Magnolia Bakery Continues Franchising Overseas as It Nears 20th Birthday
Now with 25 international locations beyond its home state of New York, Magnolia Bakery CEO Steve Abrams is thinking even bigger as the brand reaches its 20th anniversary. Abrams, who has been CEO of the bakery since 2007, is looking to bump the franchise total up into the 150-200 range in the next five years.
This ambitious objective will be a tough sell for the New York-based company that has yet to franchise domestically, but the booming international side has fueled the bulk of Magnolia Bakery’s growth in recent years.
“We have a very robust development schedule with our current partners, and we’re expanding our footprint there [internationally],” said Abrams.
Long before its international ambitions, Magnolia opened its first location in New York City’s West Village in 1996, centered on a product Americans love dearly: desserts. The cupcake is one of the biggest sellers for Magnolia; 40 percent of corporate sales come from this specific line. The chain offers a variety of baked goods including a breakfast line, mini cheesecakes, and specialty cakes.
The company started franchising officially in 2010 through a Bloomingdale’s location in Dubai after Abrams and the rest of his executive staff felt the market was interesting enough to take a chance. The success of the new location has led to more franchising and a steady growth, with 16 current locations in the Middle East, as well as Seoul, Tokyo and Mexico. A new location will soon be opening in Brazil.
Aside from the Bloomingdale’s location, many of these international units are located within malls and gallerias.
“It wasn’t part of our business plan to go overseas and franchise,” Abrams said. “That store [in Dubai] sparked enough interest that as business people we couldn’t ignore it.”
The introduction of chocolate banana pudding, as well as the broader pudding line, has been a big boom for business as well—it’s been the company’s second-largest product category systemwide.
Free publicity certainly hasn’t hurt either. The original Bleecker Street location in New York has been featured on the HBO show "Sex and the City," the movie "The Devil Wears Prada," and “Lazy Sunday,” a popular Saturday Night Live digital short.
One challenge the company has faced in expansion is acquiring ingredients through both its domestic and international markets. Because of customs issues, there are many countries, especially in the Middle East and Asia, where many of the ingredients used in corporate U.S. locations are not allowed.
The company’s methodology of being completely scratch-based hasn’t made expansion any easier, given the difficulties of local sourcing outside of North America. “It’s a limiting factor, but it’s our calling card,” Abrams said.
This “made from scratch” ethos has paid off internationally, as expansion stores in Asia have been especially popular. Many of the New York locations typically have lines leading out onto the busy Manhattan sidewalks, and similar demand has been seen overseas.
Abrams relayed an experience about the company’s Japan location where, shortly after opening, a line of more than 700 people waited for their baked goods. While this excitement has slowed, the location still has lines of 30-40 people around the store.
In building off the overseas success, Abrams and his team hope to expand deeper into the Middle East, specifically Egypt and Morocco. European expansion is also in the company’s sights, and Abrams views England as a strong jumping off point. The company refrained from commenting on the United Kingdom’s recent withdrawal from the European Union, adding that it has not affected their plans to go to London.
With revenues of nearly $40 million in 2015 throughout the system, the steady growth plan is seeing success. Abrams claims his team is looking to capitalize the company for domestic rollout, which, if done soon, could make the dream of 150-200 locations a reality by 2021.