Two Doors

Venture in Play · Case 3 — A Masa Madre Story

A later bake for after-work customers and an evening to win back lost regulars steadied the first shop. Neither told André and Wouter how to open a second.

It's about opening a second shop with external funding. The first shop has lost regulars and won some back. Then a second site comes up and a family loan is called in, so whatever they open requires a bank loan. Each founder has a route he prefers, and the bank has a challenge for all three.

Watch what each route depends on, and who. The case pauses when the bank's figures arrive. You choose which loss Wouter should carry before you see which one he chose.

Part One

On the second Monday in May, Wouter came in to do the ordering and found André at the bench with a Volta on a plate.

It was from Sunday's afternoon tray. André had taken it home at closing and left it on the kitchen table. He ate it at 9 in the evening, cold, with a coffee, the way the woman from Tuindorp said she ate hers.

It's old, André said. Not stale. Old. It comes out at 7 in the morning and she eats it 14 hours later.

Which woman?

André told him. A Thursday at the end of April, Fenna's day off, Wouter in town. A regular since the opening week, who bought after work and ate it in the evening. She had said the Volta was stale two weeks running, and he had given her one and asked her back. She came back the next Thursday and said the same.

You didn't tell me.

I wanted to know first. André pushed the plate across. Now I know.

He had already changed the bake. The third oven load had gone in at 11:00. From Wednesday it would go in at 2 pm, from a tray shaped that morning and left to rise in the room instead of the retarder. Anything still on the counter from the morning loads at 3 pm went to the café.

And bring them back, André said. The ones who stopped coming. Your evening.

You said not until it's the same bread two days running.

It's the same bread on the bench. It isn't the same bread at 9 at night. He took the plate back. Bring them back.

That afternoon Wouter rang the printer about a sign for the window.

By the end of June, waste had fallen from 9 coils in every 100 to 6, back to the winter level. André had done it without the retarder-proofer, the €28,000 machine Wouter had costed in April for the same purpose. The costing stayed on the shelf.

Part Two

Two men had taken the café table three times since the spring. They came by tram, from somewhere else, and ordered two coffees and two Voltas each time.

The third time was a Saturday in June. Wouter was clearing the next table when one of them pulled his coil apart and looked at the inside.

Different again, he said.

They're still working it out. The other one finished his coffee. Try it after the summer.

They paid, thanked Fenna and left. Customers told Fenna what they liked every day. Nobody had said why they were coming less. Wouter wrote the two words on the back of the till report.

In July Wouter ran the win-back campaign André had asked for. As always, he put it on one sheet before he spent anything.

To measure it, Wouter put two more columns on the daily sales sheet: what people asked for that was not there, and who came back. From then on he called it the customer sheet.

Fenna filled them at the till. A normal white went in the first column, three times that week. So did anything after five, and the Volta at four. In the second column she put a tick for every face she had not seen since the winter.

Fenna ticked 52 returning faces in the 4 weeks of the voucher. By September, 36 of them still came most weeks. The woman from Tuindorp was one: she took a voucher at the evening and came back on the Thursday after it, and on the Thursday after that.

Over the next year the customers sorted themselves.

The families on the street had never left. The girl who called the coil a snail was there on Saturdays with her family, when the bread was good and when it was not. The people who wanted the bread itself returned once it was fresh at 4, and they stayed. The people who crossed town for something new had gone. The two men did not come back after the summer.

By the following spring the shop sold about 101 takeaways a day, up from 96 in April and still well below the 118 of the first winter. The 2 pm bake was sold out most days by 6.

Part Three

Two years after the doors opened, André found the second site.

It was on a street on the other side of the city, 20 minutes by car. Offices at one end, a tram stop in the middle, flats above the shops. It was busy from 8 in the morning until 7 at night, five days a week.

Kees van Loon, the landlord, met them there on the first Thursday in September. He unlocked the door and stood back while they walked the floor. 90 square metres, an old counter still bolted down, a back room with a drain.

You're the second bakery this month, Van Loon said. Bakhuis came last week.

Did they make an offer? Wouter asked.

Not yet.

On the Saturday his mother rang. She had found a flat she wanted to buy outright, and she asked whether she could have her money back. She said it carefully, the way she had said the word loan the first time.

He worked out what she was owed: the sum she had lent, 31 months, and interest, which she had not asked for. €60,683.

He told André that afternoon, at the bench, before he had decided how.

My mother wants her money back. €60,683, with interest.

André stopped shaping. All of it?

All of it. It was always a loan. Wouter put the figure on the bench beside the tray. If we pay her and keep 2 months' costs back for this shop, we can't open a second shop out of what's left. Not even a small one.

Then we need a bank.

Yes, Wouter said. Whatever we open.

Part Four

They talked about it on the Wednesday after closing, at the counter, with the blinds down.

Wouter had the sheet.

A full bakery. He put his finger on the first column. Its own oven, its own room, its own head baker. The same bread, made over there.

