Paul is Europe's fastest growing bakery chain. Maxime Holder, Operations Director of Paul, talks about the history of the business and how the family have approached the future issue of a generation transition
Led by Francis Holder for close to 40 years, Paul, Europe's fastest growing bakery chain, has established a peerless reputation anchored in an uncompromising commitment to quality – and a reputation as France's leading breadmaker. Over the past 10 years, the company has experienced tremendous growth and expansion, in both business and family member involvement. Francis Holder's two sons, David and Maxime, have joined the firm, finding their respective niches under the guidance of their father. The brothers have inherited their father's strong commitment to the business which, along with training and experience, they hope will ensure its future success.
Baking has been in the Holder family for over 100 years. The family traces its baking history back to 1889, when Charlemagne Mayot and his wife opened a small bakery in the town of Croix, near Lille in Northern France. Successive generations sustained and grew the business. In 1953, Suzanne Mayot, the granddaughter of Charlemagne Mayot, and her husband, Julien Holder, took over a bakery in Lille called Paul. Because the name Paul was well-known, respected and very French, they decided to continue to trade on it. When Julien died, his son Francis took over and expansion soon followed.
Today, Paul is actually one part of a larger company, Groupe Holder (Fr1350 million in revenues in 2001). Groupe Holder is made up of Paul, Ladurée and Moulin Bleu. Of the three companies, Paul is the largest in terms of revenues (Fr904 million for 2001) and number of shops. It boasts an impressive 250 outlets around the world, including France, the UK, Japan, Turkey, Spain and the Netherlands. Their main product is bread, and Paul offers more than 150 varieties. An extensive range of patisserie and viennoiserie are also available, and some stores have a tea salon offering a café menu. (Ladurée consists of three large, upscale tea salons, all located in Paris. Moulin Bleu is comprised of four factories that produce 'half-baked'bread products for the Saint Preux shops owned by Groupe Holder, and for other clients. ) To understand why Paul is so successful, it is important to take a look at the family that shaped it.
A family firm
Presently, Francis Holder runs Paul with his two sons, David and Maxime. Francis (age 61) is Chairman and President of Paul, David (age 33) is President of Ladurée and Vice President of Paul, and Maxime (age 31) is Operations Director of Paul. Until about 10 years ago, Francis' wife Françoise also worked at the company, in both the bakery and the head office. In the early days, she helped Francis to expand the business and was in charge of the legal aspects of the company, as she had legal training. However, she decided to step aside to make way for her sons. She is still involved in company decision-making and often acts as an intermediary between her sons and her husband – a very necessary role as the company is expanding and changing.
It has only been in the past ten years that the sons have really come into the business. Francis very much wanted his oldest son, David, to enter the family firm when he graduated from business school with his MBA at the age of 21 in 1989. Francis lost his father, Julien, at a young age and he was anxious that history would not repeat itself. David agreed to join the company and spent his first two years learning the trades of baking and pastry making. Then he spent the next 12 months as his father's 'shadow', working side-by-side and doing exactly what his father did. This was very difficult for David because he felt he could not be his own person or make his own way in the business – he couldn't shine.
David branched out as far as he could within the confines of Groupe Holder and away from direct contact with his father. Using what he learned in business school, he went to run Ladurée (acquired by Groupe Holder in 1995), a small tea salon in Paris at the time. Right from the start he was put in charge of the whole company.
Under David's leadership, Ladurée thrived. Once only a small shop in Paris employing 30 people, David expanded it to three stores employing 300 people. Francis recognised David's success and asked him to be in charge of development at Paul, a position that involved finding new locations for the expanding Paul. In 2000, Francis made David President of Ladurée and VicePresident of Paul.
Maxime too, joined the family business under pressure from his father. In fact, his father wanted him to forego university, as he could not understand why Maxime would want to study law and economics when the bakery was there for him. However, Maxime stood his ground and finished university. He then joined the army as an officer before beginning work at Paul at age 25.
In 1995 Maxime finally joined his father and brother. He spent six months learning the trade but found it difficult to know if he was doing well, as he was always either "Francis's son"or "David's brother". He soon left without telling his father, though he knew he'd be back one day.
Of course, Francis found out and told Maxime he could not come back to the company until he had something to offer, a principle that still guides the business and family today. Maxime spent five months unemployed, an experience that he says was good for him: "It helped me to appreciate having a job – that a job isn't always there waiting for you".
Using the skills he learned at university, he finally accepted a job at Arthur Andersen as a consultant, where he spent three years working with a new client each week. He gained a lot of business experience and finally felt he was ready to 'bring something to the table'at Paul. However, he did not want to join the company unless there was an opening; he was adamant that he would not be the cause of someone else losing their job just because he was the owner's son. He also did not want to work directly with his brother or father. He felt it would be extremely constricting and that they would want him to keep a low profile – essentially be their shadows, much like David had been to Francis years earlier. Maxime knew that in such an environment it is difficult to bring forth new ideas and even harder for them to be implemented. Like his brother, Maxime wanted to find his own niche.
