Kara Mauer - AMDP Investment Proposal Final

 TO:             Clark Hansen, CEO

FROM:        Kara Mauer, Development and Research

SUBJECT:   Schat's Bakkery - Investment Proposal

DATE:          June 30th, 2021

AMDP is looking for environmentally sustainable and socially responsible companies, and with extensive research, I have come to the conclusion that Schat's Bakkery would be an acceptable investment. Written below is a short summary of AMDP's policies as well as a detailed analysis of Schat's Bakkery.

AMDP Standard:

Triple Bottom Line

Profit: In order for a company to be successful, financial performance must be dictated in a way that is beneficial for shareholders. Companies have to be conscious of cost vs. benefit, and must be strategic about keeping steady profit with minimal hinderance to performance.

People: Societal impact is extremely important when it comes to running a sustainable company. In a traditional sense, companies focus on benefits for shareholders, but as companies prosper and gain profit, stakeholder satisfaction (employees, customers, community members), becomes valuable.

Planet: Environmental impact is another crucial part of a company's success. AMDP is looking for companies that are conscious of the earth and its inhabitants.

Corporate Social Responsibility

Companies have a responsibility to their shareholders, their workers, customers, and the general public to hold themselves accountable for activities that they partake in. In order to fully embrace corporate social responsibility, the company must operate in a way that enhances the environment as well as society. This is important for both company and consumer, because without it, there could be negative impacts.

Social Enterprise

In the simplest terms, the company is defining a need or a social/environmental problem through market-driven approaches. Social enterprise is a foundation to the Triple Bottom Line. Finding ways to maximize profit while valuing people and planet is the basis of this idea.

Carbon Footprint

For the average individual, 4 tons of greenhouse gases are emitted by our actions. Companies have more to be conscious about, because they are not only dealing with individuals, but they are dealing with their own manufacturing, structures, and distribution doubled with consumption. It is important to actively work to reduce carbon footprints, and their impact on the natural world.

Schat's Bakkery Analysis:

Introduction

Schat's Bakkery opened in the the early 1950s, after Jack Schat immigrated from Holland to America. He found work in Bishop, California and started his own bakery, specializing in the Original Sheepherder Bread. He picked up on the tradition started by bakers in the early 1900s, who were responding to sheepherders passing through. The sheepherders wanted bread that would retain "palatability", or taste. Soon Schat's Bakkery became a phenomenon, and a second shop opened in Mammoth Lakes, California, a third opening in Ukiah, California. They are known for their customer-based, environment friendly conditions and processes.

Profit

Schat's Bakkery is similar to a mom and pop shop, especially when it opened. Because Bishop is an obscure location, and is centered around tourists just passing through, Schat's can be overlooked. In the early 2000s, revenue was $2.97 million. With the second location in the mountain town of Mammoth Lakes, and the third location in Ukiah, revenue has raised to over $30 million within the last twenty years. (Owler). There is not much about the revenue throughout the years from the 1950s, but with a location opening up in El Segundo, California, the company is predicting higher profitability. El Segundo is a bigger town, populated by over 16,000 people. It is also not far from L.A., which is a large generator for small, original bakeries.

People

The purpose of Schat's Bakkery is to provide food for truckers and tourists making the long trek between desert and mountain in the Eastern Sierra Nevadas. The main mission of the bakery when it first opened was to deliver bread to travelers that would maintain taste for days. The biggest advertisement for the bakery is word of mouth. People come from all over California to taste the bread and other pastries. Daily, the company produces 10 times more bread daily than it has residents in the town. With this much production, they are able to satisfy hungry customers arriving from a long road trip, including some that still have hours of driving to do.

One problem that the company had when first starting out was the lack of seating areas for guests, especially guests just passing through. (Madrigal). Jack Schat decided he was going to take a parking space and put picnic benches next to each other so customers had a chance to sit and talk with one another, and provide a sense of community to the shop. Now, there is a makeshift, antique seating area out front where cars used to park. Passing through, Schat's is always full of customers, and the areas out front are bustling with people. The property is also dog-friendly, and customers can get their pet a treat for the road.

