Hitting the sweet spot of success

INLSA

Ilan Lipschitz, the entrepreneur and master pastry chef behind Ch�teau Gateaux outside a patisserie concept store in Morningside, Durban, which is set to be rolled out nationally over the next few year. PICTURE: GCINA NDWALANE

Master Durban pastry chef and the man behind the Château Gateaux cakes, desserts and pastries business – Ilan Lipschitz – has set his sights on franchising through quaint little French-styled patisserie outlets countrywide to take the brand to the people.

He and his business partner have already opened four Château Gateaux Patisserie outlets – three in Durban and one in Illovo, Joburg – which serve his famous array of European-influenced desserts and treats.

A year after opening a store in Morningside’s Problem Mkhize (Cowey) Road, the shop is already being renovated ahead of franchising the concept.

Lipschitz was a struggling pastry chef in the mid 1990s when he decided to start his own business. He had the experience and a passion for pastries after travelling through Europe learning to master the art of fine pastry-making while working with the Hilton hotel group.

Born in Israel, he moved to Durban and worked as a pastry chef at Clanceys on the Berea, where he met Robyn Webster, his first business partner.

Together they started the Château Gateaux business in 1997. Lipschitz and Webster, who sold industrial kitchen equipment at the time, faced an uphill battle getting the business going. After failing to convince a venture capitalist to invest in their business, they managed to secure a R350 000 loan from KZN development finance corporation Ithala.

“We started Château Gateaux out of a 400m2 warehouse basement in Durban’s Sydney Road. It was tough going in the first few years but, we learnt lessons along the way and persevered. We grew the business and our reputation for making the finest handmade cakes and desserts,” Lipschitz said.

“Initially we were living day to day. We created something from nothing and built the brand and our production capacity.

“This business was built on a dream that snowballed into a bigger success than I ever would have imagined when we first started out,” he said.

By 2005, the business had grown to such an extent that the venture capitalist they originally spoke to was knocking on their door to invest and take the business to another level. They opened a 1 800m2 factory in the burgeoning Riverhorse Valley Business Estate, north of the Durban city centre, at a cost of R10 million, which included hi-tech new equipment.

Today the factory makes between 800 and 1 000 cakes a day and about 10 000 individual portions of desserts and pastries, which are distributed to coffee shops, restaurants and hotels countrywide.

While Château Gateaux had started exporting to Europe and the US, new food rules threw a spanner in the works a few years ago. Now the company limits exports to mainly neighbouring African countries such as Botswana and Zimbabwe.

Lipschitz said tough EU restrictions on exporting dairy products meant he had to look for another area of growth for the company. They had already secured a contract to supply a supermarket chain, but a new area for expansion was the Château Gateaux Patisserie outlets.

“When we started, we had five people working in the business and made about 20 cakes a day. I did everything from making the cakes, to marketing and selling them, and even handling payroll and other administrative issues. Now we employ about 70 people in our factory, many of them who came without skills and who have been with us for years,” he said.

The business is a multimillion- rand operation and Lipschitz estimates that it would cost well over R25 million to establish the entire operation today. He could not mention turnover figures for competitive reasons.

Château Gateaux has become the biggest niche market dessert manufacturer in South Africa, but has several new competitors. Many of the new players have tried to replicate what Château Gateaux has done, but Lipschitz is confident his brand has established itself in the market.

“People eat our cakes and desserts in coffee shops and hotels all over the country, but many may not know that they are eating a Château Gateaux product. Our venture into opening patisserie outlets, which serve coffee as well as selling our extensive range, is to build on our brand,” he said.

Webster sold her stake in the business and Lipschitz has a new business partner in Malcolm Lyle, who has taken on the role of marketing director.

Lipschitz said they were not rushing their franchising growth plans and that the core of their business would still be in catering for the food services industry.

Other growth plans include expanding the Riverhorse Valley factory by another 1 000m2 and expanding their range.

One of the secrets to their success has been being among the first in South Africa to use blast-freezing technology, which can take their cakes and desserts from fresh to frozen in minutes. This “frozen freshness” can see a cake last for up to 12 months.