My guest today is Rachel Porges, former CMO of Levain Bakery, the maker of the most famous 6-ounce chocolate chip walnut cookie. This is Part 2 of the interview where we explore how she grew the Levain business.
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Transcript
Edward: This is part two of my interview with Rachel Porges. Today, we're going to dive into her experience as Chief Marketing Officer for Levain Bakery. Rachel, can you start by explaining what Levain Bakery is, and how I'm mispronouncing it?
Rachel: You're actually getting it exactly right, which is a first for me because nobody pronounces it right. Levain Bakery was founded about 25 years ago by two amazing women, Pam Leekes and Connie McDonald, as a little bakery shop in the Upper West Side in New York. They were actually training for marathons and were making cookies at home for themselves to keep up their energy. They're training for triathlons and were keeping up their energy with these giant cookies.
They started selling them. The New York Times picked it up and the world changed. To this day, 25 years later, even in COVID, there are lines down the block at the bakeries for these cookies. They're an icon. If you've ever seen one of those pictures of a giant cookie being broken on Instagram, the genesis is Levain Bakery.
Levain brought them private equity money a couple of years ago and hired a new executive chief, of which I was one, to take the brand forward and figure out how to scale it out of four bakeries in New York—three in the city, one in the Hamptons—and do three things. One was to increase the footprint of the bakeries and add stores, two was to grow ecommerce, and three was to launch into CVJ.
I was involved in all three of those things over the course of my couple of years there. The store, it fits incredibly. Even in the middle of this pandemic, the performance of the stores and of all the other pieces of the business has been truly remarkable. I was super honored to be a huge part of it, and I continue to advise them today.
Edward: How are they different than all the other bakeries out there? Is it just a better product? What makes them different?
Rachel: It's a really interesting question. One is that this cookie, it's the first of its kind in this giant cookie. The cookies are six ounces. Picture a softball squished down and break it up with a ton of chocolate chips in it, it's a little insane, so just the size and scale.
I think what Levain does better than anyone is in experience. When you walk in, you're greeted by people that love what they're doing. When you walk up to one of the bakeries—whether it's on the Upper West Side, or in the Hamptons, or the store we opened a couple of weeks ago in Washington, DC—outside, you see people snapping pictures of that cookie break. You see people with these joyous faces. That's what it does better than anyone.
Sure, we have really great bread, some sticky buns, and all of those things, but what Levain does best is it creates a moment of joy for people. At any time, it's a big piece of it. Pam and Connie often talk about the fact that 9/11 people came up to the bakery as a place just to get a moment of normal [...] to hell that was that day. The same thing has happened. We got customers coming in during the pandemic handing our employees notes (with gloved hands) saying thank you for being here at this time.
It's not just the cookie, that's the moment. What we see is that translates across ecommerce, certainly where people want to send their friend a moment of joy. They send our cookies via our DTC website. As I helped to create the CPG product, it was incumbent upon us to make sure that we did that there as well. It's really easy to throw something in a bag and put it on a shelf and have to be a different experience, but what makes those special is that breaking open that moment of joy, the dewy chocolate chips. We had to find a way to bring that to life at a grocery store when you don't control the environment around you.
Edward: That cookie is obviously very important, especially for the brand. Is it important sales? What percentage of your sales would come from that cookie versus everything else?
Rachel: I can't disclose numbers, but a whole hell of a lot.
Edward: It's more than just a brand, though. It's like people come in and buy the cookie, and everything else is there almost just like an add-on. It’s like, I’ll have fries with that.
Rachel: Yeah, which is ironic because the name is actually a type of bread. Levain is a leaven sourdough bread out of France. It's an actual name for a sourdough starter or a fermented starter. The brand is the cookie to some extent. Even our logo that we launched last year is a cookie. It has nothing to do with the original name of it.
No one lines up down the street. I'd love to say they do. Certainly, our products are amazing across the board, but they line up down the street for the cookie. As we extended that brand, it became really important that the cookie stays at the center of it. That's where a lot of marketers sometimes get confused is they forget that the consumer has a voice in what you're trying to do. For us, it became really obvious as we were watching social media, as we were talking to people online, as we watched sales. They're telling us what to maximize growing this business. That became a big common arc of what we did as we extended the channels.
