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 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.

Dietary Trends Change Demand

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

Variable Costs Impact Margins

The cost of ingredients, such as flour, sugar, and dairy products, can vary and affect margins.

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

                                    Recent Developments

                                    Nov 15, 2022 - Breakfast Baked Goods Rebounding
                                    • Supermarket bakeries impacted by the pandemic are slowly beginning to recover. The breakfast segment in the bakery department started to rebound in early 2022, but the category remains down approximately 4%, Supermarket News reported in October. While more stores are seeing a return of customer interest in baked goods like bagels, donuts, and muffins, inflation is eating into sales — especially for specialty items, SN reports. Sharply higher ingredient costs for butter, eggs, and flour are pushing up prices and discouraging price-sensitive shoppers. Lingering safety concerns from the pandemic have eliminated tastings in most bakery departments and individually wrapped items don’t appeal to a majority of consumers who say they’re concerned about plastic and other package waste.
                                    • Bobo’s, a maker of oat bars and other baked goods, has opened a new wind-powered production facility in Loveland, Colorado, SF&WB reported in November 2022. The new 123,000 square-foot production facility more than triples Bobo’s production capacity while reducing its carbon footprint, and will help the company achieve carbon neutrality by December 2022. The company also plans to purchase carbon offsets. The new facility is powered entirely by wind and consolidates three previous facilities into one operation. It has the capacity to produce 1 million bars, bites, or toaster pastries a day, according to the company. The new facility has also achieved more than 95% diversion of its solid waste from the landfill through a comprehensive waste management program.
                                    • US supermarkets are offering fewer and smaller promotions than before the pandemic. On average, 20.6% of food and beverage products were sold with price reductions in Q3 2022, according to research firm Information Resources Inc. (IRI), down from 25.7% for the same period in 2019, The Wall Street Journal reports. Promotional levels are down from 2019 levels for all grocery categories except meat, IRI data shows. In today’s inflationary environment, grocers are faced with a difficult choice between offering sales on less popular items, or losing money offering discounts on staples proven to bring in shoppers. Ongoing shortages and supply-chain problems at food manufacturers that typically provide funding to supermarkets to support discounts and promotions are limiting production and leaving fewer products available to be put on sale, leaving grocers to shoulder promotional costs, according to WSJ.
                                    • Retail bakeries are poised to profit from the ongoing boom in weddings and accompanying demand for wedding cakes. A new business-to-business (B2B) survey of event venues and vendors revealed restored optimism for the events industry in 2022 and that the wedding market is not slowing down heading into 2023. The survey by Carats & Cakes, a financial operating system for the events industry, revealed that 87% of respondents are optimistic about the current state of the events industry. Of those surveyed, 67% say they are fully booked for 2022 and 78.6% are already booking up for 2023, an indication that the 2022 wedding boom is not slowing down. Other key findings include: 59.9% of respondents feel the wedding market is “very hot” right now; and 87.4% of respondents are primarily booking events with over 75 guests.
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