To understand why it’s such a big deal that Kneads Bakeshop and Café is opening in Harbor East this month, it helps to know some history.

In the 1960s, John Paterakis made a $1.5 million gamble. The H&S Bakery owner built a state-of-the art manufacturing plant in Baltimore in hopes he could sell his wares to McDonald’s. Soon, he was providing the fast food restaurant with the bulk of its hamburger buns and his business was on its way to becoming one of the nation’s largest privately owned bakeries.

When his grandchildren decided to team up to start a new retail shop for H&S Bakery decades later, they knew it was never going to be just a cute little storefront.

When it opens later this month with a ribbon-cutting ceremony attended by city officials, the 17,000-square-foot Kneads will combine a shop, cafe, high-end restaurant, event space and industrial bakery that the owners say will bring the family-owned H&S Bakery into the future.

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The idea for Kneads came about a few years ago, when triplets Kira, Adam and Jonathon Paterakis and their cousins Shawn, Ryan and Matt Paterakis — part of a cohort their dads have nicknamed “the next gen” — came up with what Adam calls a “Shark Tank” pitch to overhaul the H&S Bakery outlet.

The Fells Point store that sold marked-down bread was an institution for some Baltimoreans for its easy access to affordable baked goods, but the next gen found it shabby and borderline embarrassing. They wondered how the company’s only retail presence was “an old thrift store,” as Adam called it, that sold day-old bread for $1.

Adam, 33, who works at H&S Bakery with his dad, president and CEO Bill Paterakis, wanted the company to address a growing trend: the bougie-ing up of the bread world. Hoagie rolls, for example, were once a major seller for H&S, purchased by “every mom and pop shop around,” Adam said. But business has been declining for years as food trends have gone upscale.

“Me having grown up around bakery equipment my whole life, it was natural for me to say, ‘How do we make artisan-quality products but with larger equipment?’” Adam said.

Siblings Kira and Adam Paterakis stand inside Kneads, a cafe, restaurant and retail space from H&S Bakery. (Christina Tkacik)

Bill and his brothers, who also manage the family’s real estate holdings in Harbor East, were impressed by the pitch and decided to support it, offering not only financing but a location: a former office building at 506 South Central Ave. (John and Matt have since bowed out of the project, which is now owned by Adam, Kira, Shawn and Ryan.)

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Over time, Kneads grew to include various concepts under its umbrella, including a restaurant, which will eventually serve dinner.

Adam’s cousins, Alex and Eric Smith, co-founded the Atlas Restaurant Group, which is headquartered in Harbor East and has restaurants on the same block as Kneads. But the Smiths aren’t involved in the project, nor did the Paterakises reach out to them for help. “It seemed like the easy way out to just let them do everything,” Adam said.

Alex Smith said he is proud of his cousins, who “did an incredible job” building the new bakery. Atlas also owns Cunningham’s Cafe and Bakery in Towson, which provides the bread for its restaurants and limited retail sale. But he doesn’t see the two as competitors. Kneads is “far bigger than what we’re doing,” Smith said. But at the end of the day, “It’s all in the family.”

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To man the Kneads restaurant, Adam hired an “all-star kitchen team,” including chefs from fine dining backgrounds, and set them loose to design a menu. “Some of the stuff on the menu, I can’t even pronounce,” he said. A more down to earth dish: The JP Mac, a high-end twist on the Big Mac that is an homage to John Paterakis.

“Without my grandfather, there would be no Big Mac,” he said, demonstrating trademark pride in his family, with a hint of hyperbole.

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Adam sees a bit of himself in his risk-taking grandfather. But he also has the benefit of learning from his more conservative father, Bill, whose stewardship Adam credits with keeping H&S Bakery on solid financial ground.

“If my grandfather had stayed in leadership, it’s possible that the banks would own the bakeries,” Adam said. Always a gambler, John might have invested in more projects after Harbor East, taking on more debt for the company than it could handle. “I don’t think he knew how to turn it off,” he said.

Adam hopes that Kneads will solve another problem for H&S Bakery: image. “Baking manufacturing is not a very sexy industry,” he said. “There’s just nobody going into that field.”

Kneads, on the other hand, is a sexy bakery.

Hanging from the high ceiling are massive wooden light fixtures custom-designed in South America to resemble baking whisks. A Greek mosaic motif on the floor is an homage to the family’s heritage, and in particular to Adam and Kira’s mom, who died when they were teenagers. Nearby, chefs place gold leaf on some pastries while a team of food stylists and photographers arrange cocktails and other dishes in the soon-to-be restaurant for a photo shoot.

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Pastries at Kneads, a high-end bakery and cafe opening in Harbor East March 24. (Christina Tkacik)

All the equipment — which includes a Japanese-made bread line that will be able to produce 100,000 baguettes per week as well as other baked goods, Adam said — is state-of-the-art, and visible from an upstairs lounge where customers can work, study and chat. “I built the bakery I wanted to work in,” Adam said.

As his 2-year-old Australian labradoodle, appropriately named Baker, scampered after him, Adam noted that Kneads will also have an entire to-go menu for dogs, including birthday cakes that he said will “support the dog community here in Baltimore.”

Then there’s the human community. Kneads will sell products from local businesses, sourcing produce from area farms and coffee from Towson-based Aveley Farms Coffee Roasters, whose owner Corey Voelkel called it a “natural fit.” Aveley had previously operated in Harbor East for two and a half years, which is where Voelkel got to know Adam and Kira, who live in the neighborhood and were regulars at the shop.

Voelkel said he anticipates Kneads will fill a void in terms of offering a breakfast and meeting spot to surrounding residents and workers in the Harbor East area: “I think it’s just good for the city and area in general.”

Kira said that if their grandfather John, who died in 2016, could walk through the space now, “I think he’d be impressed.”

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She noted that the shop is incorporating a lot of “old school” techniques, such as long fermentation, that would have been familiar to her granddad in his early days of running the bakery. It’s that mix of tradition with science and technology that is helping the next gen break into the artisanal baking world.

While the bakery doesn’t open to the public until March 24, the owners are already talking about plans for expansion, with presences at local farmer’s markets and potential satellite locations.

“This is just the start,” Adam said.

This article has been updated to better reflect that Adam, Kira, Shawn and Ryan Paterakis are the joint owners of Kneads.