Bakers Delight turns down takeover bid

Despite receiving a big cash offer for Bakers Delight, the Gillespie family decided to turn down the dough, keeping the business in the family and planning for growth in Australia and Canada.

Two months ago Australia’s biggest independent bakery chain, the Gillespie family’s Bakers Delight, received an offer to buy the business. 

The family council gathered. Was it time to sell? The business had been operating for 34 years and Roger Gillespie, who started it with wife Lesley, was 64. Bakers Delight has 587 stores in Australia, 30 in New Zealand and 76 in Canada and turns over more than $600 million. The business would fetch hundreds of millions of dollars: maybe the Gillespie’s two children, Aaron and Elise, both in their early 30s, would like to take the cash do something else with their lives.

Nope, definitely not. They turned down the approach before learning the price. As Aaron told me this week: “whatever we did with the money, it would be a lower return than we get from Bakers Delight. And anyway, we love it.”

On the other side of the table, Roger and Lesley beamed happily. Aaron is the same age as the business. He lives in Canada and manages the operation there, called Cobs Bread. Elise, 32 and more than a little bit pregnant, and her husband David, are both general managers of operations in Australia.

It would be every family business founder’s dream to watch their kids grow up with the business, move into its management and then turn down a big cash offer for it, talking excitedly about the future plans for growth.


Graph for Bakers Delight turns down takeover bid

Bakers Delight executive chairman Roger Gillespie with his wife and Co-chair Lesley and kids Elise (front), Aaron and David Christie (back) in their Camberwell store.

The Gillespie family trust owns 85 per cent of Bakers Delight, with the other 15 per cent owned by former directors and employees. There’s a board with three non-family directors plus a family council that meets four times a year with Michael Andrew and Dominic Pelligana of KPMG to review family strategy and other investments.

Roger actually started his first bakery in 1975 when he was a 25-year-old hippie in a yoga cult in St Kilda. He started the Old Style Bread Centre in Ashburton to help provide cash for his guru, one Vijay Yogendra.

Roger had learnt how to bake bread from his father, who learnt it from his father, who learnt it from his father. Old Style Bread Centre became Brumby’s, which is still going. By the end of the ‘70s, Roger was married and the guru had turned out to be a “liar and a thief”, so he left the cult and that first bakery behind, and with some secondhand equipment started a new one called Bakers Delight in Glenferrie Road, Hawthorn, an inner Melbourne suburb.

Conflict of interest disclosure: not long after that I became an enthusiastic customer of that store, and I still am. For those of us sick of Home Pride bread wrapped in plastic in supermarkets and milk bars, the Bakers Delight proposition of freshly baked and sliced loaves was a revelation.

By the way, Home Pride bought Roger’s father’s horse-and-cart home delivery bakery in 1954 and many others like it to close them down and force us all to buy our bread in supermarkets. In a way, the Gillespies were turning back the clock, apart from the horse and cart.

Anyway, they started franchising in 1988, having refined the proposition -- that is, the recipes and the look of the stores -- over the preceding eight years while building a chain of 15 stores of their own.

15 years ago they tried the United States, opening three stores in Seattle, but that venture was a failure. Americans buy their bread in supermarkets and they weren’t ready to change that.

Then in 2003 they opened in Canada. The entire family -- Roger, Lesley, Aaron, Elise and David -- moved there for a while to launch Cobs Bread. Roger and Lesley moved there just for a few months, Elise and David for eight years and Aaron is still there.

It worked, and now Cobs is at 76 stores and growing fast, albeit with slightly lower margin and different offering (no cheesymite scrolls). Will they have another crack at the US? Maybe one day, but there’s plenty to do in Canada and Australia first.

Roger thinks there are probably another 100-200 stores to go in Australia, and potentially a lot more in Canada. And then there’s the growth that’s still available from existing stores: this Easter just past saw a 17 per cent increase in hot cross bun sales in Australia and 24 per cent in Canada.

And they are pretty good hot cross buns, it must be said. We were disloyal this year and bought ours from a new place around the corner, but never again! The order was mucked up and the buns weren’t light enough.

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