As it happened, at that time Paul was in the midst of a major expansion, opening 30–40 shops a year. In 1999, Maxime officially re-joined the firm as Manager and Operations Director of 11 shops in France. He soon expanded Paul to the UK as a way of "doing something for the company". He opened the first UK shop in London in 2001 and another will follow in April 2002.
Francis's daughter Elisabeth (age 29) is a shareholder of the company, but is not directly involved with Paul or Groupe Holder. She has worked for another family business, Hermés, for the past year and a half and will probably not join the firm. Her passion is fashion, not bread. Maxime said, "There is definitely pressure for her to join, but she needs to bring something to the company".
Paul is a very forward-thinking company, ruled by modern concepts of business. The family describes the business as a "family business in terms of important decisions", meaning that when important decisions need to be made, the family makes them together. However, they are a 'regular'business in all other business senses: in the way they expand, in financial matters and in employing nonfamily members.
The company employs ten non-family members in management positions, including two non-family general directors. There is a third non-family member in charge of the head office, who also handles the financial affairs along with David. Maxime admits that it is easier for him and his brother to accept non-family involvement than his father – at all levels. Maxime credits it to both training and experience: "This is where my experience at Arthur Andersen and David's MBA training pays off. We know first-hand that in order to be successful, you need to give control to people who actually know how to do a specific task or job and then step aside to let them do it".
The Holders have no official, written plan for the future. Francis Holder is not yet ready to step aside and relinquish control to his sons. However, he is slowly helping David and Maxime to be in charge of more things, to play larger roles in the company. For years, it was only Francis making decisions about the company. While these were mainly good decisions, they were sole decisions. The family believes that quick decisions have been and are still crucial to its success, but Francis will not be around forever. Thus, Francis is now involving David and Maxime in the decision-making process, teaching them how to make decisions as quickly and effectively as he has done. Francis also listens to his sons more and takes their ideas and advice seriously, a sign that he is slowly letting go of the reins.
When Francis finally does let go, the family very much wants to avoid a 'war of succession'between David and Maxime, as they are so close in age and business experience. Though Francis will probably not step down for quite some time, the family has started to discuss the future. They have talked frequently and openly about succession and have agreed that, unforseen circumstances aside, David will become President of Paul and Maxime will become Vice President of Paul. The brothers want to continue to work together and be together for important decisions. The roles will be split as such mainly due to the types of work each brother likes: David enjoys the head office activities associated more with the role of President and Maxime wants to be involved with the Vice Presidential day-to-day operations. However, "nothing will be decided without the full agreement of all the family members".
It is important to the whole family that the business stays in the family. Like many family business owners, one of Francis's worst fears is that the company would be sold to an outsider. To help prevent this from happening, the family has instituted a new shareholder policy in the hopes of encouraging Elisabeth, the only sibling not working in the family business, from selling her shares to an outsider (David, Maxime and Elisabeth all own equal shares). The new policy states that if she decides to sell her shares, the other family members have the right of first refusal. Furthermore, Elisabeth will get twice their face value, but the right to vote will not transfer to the new owner. Thus, as shares without the right to vote are not very valuable, Elisabeth is unlikely to sell them and the company will stay within the family. Whether this 'illiquidity policy'will have the desired effect of keeping all the shares in the family is yet to be seen.
Secret of success
Family matters aside, today Paul is Europe's fastest growing bakery chain. So, to what does Paul owe its success? As is often the case in fast growing family businesses, it basically comes down to one person – in this case, Francis Holder. Maxime explains, "My father had not only a great idea, but also a great market view -– he thinks about the future and seems to be continually ten years ahead of the trend. However, at the same time you can also say that we are one century behind in terms of the type of bread we make". When Francis Holder took control of Paul in the late 1950s, he maintained the traditional, labour-intensive methods of breadmaking that had been handed down through the family since the 19th century. In doing this, he 'bucked the trend'of producing mass-quantity white bread and stuck with the tried and true recipes and methods he had always known. The formula has certainly proven successful over the years.
Today, just like years ago, each loaf of bread takes seven hours to make. To ensure maximum freshness the bakeries operate on a twenty-four hour basis and four batches of bread are produced throughout the day. Prices are aimed to be as accessible to a builder as a bank manager. Gaging Paul's financial success, once customers taste Paul's bread, they only want more.
Francis has also ensured that customers enjoy the atmosphere of each Paul outlet. He works closely with designers on each store. As a result, whether each store looks like a rustic village bakery or an Empire salon, Paul differentiates itself from the competition by creating a refuge of French elegance and calm from the hectic world outside.
Furthermore, Francis has always been close to everyone who works with him, from the breadmakers to management: "all the employees work for Francis Holder". He makes personal connections with his employees and genuinely cares about them and their work. As a result, the employees respect him and share his vision.
These traits, along with a strong commitment to the company, have been passed along to David and Maxime. Both brothers take pride in their work and want the company to succeed. If that means getting up at 1 am to check on the ovens at a new bakery, so be it. The brothers also share a common vision regarding their status at Paul: "You are a shareholder of the company and you are an employee. If you are not a good employee, the company suffers and the shares suffer". As a result, David and Maxime have told management that, "If the company is in danger because of us, let us know and we will step aside. Preserving the trust of our 4,000 employees is foremost in our minds". The future of Paul appears to be in safe and capable hands.