After receiving nationwide accolades from no less than Rachel Ray and Epicurious, Tootie Pie Company celebrated twice the revenues third quarter compared to the same quarter last year. This is notable because pie is far from the minds of the most consumers in the third quarter, especially those in Tootie Pie’s home state of Texas where temperatures hovered above 100 degrees in a historic heat wave and drought.
Quarterly revenues were $630,601 compared to $315,907 for the quarter ending in September 2010, as reported in the company’s quarterly financial report. Profits have more than doubled, to $399,960 as compared to $196,192 for the same quarter last year. Despite the increased revenues, Tootie Pie is still operating at a net loss of $178,782 for the quarter. This loss is 12 percent less than the same quarter last year, when it was $200,059.
Such losses are largely due to the company’s expansion into retail locations, or cafés, which will number seven at the end of the year, said Don Merrill, Jr., president and CEO of Tootie Pie. “It was a big gamble to go into the cafés, and it’s a gamble that’s paid off,” Merrill said.
During an interview Nov. 16th, Merrill said the net losses are largely due to the expenses of purchasing equipment for the cafés, as well as increasing inventory for the coming busy season. Merrill described the expansion as a “delicate balance.” “We need to choose the perfect demographics right now…we can cherry pick locations,” Merrill said. And the company is selecting locations in wealthy residential areas, including two new cafés set to open before the end of the year in Austin’s Westlake neighborhood, and the Preston Royal neighborhood of Dallas. “We get calls every day, ‘When are you going to open Preston and Royal?’” Merrill said.
Currently five cafés are operating: Fredericksburg, Frisco, the Arbor Walk area of Austin and two cafés in San Antonio, one in Huebner and another in Alamo Heights. The company also plans to open some low-cost, temporary locations for the holidays, Merrill said, including a gazebo in a mall.
As part of its attention to the bottom line, the company closed one under-performing storefront location. Tootie Pie acquired the site when it purchased a bagel bakery with two locations. That storefront suffered from construction in the area and severe traffic congestion.
Also significant, 43 percent of Tootie Pie’s customers were purchasing pies retail. So far this year, those customers represent nearly half of the company’s sales. At this point in 2010, with only one café operating, only 13 percent of the store’s customers came from retail locations. This is particularly important to the future of Tootie Pie because retail pies, as compared to pies sold to wholesale retailers, bring in significantly more profits. A $20 pie becomes a $35 pie or even a $60 pie when it’s sold by the slice, Merrill said.
These sales also bode well for the fourth quarter as the company prepares for the traditional pie-eating seasons of Thanksgiving and Christmas. For every person who bought one pie in the summer, “that one person turns into ten pies. That is where I think we are going to see a domino effect in our favor,” Merrill said.
The company will also likely see a bump in mail-order sales after strong mentions in the national press. Tootie Pie’s pumpkin pie was named “The Best Pumpkin Pie” in the November issue of “Every Day with Rachel Ray.” It is also featured online by Epicurious.com as pie in a meal of “mail-order Thanksgiving-tastic foods worth considering.”
In addition, H-E-B grocery stores, a beloved chain in Texas and Mexico with 329 locations, will begin carrying Tootie Pie pies for the holiday season. At least 45 stores in Houston, San Antonio and Austin will have the baked goods on the shelves, all in high-end H-E-B plus! locations.
The company reports a 31 percent increase in October sales over last year. “I think the quarter ending Sept. 30, 2011, is the quarter that shows investors that the turn is finally under way,” Merrill said. “We are set for the holiday season.”
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