He moved to the third. Or a morning shop. You bake here at 4, I drive it over, it's open 7 till 2. Roughly half the money of either of the others.

And the middle one?

Bake-off. The dough's made here and baked there. You still need an oven over there, and a van every morning. He tapped the first column again. I'd do the full bakery.

André read down the first column. Rent, fit-out, the oven, the extraction. Then a wage line: Head baker — trained by André, 3 months.

3 months, he said.

Someone good, with a few years in. 3 months next to you, and then they run it.

Who?

We'd hire. That's what the line is for.

And then there are two bakeries, and I'm in one of them.

Yes. Wouter put the pen down. I want one place where I don't have to ask you.

He had not meant to say that part.

André looked at him. Is that what this is? A shop where I'm not in the way?

Partly, Wouter said.

André folded his arms.

I can't teach it, he said. Not in 3 months. Not yet.

You've got Sanne. You've got the boy.

I tried with Sanne. Last April, before the boy. He said it flatly. I gave her a time for the first rise. She did exactly what I said, from exactly where I said, and the Saturday came out flat. That was the Saturday nobody sent one back.

Wouter remembered the Saturday. He had not known it was flat.

Why was the time wrong?

I don't know. André unfolded his arms. I know when it's ready. I can't tell you how I know. I can't tell her, and I can't tell somebody you hire.

Then what do we do?

The middle one. André turned the sheet round so the second column faced him. I make the dough here. Sanne shapes it here. It goes over cold first thing and it's baked over there. Every coil in both shops comes out of this room, and I can stand behind every one.

Every coil comes out of your room.

That's what I said.

That isn't a second bakery, Wouter said. That's this one with a longer counter.

André did not answer. Wouter folded the sheet and put it in his bag. Neither of them had moved off his column.

Part Five

On the Friday, André came out to the counter while Wouter was doing the books.

If it's baked over there, it has to finish rising over there, he said. Risen dough won't survive 20 minutes in a van. It sinks in the tray. It has to travel cold and still tight.

Then what brings it up before anyone's in?

Your machine. André sat down across from him. The retarder-proofer. €28,000.

Wouter had put the machine in front of him three times.

So it's yes, Wouter said.

It's my argument. I don't get to keep the half I like.

That week Wouter did what he always did before he spent money.

He stood outside the unit on two weekdays and a Saturday and counted people walking past. The street was busiest at lunch and almost as busy after work. He read the lease: a 5-year term, with no way out before it ends. He timed the drive between the shops at 5 in the morning: 20 minutes. And he looked into Bakhuis. They had 3 shops and a 4th opening close to the new street, and people in the trade said there was bigger money behind them.

None of it told him who would come back.

The customer sheet tells me who comes back here, he said to André. It can't tell me who'll come back there. On that street all I have is people walking past.

The bank's adviser had last year's accounts and 12 months of till data. Wouter's application assumed the second shop would sell what the first one sells: €463,382 a year.

The adviser read it through, then looked up.

Who runs a full bakery over there?

A head baker. We'd hire one.

Trained by whom?

Wouter looked at André. We'd have to find one already trained.

Then I'll take all three as you've written them, the adviser said. For all three I'll plan on 75% of your first shop's sales. That's the haircut we put on any new site: it doesn't start where your first shop is now. And whichever you choose, you both guarantee the loan, and I want a shareholders' agreement signed before we pay out. I'll send you the figures.

Part Six

André ran his own test the week after.

On the Tuesday, alone, he shaped 20 Voltas more than Wednesday needed and held them overnight in the retarder they already owned. At 5 on the Wednesday he put them in a cold box in the back of Wouter's car. Wouter drove to the new street and back, 20 minutes each way. The Voltas rose in the room beside the morning's trays and went into the oven with the second load.

Every coil came out the same as the one beside it. Next to the morning's trays they stood a little lower at the ridge, and they were a little tighter inside.

They're all the same, André said. He broke one open. That's good. But they're not as good as the ones I bake here.

Would anyone notice?

I would. The regulars might.

Then why not bake them most of the way here, Wouter said, and just finish them over there?

Because then it's what the supermarket sells. André put the coil down. Half-baked and finished in a shop oven. People know that bread. They buy it for a euro.

Then we test your way properly before we open, Wouter said. On the machine, with Sanne shaping, and regulars tasting it. If they can't tell the difference, it's good enough.

And if they can?

Then we find out before the customers do.

Part Seven

Van Loon brought the lease to the unit on the Thursday of that week and went through it clause by clause at the old counter. André read along over Wouter's shoulder.

Wouter put the pen down before he signed anything.

The bank wants the shareholders' agreement first, he said to André. I want it to say who decides what. And what happens if one of us wants out.

Yes, André said.

That evening they wrote down the main points for the notary. André decides what goes out under the Masa Madre name: the method, the standard and who bakes. Wouter decides the money: budgets, staff, rents and the bank. Anything that commits both shops, like a lease or a loan, needs both signatures. If one of them wants out, the other can buy his shares first, at a price an accountant sets.

