Volume 27, Number 2
MINORITY BUSINESS ENTREPRENEUR
Dedicated to the success of minority and women business owners.
ANDREW LY
Sugar Bowl Bakery
www.mbemag.com
March/April 2010
The sweetest thing about the Sugar Bowl Bakery
is, surprisingly, not the 300-some treats it makes,
including the perfect-sized brownie bites, rich
madeleines, and flaky palmiers. Nor is it the ingredients that go into the products, such as the sugar that
is piled high in its factories, or the chocolate waiting to be mixed into the batter, or even the melted
butter in a large silver bowl. No.The sweetest thing
in the whole place is the smell of success.
The Sugar Bowl Bakery started as a way for Andrew
Ly and his four brothers, all of whom are partners, to
provide for their family after making the courageous
trip from Vietnam to the United States.
“I tried three times to get here,” explains Ly, now
sitting in his Hayward, California, office surrounded
by photos of the family. The Lys, like an
estimated 135,000 other Vietnamese people, fled the country after South Vietnam’s
capital, Saigon (later renamed Ho Chi
Minh City), fell to communism in 1975.
Sweet Success
(continued)
“It was a very difficult thing to do—to
leave,” Ly explains. Newspapers reported
that nearly half of the people who fled died
during the journey. “You must go through
the jungle to get to the ocean and then use
a small boat to find a big boat that will
and we were eventually sent to a refugee
have to learn English right away in order to
camp in Malaysia,” Ly recalls. “That took
find steady work, so he began taking ESL
three days, during which we had no food.
(English as a Second Language) classes
When we arrived at the camp, they gave
and studying intensely. Soon, he applied
us instant noodles. That was the best meal
and was accepted to the City College of
of my life.”
San Francisco. He started school in 1981
The refugee camp, about four
and was there for three years, using scholarsquare miles, held 53,000 people, all
ship money and enrolling in a work-study
waiting for word that they would be
program.
accepted by the United States or some
“I couldn’t believe it,” he says of passing
other country. Ly and his parents
the entrance exam with flying colors. It
waited nine months before knowing
came as a shock, considering that he had
which country they could call home.
very little formal education before being
“We had heard so much about
accepted by the college. When they lived
America,” he says. “We thought it
in Vietnam, his father, the owner of a small
was a good life there. We were told
grocery store, fell ill shortly before Ly was
The Ly brothers in 1974 (left to right): Paul; Andrew; Dieu Chau, that if you worked hard, you would
to begin junior high school. Ly then quit
a brother-in-law; Binh; Tom; and Sam at Bihn’s wedding.
prosper.”
school to help out at the store and provide
take you away. There was no navigation, no
As he says this, Ly looks around his offor his family.
technology, nothing to help you find that
fice and pauses, taking in the fact that his
After his stint at City College, Ly transbig boat in the darkness. Each time I failed,
dreams are now a reality.
ferred to San Francisco State University.
I was not only disappointed, but starving
“America,” he says, concentrating again,
He graduated in 1986 with a bachelor’s
and scared.”
“really is the best country in the world. You
degree in financial accounting and a minor
Not every attempt was a complete failcan go anywhere else, and it is obvious.
in computer information systems.
ure. Paul, the youngest of the Ly brothers,
Here, if you create wealth, even though you
“I wanted to go to school to learn to be
escaped on the first try with Ly’s help. Six
pay taxes, that wealth is yours.”
an entrepreneur,” he says. “That is what
nights later, Ly tried again to escape but was
On the plane ride to the United States
I had always wanted to be. That is in my
caught, and his companion was shot dead.
he focused on those positive thoughts.
blood. It is part of why I delayed getting
Three months after that, Ly and Binh, the
“I wasn’t scared really; I was excited to
married. I wanted to have my own business
second oldest brother, helped their eldest
finally be going to the
and be able to take
brother, Tom, and his family escape. Ly
place I had struggled
care of my wife and
and Binh were left behind after they helped
to go to for all those
family.”
others board the boat. Six months later, Ly
years.”
