Commercial and Retail Bakeries
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 10,800 bakeries in the US produce bread, rolls, and other bakery products. Commercial bakeries sell primarily to businesses (retailers, restaurants, and food service companies). Retail bakeries sell primarily to consumers. Major revenue categories include bread, rolls, cakes, cookies, and crackers. Companies may also sell frozen bakery products or may specialize in a particular type of product, such as cupcakes.
Variable Costs Impact Margins
The cost of ingredients, such as flour, sugar, cocoa, and dairy products, can vary and affect margins.
Dietary Trends Affect Demand
Trends and fads that drive food preferences can impact demand for bakery products.
Industry size & Structure
The average commercial bakery employs 43 workers and generates between $14 million annually, while the average retail bakery employs 11 workers and generates about $665,000 annually.
- The bakery industry comprises about 10,800 firms that employ about 337,000 workers and generate about $40.7 billion annually.
- Commercial bakeries account for 25% of firms and 88% of industry revenue.
- The commercial bakery industry is concentrated - the top 50 firms account for 70% of industry revenue. The retail bakery industry is fragmented - the top 50 firms account for just 16% of industry revenue.
- Large companies include Grupo Bimbo (Sara Lee, Arnold), Hostess Brands, and McKee Foods (Drake’s Cakes, Little Debbie).
- Bread is a standard household staple, with per capita consumption in the US of nearly 44 pounds annually.
Industry Forecast
Commercial and Retail Bakeries Industry Growth
Recent Developments
Oct 20, 2024 - Healthy Indulgence
- When it comes to baked goods, consumers want the best of both worlds – health and indulgence — and are willing to pay more for baked goods that offer both, according to new consumer bakery research from Cargill. Growing interest in keto-friendly and plant-based bakery products are examples of health meets indulgence in the bakery case. Keto-friendly baked goods that are lower in sugar and high in protein are seeing increasing interest from shoppers. As new products offer improvements in taste, texture and overall quality, the keto-friendly, reduced-sugar, high-protein bakery space will continue to grow, according to Cargill’s research. Also, “vegan” is among the top claims for new products launched in both the breads and sweet-baked-goods segments. While vegan and plant-based claims are trending right now it’s unclear if the trend will continue given the small number of consumers who follow a vegan diet.
- Wholesale price inflation for baked goods is easing, according to the latest US Bureau of Labor Statistics data. The producer price index for commercial and retail bakeries, which measures prices before reaching consumers, rose 1.9% in July compared to a year ago after rising 7.2% in the previous July-versus-July annual comparison, per the BLS. Still, industry producer prices continue to climb as input costs, including ingredients and labor, rise. Employment by the industry grew 4.1% year over year in July, while average industry wages climbed 4.6% over the same period to a new high of $22.40 per hour, BLS data show.
- Inflation-weary shoppers are hungry for more affordable versions of their favorite bakery products, Supermarket News (SN) reported in August. According to the International Dairy Deli Bakery Association’s most recent “What’s In Store” update, bakery department (aka perimeter bakery) sales are performing slightly better than center-store sales, with bread and rolls looking especially strong. In June, the bakery department rang just over $2 billion in sales, according to the IDDBA report, with desserts and sweet snacks taking in $1.1 billion, morning bakery representing a little more than $499 million, and bread and rolls seeing $400 million in sales. About 44% of US consumers surveyed by the Census Bureau in September reported feeling “very stressed” by the increase in prices in the last two months.
- Savory baked goods are having a moment, driven by consumers looking to cut down on sugar, The Wall Street Journal reported in August. Baked goods made with ingredients such as meat, cheese, fresh greens, sun-dried tomatoes, and kimchi are making their way into bakery cases. By adding savory items to their menus, bakers can attract a wider range of customers, including people looking for more of a meal than a sweet treat, throughout the day. As consumers have become more health conscious, they’re questioning the sugar content of pastries. A 2024 survey of 1,500 consumers found that 33% of those asked would choose a lower-sugar version of their favorite pastry, and 26% would choose a sugar-free version if available, according to the American Bakers Association.
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