There are few sectors so closely aligned to our traditional idea of a ‘family business’ than baking, and few more mature markets than sliced bread. The Roberts Bakery company is both, and it’s also a great example of how a family firm can turn resilience and longevity into competitive advantage.
The business was started by Robert Roberts back in 1887 as a small bakers and grocers, but by the 1930s it was focusing on the bread side of the business, and making the most of new technology like bread slicers and wrapping machines. When a flour miller bought a share in the firm in the early ‘60s, Roberts was able to invest in a new bread plant and output rose from around 200 loaves an hour to approximately 1,500. By the early ‘80s business was so good that the family could buy out the minority stake and become an independent family firm once more. The current Deputy Chairman, Mike Roberts and his cousin Julia Roberts were already part of the business by then and have seen the company grow exponentially since, “By the late ‘90s we were making nearly a million loaves a week, and it’s double that now. We’ve gone from £1m or £2m of sales per year in 1976, to £94m in 2016.”
The company’s physical presence has grown too, from the back kitchen of its Victorian founder to a huge complex on 24 acres, which includes a brand-new facility which “future-proofs the business for the next few years”, and includes [two baking plants], a packing hall, slicing and wrapping, and despatch.
And these days, it’s not all about bread, either. “Biscuits are big for us now,” says Mike. “Both commercially and literally – we make giant custard creams and bourbons that are four times the normal size. Our Little Treats business is really important to us strategically. It’s related to our core capabilities, but it’s also a different market from bread – the shelf-life is longer, the margins are higher, and the logistics are different, as is the consumer.”
But bread is still in the Roberts’ blood: “We’ve explored pretty much every aspect of the bread business over the years, and we keep up with how consumer tastes are changing. We experimented with gluten-free as that looked like a growing segment, but it didn’t work for us – it’s very niche and surprisingly difficult and expensive to do well. Specialty artisan bread, on the other hand, has definitely been a success, and we’re constantly looking at new ways to make and sell our main staple, which is white sliced.” That ranges from new recipes and new production techniques, to selling frozen bread for export, making private label for distributors, and supplying the sandwich market. “We’re exporting to Europe, the US, and the Middle East, and though it’s still a small percentage of our sales right now, we’re looking to grow it.”
Roberts Bakery has innovated in the running of the business too: “We’ve expanded our distribution by working with a logistics company, which has helped us get into around 400 supermarkets. We’ve put massive investment into infrastructure too, including more sophisticated order planning and processes, SAP for IT, and our first IT director. We’ve automated a lot of our plant as well – we have robots making biscuits these days.”
Only around 3%* of family firms make it to fourth generation and beyond, but fifth generation is looking good for Roberts. “I’m one of the fourth generation,” says Mike, “and we have around 9 people who could come into the business from the fifth generation. These days we’re more like a ‘cousins consortium’, in structural terms, but unlike many other long-standing family firms there are only seven family members with shares, and four of those are on the board. That could change with the next generation, but it’s a structure that works well right now. We have a non-family member, Robert Higginson, as our Chair, and he brings over a decade of experience at another family bakery business with him. We also have specialist advisers who aren’t on the Board, but who help us with HR, marketing, and pensions. As for the next gens, we tend to think that 30 is a good age to join. That gives people the chance to develop their skills, and make an informed decision about their career plans. We invited all the next gens to the last shareholders’ meeting, and the management team gave presentations about what’s happening in the business and where we want to go in the next few years. That’s the sort of knowledge they need to have if they want to work here, but they’ll also need it to be good shareholders. I think that’s a really important skill, and can get overlooked in family firms. But to stay in that magic 3%, that’s what you need.”