Electric pallet jacks rush in and out of the many 24-foot high warehouse aisles at Johnson Brothers Bakery Supply. Workers pull supplies that will later become that cake you ordered for your grandmother’s 90th birthday or that jelly filled roll you pretended not to eat at work last week.
Johnson Brothers started operating 25 years ago, filling orders to donut shops and mom and pop bakeries throughout South Texas.
Owner and CEO Kevin Johnson walks through the 95,000 square foot warehouse and motions to the sacks on the rows of shelves.
“So what we have here is we have all our bakery supply: the bulk items, the flour, the sugar, the shortening,” said Kevin.
The aisles are almost a chronology of the company. The flour, sugar and toppings represent the early years, followed by professional cake supply, and a freezer with two of its latest endeavors frozen yogurt and the malts and yeast for supplying craft breweries.
“The product line is the same as bakery. It’s grain. It’s yeast, It’s malt. It’s fruit, spices. It’s all the same,” he says of the the craft beer supplies he’s been selling for five years, and licensing in many other states under the Brewery Direct name.
The San Antonio company now supplies Texas, Oklahoma and Arkansas and generates more than $50 million a year in revenue, but the story of Johnson brothers starts with just him and his brother Blain. It was 1994, and the two thirty-somethings were making six figures with the national bakery supply company — Best Brands Corp.
New owners came in and started making changes, many of whom the two didn’t agree with, including cutting costs.
“And they were wanting to shut down San Antonio and consolidate distribution into Dallas. It was going to sacrifice a lot of service in a market we spent many many years of our life building,” Kevin said.
Kevin and Blain had grown up in bakery. Their father had owned a number of them in Minnesota. They knew that the pull back from South Texas would put too much distance between customers and their ingredients and service would suffer.
But the two said they were good company men and went along with the plan. That is until a business trip to a family owned vendor run by two brothers roughly their age made them think.
“The whole culture and what we saw was pretty bad ass,” Kevin said. “People were happy. People were excited about their job.”
On the flight back they started asking each other: “Could we do what they did?”
“By the end of the plane trip, which was I don’t know maybe 2:20 minutes we had actually made a decision to quit,” Blain Johnson said.
It was a “crazy” decision said Blain. They would sell their houses and pay down debt because they didn’t see paying themselves much to start. They would move into apartments — a tough sell for Blain, whose wife was pregnant with their third child.
“We thought it was going to be just a mom and pop, cash-and-carry, just Kevin and I, just truly starting with nothing.”
But when they approached two of their biggest clients, Albertson’s and H-E-B said they wanted to leave and follow Kevin and Blain as customers.
“And we’re like ‘Yeah, of course, we can handle it.’ We had no idea if we could handle it,” said Kevin beaming.
Their decision to leave couldn’t have come soon enough for one of their customers. For months Connie Gist who at the time owned a donut shop called Donuts Etc had been unsatisfied with the supplier.
“They started sending me stuff that was outdated or stuff I didn’t order,” she said.
When she called to complain, her rep Blain said he understood and would be leaving the company to start his own. Her Husband Mike called him right back.
He said their donut shop would sign on as customers.
“Then he he just made a comment right before we hung up. ‘If you ever need any money, please call me.’ And I was like, ‘Ok, wait a minute before you hang up.” said Blain laughing.
With big clients like H-E-B, the two had needed a lot of capital to start, about a $1 million. When Mike called, they were days from giving a third of their company away to an investor for a third of the company. Mike presented a much better offer, a loan and the brothers could keep complete ownership.
“We wrote up a one page agreement. Basically, it said ‘I’m gonna loan you the money and you guys are gonna pay me back’ and I don’t even think we got it notarized,” said Mike Gist.
Mike made a good living at Southwestern Bell and Connie ran their shop, but to get the money he promised, they would have to loot just about every account they had, including their retirement.
When asked why the couple would mortgage their future on two relatively untested young men, this was their response:
“He was a good guy,” Connie said, eliciting a hearty chuckle from Mike who shakes his head. “He was a nice guy. He was good. He was a Christian,” she said matter of factly over the laughter.
“I don’t want to give him a big head but he seemed like he worked hard and wanted to do a good job,” said Mike.
And just like that the brothers were funded. They opened their warehouse six weeks later. A warehouse that proved difficult to lease because the two they had so little credit and credibility. It took a visit from an H-E-B ally to get the owner to approve the deal, they said.
Now opened, more and more small shops — mom and pops — said they wanted to follow them as customers. Their current customers asked them to take on more of their supply. The company was taking off fast.
“That year (which was only four months) I think we might have done $4 million,” said Blain. “And I think the next year, I think we might have done $10 (million). Then it jumped quick, like $10 to like $17 to $24 to $29 to $35. It just grew fast.”
Blain asked to be bought out in 2012. He was taking on more leadership roles at his church and wanted more flexibility to lead additional mission trips. They would evangelize and build houses or do other service projects in Romania, and countries in Africa, and South America.
The company was able to pay Mike and Connie back with in a few years. Looking back, Mike said there’s just one thing he would have changed.
“Well, I wish I would have taken part of the (company),” Mike laughs so much he can’t finish the sentence.
Kevin, now 59 years old, is the sole owner. He thinks about retirement and was even offered a buyout by a national chain. But he turned it down worrying they would have cut it up and, and lay off many of the 85 people that work there. So, retirement has to wait.
“I know that we are going to get there. It’s just gonna be done a different way. And it’s gonna not sacrifice all these families that have committed — a lot of them — half their life to us.”
He also wants his sons to take over the business to continue the 25-year legacy he and his brother built.