to local Chinese-owned markets. "Eight of us lived together in a two-room apartment in the Tenderloin district," says Andrew.
Five years later, by pooling every extra nickel and dime they had scraped together, the Lys had managed to save up about $40,000. "A friend of ours had a little coffee shop across the street," Andrew says. "It wasn't doing well. He decided to sell." In May 1984, Ly-owned Sugar Bowl Bakery—a small coffee and doughnut shop in the Richmond district of San Francisco—was born.
Round-the-clock efforts
Just as they had worked to reach business ownership, every member of the family pitched in to make the business a success. Those who had other jobs moonlighted at the bakery. They had no plan other than what Binh refers to as "moving ahead, step by step," earning enough to support their families. "We did not specifically assign jobs," says Andrew, who became an American citizen with his brothers in 1985. "But we figured out how to split everything up so things were being done 24 hours a day, seven days a week."
Even Andrew, who was taking English and business courses while also working at school to cover his expenses, was helping out in the bakery at night. "When I met my wife, our dates were often delivering doughnuts," he says.
For a family with no practical experience in business or baking, it was a learn-as-you-go tightrope act. "We studied trends. We learned from others; we hired people to come in and train us on how to make better products, how to add more products," says Andrew.
The most important lesson, he says, was quality, something that, along with effort ("There is no substitute for hard work," he says), quickly became the mainstays of their company. "Marketing opens the door, but quality keeps it open," he says. Even in these tough times, as prices for staples have skyrocketed, Andrew says they will never compromise on quality. "I'd rather sacrifice margin than sacrifice quality. You lose quality, you lose the faith of your customer."
By 1986 the shop had expanded its reach, selling not only to local customers but to convenience stores and other coffee shops, and was netting about $150,000 annually. They decided in 1986 to invest in real estate for a second bakery. In 1990, the brothers bought a third.
At this point, the family was presented with a choice: Continue along the retail path, becoming what Andrew described as "the Starbucks of baked goods," or diversify. As it happened, the solution presented itself.
In the late '80s hotels were trying to cut
costs by cutting back on baking their own pastries. Sugar Bowl jumped on the opportunity to make products for hotel bakeries. They became a custom bakery for several San Francisco hotels. That, in turn, led to the development of high-end wedding and specialty cakes.
Then the brothers discovered that there was a demand for laminated dough. Laminated dough allows constant folding, which in turn enables a baker to make treats such as croissants. The company in 1993 got an SBA loan to purchase their main San Francisco facility, which spans nearly a block, and began a frozen-dough division, complete with a fleet of trucks serving its primary customers—Las Vegas casinos—as well as other businesses throughout Northern California.
The final step was to expand into packaged items for retailers such as Costco, for which the Lys have developed several successful creations, including Petite Palmiers, Madeleines and Petite Brownie Bites.
A bakery powerhouse
The area surrounding the intersection of Toland and McKinnon streets, about 10 minutes south of downtown San Francisco, is a nondescript industrial neighborhood, nothing more than an unassuming collection of large, squat, flat-roofed warehouse-type
lier profile
Name: Sugar Bowl Bakery
Owners: Tom, Binh, Andrew, Sam and Paul Ly
Address: 1963 Sabre Street
Hayward, CA, 94545
Contact at: (510) 782-2118
www.sugarbowlbakery.com
PHOTODISC/RF
Products at Costco: (varies by region) Petite Palmiers, Petite Brownie Bites, Madeleines
Comments about Costco: "Working with Costco buyers has helped us improve as a business, in terms of quality and efficiency. Costco is a model of both."