Enterprise Investors’ Michal Kedzia Discusses Pan-Pek’s Growth Plans

By Robert McHugh

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  • The tourism season in Croatia was in full swing when ESM arrived for its second visit to the country in just over a year. Restaurants are full, cafes are bustling and people are taking advantage of the beautiful weather by taking long drives along the Adriatic coast either for swimming or seafood dining.

    When you're in Croatia, you get the impression that people like to be active and making the most of their time. This seems to be the case with their eating habits as well – grabbing a coffee along with a pastry and hitting the road is very much part of the lifestyle in the capital, Zagreb.

    One brand that has cleverly tailored its approach to this need for convenience and food on-the-go is Croatian baker Pan-Pek, which offers a range of breads, pastries, cakes, tarts, salty and sweet products, across its network of 72 outlets, located predominantly in the Zagreb area. 

    Established in 1992 by two Croatian entrepreneurs, it has been owned by private-equity fund Enterprise Investors since 2018. In 2023, its revenue grew to €52.2 million, representing a 13% increase compared to 2022.

    It has announced plans to continue with its network expansion, aiming to open 100 more stores over the next four years, while it also sees the export of bakery products as a significant opportunity. 


    Sandra Vojković, CEO of Pan-Pek, recently took members of the media, including ESM, on a tour of some Pan-Pek's stores and its production facility in Zagreb. I caught up with Michal Kedzia, partner at Enterprise Investors, to discuss Pan-Pek's successes to date and the company's plans for the future. 

    Tell me about Pan-Pek and how your relationship started with the company? 

    Back in 2018, we started screening the market for the QSR segment in the Adriatic region. Eating habits out here are vastly different than in Central Europe. I come from Poland, where there is a much bigger habit of food on the go. You grab a bite and a coffee and walk out, as opposed to either staying at home or going to a restaurant.

    This market review led us to Pan-Pek. I liked the quality of the network and we managed to agree a deal with the original founders. From the very beginning it was a majority transaction. We bought out a passive shareholder and with the other shareholder we teamed up and continued growing the business. The second phase of the deal happened in 2020, when we went to full buyout of the company and established a new management team to run the business going forward.


    From day one, the deal was based on two very strong factors. On one hand, the QSR business, which is basically retail, and on the other, production of frozen bakery products for modern grocery retailers.

    We would never touch the traditional bakeries because this is a declining market in Europe, while the frozen bakery business is a growing business. It is a business that allows you to grow profitably attractive margins, via penetration of the bakery listings in grocery retail space. Having these two legs, we knew we were well positioned to capture growth. 

    How did the events of 2020 affect your plans? 

    In 2020, we bought the outstanding minority stake and became the full owner. 


    When COVID hit, we spent this period of muted activity and less customer traffic on developing our product and winning new accounts. We basically waited for the pandemic to end, and when it did so, we ended up with the company having more retail stores and bigger export orders. 

    Pan-Pek recently embarked on an internal transformation. What was the strategy behind this?

    We did not want to be a bakery that produces everything for everybody. Due to our size, we want to be the champions on our home turf. We are experts when it comes to higher value product, a more sophisticated product with higher unit value, as well as providing regional products which are specific for the Balkan peninsula. We do not really want to compete on products which are consumed everywhere, such as the plain croissant or the Kaiser Roll, which don't really differ between Warsaw, Berlin, Dublin or Zagreb.   

    What are some modern trends in the baking industry at present? 


    On the one hand, there is a drive to functional bakeries. There is much more demand in the market for anything that is gluten free, lower calorie, and a longer shelf life. Anything that is functional is definitely taking space. 

    At the same time – and this is particularly applicable to this part of the world – there is a drive towards quality. This part of the world in particular is spoiled with quality. 

    Is it difficult to balance working as technically efficient as possible while maintaining quality?

    I don't think there is a conflict. You don't have to compromise quality. It is all about ingredients. I would even risk saying that sometimes the newest machinery can enhance quality, as long as you put the right fuel inside – whether its excellent grain, wheat, flour, meats or anything else.

    What are Pan-Pek's plans for future growth?

    We have three basic pillars for growth of the company. One is our wholesale division, where the plan for Croatia is to do more of the same. We need to grow on a like-for-like basis together with our grocery retail clients, and we envisage that this like-for-like growth of existing customers can reach at least 10%. On top of that, we are adding new accounts.

    The second pillar is the export market, both to nearby countries like Slovenia and countries further away, such as the US. If you go for a bun and coffee in Harvard, you are buying our product. Although our US line is not huge at the moment, it is developing extremely nicely.   

    We are a peculiar animal, in that we hardly engage with the HoReCa channel, and as such we believe it is a huge opportunity. We have a lot of inbound interest from HoReCa operators, which we have been working on. 

    We have been working on our logistics capability, because there are very nice clients that order a lot, pay the right prices and want good quality. However, they are difficult clients, logistics wise. You have to be able to reach every hotel and location, and right now we don't have the capacity to do this. HoReCa is a major opportunity in Croatia. 

    The last pilar is retail. We currently have just north of 70 units, and we see potential for at least 200 units in Croatia.  We have five locations outside of Zagreb. The entire coast in some parts of the south is unpopulated. So I think that over the next five years, it might be a very busy and successful business.

    What challenges do you see for the business in the future?

    Needless to say, statistically, we have one pandemic every hundred years. Hopefully I won't live long enough until the next one. 

    That is the beauty of the food segment. When times are good, consumers buy more clothes, cars, furniture and TVs. But as long as you are providing staple food products, it's a steady business. If you get a raise you won't buy more bread. If you lose your job you still keep buying bread. 

    It's always a staple product. I think it makes a very nice and stable investment, as long as we are increasingly competitive, cost-wise, and continue to deliver quality outputs.

    It's about moving new customers with high quality and prices. The only imminent threat from the macro perspective is if people are forced to stay shut at home, which we went through in 2020 and 2021. As I said, I do not expect to live long enough for a new pandemic. 

    Ukraine used to be one of biggest exporters of wheat in the world. Has the war had any knock on effects on the Croatian bakery industry?

    It made prices shaky, but in this part of the world, we don't generally source our wheat from Ukraine. The impact of the Ukraine situation had more of an effect on bakers in Poland, or German-speaking Europe. 

    In Croatia, it is sourced locally, or from Bosnia or Serbia. There are a lot of wheat producers here. So in the mills, not exactly the raw source, the mills. The import from Ukraine was not very dominant in the mix.  

    What excites you most about Pan-Pek?

    Two things excite me the most. The first thing is the opportunity, with the QSR segment in central Europe, from Croatia down south to Poland in the north, still underdeveloped. Everything from salad bars to bakery businesses to coffee and snack chains – there is a lot to be done. 

    The second thing that excites me the most is the management team. It really is a pre-eminent, first-class management. There is an unbelievable dose of enthusiasm and I think it is just a pure joy to work with such people. As the primary guy in charge of investment, I never had to push them to do anything. It was the opposite. It was like 'Hey, why don't you just slow down! Take one Sunday off please. You don't have to do all things at once!'

    The enthusiasm, the tiger approach, is just a dream. It makes my life much easier. Once you have a true partner in the CEO, who has an alignment with your interest and mentality, that's what makes it work.  

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