Imagine $34 million worth of cookies. That’s this year’s projected revenue for Cheryl&Co., says its founder, president and CEO Cheryl Krueger.
“We’ll be at $50 million by 2007,” she says.
After nearly 24 years in business, Krueger says she has finally learned how to leverage her company’s strengths.
“We know when to put on the gas,” she says. “And when to put on the brakes.”
Krueger has had to do both frequently during the past two decades, as what started out as a strictly retail store operation has turned into a largely catalog and Internet-driven business.
“Eighty-five percent of our business used to be in Ohio,” Krueger says. “Now that number is less than 15 percent.”
But the company’s evolution took time and, says Krueger, a lot of trial and error.
From the company’s inception in 1981 through 1989, Krueger focused on retail locations. A self-professed farm girl — “I was born and raised on a farm. I was tied to my grandmother’s apron strings at home, preparing meals” — she opened her first physical location at The French Market in Columbus.
Krueger learned the tools of her trade after graduating from Bowling Green State University in 1974. One of the places she worked was The Limited, where she says she learned a lot about the retail business from company President and CEO Les Wexner.
“One of the reasons we’ve done so well is our merchandising ability and the way we present the products,” Krueger says. “I learned that at The Limited.”
In 1981, Krueger and partner, Carol Walker, her former college roommate, felt that the last thing busy working moms had time to do was bake fresh, homemade cookies, and the concept for Cheryl’s Cookies, which eventually became Cheryl&Co., was born.
Armed with her grandmother’s cookie recipe, Krueger hired her brother to run the production end of the company and Walker ran the store. Krueger kept her job, working in New York and flying home each weekend to help out.
“There were no strategic plans. I was basically in survival mode,” she says.
Krueger sacrificed her personal life, including all of her financial assets.
“I was not on the payroll,” she says. “I was working in New York to subsidize the company. I sold all of my assets and turned them into cash, and there were still times I put our payroll on my credit card.”
In 1986, Krueger had to cut her ties with The Limited and focus on her own company full time.
And she soon lost her partner, Carol Walker, to cancer.
“That was a turning point,” Krueger says. “I lost my safety net.”
Starts and stops
Krueger says two key strategies accelerated the company’s growth and success in its first 15 years.
The first was the company’s transition from Cheryl’s Cookies to Cheryl&Co. Krueger says although the company’s retail stores were successful, she knew she should be looking at additional sales channels and products. So she put the brakes on further store development and shifted gears, focusing on new products and marketing strategies.
“The name change allowed us to broaden our product offering to containers, cookie jars, cake slices and gourmet coffees,” says Krueger. “Cookies only make up about 10 percent of our sales now.”
Krueger says the company started out with five cookie varieties, and now offers more than 200 products. The company also gave the customer a reason to buy by promoting specific occasions such as Valentine’s Day and Halloween.
“We made that change in 1986, and it’s the best thing we ever did,” she says.
After that, Krueger launched the company’s corporate business wing and was the first cookie company to begin mailing a catalog.
“Our catalog does more business than Mrs. Fields,” she says, “even though they are more nationally known.”
That was the beginning of the company’s multisales channels – Krueger’s second key strategy — and by 1999, she had launched an Internet site that allowed customers to order online.
But Krueger also experienced her share of setbacks during that time.
“Our least successful experience was opening a store in New York City in 1985,” she says.
It came about because the company’s New Jersey store was doing very well. So when a space in Herald Center, next to Macy’s, became available, Krueger jumped at the opportunity.
“We spent $250,000 to open the store,” she says. “We thought it would do a lot to make us more nationally known.”
That strategy would have worked, Krueger says, but the owner of the property became involved in a money laundering scheme and the shopping center was forced to close for four months not long after Cheryl’s Cookies opened its doors.
“It took us a while to recover from that,” Krueger says. “And we shifted our focus to the catalog and the Internet.”
That shift has proven successful for Krueger. Cheryl&Co. now publishes 10 catalogs each year and ships products all over the world.
“We ship to Canada, Iraq,” says Krueger. “And we used to have trouble year after year getting financing. Today, banks are beating down our doors.”
All grown up
Krueger compares managing the company’s growth to raising a child.
“At first, you are very hands-on and want to understand everything,” she says. “As the child grows up, more people are involved, and eventually the child goes off to college.”
Over the years, Krueger says she has been able to share responsibility for the company with more sophisticated managers and executives.
“We started hiring one at a time,” she says. “First, I hired a manufacturing expert, then a finance person. I evolved from micromanaging to strategic thinking; it’s a great place to be.”
Part of Krueger’s continued growth strategy is to refine the company’s marketing techniques. She says that thanks to advances in technology, such as the Internet, she is able to get her hands on critical information faster, and keep the company nimble and able to respond to changes in buying trends.
“We get our information faster, and the early bird gets the worm,” she says. “We leverage our strengths by doing a lot of data mining. We can now look at our customers’ buying profiles and see who to mail a catalog to and who not to e-mail. We can hone in on the most profitable customer segments and not waste money. We didn’t have that capability seven years ago.”
Armed with this knowledge, Krueger is also able to make better decisions about other aspects of the company.
“We are now managing our own call center and providing better customer service,” she says. “We are better at judging our staffing requirements, and when those Internet orders pour in, I can tell instantly if we have the inventory to accommodate them.”
Krueger says this just-in-time information allows the company to expedite orders, sometimes shipping them the same day.
“The information is awesome,” she says. “How you use it depends on the human beings receiving it.”
In fact, Krueger says the company’s future potential can sometimes be overwhelming. There is one question that she and her team will be deciding on, to steer the company in the future.
“We have four great sales channels,” she says. “Which ones do we want to go after?”
Krueger says it is critical to focus on just one or two. Too much energy spent on an underperforming channel will draw valuable resources away from the others, and spreading the focus across all four will leave money on the table.
“Since 1999, when we launched the Web site, we’ve been challenged to become experts in Internet marketing,” she says.
But the Internet is where the customers want to shop, so it is where Krueger will be pushing on that gas pedal.
“It’s where our customers want us to be,” Krueger says. “It is our fastest-growing sales channel.”
That said, Krueger admits that she is still learning how to comfortably manage the company’s rapid growth.
“As we continue to grow, there are a lot of questions to be answered,” she says. “How do we manufacture and produce to meet demand? Do we add on? Lease space?”
But rather than let those questions overwhelm her or pull her focus away from working on her business, Krueger has taken a more strategic approach to growth – drawing a map that leads toward success.
“There are 100 ways to get there,” she says. “Without a road map, it could be a meandering road. We want to be more direct.”
While this map is still on the drawing board, Krueger says it includes walking away from distractions.
“We plan to stay focused on where we can have an impact,” she says. “We’ve been offered grocery stores and vending machines. We’ve had to walk away from some business, but that is better for us long-term. That is an important turning point for us.”
How to reach: Cheryl&Co., (800) 433-1787 or www.cherylandco.com