Podcast Summary: Odd Lots - "What an LA Bakery Says About the Economy Right Now"

Release Date: August 1, 2025 | Host/Authors: Joe Weisenthal and Tracy Alloway | Guest: Andy Kaden, Owner of Bub and Grandma's Bakery

Introduction

In this enlightening episode of Bloomberg's Odd Lots, hosts Joe Weisenthal and Tracy Alloway delve into the intricate world of industrial-scale baking through the lens of Andy Kaden, the owner of Bub and Grandma's, a prominent bakery in Los Angeles. By exploring the operational challenges and economic factors influencing his business, the discussion offers a microcosmic view of the broader economy.

Andy Kaden's Journey from Advertising to Baking

Andy Kaden shares his unconventional transition from a decade-long career in advertising and television to the world of baking.

• From Advertising to Baking: "I grew up in New Jersey, kind of in Italian Jewish sandwich Mecca... decided to start writing some business plans and figure out how to open a sandwich shop here." ([05:06])

Following a personal dissatisfaction with the advertising culture, Andy's passion for cooking led him to experiment with baking, eventually receiving his first wholesale order from a local restaurant.

• Early Baking Experiments: "I started baking daily at home and got into that pseudo Covid rhythm of daily baking... And it found its way to a friend of mine who worked at a local restaurant." ([06:51])

Scaling the Bakery Business

Andy discusses the rapid growth of his bakery from home operations to a thriving wholesale enterprise.

• Initial Scaling Challenges: "I started as just for me, just as an experiment, but very quickly... the demand grew very quickly, I quickly had to figure out how to run a business." ([07:57])

Today, Bub and Grandma's operates a 6,500 square foot facility with 50 employees, supplying bread to approximately 180 restaurants across Los Angeles.

• Current Operations: "The wholesale bakery is now a 50 person business... producing bread for about 180 restaurants in Los Angeles." ([07:57])

Operational Challenges: Production and Distribution

Operating at an industrial scale, Andy highlights the complexities of maintaining production and efficient distribution.

• Production Constraints: "We are wall to wall in that space and need to move in the next two years... we have no more oven space per hour available for new loaves of bread." ([11:16])

• Distribution Logistics: "We have six vans... building out this whole network is a major, major part of what we do... our ops team at the bakery are true geniuses in building out these routes." ([11:39])

Andy emphasizes the delicate balance required to ensure timely deliveries within narrow windows, especially amidst Los Angeles traffic.

Labor and Commodity Costs

The discussion delves into how labor dynamics and raw material costs impact the bakery's operations and pricing strategies.

• Hiring Availability: "Hiring availability is unique for us... the skills that they hopefully already have are in rare supply in Los Angeles." ([17:29])

• Commodity Price Fluctuations: "We saw maybe a 10% increase in flour pricing... prices have settled back down, but in the meantime, everything else has gotten more expensive." ([17:57])

Andy explains the ripple effect of global events, such as the Russia-Ukraine war, on commodity prices and, consequently, on their pricing models.

Strategic Expansion: Opening a Pizzeria

Andy shares insights into expanding his business by opening a pizzeria, highlighting the regulatory hurdles faced in Los Angeles.

• Regulatory Challenges: "It took us three years to open... very difficult process with bureaucratic red tape." ([31:05])

• Impact on Business Operations: "When you open the restaurant, they walk in on the last day and demand changes... it's excruciatingly frustrating." ([33:20])

The conversation underscores the significant time and financial investment required to navigate Los Angeles' complex regulatory landscape.

Economic Insights: A Microcosm of the Larger Economy

Andy and the hosts explore how his bakery serves as a reflection of broader economic trends, particularly in terms of supply chain disruptions and labor market dynamics.

• Supply Chain Dependencies: "We are subject to their markup and they are fluctuating based on their algorithms... we have to stay on top of it." ([22:10])

• Labor Costs vs. Cost of Goods Sold (COGS): "We have labor at 42% compared to traditional models at 30%... COGS are in the 12% range." ([25:25])

These insights reveal the delicate balance businesses must maintain between labor expenses and material costs, especially in volatile economic climates.

Maintaining Authentic Relationships Amidst Growth

Andy emphasizes the importance of sustaining genuine connections with customers and the challenges posed by scalable distribution models.

• Distribution Choices: "If you outsource distribution, you lose the personal connection with chefs... potential for relationships to sour." ([22:10])

• Price Adjustment Strategies: "We've raised prices maybe twice in the last four years... it's crucial for us to protect the business." ([27:36])

Andy advocates for maintaining in-house distribution to preserve authentic relationships, which are vital for long-term business sustainability.

The Future of Los Angeles' Restaurant Industry

The episode concludes with a candid discussion on the state of Los Angeles' restaurant scene, highlighting both its resilience and the formidable challenges it faces.

• Market Dynamics: "There's an endless list of factors that make Los Angeles complicated... expansion and contraction in this wide city." ([42:56])

• Longevity vs. Trend-Driven Success: "Trends are a business killer... authentic relationships are essential for long-term success." ([38:47])

Andy reflects on the dichotomy of operating in a vibrant yet unpredictable market, emphasizing the need for authenticity and adaptability.

Notable Quotes

• Andy Kaden on Distribution: "We have to do our job. Not only just the baking job, but the distribution job before anybody else from our accounts show up to work." ([11:39])

• Andy on Labor and COGS: "In the wholesale universe, labor is 42% and COGS is 12%, compared to traditional models where COGS are 25-30%." ([25:25])

• On Regulatory Frustrations: "It's excruciatingly frustrating to be put in this position where nothing is logical... decisions are based on mood or whether they like you." ([33:20])

• Authenticity Over Trends: "We are going to have our regular return customers who have a relationship at the restaurant. Trends are a business killer." ([38:47])

Conclusion

This episode of Odd Lots offers a compelling exploration of how an LA-based bakery navigates the complexities of scaling operations amidst economic fluctuations and stringent regulatory environments. Through Andy Kaden's experiences, listeners gain valuable insights into the interplay between labor, supply chain dynamics, and the importance of maintaining authentic business relationships. The discussion serves as a poignant reflection on the broader economic landscape, illustrating how micro-level business strategies can mirror and respond to macroeconomic trends.