As a full turnkey co-manufacturer serving regional and national brands throughout the United States and Canada, Fantasy Cookie purchases all the ingredients and packaging and converts them into products and brands.

“That’s it,” said Russ Case, chief executive officer of the Sylmar, Calif.-based cookie and bar producer. “We don’t warehouse or ship product. It’s free on board from our dock. Customer pickups occur within 24 to 48 hours from production.”

What sets the company apart, he added, is Fantasy Cookie’s transparency and its open-book pricing policy.

“Our customers know what we’re paying for all ingredients and packaging materials,” Mr. Case explained. “If commodities are going up, as they did earlier last year, or down as they did toward the end of last year, we adjust accordingly each quarter.”

Fantasy Cookie then charges a “toll,” which is the annual price for labor, overhead and profit, and allows the company to remain financially strong.

“The toll is pretty standard for co-manufacturing, but because we share pricing with our customers, it takes all of the guesswork out of the process,” Mr. Case noted. “We’ve had situations showing that we’re paying 75 cents a pound for an ingredient, and our customer says, ‘If you buy it from this vendor, you can get it for 60 cents a pound.’ We’ll then buy it from their suppliers.

“It’s really given us a good lane to get into co-packing in a big way, and that’s why we expanded our co-pack customer base so dramatically over the past three years,” he continued. “The bottom line is our toll stays the same so we’re protecting our margin, which all of our customers understand because they want a co-manufacturer that’s financially healthy.”

Founded by Hans Semder as a small bakery in 1979, Fantasy Cookie purchased a commercial bakery that was later operated by his sons, Joe and Rich Semder, who expanded the operation over the decades.

Back then, the owners’ philosophy involved producing premium cookies with a twist — more nutritious indulgences than most other co-manufacturers would make. “Not possible” was rarely spoken with customers with the bakery even applying some hand-crafted touches to their products. Minimums for clients were as small as 1,000 lbs and sometimes less than an 8-hour shift.

In 2016, the company was purchased by Encore Capital, a San Francisco investment firm that retained Joe Semder as part owner and brought in Mr. Case as its CEO from another nearby snack and nutrition bar producer.

During the past few years, Fantasy Cookie fine-tuned its business to play in the big leagues. The bakery has reduced its SKUs from 200 to about 70 today with monthly minimum orders on a regular basis.

“What happened is we were running some of those 200 SKUs only once a year,” Mr. Case said. “We don’t want that. We want once a month or multiple times a month if we can. That’s made us more efficient. We’ve gone from all things to all customers to a much more strategic-specific type of customer. Our focus is on the fast-growth, high-pace emerging brands or premium store brands that market their labels like a national brand.”

To drive those efficiencies, the company relies on “block scheduling,” or grouping similar products together to minimize changeovers and reduce the amount of scheduled sanitation.

“This way, we’re not shutting down production and cleaning mixers every 5 hours,” Mr. Case said. 

For example, the SQF-certified bakery will run a group of gluten-free products over an eight-day period; organic items over several days; or keto, kosher or allergen-specific items one after another.

“We brought a simple approach to our operation in that we want to run limited SKUs as often as we can,” Mr. Case explained. “We’re not opposed to going from 70 SKUs to 120 SKUs in 2023 if those 120 SKUs are high-volume and running on a regular basis. We don’t want to go back to running SKUs of grandma’s recipe twice a year.”

Because the operation plans production six weeks out, the company knows what ingredients to order in advance and works to avoid potential supply chain disruptions that have wreaked havoc on the food industry in recent years.

“It’s all about keeping our uptime at a high level, and we have been able to do that by getting rid of a lot of old SKUs that were incredibly inefficient and by bringing in new SKUs that make our business predictable,” Mr. Case said.

Daily production meetings provide a key component of that predictability in a co-manufacturing operation. Joe Rivera, director of operations, tracks hourly volume, size of the crew, pounds per manhour, waste, downtime and other factors that are keys to profitable scheduling.