Ly fulfilled his
and the rest of his immediate family finally
In 1979, Ly, then
dream of owning his
made it out of Vietnam.
26 years old, and his
own business in 1984,
“Up until that point, we thought there
parents landed at Traeven before he comwas no hope of leaving,” Ly explains. “But
vis Air Force Base in
pleted college. Ly’s
we knew we had to at least try again.”
Fairfield, California.
oldest brother had
Ly and the rest of the family were finally
They had nothing, not
heard from a friend
able to leave by way of what was then called
even change to make
about a small coffee
an “orderly departure,” a semi-public way
a phone call to Ly’s
and donut shop in San
of leaving the country, after they had rebrothers who were alFrancisco that was
linquished most of their possessions to the
ready living in San
for sale. When the
government. They did not make it to the
Francisco.
brothers saw it, they
United States right away. After six nights
“We spoke no Engimmediately decided
and seven days of very little food or sleep,
lish, we had no money, The Ly brothers (left to right, back row): Tom, chair- to buy it, keeping the
cramped living conditions, and after survivwe had nothing,” Ly man of the board; Andrew, president; Paul, vice presi- original Sugar Bowl
and treasurer; (front row) Binh, vice president of
ing three separate pirate attacks, Ly’s group
remembers. “Finally a dent
Bakery name.
retail; and Sam, vice president of special projects.
arrived in Malaysia. There, they were met
stranger helped us out
“ We a l l [ h a d ]
by villagers who rushed the boat and tried
with change, and we were able to call my
saved everything we made at our jobs,” Ly
to force it back to the ocean. But when the
brothers.”
explains about where they got some of the
people aboard deliberately sank the boat in
A Catholic charity, that had already
$40,000 to purchase the shop. The balance
desperation, the Malaysians had no choice
helped some of Ly’s brothers, helped him
was borrowed from friends. “We didn’t go
but to let them come ashore.
and the others find odd jobs as janitors,
on trips. We didn’t go out to dinner. We
“We met a group of reporters who
cooks, dishwashers; anything to help them
just saved. We knew we had to make a
helped us find a delegate to meet with the
earn a living. Ly, who lived with his family
decent living, and we wanted to be the
International Red Cross on our behalf,
in a small apartment, knew that he would
agent of change and take control of our
destiny,” Ly says.
The bakery soon became a second home
to the Ly family. The brothers worked day
and night learning the business, with Ly
and his brothers learning how to make
donuts from the original owner. While
school and work kept Ly busy, he creatively
found time for dating. He met his wife at
San Francisco State when they worked
together on a school project, and some
of their first dates were spent delivering
donuts to nearby coffee shops.
Slowly, the brothers transformed the
shop into a full-fledged bakery, which also
sold Vietnamese food. Three years after
buying the shop, the brothers bought a
second retail store.
They couldn’t get a loan from the bank
because they had not established credit, so
Ly convinced the seller of the building to
allow them to make small payments and put
their first location up as collateral. It was a
big risk, but Ly knew that was what had to
be done in order to grow.
He explains that it was challenging. “We
were trying to grow, but people don’t realize that growing costs you money before it
makes you money.”
The 3,000-square-foot building became
the second Sugar Bowl Bakery in 1987.
There, donuts and pastries were made in the
back of the building, and the baked goods
and coffee were sold in front.
“We set a goal that every year we would
do better in some way,” Ly says. “We would
buy a new building, get a new big customer,
or somehow improve.”
Soon, the company had grown so much
that they were able to buy two additional
retail stores in the San Francisco area, one
in 1991 and one in 1993. Around that
same time, Ly and his brothers began to
go after bigger customers, beginning with
the hospitality industry.
“I had heard that hotels were starting to
outsource their bakery products,” Ly recalls.
“I approached Parc 55 Hotels [a chain of
hotels in the San Francisco area], and convinced them to give us a chance.”
