Why Philadelphia’s Termini Bros Bakery Is Lowering Its Prices

A version of this post originally appeared in Eater Today, which spotlights the freshest news and stories from across the food world every day. Subscribe now.

In the age of $12+ croissants and long lines still willing to pay for them, it’s shocking to hear of a bakery actively choosing to bring its prices down. Most simply don’t have the margins for it, especially in this economic climate. And yet, as the more-than-100-year-old Philadelphia bakery Termini Bros recently announced, it has: The bakery has lowered prices on some of its most popular items and is now working to stabilize all of its costs to offset the need for future price hikes.

When a business owner could easily choose to go the way of the luxury pastry, why resist it? I talked to Joe Termini, who co-owns the bakery with his brother Vince, about how they’ve lowered prices and why they’re trying to preserve the accessible nature of the neighborhood bakery.

Eater: Recently, Termini Bros posted on Instagram about stabilizing prices and even lowering prices on some items. Can you give me a few examples?

Joe Termini: Our initial focus was family-oriented products, and when I say family, I’m talking about family like an Italian, meaning your neighbors, your co-workers. Our birthday cakes were $40 and we lowered them to $30. Our coffee cake rings were another focus, because it’s a South Philly tradition to always have cake at the table when you invite company over. Our coffee cakes were $25. It got out of hand, so we lowered that to $15. We put our pound cakes back in line from $18 to $12. Finally, it was the cupcake; that was priority number one for us. We lowered that from $5 to $3.

What was the impetus for this?

Termini Bros is founded and based on being a neighborhood business. Through the years — and especially over the last 12 months — the overhead of our business has increased drastically: things such as insurance, our contribution to our employees’ health insurance, taxes. We have been doing our best in terms of trying to keep our prices stable over the last 12 months. Now, that doesn’t mean that we were exactly happy with the way our products were positioned in terms of costs.

Over the last two or three months, my brother and I felt as though our business was being dictated to us in terms of how we had to price our products. We were very angry about it, because we see the effect it has on our customer base. My brother and I witnessed a little boy asking his parents for a cupcake. They were purchasing like, four or five of them, and he wanted to buy one for himself, I guess, in the moment. The mother told the little boy that they could only afford to get the five cupcakes that they had. Of course, we gave the kid the cupcake, but that was really the drop that made our bucket overflow. We promised ourselves that we were going to lock ourselves in a room and we were going to get our suppliers on the phone and figure out how we could regain control of our costs.

What do those negotiations with your suppliers look like?

Let me use an example. To get our price per bag of flour down, we brought up solutions like [changing our delivery days] or things like, “What kind of effect will it have if we buy flour by the pallet instead of by the 50-pound bag?” We were able to get our ingredient prices and our suppliers in line with the price reductions that we wanted to put in place. We felt as though [our suppliers] were pretty angry about these rising [overhead] costs too, so it was like, “Let’s see if we can work together to make these reductions happen.”

There’s a tremendous amount of respect for Termini Bros, especially with suppliers, and part of that respect is because we are very hands-on. It gives us a lot of flexibility in terms of getting suppliers to compete for our business in many ways. And yes, the volumes also help out greatly, because, you know, if we only had one location, we would only have so much purchasing power.

Are you also reformulating recipes in order to make them fit the food cost you need them to be?

Absolutely not. The one thing that we are 100 percent sure of is that we will never change our recipes. We’ll never change our recipes, we’ll never change our serving sizes, we’ll never change our portions. At the cornerstone of our bakery is consistency and tradition. We want to make sure that when our customers come in to buy an Italian cream cake or a birthday cake, that it is the same exact Italian cream cake or birthday cake that they purchased 20, 40, 60 years ago.

From a production standpoint, what we were able to do was pair different types of production together to make it more efficient [like pairing cupcake and birthday cake production on the same day, instead of separating them, and increasing batch counts]. This isn’t something that’s new by any means, but we [wanted to make sure to] revisit the efficiency of our production and our supplies so that we can pass the savings on to the customer. Most companies will become more efficient and try to save money on production or purchasing so that they can make their bottom line look better, so that they can keep the profits. Where my brother and I differ is that we want to pass it on to our customers.

Was part of this the idea of buying goodwill among your customers?

It wasn’t a focus of ours, because, I’ll be honest with you, we already have tremendous goodwill with our customers. The issue that we wanted to address was we did not want Termini Bros to be a once- or twice-a-year visit for special occasions. We want our customers to be able to come here on a weekly basis or a monthly basis. We are not going to allow Termini Bros to become a luxury item and not a neighborhood staple.

But the only way that this is going to work — and that this is going to stay stable — is through our customers continuing to support us. The only thing that I can ask of people is just to continue to support us and love us as much as we love them, and hopefully we can keep these prices as stable forever and even add some items.

This interview has been edited and condensed for length and clarity.