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
Dec 20, 2024 - Bakery Price Inflation Easing
- 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, inched up 0.4% in November compared to a year ago after rising 4.2% in the previous November-versus-November annual comparison, BLS data shows. Employment by the industry grew 5% year over year in October, while average industry wages increased 2.5% over the same period to $22.10 per hour, per the BLS. Industry payrolls continue to rise amid falling profits for food companies, which tumbled nearly 30% in the second quarter versus Q2 2023 and 29% compared to Q1 2024, Census Bureau data shows.
- The bakery industry is bracing for a major shakeup under President-elect Donald Trump’s nominee to head the Department of Health and Human Services, Robert F Kennedy Jr, Bakery & Snacks reports. Kennedy’s health agenda could unleash a wave of regulatory changes for manufacturers of baked goods and pastries and the broader food industry, according to B&S. An environmental lawyer by trade, Kenedy is an outspoken critic of ultra-processed foods, artificial additives, and Big Food in general, which he says is “literally poisoning our children” and primarily responsible for the chronic disease epidemic in the US. Manufacturers, including Hostess, are voicing concerns over possible sugar taxes and reformulation mandates, B&S notes, adding Kennedy is a proponent of greater transparency in food production, particularly in ingredient use and labelling. Still, his control over what Americans eat is limited and his appointment requires Senate confirmation.
- Organizational charts are an essential tool for effective bakery management, benefiting managers and employees, according to a recent Retail Bakers of America blog post. A well crafted org chart can increase operational efficiency, improve collaboration and communication, help effectively allocate resources and avoid bottlenecks, and support new hires and employee retention, according to RBA. Choosing the right org chart requires aligning it with the bakery’s goals and strategic plan. Factors include bakery size and age and the business environment. Examples of different org charts include hierarchical, flat, and process-based. The matrix org chart combines aspects of hierarchical and flat structures by showing dual reporting lines, while a divisional organizational structure divides the bakery into semi-autonomous units based on product lines or locations. Size is significant in determining the most effective org chart structure with flat structures best for small bakeries, while larger operations may opt for hierarchical or processed-based structures.
- When shopping for baked goods, consumers want the best of both worlds – health and indulgence — and are willing to pay more for items 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.
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