The hotel bought donuts, muffins, and
croissants from the Sugar Bowl Bakery.
Then more hotels, such as Marriott and
Hilton, quickly followed, which helped the
company prosper.
Ly thrived as the leader of the company.
“I could speak and write English bet-
Technology has taken the Sugar Bowl Bakery a long
way from the original donut fryer.
ter than my brothers,” Ly says. “It wasn’t
that I wanted the title [of president], I just
naturally had taken on that role. I believe
people view you for what you do, not what
your title is.”
W
hile Ly was the natural leader, settling
on titles wasn’t easy for the brothers.
In a traditional Asian household, the oldest
child is usually the leader. Therefore the
oldest brother, Tom, became chairman of
the board; Binh, vice president of retail;
Sam, vice president of special projects; and
Paul, vice president and treasurer.
“We grew up understanding that you
respect your elders,” explains Ly, who is
the third oldest. “Sometimes you are more
scared of your older brother than you are
of your dad, but because I was educated
here, I knew that the most qualified person
should be the boss. I even tell my nephews
and nieces [12 of them now work at the
company] that if they can do my job better
than me, then they can have it.”
As for his brothers, after much discussion, everyone eventually agreed on roles
and titles.
“We argue,” Ly says. “Sometimes you
have to walk away, take a break, and come
back, but in the end we always come to
some sort of consensus.”
In 1993, after the division of titles was
settled, the additional retail stores had been
purchased, and more hotels had become
customers, the brothers secured a bank loan
through the Small Business Administration
loan-guarantee program. They used the
money to buy a 5,000-square-foot manufacturing facility and then hired 30 new
employees, transitioning from primarily
family workers.
“[Until then], we were doing everything
in-house at our bakeries,” Ly explains. “We
worked long hours, and we were everything
from the accountant to the janitor to the
driver.”
The loan, and the fact that almost all
the money the Sugar Bowl Bakery brought
in was put right back into the business,
allowed the Ly brothers to not just start
operations at the manufacturing plant, but
shortly after, to expand to the facility next
door, increasing their space to more than
17,000 square feet.
Ly explains that the needs of the
hospitality industry, as well as the needs
of future customers, meant a larger plant
was needed.
“We were already producing high-quality baked goods for our retail stores, [and
when we] chose to diversify our client base
and sell to hotels, schools, and convention
centers, that was the next step,” says Ly.
Today, the Sugar Bowl Bakery, which
has 250 employees, has sold all but one of
its retail stores, but still has two manufacturing facilities in San Francisco plus its
headquarters and a third manufacturing
plant in Hayward.
“We grew with hard work and by saying
what we mean and meaning what we say,”
Ly explains. “We called companies for two
or three years before they gave us a chance,
and we were lucky when they did. Delivering quality products at a good value is what
kept them coming back.”
Companies like the aforementioned
Marriott and Hilton, and new customers
like Costco, Kroger, Walgreens, Safeway,
and United Airlines, are just some of the big
names that buy from Sugar Bowl Bakery.
As the company grows, Ly is focused on
efficiency. In March of this year, he plans
to consolidate the three manufacturing
facilities.
“By moving everything to one location, we can be more efficient,” Ly explains.
“The facility will have new technology,
Sweet Success
(continued)
and we can provide better management
at around 8:30 a.m. When I go to lunch,
quality you can.”
because we will have fewer facilities to
I walk one Costco, Walgreens, Starbucks,
Product changes, such as making some
manage.”
and Safeway. I love to look at the way our
products all natural (meaning no artificial
Ly has also thought about adding an
products are displayed, see our competition,
ingredients such as colors, flavors, preserEast Coast plant. The idea of moving some
and notice how their prices and quality
vatives, or other chemicals are used), will
of the product manufacturing to the other
compare to ours.”
also make the Sugar Bowl Bakery more
side of the country comes at a time when
And at 4:30 p.m. when he leaves work,
attractive to customers.
