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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 9,500 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, and dairy products, can vary and affect margins.

Dietary Trends Change Demand

Trends and fads that drive food preferences can hurt demand for bakery products.

Industry size & Structure

The average commercial bakery employs 41 workers, and generates $12 million annually, while the average retail bakery employs 9 workers and generates about $760,000 annually.

    • The bakery industry consists of about 9,500 firms that employ about 169,600 workers and generate about $37 billion annually.
    • Commercial bakeries account for 28% of firms and 86% 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 (Little Debbie).
    • Bread is a standard household staple, with penetration in almost all US households.
                                    Industry Forecast
                                    Commercial and Retail Bakeries Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Coronavirus Update

                                    May 14, 2022 - Fresh Baked Bread Draws Supermarket Shoppers
                                    • Fresh baked bread is making a strong return to supermarket bakeries, Supermarket News reported in April 2022. Sales of artisan breads are returning to pre-pandemic levels as stores resume pre-pandemic operations and customers return to in-store shopping. Schnuck Markets is seeing strong sales in all breads offered in the bakery department, with artisan-style crusty and take-and-bake breads growing at a faster rate than the overall bread category. Florida-based Publix Super Markets says it has seen sales of fresh baked bread boom over the last year and are better than ever, with any fears caused by the early days of the pandemic mostly being assuaged.
                                    • Prices for dairy, eggs, and cereals soared in April driven by an outbreak of bird flu, the rising cost of fuel and fertilizer, labor shortages, and other factors, according to The New York Times. The wholesale cost for a dozen eggs reached $2.50 on April 13, rising 92.3% from March’s figures and 160.3% from the prior year, according to Food Institute analysis of USDA data. Overall, the price of food rose 0.9% in April from the previous month, the 17th consecutive monthly increase. As large consumers of commodities, even small moves in ingredient price can have a significant impact on commercial and retail bakeries, according to the American Bakers Association.
                                    • Bakeries are experiencing higher flour prices. The cost of wheat, a raw material of flour, has risen steeply due to the Russian and Ukraine conflict and unfavorable US crop ratings. Ukraine and Russia together account for 14% of global wheat production, but exports have been strained by the fighting in Ukraine, closed ports, and boycotts of products from Russia. As a result, wheat prices for May deliveries exceeded $11 per bushel at the start of April 2022, according to Farm Progress. Depending on how long the conflict lasts, Ukraine farmers may not be able to plant spring crops, which would result in a year of down production.
                                    • Bakeries and other food manufacturing industries started 2022 with the FDA issuing a host of new safety guidance to address during the year that could impact food classification and labeling. Many of the topics focus on plant-based ingredient labeling and reducing contamination and foodborne illness. Classifying foods as ready-to-eat or not ready-to-eat also made the list. Bakeries will need to pay close attention as new guidance is issued to ensure adherence.
                                    • Employment at commercial bakeries increased 5.3% year over year in March 2022 and was up 0.5% versus the pre-pandemic month of March 2020. Employment at retail bakeries increased 9.2% year over year in March 2022 and was up 3.7% compared to the pre-pandemic month of March 2020. While the retail segment’s employment has largely recovered from its pandemic losses, the commercial segment remains short but is making progress in rebuilding its workforce.
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