Edward: Why expand the product at all? Do you get incremental sales by having bread? How do you decide what else to add in?
Rachel: We've actually had much the same menu for the better part of 25 years. We haven't done a ton of add-in. Pam and Connie—prior to the growth equity coming in—made some changes along the way. In my time there, we actually didn't add anything. As we had to narrow the menu during the pandemic just to make it easier to operate, we didn't take out any of the cookies.
We took out other things that were either complicated, took up space, or caused a little bit of operational hurdle. Bread actually—interestingly enough during the pandemic—became a bigger piece of it because people needed the staples at home in a way that they didn't before, or they had other venues to get it before. But the cookies remained true.
In the time that I was there, there are three big innovations that I helped with. One was the ice cream sandwich on the Upper East Side last summer using our cookies, which is kind of a media darling at the time. It drove a lot of excitement because suddenly, we are using our cookies for a different purpose.
By the way, ridiculously decadent and very much in keeping with the brand, we launched the first-ever chocolate chip cookie without nuts, which was unheard of before at Levain. Levain had only had a chocolate chip cookie with walnuts. We launched a chocolate chip cookie, it's called Two Chip Chocolate Chip. It has two different types of chocolate chips in it. We launched that when we opened our no-host store in February of 2020. We'll do that to the other bakeries as well.
Just a couple of weeks ago, we co-created a cookie in Washington, DC with a local James Beard recognized chef. Again, made sure we savored the cookie and brought something to life, but did it in a way that localized the brand as we are going to new markets.
Edward: I want to talk a little bit about moving Levain into CPG from retail. You've already mentioned a little bit of the challenges doing it. What are the other challenges of moving a retail brand into CPG?
Rachel: Product experience is number one on that list, so maintaining the experience. It doesn't have to be the same experience as what we found, but it had to be something that was relevant. We actually didn't launch our six-ounce cookies into CPG. We did an everyday indulgent size two-ounce cookie. The reason we did that is because who needs the six-ounce cookie every day? You're not going to get the eating occasions you need for the velocity at the shelf at retail. We did that.
We also did it in a way that wasn't very main to a lot of brands. You see it even recently with Milk Bar. They go and they launch into the same set that has Tate's, Oreo, and all of these other brands in it. For us, we decided to go to frozen desserts because it is a dead category in a place that we could really stand out and deliver real value to the retailer and to the customer. That was a lot of fun.
The other thing is cannibalization. You have to be really clear of what you're trying to achieve, and make sure you do nothing to either bastardize or cannibalize the cash cow, the thing that's giving you life. Moving forward, assuming that the CPG product continues to be as successful as the early launch numbers would show, the vast majority of the consumers in the world are going to experience us first as a CPG brand.
We had to create a really nice usage circle that encouraged them to also consider coming to New York and coming to the bakery or purchasing the crazy giant cookies as a gift for friends. It all has to be really harmonious. If you try to segment it out and make it one versus the other, you're losing the value that the future buyers at one bakery might actually want.
Edward: Where is the future value of CPG? Is it almost as a loss leader driving to the bakeries, or is it a profit center in itself? In fact, to your point, a much more scalable product than your bakeries. Are your bakeries the marquee that helps you sell CPG or the CPG like a marketing channel that gets you to the bakeries?
Rachel: Both. It's certainly the latter. It's certainly not a loss leader. It's certainly a valid profit center into itself as it grows. I couldn't say that you would put one over the other. Obviously, the scale you can get at a CPG, you can take [...] and go to 40,000 stores, as opposed to the cost of building out 40,000 bakeries. It would be alarmingly high, not to mention highly cannibalistic at some point.
I'm not speaking to Levain strategy, but I don't think it would ever make sense for Levain to be on every street corner everywhere. We said that time and time again. There's still a beauty in the scarcity of that bakery experience and in making it a moment of joy.
It's the same thing as my time at Kriser's and other brands. You have to maintain an experience to bother having a brick and mortar facility. It has to be something that you walk in. It's not just about the transaction. Nothing in brick and mortar is strictly transactional anymore. We've seen the failure of so many bricks and mortars that were strictly transactional.