Planet

Schat's Bakkery is extremely conscious of the environment, and keeps their processes all natural. No ingredient is processed with chemicals. For example, their Original Sheepherder bread is created with pure artesian well water, stone ground unbleached flour, and freshly churned butter. (Meathrell). The company visits their growers and personally inspect ingredients that they purchase, such as almond paste, pecans and walnuts.

With the impact of COVID-19, the company joined the Mendocino Grain Project, which is a process of growing grain like wheat and rye from the ground. They are then stone-milled into whole grain flour which provides not only natural ingredients, but local security. (Britten). This means that in times like the pandemic, when processed flour is few and far between on shelves, then this organization can provide for places like Schat's Bakkery that rely solely on freshly grown products. Along with the shortage of processed foods in 2020, Schat's Bakkery reached out to California colleges and offered fresh alternatives to keep kids healthy and well-fed.

Critical Appraisals

Holly Madrigal, a journalist for Word of Mouth, a community and food news organization, speaks of the societal impact that Schat's Bakkery has on not only passerby, but the local community as well. "A job with Schat's is often the first employment for many local kids." (Madrigal). When kids are looking for jobs, they look to Schat's. The company teaches them not only how to work the bakery, but how to be communicative in everyday life, and the lessons that they will need. The company donates extra bread and pastries to the local community as well. "The business is a true leader in Ukiah." (Madrigal).

Gastro Obscura, a subhead of the news column Atlas Obscura, talks about the importance of their environmental decisions. "They make everything from scratch, including their baker's yeast. All their bread is baked in stone hearth ovens, using no preservatives." (Obscura). With their all natural ingredients, they have never dabbled in utilizing chemicals that could be harmful to society and the environment alike. They inspect all ingredients from the farms that they buy from.

Conclusion

Schat's Bakkery is an environmental friendly, community-loving bakery that is popping up in locations throughout California. Through word of mouth, the bakery has only gotten more popular, which will in turn lead to more profit. Investing in the company would be a chance to be part of a movement that is working to influence more natural processes and societal change.

Works Cited:

1. Agostoni, Kristin. “Legendary Baker Family Comes to El Segundo.” Daily Breeze, Daily Breeze, 6 Sept. 2017, www.dailybreeze.com/2011/10/09/legendary-baker-family-comes-to-el-segundo/. 

2. Douglass, Torrey. “Schat's.” Word of Mouth Magazine, Word of Mouth Magazine, 11 Dec. 2018, wordofmouthmendo.com/word-of-mouth-stories/2018/9/1/schats. 

3. Douglass, Torrey. “The Mendocino Grain Project Changes Hands.” Word of Mouth Magazine, Word of Mouth Magazine, 1 June 2020, wordofmouthmendo.com/word-of-mouth-stories/2020/6/1/the-mendocino-grain-project-changes-hands.

4. “Erick Schat's Bakkery, Bishop CA.” Erick Schats Bakkery Bishop CA, schatsbakery.com/wp/.

5. “In Bishop, Calif., a New Schat's Opens up the Dining Options.” Los Angeles Times, Los Angeles Times, 20 Aug. 2014, www.latimes.com/travel/deals/la-trb-a-new-schats-eatery-opens-in-bishop-20140808-story.html. 

6. Meathrell, Carrie. “Schat's Bakery: Best Bread in California?” LAist, 2 July 2018, laist.com/news/food/schats-bakery-best-bread-in-califor. 

7. “The Triple Bottom Line: What It Is & Why It's Important.” Business Insights - Blog, 8 Dec. 2020, online.hbs.edu/blog/post/what-is-the-triple-bottom-line.

8. Ugc. “Erick Schat's Bakkerÿ.” Atlas Obscura, Atlas Obscura, 11 June 2013, www.atlasobscura.com/places/erick-schat-s-bakkery. 

9. “What Is a Social Enterprise?” Social Enterprise Alliance, 11 June 2019, socialenterprise.us/about/social-enterprise/.