And while the bakery began as a way to supply its restaurants, Schwartz Brothers Bakery distribution is now nationwide, serving some of the largest retailers in America.

Energized growth
In the late 1980s and early 1990s, Schwartz Brothers saw exponential growth in its bakery thanks to another pioneering Seattle company, Starbucks.

When Howard Schultz bought Starbucks, he set into motion plans for rapid expansion, and he needed a bakery partner. That’s where Schwartz Brothers came in.

“We were the original Starbucks bakery,” says Schwartz. “We provided all the muffins, cookies, scones, and croissants that you would see in Starbucks.”

This proved an enterprising relationship. “They kept saying ‘Jump,’ and we kept saying, ‘How high?’ Over the years, we continued to grow as fast as we could,” says Schwartz. “We delivered fresh to the original 10 Starbucks stores in Seattle. We expanded to 100 stores. At the end of it, we were doing 7,500 stores west of the Rockies.”

In 2012, Starbucks bought the La Boulange bakery chain, and Schwartz Brothers lost that business, which was a significant setback.

However, that experience—growing in tandem with Starbucks, adding bakery competencies—helped Schwartz Brothers develop the infrastructure that remains in place today.

“Over the ensuing decade, we’ve really done everything we could to rebrand ourselves to create the Schwartz Brothers Bakery brand and to expand nationally,” says Schwartz.

“Throughout that time, we obviously had the support of our restaurants,” says Schwartz. “When we lost all that Starbucks business, we were really fortunate to have the restaurant business, which was able to maintain our infrastructure and be in a position to invest in the bakery so that we could have a long-term sustainable business model.”

The investments Schwartz Brothers made in its capabilities has paid off, and the bakery now offers a product set that includes bagel chips, dessert bars, breads, buns, rolls, bagels, croissants, cinnamon rolls, muffins, scones, cookies, and similar items.

“We made a big investment in the bread category, and we made a big investment in opening a new plant in Renton,” says Schwartz. Facility certifications include kosher and SQF Level 2, and a capability for organic products, including bread.

The COVID shift
Business development was moving along at a steady clip before the pandemic hit in December 2019. That was an industry game-changer, but Schwartz Brothers took the subsequently formidable challenges in stride.

Employee recruitment and retention during the COVID-19 pandemic has been essential to maintaining production continuity. “The No. 1 challenge we have had is the labor force,” says Rachid Ouardi, director of manufacturing and business development. “A lot of people just were afraid to work in an environment with a lot of other team members, worried that they might get COVID. We had to show our team members that we have strong sanitation practices.” This included hiring additional sanitation staff to clean all employee touchpoints around the clock to help ensure a safe work environment.

Ouardi notes the older equipment in the facility wasn’t designed to have the OSHA-recommended six-foot separations between personnel. “We had to build barriers in a certain positions like product finishing, icing, or packing—anything that require manual labor.” He notes equipment suppliers have now started to think about how distancing can impact production, and how to implement solutions.

The bakery also structured shifts so that different groups were not working at the same time—keeping shifts separated, but also focused on specific aspects of production to concentrate efforts. For instance, for a product set with two potential lines, the bakery would just focus on one line, one product run at a time, with an emphasis on high operational efficiency.

Schwartz Brothers Bakery didn’t mandate vaccination, but saw a roughly 95% vaccination rate among its workforce.

Schwartz notes some of the company employees who were let go due to pandemic-related restaurant disruption were rehired to work in bakery operations as that arm of the business saw development. “At that time, the bakery was an ‘essential business,’ providing products to grocery stores,” he says.

“We never would have thought that we would be taking care of 3,000 Kroger stores during a pandemic,” says Schwartz. “We’re really proud of being able to be an essential bakery for the entire country.”

The ability to grow was indicative of a strong supply chain. “We’re really appreciative of all of our vendors—and internal leaders. We’re just really proud of everyone who works for us. We’re a family business, and we treat our employees like family,” says Schwartz.

