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
Aug 20, 2024 - Cooling Prices
- 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 comparison, per the BLS. Still, industry producer prices continue to climb as input costs, including ingredients and labor, rise. Employment by the industry grew 3.5% year over year in June, while average industry wages climbed 4.7% over the same period to within a penny of their record high of $22.33 per hour in December, BLS data show.
- 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.
- Farmers’ markets can be a valuable asset for retail bakeries looking to grow, according to a recent Retail Bakers of America blog post. Renting space at a local farmers’ market allows local bakeries to raise their profile in the community, reach new potential customers who might not otherwise visit their brick-and-mortar location, and expand their market. Farmers’ markets attract a diverse group of consumers, including food enthusiasts and local residents eager to support small businesses. Moreover, like bakeries, farmers’ markets open early in the morning, ideal for selling bakery items like fresh bread, pastries, and coffee. Also, they offer bakers an opportunity to connect with local producers, including dairy and fruit farmers, honey producers, and others, per the RBA blog, which suggests that sponsoring a farmers’ market can be a smart move to enhance a bakery’s visibility.
- Labor and other input costs are driving how bakeries intend to invest this year, according to Baking & Snack’s 2024 Capital Spending Study. Bakers are focused on reducing reliance on labor and improving efficiencies to lower costs. “When asked what their biggest challenges were for the next 12 to 18 months, 73% of bakers said attracting and retaining a quality workforce,” said Kerwin Brown, president of Bakery Equipment Manufacturers and Allieds, which sponsored the study. The next top three concerns were labor costs, increased raw material costs, and inflationary pressures, all of which impact profitability. More than half of respondents (58%) reported that their companies would increase capital spending due to a lack of labor, followed by 52%, who said rising raw material costs would drive capital spending. Investments in facility expansions and new buildings are down compared to 2023, with most companies intending to use capital spending dollars on systems improvements (84%).
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