Okay. Fair enough. Yeah. And the luggage was so successful, they're bringing it back. And the color palette of the luggage is so lovely. I have the purple bag. It's just beautiful. Yeah. I do want to talk about the packaging.