As the Daily Cal has written about before, Cinnaholic, Berkeley’s favorite gourmet cinnamon roll bakery, plans to expand to a hundred stores in five years after its appearance on the ABC reality show Shark Tank. Its franchise prototype is 700 to 1,200 square feet, featuring its signature vegan, lactose-free, egg-free and cholesterol-free cinnamon rolls. The Clog met with Cinnaholic’s co-founder Florian Radke to discuss entrepreneurship and marketing.
The Daily Clog: How did you get the idea to start Cinnaholic?
Florian Radke: My wife and I always joked about starting a bakery, but we weren’t sure how to begin. I had two advertising businesses before in Germany, so eventually I said, “You know what, I have no idea about food business, but I’m sure we can learn it, and I know about advertising, so I know how to promote it. Why don’t we try it and see how it works out?” And we did.
We started with a catering company, so we didn’t have any fixed costs, and we got direct feedback on what customers liked. We got our name out there by catering for a few nonprofit events, and Shannon also started a blog about baking that I marketed. Her blog got picked up by SF Weekly and East Bay Express, and she also won a pretty famous cupcake competition in San Francisco. But she said she didn’t want to do cupcakes, because everyone does cupcakes. Everyone loved the cinnamon rolls, so we figured out what kind of spin we could put on the cinnamon roll to make it more exciting.
DC: What was the most difficult part of starting your own store?
FR: The most difficult part is learning by doing. When you have an operation running, like a storefront and all that, every time you make a mistake, it costs you money. We spent probably $50,000 on just making mistakes, but on the other hand it’s a great way to learn. For example, our mixer went out because it wasn’t serviced right. That was half a day of not being able to produce something. Instead of using the mixer, we had to knead by hand, so we had to hire more staff. Things like that really cost you money. I would advise starting out in an environment where you can allow yourself to make mistakes.
DC: You’re opening new franchises, so what do you think is the most important principle to stick to when expanding your brand?
FR: We’re in a pretty unique position with our Shark Tank experience. Overnight, from a local Bay Area brand, we created a national brand. We pretty much scaled from 10 to 100 in those five minutes on TV. Typically I would say you need to be careful with scaling, just scale slowly, but we didn’t have that opportunity. There’s a big truth to the saying, “You have to work on your business, not in your business.” You can’t stand in your business and sell cinnamon rolls, then you don’t have time to grow your business. The key to that is to sometimes say no. That’s a very important thing when you scale — don’t try to get every dollar. Make the right decisions; don’t get greedy because that’ll just bite you in the back.
For us, it was very important that the people we teamed up with are people that we would consider friends and family. The franchising partner we teamed up with, the first night she flew out here, a two-hour meeting turned into a two-day meeting. She just stayed, and we got along really amazingly. That was the main reason we signed the contract with them — not because the offer was the best but because her personality was the best. I think if you go into business together, it needs to be someone you’re fully comfortable with.
DC: What’s one thing about Cinnaholic that no one knows?
FR: I do not know how to make cinnamon rolls. My wife is the baker — she’s product; I’m marketing. I know how they’re supposed to look and taste, I don’t know how to make them. We just split it up that way, and I never learned how to make them. But I know how to eat them!
Her role is product control — her main focus is making sure the product is always up to her quality. She’s very tough about that. She’ll say, “It’s more important for me to sell an excellent product than to have a higher turnover per hour.” That’s a very smart decision if you look at the area we’re in, gourmet food — it’s not about quantity; it’s about quality.
DC: Why do you think Cinnaholic’s cinnamon rolls are more popular than other cinnamon roll places?
FR: I really think people are done with seeing dessert as a fast food and a cheap food, because people in general are more health-conscious these days. For example, people are willing to pay $3 more for a cupcake that’s made with good ingredients than going to Safeway and buying packaged stuff from a big factory. Therefore, if you have this perspective in mind that you want to treat yourself to a healthy dessert, then you go to a more gourmet place. But if you eat dessert all the time, you probably still end up at Cinnabon or getting a Twinkie.
DC: Do you have any advice for UC Berkeley students who want to start their own businesses?
FR: The biggest thing is, whatever it is, test it on a small scale. Don’t take too big of a risk; there are always opportunities to test your product. Shannon brought cinnamon rolls into the office at her previous job and saw how people reacted to it. The best part: when she brought it into the office, she didn’t tell people it was vegan. If people who didn’t care about vegan products or even hated vegan things loved the cinnamon rolls, then she achieved her goal.
Nowadays with access to the Internet, you can test everything on a small scale. Test it with 50 people, then take that data, and improve your product. Test it with 100 people, and go from there, and grow it. Data-driven decisions are key: look at your data, and figure out what people want and what works.
DC: What’s your own favorite icing-and-topping combination?
FR: My favorite roll is the mocha almond — it has coffee frosting, almonds and chocolate chips.
Image Sources: Cinnaholic