We met with Antonio and Lourenço in Lisbon and talked about the story behind Pão do Beco. These two brothers started a baking business from home two years ago and have grown ever since. From one person baking bread for family and friends, they now have a bigger team, work with businesses and are ready to embark on their next chapter: their own bakery. Let’s find out what they have to say.
We got introduced and during our first call the phone continuously made sounds. Every sound the phone made meant an order. That's how we started collaborating.
This project started at the beginning of COVID with my brother Antonio. He's my oldest brother in a family of five brothers. He worked in different areas, one of them being start-ups in London. But Antonio always had a love affair with the kitchen. Three years ago, Antonio decided to change his work and began working in kitchens in London, and after that, around the world. When he returned to Lisbon, he started a project where he was running private dinners, like a degustation menu. He would go to people's houses and cook the menu for them. It was working pretty well.
In the menus, he was already making slow-fermentation bread, sourdough bread. So he started making bread at home for the family, then friends. Suddenly, in the middle of COVID, everyone was at home, and he was baking and delivering bread in Lisbon. It started very slow, but then orders began to increase. He was making bread at home then. At the time, baking one loaf of bread took one hour. So to make 12 loaves of bread, it took 12 hours with the oven turned on. Which meant we had to change the kitchen very fast. That's when he started renting a co-work kitchen. Then, the capacity for making bread got a little bit bigger.
A big turning point for us was the market. We started doing a market in the middle of Lisbon. There was an open-air market every Saturday. So we did the first markets, and we sold out every time. Then, we started growing, and we employed our first person. After a couple of months, we had to change space again. During that time in the co-work kitchen, we were already baking around 50 to 60 loaves of bread. As things kept growing, we had to move to another space at the end of the first year, the one we are in now. It's a 40 square meter kitchen with no vitrine. So, we don't have a store to sell to our customers directly.
At the end of COVID, and as restaurants started to open, we focused a lot on working with businesses (B2B). Working with restaurants helped us a lot. Things kept growing, and our team also. The team is 11 or 12 people now.
We work with 50 to 60 restaurants. In terms of profit, it's worse because you have to do better prices for them. But in terms of logistics, it's much easier because they order you larger quantities. You know, more or less, what you're going to sell at the beginning of each month because the orders don't fluctuate, except if you gain new customers. It's going to increase. So now there are days we're making 200, 250, or even 300 loaves of bread.
I think the max capacity we can produce is more than what we currently do. But it depends on the oven you have and on the fridges you have. In terms of fridges, we are pretty tight, because we already have four or five fridges. And I think the next step will be buying a room where you can enter, and then the oven. Buy a larger one, where you can bake 40 loaves of bread an hour. But in terms of people, we can make more bread with the bakers we have.
"We believe in the growth we are having. But we didn't want to grow very fast and then lose things."
The upcoming months are going to be pretty critical for our business because we are on the way to opening a bakery. It will be in the city center. The localization is pretty good. We have already signed everything, and we are probably starting construction soon. So the bakery will be open next year, in February. It will be two years since we found that spot until it's ready. Or two years and a half. It's crazy!
The team will have to grow because we will have a restaurant. So we need a completely different team for that as well.
Since the beginning, we've been trying to grow organically. A couple of times, we had people who wanted to invest in our projects. We believe in the growth we are having. We didn't want to grow very fast and then lose things. There were a couple of projects that decided to get an investment. They grew so much and then lost quality and customer service. And after five or ten years, it's like that project doesn't exist anymore.
We didn't have to invest anything in the project. All the money we get from the project, we reinvest in the project. It's pretty organic. But obviously, now we're going to have to invest in the project because if you want to open a bakery, you'll have to invest a couple of thousand.
I think we have already reduced that risk because we already have a firm with revenue, and we know more or less what we need to sell to be able to pay. We know all the costs and all the expenses. So that risk is now minimized. But indeed, we need to take that risk if we want to go bigger.
A difficult part for the business is when you have to make decisions, such as "Should I employ another person? So I get more time to focus on making sure the business grows? Or should I stay the way I am? I'll do this kind of work. I will do a lot of operations, but I will get more money." And I think it is important to make that decision of, okay, maybe I'm going to spend a little bit more money because I'm paying someone. But when I'm not in the bakery, I focus on growing. Eventually, in a couple of months, it will pay off.
So basically, at the moment, I am the salesperson responsible for all the tastings. I find the restaurants and pop them a message "Guys, I have this bakery. I do slow-fermentation bread. Would you like to try it?" They say yes, and I offer them a tasting. So, I select different types of bread that I believe will suit their menu. And then, to be honest, 80% of the tastings that we do, we close them. Or even more so.