Ly is trying to make his company greener.
he knows that everything will be handled
Ideas for new products often come from
Currently, his products are only sold in
because he trusts his employees like they
Ly’s family, friends, and customers.
a few places on the East Coast, due to
were family.
“My wife will make something at home
transportation costs and his concern that
“My employees are my extended family,”
that we all like [and we’ll try it out at the
driving trucks that far would
bakery],” Ly says. “Although my
increase pollution.
family isn’t that big on sweets, my
“A few years ago, we impleyounger son Gordon tells his mothmented a recycling program for
er that he wants to work here one
paper products,” Ly says about
day. But he is 12, so we will see.
his efforts to be environmen“And Alan, who is 19, has already
tally conscious. “Any food that
expressed an interest in a different
we waste is turned into compost.
career. He wants to be a doctor.”
We worked with the City of
Ly doesn’t pressure either of
San Francisco under the utilthem to join the family business.
ity agency to change all of the
“I think people should do what
lights we use to energy-saving
they are best at,” he explains. “If you
ones. Our plants have autoforce someone to do something they
matic motion detection lights.
don’t want to do, then you cannot
We encourage our vendors to
bring the best out of them.”
improve their plastic containers
Ly tries to bring out the best in
Since 2003, the Sugar Bowl Bakery has had an executive pastry chef who creates
to be biodegradable, or at least specialty cakes for weddings. The designs for the cakes are all made to order.
his employees as well.
recyclable. And we encourage our
“I encourage people to share
employees to go paperless by not printing
Ly says. “They work here and bring value
their ideas,” he says. “If I have one dolany unnecessary documents.”
to our company. And my family that does
lar, and my employee has one dollar, and
Ly says Sugar Bowl Bakery, which
work here, I make sure they earn their pay,
we exchange those dollars, we each have
earned around $40 million in revenue last
that they are the best people for their job,
one dollar. But if I exchange ideas with an
year, will continue to grow because it meets
and that they always do the right thing.
employee, we each have two ideas.”
customers’ demands, makes good quality
Doing the right thing is sometimes hard,
All the Ly brothers discuss these ideas
products, provides good value to consumers,
but doing the right thing is always right.”
and more during their “brothers’ council,”
and knows that success is a moving target.
Ly says that it doesn’t take much proda monthly meeting when the family gets
“ We went international five years
ding. “I am so proud of everyone here,” he
together to discuss new trends, products,
ago with Costco, selling to their posts in
explains. “They make this company what
and problems.
Taiwan, Canada, Korea, and Mexico, and
it is.
“I don’t know where I would be without
another one of our customers sells our
“We want to be larger than we are,” Ly
my family and my brothers,” Ly says. “We
products in South America,” Ly says.
explains. “We hope to take our products
all have different ideas, but those ideas have
Growth, however, has not stopped Ly
to cruise ships, sell to more airlines, and to
come together to make Sugar Bowl Bakery
from having a hands-on approach to runmore chain stores.”
what it is today.”
ning the company. His daily routine enables
One of the ways Ly gets noticed by
Their success, he says, is even sweeter
him to know exactly what is happening.
bigger companies is by being certified as a
because it has come from hard work.
“Every day I wake up at 5:00 a.m., watch
minority-owned business by the National
“There is no substitute for that,” he
the news, drop my wife at work and my
Minority Supplier Development Council.
insists. “You must have your business in
youngest son at school, and then I walk the
“It entices large companies to do busiyour heart and heart in your business.”
plants in San Francisco,” Ly says. “After I
ness with you,” he says. “It gets you in the
That is more than a mantra for Ly. It is
am done there, I go to our Hayward plant
door, but then you have to deliver the best
his recipe for success.
◆
Reprinted with permission from the March/April 2010 issue of
Minority Business Entrepreneur
For subscription information, go to: www.mbemag.com or call (310) 540-9398