Self-starter Sourdough Sophia on the rise
With stores in the smart areas of Hampstead and Highgate in North London, Sourdough Sophia has made serious progress since its founder began baking bread in her flat for neighbours in Crouch End during the height of Covid-19.
Such was the demand for her home-baking – beyond just the neighbours, as word spread about her chewy sourdough loaves – that Kickstarter funding was raised and a first store opened in late 2020 near her home. And from this modest start the business has been on an upwards trajectory ever since.
Expanding operations
When I sit down with Sophia Handschuh, founder of Sourdough Sophia, in her Hampstead unit she details the next steps as the company is in the early stages of a £1.5 million fundraising that will help it expand its operations and see the business through to profitability.
Subscribe to TRBThe key to the next move is the relocation of the central production unit (CPU) – that supplies all the baked products into its current four cafes – from within the Essex Road café to a railway arch in Bermondsey. “Next year we will grow from four to eight units and relocate the CPU that will be able to supply up to 20 units. We could have pushed Essex Road to supply six or seven sites and double the 750 loaves baked each day but the quality would have been questionable,” she explains.
Undermining the quality is a red line at the moment while the company is in its infancy. “Quality is a lever that we will not pull in order to increase margins and boost efficiency. It then becomes a different company. It is inevitable that it is done at a certain level [of size], but we’re in a wonderful phase right now where we can just think about the quality,” she says.
There is no doubting the similarities of Sourdough Sophia to Gail’s and Handschuh acknowledges they share customers and also find their stores in the same areas of London. They are mere metres away from each other in Hampstead where Gail’s still has its very first store.
This scenario will continue with the Primrose Hill café Sourdough Sophia will open in March and likely near London Bridge following that. But the Q2 opening on South Molton Street will be purely Sourdough Sophia territory.
Changing operational practices
As the company has opened new units its operational practices have inevitably changed. This has been partly driven by the shift towards more dine-in space within its cafes. At the first Crouch End unit in 2022, with its six indoor tables, 91% was take-away and coffee accounted for 11% of its total sales. Today as much as 30% is now eat-in across the four units and coffee represents a hefty 30% of total sales.
To accommodate the greater numbers who eat-in the product range has grown and changed – to include coffee of course. It is no longer about social media sensations such as the launch of a cruffin that drives sales but it is about delivering a proposition that runs across breakfast, lunch and into the afternoon. Sandwiches, savoury goods, cakes and brownies have been added to the menu and at Primrose Hill there is the potential to also include food to be heated up on the premises in order to further broaden out the offer.
“This all requires planning the production and the staffing levels required as well as constantly monitoring what sells. For waste management we have a bespoke system that creates a report and we’re adapting it each week,” she says.
The other implication of growth, and dine-in, is greater consistency of opening hours. The older set-up was just Wednesday to Saturday at 8am to 4pm or whenever the goods had all been sold but today across the growing chain the hours are now set at 8am to 5pm seven days per week and certain ‘hero’ products are always available, even up to closing time. These comprise N8 sourdough loaves, cinnamon cruffins, croissants, pain au chocolat and cereal milk cookies.
Unforgiving customers
“When you expand the customer expectations change. We’ve noticed they are less forgiving when you have scale. With one site anything goes but when you grow they expect consistency of product, quality and opening times,” explains Handschuh.
The immediate plan is to move the business up to eight units by which time it will be cash generative. Helping this step is the £1.5 million fundraising that includes tapping into the customer base for support and also traditional growth capital sources such as institutional investors.
Finding sites in the right locations is certainly a challenge, according to Handschuh, who reveals that Primrose Hill required knocking on the doors of existing operators enquiring if they had thought of moving on. She found owners who were looking to retire. In Hampstead she spotted a site she liked and found out Redemption Roasters were looking to leave and so she took on their lease.
“You’ve got to be bold,” she says, adding that large landlords such as Grosvenor who are the owner of the South Molton Street site are looking for “edgy brands now and we look like a start-up”.
Such landlords will no doubt recognise the favourable dynamics around bakeries and coffee shops. Handschuh says people are simply fed up with bad bread and the larger supermarkets have been reducing their bakery ranges: “There is also greater awareness of bakeries, greater health-consciousness [around ingredients], and working from home has also driven people in these places.”
Names above the door
The longer term plan is to open four units per year up to the 20-unit size when she suggests it will be time to sell the business. She is confident about this prospect although she also recognises that having her name above the door might represent a potential challenge. Handschuh has been able to use her name on the company’s social media channels, which has given the business its personality, and she intends to begin running baking classes in the Highgate basement.
Of course, having an eponymous founder no longer involved with a business has not in any way affected the upwards trajectory of Gail’s. Sourdough Sophia will have yet another thing in common with its neighbour in Hampstead, Highgate and other locations to be announced.