What is challenging is doing the tasting. Because you get the opportunity to go there and do the tasting once you have the approval from the chef, "Okay, you can come here. Let's do the tasting". Because some of the businesses already have the bread or are occupied with other matters. Bread is the last thing they think. So they see the message, and they don't answer. Or they are already happy with their bread supplier.
Our team is bigger, meaning that we can be open every single day of the week, meaning that we can deliver at least five or six days a week.
First of all, the product. It's a good product. And as you said, you have bakeries coming up more and more. And good bakeries. Good buy and with a pretty good price-quality. So businesses are very sensitive to price. Compared to other bakeries, we are one step forward, meaning we have a bigger team, can be open every single day of the week, and deliver at least five or six days a week.
Since the beginning, we have been delivering only two or three days a week. When a business orders bread every day, and you tell them, "I just deliver it three days", they will respond, "Man, three days is not enough for me. Unfortunately, I would like to have fresh bread every single day". So, I think we are one step forward, and the bigger you get, the better prices you can do.
I think B2C was our only option during COVID. And we were working very well like we were doing good deliveries and a good amount.
Now, I'm doing maybe 5% of those deliveries, but I think it's normal. People, at least in Portugal, like to order, but for bread, it's the type of product that when you order, you want it 5 minutes after or 15 minutes after. And the way we work, you get your product 36 hours later because of the slow fermentation. This is why we lost a lot of B2C, but also because people don't rely now just on deliveries. Now, they go outside, and like to have that routine of buying bread in the little tiny bakery they have next to their place. But we are not very worried about that loss of B2C because soon we're going to open a bakery, and that B2C, we're going to get it back.
Yes, we have people who, instead of ordering every single time, say, at the beginning of the month, "Lourenço, I would like to have bread every Tuesday of the month." So four days a month. They get a 10% discount and need to pay only once. And they just worry about the bread once. And on top of that, they get a 10% discount. Yeah, it works pretty well!
Most important is how you react and how you solve the problems. If you show your customers that you are really sorry, explain the problem, and you're going to fix it next time, the majority will understand.
I mean, mistakes happen every week when you work with fermentation. Or mistakes like being rude to a customer or not speaking the right way. Coming from my background, in four seasons hospitality, the customer is king. In general, the customers like the communication. It's because we are very personalized with each customer.
In terms of mistakes, yeah, we already had multiple ones. We already had everything that could happen to us: fridges that turn off in the middle of the night, and we arrive in the production and lose all the bread, no water, the bread that ferments too much. That happens a lot. I mean less and less because you learn from your mistakes. But we already had every single one in our bakery.
Most important is how you react and how you solve the problems. If you show your customers that you are really sorry, explain the problem, and you're going to fix it next time, the majority will understand. And they know that you are a bakery. They know that you work with fermentation, which is very sensitive to temperature and humidity. Be yourself and be transparent and honest. And if you need to take bread off from the receipt, you take it off. In the end, you lose the money. But it's your mistake as well.
The market was great for us because it was our vitrine. So I messaged with the customers, and then on Saturdays, I would meet them in person. Unfortunately, that open market stopped.
In terms of marketing, to be honest, we are really bad. But in the way that, if we do marketing, we want to do it right. So, for example, for now, we are in a "cave" where we make our bread. We call it a cave because there are no windows and making pictures is awful. So sometimes we take some photos but prefer not to create them and make something that is not amazing. My youngest brother is a photographer, and he is really good at it. And that's why we have those pictures.
But obviously, marketing is something that we want to invest in when we're going to move to the new space. Nowadays, marketing is super important, especially for our opening. And at the beginning of the project, we were working a lot with influencers, so we sent the bread to the influencer, and it worked pretty well.
It's something we want to get better at. Or at least have a company who does it for us because it requires patience and it's something you need to do every day.
Making the best bakery in Portugal, this is the vision. To be the best bakery, first in Lisbon.
People like bread. It's bread. And there's very good bakeries in Lisbon. And maybe you are considered one of the best bakers in Lisbon, but sometimes you cannot say you have the best bread because this guy might like your bread. But the other one will say, "Yeah, it is good, but I prefer the other one". We want to make sure we are a good reference in the bread world here in Lisbon. I believe we are already a good reference and want to increase the quality.
And then the restaurant. I think the restaurant will also be a good goal for us, to make sure the menu is good. Maybe we don't want to have a big menu, but at least the dishes we have are good, focus on the quality, and then we'll see what the next project will be.
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