Article and photo by Liyan Zhang
A 100-layer sweet glutinous rice cake, colored yellow with turmeric, is decorated with an egg and a tortoise to honor the birth of twins. Jerry Chen, the manager of the Iris bakery in Flushing, Queens, is dressed as Mickey Mouse as she wheels the customized cake for a lavish 100-day celebration, a traditional Chinese family event akin to a birthday, at the Grand Restaurant in Queens.
Chen, an intrepid baker who recently failed in her plans to expand to Manhattan, where costs are increasing sharply, said she’d hit on a new idea to help her Asian bakery survive in a notoriously crowed field: baking customized pastries for luxury restaurants and high-end clients.
Iris, owned by Sam Lin, a Taiwanese native who graduated from New York University with a business degree, produces more than 50 varieties of customized pastries every day. It has long-term contracts with 12 high-level restaurants, including ones that offer Chinese, Vietnamese, Japanese, Mongolian and Thai food, to offer customized desserts for large parties dining there. The customized pastries have developed a strong following at both restaurants and among walk-in customers. Behind the brisk business however, lies a tale of trial and error.
In 2010, Lin got $150,000 bank loan and leased a two-floor commercial studio on a corner one block away from the subway station in Flushing, where more than 55,000 Asians make up nearly 64 percent of the total population, according to Statistical Atlas. (http://statisticalatlas.com/neighborhood/New-York/New-York/Flushing/Race-and-Ethnicity). Iris, which focuses on a fusion of Japanese-styled and Chinese-styled bakery, was started with $180,000, including Lin’s personal savings of $30,000.
As an accounting major, Lin had done the accurate cost and profit calculations before the business started. “I was ever so confident with my business plan,” he said. “The fixed expense, which includes salary, insurance, interest, rent and utilities, was $12,000 per month, and the average pastries materials such as flour, sugar and other ingredients were estimated $1.10 for each. I made the average price $2.20. If only more than 300 pastries were sold each day, the shop would make profits.”
The performance, with a 46 percent gross profit for the first six months, proved Lin was right. On his best day to date, 3,000 pastries were sold. But problems arose.
Five bakery shops opened within two blocks and produce very similar Asian-styled pastries. The market share of Iris is getting smaller and smaller. Mr. Lin introduces that the 20 tables on the two floors were full at least one hour every day in 2011, however the 10 tables are never full even in the rush hours since 2012. In order to keep the profit Lin had to sub-lease the second floor to reduce the rent expense, removing the 10 customers he kept on the second floor (another 10 are on the ground floor). Recognizing the limited market in Flushing, Lin expanded to Manhattan, opening the second Iris in 2012 in the East Village. It lasted only 30 months. The store manager, Jerry Chen said, “Bread and pastry is ethnic food. The East Village is a diverse community; some groups of people don’t like Asian bakery. There are Corner café, Bagel stores and Greek bakery. Iris could only attract a small part of people who want to get new experience. It is hard to get loyalty customers.”
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One customer, Yokota Woong, a senior at New York University, which is two blocks away from Iris, said: “I had got an egg tart for breakfast in the new open bakery a year ago. The reason I went there is just to try something new. It is heavy sweet. I would like more bagels with vegetable spread for breakfast than Iris creamy bread.”
Lin acknowledged the Manhattan venture was a bad strategy. “Cost is too high, rent is double of Flushing, and I have to pay more salary than Flushing to hire excellent English-speaking cashier and waiter,” he said, noting that the Manhattan store was profitable only for 10 months out of 30. After the financial crisis of 2008, most commodity prices fell back to earth by 2010, according to Modern Baking magazine. These changes, coupled with new procurement strategies, allow bakeries more profit without increasing prices. With the favorable economic environment, Iris became profitable in Flushing.
But the wheat markets have been volatile. The price of bread flour has increased sharply, Lin complained. “The cost has skyrocketed. Bakery flour increases to $20.15 per pounds from $14.10 in 2010. White sugar is more than doubled since 2010. Even relatively flat eggs have been increased to $1.49 from $1.23 a dozen wholesale. And the rent increases by 5% per year in the contract period.” Contrasted to the increasing cost, as business data base of reference USA shows, the sales volume of Iris drop to $160,000 in 2013 from $270,000 in 2012. In the disadvantageous environment, Iris closed the Manhattan operation in June 2015.
Learning from the failure, Iris started focusing on Queens and introduced customized desserts.
The store manager, Jerry Chen noted, “Most bread in the shelves come from the ideas of customers, they are very popular.” Each bread is given a fancy name such as cheese boat, plait bread, caterpillar bread, bamboo bread, taro cube, trunk bread, wheel toast. There are also some stories behind the names. The trunk bread, for example, was requested by a young man who wanted to surprise his girlfriend. “Can you make a bread which should be colored with coffee, shaped like a cylinder with a crispy layer and soft fillings,” Chen said he asked. He named it “trunk with love locked inside.” Chen said, “The trunk bread attracts many young customers.”
To show the baking of customized bread, Iris made the baking room transparent. People can watch how chefs shape and decorate the dough through the glass window.
The master baker, Kevin Chow, born into a bakery family, has studied the craft since he was 16. He has special passion for artisan pastries. “Dough is living like you and me,” he said. “You treat it carefully, it always surprise you.”
Chow has worked at Iris since it opened. For him every day is a new one in the same baking room, because he works on the variously designed bread. The bread never looks same to those in the last day in Iris. The shelves change regularly as preferences of the customers change.
Beside the walk-in customers, Chen works with the high-level restaurants. “We have contracted with a dozen of restaurant to offer them dessert in Queen. Both the Mulan restaurant and Grand Restaurant have put Iris customized dessert in their party menus. These restaurants will be our major customer in the future,” she said.
When talking about the benefit of ordering Iris customized dessert, Bob Fen, the manager of Grand Restaurant in the New World Mall on Main Street, said, “Iris has a wonderful chef who can make whatever my customers want. My cost might be a little more for a party dinner than baking the desserts by myself, however in the long term I save the salary for hiring an excellent bakery chef.” Lin believes “though Iris have to give allied restaurants lower price than walking-in customer, the alliance could save the advertising cost and get the wholesale deal. It is a good opportunity for Iris.”