How To Improve Your Bakeries Profit!

Published on
17 December 2020
Gareth Busby
Gareth Busby

If you have a bakery business or micro-bakery you’ll need to make sure you are making some sort of profit. To start with you’ll need to be selling your products at the right price, but how can you ensure that your bakery is profitable? How can you control your expenses? And, what about the costs that aren’t factored into your costing? How do they affect your profit and what can be done to improve the profit of a bakery business? Let’s take a look.

How to improve a bakery business by increasing sales

The best way for your bakery business to make more money is to simply sell more stuff! There are many ways to do this, you can sell to businesses, introduce a new bakery marketing plan, bring out new lines and plenty more! See how to increase sales in a bakery to delve into these strategies (and others) in more detail.

If you already have your day packed then simply adding more workload isn’t going to help you. If you want to make your busy bakery profitable there are other things you should do first. The rest of the ideas in this article won’t necessarily turn your business into a cash cow overnight. The big changes in profitability will come when you pursue two or three.

1. Charge the right amount for your bread

Many new bakeries or micro-bakery businesses get started without doing proper costing of their products. Knowing how much your products cost to make means you can charge the right price for them. This is one of the most important ways to prevent your bakery from running at a loss. The topic of costing is pretty big, so head over to the how to price bread page for a full explanation.

2. Maximise production efficiency

When you calculated your selling price it was based on the oven being full for each batch. But if you are continually making 1/2 loads this could be losing you money. Baking small batches reduces your profitability. It will also take your time away from doing something else that could be making you money. You still have the weighing, kneading, shaping and proofing to do in a small batch, and that’s excluding the attention you’ll need to give it!

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If a client only orders a couple of units of one bread and nobody else orders, running an unprofitable bakery is where you’ll be heading! You should look to address this issue right away. Options to consider include:

  • Set a minimum order quantity
  • Ask your customer if they can select something else
  • Continue to make them, but not every day
  • Try and increase sales of that particular product

3. Don’t waste dough

If you take orders before you bake then you should be controlling your waste by using production targets. Make the amount of dough needed by using a baker’s formula to produce a unique recipe each day. This will be based on the number of loaves ordered. Doing this will reduce waste, and wasted time.

If you sell your products in a shop or stall without taking orders your sales will be more unpredictable. One day you can underproduce and miss out on sales or potentially upset customers. On others, a lack of footfall can lead you to have to throw your products away at the end of the day – there’s only so much bread pudding you can make!

Carefully record sales and monitor opportunities to see how you can maximise your sales whilst limiting waste. Keeping abreast of local activities, the weather and seasonal events such as school holidays will help you to do this.

4. Build up production on long-life products on quiet days

There will be nights when the orders are low and your baking team have some time on their hands. This is not particularly helpful and can eat into your margins. You could try to generate more customers on your quiet days. But instead of focussing on that, you could be using your time to make longer-life products or using the fridge or freezer to store par-baked products for busier days.

Once you’ve got an efficient production routine like this you’ll find growing sales is much less painful! A great benefit of this method is that you won’t need to find bakers to just work a couple of days a week. If you’ve tried to hire a Thursday – Friday baker before you’ll likely agree that it’s an almost impossible task!

5. Introduce new lines

Make longer-life products on the quiet days of the week. This will improve your bottom line massively! Things like cakes, pizza bases and home baking kits can work! If your existing customers are not going to buy, try and find some more.

6. Invest in your team

Not every member of your team is going to be effective all the time. New starters will need training, others might want to steal an extra break. It is always worth investing your time into training and engaging your team. This will make them better in their role and more motivated to work harder for you.

7. Cut out mistakes

You’re going to forget the yeast, burn the buns or run out of the cheap flour and have to use the expensive stuff. It’s going to happen, but if it is happening too often look at what you can do to reduce the possibility of making these mistakes. A few suggestions:

  • Invest in several countdown timers so no proofing dough or baking bread is forgotten
  • Complete stock takes and order ingredients regularly
  • Have clearer instructions for your team

8. Remove exterior problems – or cost them in

Equipment may break, power cuts can happen or your worker calls in sick. These cause issues that decrease productivity and sales, or increase costs. Create a plan for how you can lower them. Ideas include:

  • Replace equipment
  • Relocate to a more suitable environment
  • Manage sickness with a fair disciplinary process
  • Improve your bakery’s working conditions
  • Recruit part-time staff to work extra when required
Tip: It is necessary to have a buffer built into your budget and product price. In my costing formula, I add a 70% margin to every price. This is by multiplying the cost price by a 1.7 profit index. Doing this covers further costs and allows me to make a profit provided these not-factored costs don’t rise too high.

