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London: 20 April 2014

How I Made It: Tom Molnar, founder of Gail’s Artisan Bakery

A CULINARY QUEST for the perfect loaf led Tom Molnar to quit big business for the bakery 11 years ago.

“I was craving a good, crusty loaf of bread,” said Molnar, born and raised in Cocoa Beach, Florida. “I used to make it with my grandmother back home and you can’t beat the fresh stuff. London was this amazing city but one thing it was missing was really good bread.”

Molnar was not alone in his search. The capital’s lack of good bread had also rankled Ran Avidan, a colleague at the management consultancy McKinsey, where Molnar had worked since 1999. The pair agreed there was a gap in the market and a need for an artisan bakery on the high street.

They did a lot of market research, which included meeting some of London’s top bakers. Among them was Gail Mejia, owner of the Bread Factory, a wholesaler which supplied some of the capital’s top restaurants. “It had some great customers, bakers and products but it wasn’t doing well,” said Molnar. He and Avidan decided to buy the loss-making business to complement their own venture.

In 2006 the first Gail’s Artisan Bakery opened in Hampstead, north London, funded by a hefty bank loan and £60,000 from the outgoing tenants to take the site off their hands. Today Gail’s has 16 high street bakeries and one restaurant, and plans to open another four shops by the end of the year. In February the company, which has more than 300 staff, reported a £1.5m rise in annual sales to £15m.

In 2011, Luke Johnson’s Risk Capital Partners invested £10.5m in Gail’s and the Bread Factory, which itself has 380 staff and sales of £21m. Risk Capital owns 60% while Molnar and Avidan have 40%.

Molnar grew up the eldest of three children. His mother was a teacher and pianist. His father, an entrepreneur who had two failed businesses before becoming a stockbroker, taught him the value of perseverance.

“I remember my dad mowing the lawn of my school football pitch while unemployed, but he carried on. That was the lesson,” Molnar said.

He got an early taste of retailing while spending holidays working for his grandfather, part of a first generation of Italian immigrants to be born in America, who with his brothers founded the supermarket chain Genuardi’s in Philadelphia in the 1950s. It was sold to Safeway.

“I was always motivated,” Molnar said. “I had a newspaper round and mowed the lawns in my street back home. I thought I would eventually have a business but that it would be fish farming.”

Molnar studied aquatic ecology at Dartmouth College, New Hampshire, but ended up trading commodities for the Cargill corporation in Geneva and America. After nine years he moved to London to work at McKinsey. There he met Avidan, and the pair left after 4 years to start baking.

Molnar’s idea of a shop with a working kitchen was costly to implement, but it enabled his start-up staff of 10 to bake fresh croissants and muffins on site. He packed the produce and made deliveries, doing any job other than baking. That was left to the experts at the main bakery in Hendon, where the unique yeast cultures for Gail’s are still stored and used to make the products.

“If you saw what went into the bread you would understand that £2.50 a loaf is great value,” Molnar said. “It’s a combination of great ingredients and craftsmanship, then letting nature take its course.”

Gail’s made sales of £700,000 in its first year but not until launching the third shop in St John’s Wood 2 years later did Molnar believe his gamble had paid off.

“The first shop was just pure energy and adrenaline,” he said. “The second allowed us to correct our earlier mistakes, but by the third we thought we must be doing something right because the figures were up — and people were actually returning my calls once in a while.”

Lucrative contracts with Waitrose and Ocado followed, and then Gail’s Kitchen, the company’s first restaurant, opened in Bloomsbury in 2012.

“With an artisan business, people think that every time you grow you downgrade the product, but that’s a myth,” said Molnar. “If you keep the focus on the quality before the profits, there’s no reason why you can’t use the increase in scale to just get better and better.”

He is considering launching nationwide. “I’ve still got a lot of work to do in London but the ambition is there. If it’s something that people want I’ll be happy to try to figure it out.”

Molnar, 47, lives in Camden, north London, with his wife Ersilia and two young children.

His advice for start-ups is to focus on people. “Sales and margins aren’t the place to start. The people are the lifeblood of the business. Focus on your employees and your customers and everything else will fall into place.”