“If we see a lot of red in our charts from the previous day, we figure out why we had a bad day,” Mr. Case said.

If the bakery sees green, the employees share in the operation’s success with quarterly bonuses and other incentives.

“We want to make sure that they have ‘skin in the game,’ ” Mr. Case said.

The company has also recruited a key management team that includes Jonathan Wilson, chief financial officer; Robert Julin, director of procurement and supply chain; Hilda Iracheta, director of human resources; Hendy Saint-Jacques, quality assurance manager; Mark Croskey, maintenance manager, and Michael Biodrowski, warehouse and shipping manager.

Today, the bakery has four clustered buildings. Two buildings — one on Arroyo Street and a second on Gladstone Street — serve as commercial bakeries.

The Arroyo facility, which is totally remodeled, will be the home of the two new Reading Bakery Systems production lines. The Gladstone bakery has two existing production lines that have been totally rebuilt over the past few years by Mr. Rivera, the bakery’s four-person maintenance crew and outside vendors. The company also has two other buildings that serve as warehouse and office space.

Overall, the company has 25,000 square feet allocated to production and 60,000 square feet for warehousing.

About 185 people work six days a week on either two 12-hour shifts or two 10-hour shifts, depending on the production run. Because of its diverse customer base and wide variety of proprietary formulas, the bakery relies on 50-lb bagged flour and totes for ingredient handling.

In the Gladstone facility, a 500-lb horizontal mixer makes fillings and icings while the 1,000- and 2,000-lb horizontal mixers serve the two production lines interchangeably.

To reduce workloads, the company has installed an automatic dough feeder, which will eliminate the current manual process of transferring doughs from mixers to troughs to feeding the makeup systems.

On Line No. 5 — so named because it was the fifth installed — the versatile makeup system can produce wirecut, rotary-moulded, sheeted and extruded products.

During Baking & Snack’s visit, the line produced graham crackers. The dough is sheeted, receives docking and is cut into 10 rows, then baked in a 39-inch wide, 100-foot-long direct-fired oven, which was rebuilt with a new IPCO steel band and compact belt tracker along with drum and belt scrapers to assist with cleaning during extended production runs.

After baking, products pass by TNA cryojet fans that vacuum the heat off to expedite ambient cooling.

Line No. 6 can produce wirecut and rotary-moulded cookies like the animal crackers produced during Baking & Snack’s visit. The cookies are baked in a 39-inch wide, 120-foot tunnel oven before heading to a spiral cooler for up to 45 minutes prior to packaging. 

The packaging department is designed for versatility. For instance, the animal crackers tumbled off the cooling conveyor into tubs, then were manually transferred to a bucket conveyor to a scale system and VFFS bagging prior to cartoning. The graham crackers were loaded into ISB tubs that pass through a shrink tunnel that seals the lids for tamper-proofing.

The bakery can also wheel in horizontal form/fill/seal machines for individually wrapping bars or packs of cookies. 

Afterward, the products pass through metal detectors or the X-raying of products in metallic film bags. The packages are then manually case packed and palletized before receiving shrinkwrapping before shipping.

As a part of its food safety program, Matt Cobb, director of sales, noted that samples of each lot of product are warehoused for up to a year for quality assurance purposes.

With operating efficiencies in place and new capacity coming aboard, Fantasy Cookie has been pursuing more new business opportunities than in the past.

“Matt has been on a tear for the last few months,” Mr. Case said. “Before we were near capacity, but now that we have everything in line, we had to get everything going again as far as sales.”

To sustain the momentum, Mr. Rivera said, the company is investing in training, especially in the recently reorganized maintenance department, where technicians and machinists receive additional online video training every three weeks.

To comply with security requirements, the company has also installed a comprehensive camera and video surveillance system both inside and outside of the bakery.

In addition to protecting the bakery and its employees, Mr. Rivera noted, the system allows operations to monitor production and identify areas for additional training and improvement.

This article is an excerpt from the April 2023 issue of Baking & Snack. To read the entire feature on Fantasy Cookie Co., click here.