9. Lower your bills

Power is one of the biggest costs in running a bakery. If you can reduce the amount of time your ovens are heating you can save some money. Shortening working hours by insisting your staff work together instead of throughout the day is a great way to do this. Reducing the amount of time your ovens are in use by just an hour or two a day will make massive savings in your running costs.

Can you speak to your supplier about lowering your ingredient costs? Order in bulk? Find a competitor with a similar product or service? Or improve your utility provider? You’ve probably considered this. But a full bakery profitability guide isn’t one without covering everything!

10. Freeze your products

Some of your products may be able to be frozen and baked a few days later without a loss of quality. Croissants can be frozen before baking. Baked cake sponges freeze well too! Many items can be par-baked in batches once a week, frozen and finished when required.

11. Invest in equipment

As you scale your business, you’ll realise that you are running out of time to do everything! From dividing dough to washing up, a bit of mechanical help can save you time, money and increase your sales. For example, if you are currently kneading with a small dough mixer like a Hobart, you may wish to upgrade to a larger spiral mixer to produce bigger batches.

Bigger refrigerators can be a lifesaver! If you are finding you’re up to your eyes in work during certain periods, you can make and store the dough in the fridge when it’s quiet. An hour or two before you are ready for them they can be removed and proofed before baking fresh. Many bread types such as sourdough, baguettes and even bagels love slow fermentation too.

Use this method to produce a larger range for opening by making the dough the day before. Alternatively ramp up production from Wednesday, allowing more time to produce more at the weekend.

12. Reduce your mixes

Are you making five wholemeal mixes when you could just make two? Can you combine recipes to save you time? Would anybody mind? It’s not the most artisan approach but it is one that is taken in many small-batch bakeries. It works the opposite way to produce more lines too. If you are making two similar products why not consider making five? Roll them in seeds and grains, or you could divide the dough at the end of mixing and add herbs or cheese.

13. Use less expensive ingredients

Would your customers notice if you reduced the amount of butter in your brioche by 10%, or replace extra virgin olive oil with regular olive oil? If you can’t taste the difference then it is unlikely that they will! Try and reduce the volume of expensive ingredients in your recipes or find cheaper alternatives.

14. Reduce distribution costs

If you are delivering your bread to your customers there are a few smart ideas that I’ve used or seen others do. They will reduce costs when selling your goods.

Make them come to you

Insist your small-ordering customers come to you to collect their items. It’s not always ideal for commercial clients, but if you have a good location it could work. You could also organise a local drop-off point for your customers. Could a shop or one of your customers hold the bread for you for a small charge or discount – hint – pay them in bread!

Ditch selected customers

It could be that your smaller customers or ones far away are not worth being your customers. It’s a tough decision to take but being able to concentrate on the customers you make you money can be a sensible choice.

Team up with another supplier

Can you team up with another supplier in your area to deliver or share the deliveries of your goods? How about the greengrocer or butcher? You might even find joy setting yourself up on Just Eat, they might offer a discount for morning or afternoon deliveries?

Spreading the cost of market stalls

Instead of having your own stall could you team up with another seller to share the load. It can be a great way to lower your costs, free up some time and share customers.

15. Spend less on marketing

If you are spending a lot on advertising your business, could you spend less and use cheaper options, such as social media? Once a bakery is established it can usually generate enough revenue through word-of-mouth and reviews. Don’t cut short a successful campaign, but it is worth reviewing the return you are receiving from your marketing activities.

16. Make more revenue from your bakery kitchen

Here are a few ideas that can allow you to make more income from your bakery kitchen:

Hold baking classes

Many bakeries close production over the weekend making this an ideal time to run your own baking club. Invite people to a one-off event or start your own membership club to fill your bakery’s downtime. You can even pay someone else to do it for you.

Hire out your kitchen

If you are just starting out you might find that you have some downtime in the afternoons. It might be an idea to offer it up for hire. Caterers, cake makers, culinary teachers or even a takeaway might have a use for your premises. As long as you have strict rules on cleaning up this could be advantageous.

Bakery profitability summary

There are a lot of suggestions here, and there are thousands more available that could help you to improve the profit of a bakery. Some are a little “out there” but you never know! If you implement them it may surprise you how well they are appreciated by your customers whilst also improving revenue. It’s possible that your customers prefer your new ways of working!

So let me know if you found this guide helpful. I’m also interested if you have any ideas that I’ve missed? Let me know in the comments below!

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