“We have some strong business relationships with our suppliers,” says Ouardi. “A lot of our suppliers went out of their way to support us with our growth.”

Ouardi also points to strong partnerships with retailers and other customers of the bakery, which sometimes resulted in streamlining the overall product assortment. “They were able to reduce some SKUs and work with what we can make more efficiently and effectively,” he says. This meant cutting out some high-labor, lower-selling SKUs, and focusing on high-selling SKUs with strong production efficiencies.

“Suppliers, customers, team members, ownership—everybody worked together, and we made it together,” says Ouardi.

Finding sweet spots
Schwartz Brothers has steadily worked to find market opportunities to capitalize on its existing bakery capabilities. “We had all the equipment and the infrastructure in place to do a lot of the items that we were doing for Starbucks,” says Schwartz.

The business has discovered a sweet spot is in bakery products that have a long shelf life and a capability for organic, says Schwartz. “Our most-successful product today, our bagel chips, fits those categories. It’s upscale, premium, organic, and kosher, and it has a long shelf life.” The products have distribution in Costco and Kroger stores nationwide.

Schwartz Brothers is also a top producer of private label frozen dough products, such as for pizza. “We have a big dough line and a blast freezer that operates six days a week, 16 hours a day, to meet demand,” says Schwartz. “It’s a huge business.”

This give and take across the various interests that intersect with Schwartz Brothers helps provide balance when customer and market demands shift. Most recently, the company even added an Old Fashioned Cocktail Mixer to its offerings, a product equally at home behind the bar at Daniel’s Broiler as it is in retail—including on Amazon.

“The diversity of our businesses has really helped us weather the storm throughout different economic cycles,” says Schwartz.

Ongoing workforce efforts
Schwartz Brothers operates in the Northwest, a region of the U.S. with some of the highest wages in the country when it comes to manufacturing, says Ouardi. “So ownership had to increase our wages drastically to attract good team members.”

Another staffing approach was to provide referral bonuses of $500 to encourage existing employees to recruit family and friends. “We put a lot of incentives to say that Schwartz Brothers is the right place to be,” says Ouardi. The bakery also increased the minimum starting hourly wage to $18 to attract staff.

The bakery has a good track record of retaining employees over the long term. “I’ve been with the company for over 30 years, and we have a lot of team members that have been with the company for 20 or 25 years,” says Ouardi. “I remember when their kids would come to the bakery.” Now those kids are all grown up, with jobs of their own.

“Rachid’s experience been a remarkable story,” says Schwartz. “He started with us 30 years ago in the sanitation department. He worked his way up in every single department at the bakery, and now he runs the entire operation for us. We’re really proud of everything he has been able to accomplish.”

The business has over 100 team members that have worked for us for over 15 years, says Schwartz. “So we’re really proud of that length of service. Starting at 15 years of service, and then every five years after that, we have a little ceremony, an award, and we give them a bonus and we take their picture and put it on the wall.”

Still local
Schwartz Brothers Bakery has a relationship with Seattle spanning five decades, and the bakery is still part of the community. “We serve all the local grocery stores, not just the local Kroger grocery stores,” says Schwartz. “We have a big imprint in terms of our bakery here, but we’re also known for the Schwartz Brothers restaurants, which now are just the Daniel’s Broiler steakhouses. So our name recognition in the Seattle area is very high.”

Ironically, while pies served as Schwartz Brothers Bakery’s point of entry to the industry, they no longer make their own pies. “Now we have to outsource that,” says Ouardi with a laugh.

Schwartz Brothers stopped making pies during the years baking for Starbucks. “We got to the point with Starbucks where we couldn’t do the pies anymore,” says Schwartz. “We were getting so close to capacity at our plants when we were doing those 7,500 Starbucks stores west of the Rockies. We had to get rid of some items.”

The bakery does still supply the hamburger buns, baguettes, and crostini for its Daniel’s Broiler restaurants.