CPG creates a moment that appeals to a consumer who has a craving at home and needs something in their pantry or in their freezer to heat up at night. Retail creates an experience when you want to have that, when you an Epicurious traveler who walks into New York, DC, or wherever we had next, and wants a real moment of experience. There are different [...] but they are fed together if the brand stays harmonious.
Edward: Let's say 40 years from now, the pandemic is over, people go to the restaurants again and both businesses are super successful. You've expanded to CPG, you've expanded the footprint for the retail. At that point, looking that far into the future, are they both comparably sized businesses? Maybe the retail business is smaller but more profitable, but the received CPG business is larger but smaller margins?
Rachel: I don't want to speculate too far into the future. There's only so much I can share, but they both have a place. I think DTC does this well for what it's worth. Whether it's me or whoever comes in next as CMO and obviously our CEO—Andy—they have to make sure that they're always building around the consumer insight. That's the key for it.
The consumers will dictate ultimately the size of the prize. They’ll tell you how big it is. You could see a world in which the bakery product set is mimicked in retail at some point. Here's the core bet. Cookies are a red herring to some extent. What you're creating is a decadent moment of joy. It's ooey, gooey, delicious, warm, fresh-baked, and it has all this connotation around it. You could take your product line into different places. You could take your bakery experience to different places as long as you maintain that experience across the channels. I don't know whether it's size, product varieties, or how that comes to life, but the consumers will dictate the size of the prize for sure.
Edward: What are the prerequisites for a retailer moving in the CPG? You've had obviously a lot of success, Starbucks has a lot of success, but I don't go into my Safeway and see Subway sandwiches prepackaged. Maybe those exist, but they surely aren't successful. What do retailers need to have done in order to be successful when they move into the CPG?
Rachel: Building a brand that has something unique about it is the core. Not to crap on Subway, but I'm not sure that Subway has a unique factor in the way that if you look at Jersey Mike's, they do Mike's way and they have a sauce that goes on. There are unique things that make that special. You could take some of that [...] in it. They launched their sauces at Whole Foods and have a CPG business.
Milk Bar has done it recently with their product. There's a real distinct point of view for some of these brands that have gone from bakery, restaurant, or a retail brick and mortar experience into CPG. Hale and Hearty did with soups here in the city for a while. That's what really matters.
Years ago, when I was at Unilever, I launched P.F. Chang's frozen. It was the biggest launch in North America that year. It was because, at that time, P.F. Chang's was incredibly loved by consumers. It had a really distinct point of view. It was this very bold flavor profile to most of America at the time—this is 2010—which doesn't sound like it was that long ago, but P.F. Chang's is bold.
When we were creating the products, we did our damndest to make sure that we kept that flavor profile, that mouth deal, to the extent that we were worrying one morning at 8:30 AM. We were talking about the cut of carrots. Bolthouse Farms had run out of the carrot cut that we usually use for orange chicken. We were tasting different cuts of carrots in the orange chicken to make sure we didn't do anything to lose that mouthfeel and taste profile for P.F. Chang's. That's what it is.
You have to have a point of view that can be carried into a new format, irrespective of the chairman. I actually helped advise a small brand called tenoverten which is a nail salon company here in the city. They’re [...] different times. They launched their nail products into Target. When they opened their nail salons in the city, it was with the idea of creating an environment that was better for the employees and better for the customers in terms of the chemicals used in the products, the odors, and the space, the nail polish remover, they were using non-acetone. They were creating a whole new environment. When they launched their products into Target, it was with that same mindset. It was with that mindset of being very conscious of everything that went into that product experience. It's been really great. They've had some great success in CPG. That's what it comes down to.
Same thing if you look at a brand like Drybar. They were able to create products that live outside of their retail environment. It was taking that point of view and that experience into something that you could bring and port with you.
Edward: That was super insightful. I want to dive back a little bit and go into the retail space and growing the retail space. It feels like a big, important part of growing retail is having a really good product and having a really good location. Given that you have those things, as a marketer, how do you help accelerate the business beyond that?
Rachel: There are two things in my past that come to life. One is making sure that you're never resting on your laurels. Kriser's was one of my past experiences. I remember my second week on the job at Kriser's. The brand was called Kriser's For Your Pet's All Natural Life when I started.
