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 10,350 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 impact demand for bakery products.
Industry size & Structure
The average commercial bakery employs 50 workers, and generates between $13-14 million annually, while the average retail bakery employs 10 workers and generates about $717,000 annually.
- The bakery industry consists of about 10,350 firms that employ about 200,000 workers and generate about $36.5 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 (Little Debbie).
- Bread is a standard household staple, with penetration in almost all US households.
Industry Forecast
Commercial and Retail Bakeries Industry Growth
Recent Developments
Apr 20, 2024 - Producer Prices Keep Rising
- Producer prices for commercial and retail bakeries rose in March compared to a year ago, with producer price increases by retail bakeries up 4.3%, outpacing price hikes by commercial bakeries, which rose 2.2%, according to the latest data from the US Bureau of Labor Statistics. Bakeries have been hiking prices to cover rising ingredient, labor, and other input costs. Average wages at commercial and retail bakeries increased by more than $2 per hour in 2023 over the same period in 2022, BLS wage data shows. Sales for the US commercial and retail bakeries industry are forecast to grow at a 2.13% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy, according to the Interindustry Economic Research Fund.
- According to a recent poll by Reuters, bakers can add sugar to the list of inputs whose costs are soaring. The poll of 12 traders and analysts found global raw sugar prices are expected to post an annual gain of nearly 20% this year as the global market shifts into a deficit in the upcoming season. According to the poll's median forecast, sugar is forecast to end 2024 at 24.5 cents per pound, up 5% versus the close on February 13 and as much as 19% above levels at the end of 2023. While output in Brazil, the world’s leader in sugar production, is expected to remain strong, production in India (the second-largest producer) is expected to decline. According to the USDA's Foreign Agricultural Service, the US ranks 6th in global sugar production, accounting for 5%, or about 8.37 million metric tons in 2023/2024.
- The price of cocoa, a key ingredient in many baked goods, has surged to record highs, The Wall Street Journal reports. In mid-March, May cocoa futures added $438 a metric ton to end at $7,405 in New York, nearly three times the price compared to a year ago and 38% above the previous record set in July 1977 during an earlier period of poor growing conditions in West Africa that shrank the global supply. Most of the world’s cocoa is grown in West Africa, where unusually wet weather followed by hot, desert air led to a weak harvest and diminished stockpiles for the second consecutive year. Moreover, speculators stocking up on cocoa futures have exacerbated the supply shortage. The surge in cocoa prices has caused chocolatiers, confectioners, and big food companies to raise prices, tweak recipes, and shrink products, WSJ reports.
- Supermarket bakery sales are rising, driven by inflation and consumer demand for comfort items, and bread in particular, according to the Food Industry Association’s latest Power of In-Store Bakery Report. Over the 52 weeks that ended in early December, perimeter bakery items reached $18.3 billion, while center store bakery items recorded $25.1 billion in sales. Those sales figures are up considerably from pre-COVID numbers in 2019 of $13.9 billion and $18.6 billion, respectively. Dollar sales rose last year even though total unit sales were on par with 2022. “Top growing items came from both center store and perimeter aisle,” Whitney Atkins, VP of Marketing for the International Dairy Deli Bakery Association, told Supermarket News, adding, “Standouts like bakery center store bread have seen a rise of more than $1 billion over the last three years, and that’s a trend that doesn’t appear to be slowing down.”
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