On the Saturday, after closing, they sorted out who would run the second shop.

Whatever we open, I'll be the one over there, Wouter said. Fenna takes this counter. She's asked for more days.

If it's bake-off, I'll teach you the oven and the machine, André said. That part I can teach.

If, Wouter said.

Then they asked Sanne. She was at the sink with the last trays, and she turned the tap off to listen.

I stay here, she said. I'd want to stay here anyway. She looked at André. I can follow the method. I know I can't do what you do with the dough. That's what I want you to teach me. The part that isn't written down.

I know.

You're teaching the boy. Teach me.

The apprentice was 16 months in and still not much use at the bench.

André said they would start on the Wednesday.

They went to the notary on the Monday.

Part Eight

The adviser's figures came the next Thursday. Wouter read them at the end of the bench after closing, with the sheet open beside them.

At 75% of the first shop's sales, every route lost money at the second shop in its first year once the loan was paid.

The full bakery lost €20,963 a year, and it needed a head baker nobody could train. Bake-off lost €9,129 a year, and it rested on a Volta surviving a cold night and a van. The morning shop lost the most, €43,343 a year. It closed at 2 pm, before anyone walked home from work (see Exhibit 1).

Wouter sat with the three numbers for a long time. None of them made money in the first year.

Coda

Wouter chose bake-off. 

He had wanted the full bakery for the reason he had given André at the counter. It needed a head baker who did not exist, and the only man who could train one had said he could not. The morning shop was the cheapest to open and lost the most. It closed at 2 pm, and the woman from Tuindorp bought her Volta on the way home from work. Bake-off lost the least. One bakery could make the dough for a third shop, and a fourth. 

It also meant that every Volta in both shops came from André's bench, and Wouter would be asking him for it every morning. 

At the bank, on the last Tuesday in September, the adviser laid out the loan: €113,073. On the application's figures, the two shops together covered the repayments 7.6 times. At 75%, the second shop still lost money after paying its loan. The first shop could carry it. 

The guarantee had two lines for signatures. Wouter signed the first. Beside it he put the consent form his wife had signed at their kitchen table the night before. 

And your partner? the adviser asked André. 

Divorced, André said, and signed the second line on his own. 

Three signatures, two of them from Wouter's house. The shareholders' agreement was in the same folder, signed at the notary the week before. 

That afternoon Wouter transferred €60,683 to his mother. She rang that evening to say it had arrived. 

That's all of it, he said. With interest.

What This Case Is About

Wouter had three ways to open a second shop, and each one looked sound on the founders' own figures. His application had the new street selling what the first shop sells. On that assumption every route paid its way, and the cover on the loan was comfortable.

The bank looked at the same three routes and asked one question first: who runs it? Then it applied a 25% volume haircut: it assumed the second shop would sell 75% of what the first one does. At that volume, all three lost money in the first year. The choice stopped being which shop makes money and became which loss to carry, and what each loss buys.

The full bakery bought Wouter what he wanted: a second operation that did not depend on André. It depended on one assumption: a head baker, trained by André in 3 months. André said he could not do it. A plan should be tested against the case where its main assumption fails, not only the case where everything goes to plan. The full bakery fails that test.

The morning shop borrowed the least and lost the most. It sold André's bread exactly as he made it, but only until 2 pm. The first shop had just spent a year learning that some of its most loyal customers buy after work.

The first shop's recovery cost a change in the bake time, one evening and €2,400. It started with one regular telling André the Volta was stale by the evening. She had been buying it since the opening week, and nobody had asked her before. Customers who come for the product will say what is wrong if someone asks. The ones nobody asks stop coming, and the till shows the drop months later, without the reason.

Bake-off lost the least and took the most from André. Both shops' bread now comes out of one room and one pair of hands. Bake-off makes that dependence bigger, and visible. It is built around what André cannot yet do, instead of around a head baker who does not exist.

At the bank's 75%, bake-off loses €9,129 in its first year. It pays its own way once the second shop reaches 78% of the first shop's sales, 3 points above what the bank assumed. The model covers the first year only, so whether it gets there is not shown.

It also rests on one test: 20 coils, held cold overnight, driven 20 minutes and baked. The test showed the dough survives the journey and comes out consistent, a little below what André bakes at the first shop. It did not test the machine, which they had not bought yet, or a winter morning. Wouter has said they will test both before the second shop opens. Two things would make the morning shop the better route. One is if the second shop does more than about 80% of a day's trade before 2 pm. The other is if the Volta does not survive the van on a cold morning.

Two other things in the case matter later. Both founders were explicit about what was driving them. Wouter wanted one shop that ran without needing André's agreement, and André said he cannot yet teach his expertise. And before anyone signed a guarantee, they put in writing who decides what, as the bank required, and added what happens if one of them wants out.

Wouter chose the route that keeps him dependent on André every morning. Whether André's method can be moved out of his hands, into the machine, the counter staff and Sanne, who has asked to be taught, is a question this case leaves open.