If you look across the parking lot in Irvine, California, or in Englewood, Colorado, you see Kriser's For Your Pet's All Natural Life. I walked back in my second week of the job and I said to the CEO, we have to change the name of the store. He said, would you like to wait until week three to have that opinion? I said, no. I know you've been doing this for nine years, when you're standing across the parking lot, you can't read it. People don't know what it is. You can't see that icon that you created. You can't see that it is a pet retail environment. We did and sales popped up.
It was a matter of continuously questioning everything you are doing and making sure that it really rang true to what the customer needed. Along with that is the idea of using customer experience to help drive your communication. As marketers, we strive for advocacy. It's the top of the pyramid or the bottom of the funnel or the top of the funnel depending on which area your funnel's headed this week. You want those handfuls of customers to be really crazy advocates for your brand.
Social media and digital platforms have given us a method to repurpose that at scale. At Levain, we took our social following from 100,000 to 250,000 people in less than 18 months. The way we did that was by using what consumers were telling us time and time. We didn't pay a single one of those followers. It was because we were using what consumers were showing their friends in our communication.
There was this great virtuous cycle of user-generated content, sharing experiences, bringing people back, and wanting that same experience. We started creating our entire photoshoots around the idea of capturing that same piece of experiences. We did our influencer work, it became the same thing.
As we built our new website last year in 2019, we did the same thing. We used images that were representative of what the consumer was telling us mattered to them. With retail as a marketer, it goes back to always being the voice of the consumer and championing that to executives who are more focused on operational efficiency, product assortment, or labor cost because nothing matters if the consumer doesn't carry it forward.
Edward: Yeah. It's almost not even appealing to the consumer. It's using your consumers for market research, like figuring out this is what they value because this is what they're sharing and this is what's getting traction among consumers. Let's use that and just scale it.
Rachel: For sure. It's the cheapest form of market research. Who needs to run a study when people are telling you every single day? You have social listening. There are a million platforms for social listening. Just search the hashtags on Instagram or on Tiktok, and you will see what consumers are telling you. You joked at the beginning of the last podcast or the beginning of this one, about not saying Levain correctly. There's a whole world in which we needed to understand that people don't understand how to say our name.
On the back of our CPG process, our product, and on our website, there's a comment that says ləˈvan in phonetics. It's the idea of, oh, we can actually work and have this dialogue in this interaction with consumers. One of the tech platforms I love is a company called Pixlee. They're from the Andreessen Horowitz Portfolio. They do a beautiful job with helping friends commercialize their user-generated content, either by just embedding it on the website or by enabling you to make that shoppable by scaling the idea of a permissioning UGC.
I use it on almost every website I put together, because isn't it better to show not tell? Marc Mathieu—who was the former CEO of Unilever and Samsung at one point—he had a quote. I'm trying to remember exactly what it was, but it's something along the lines of, marketing used to be about creating a story and telling it. Now, it's about finding the truth and sharing it. Insofar as we as marketers listen to our truth—not just our truth but what consumers are telling us is true about us—we're just going to be so much more successful.
That gives us the content by which the van Gogh do your AB testing, site optimization, social media buying, and all of these things that are the technical side of marketing. They're BS—to use your term—if you don't have the right assets and the right communication embedded within it.
Edward: This has been awesome, Rachel. Before you go, tell me about your quake book.
Rachel: I probably have two, actually. One, I just finished reading Pride and Prejudice when I was a teenager.
Edward: How did that change your world view?
Rachel: I became a romantic. My parents weren't lovey-dovey. I wasn't into all the romance stuff when I was a kid, but that changed my view of where romance novels started. To me, it's the basis for almost every great romance novel that ever existed. Poor guys in my life have probably set up a really bad bar to be measured against.
Most recently, I just finished reading Where the Crawdads Sing. I don't want to give away the book if people haven't read it, but it tells you about, again, prejudice about seeing the truth, and how much you can fall prey to people's ideas of what things are. To me, it was a truly beautiful book, but also that meant that I'm going to be thinking about it for quite a while.
Edward: Thank you, Rachel. This has been great.
Podcast: Rachel Porges, CMO Levain Bakery, Part 2