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Bakery Business 2014

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Retail Bakery Business Overview & Trends, 2014

SIC Code: 5461, NAICS Code: 311812
T his Bakery Business indust ry summary is f rom First Research which also sells
a f ull version of t his report .
Companies in t his indust ry make f resh and f rozen bread as well as
cakes, pies, and doughnut s. Major companies include Flowers
Foods and McKee Foods (bot h based in t he US), along wit h
ARYZT A (Swit zerland), Grupo Bimbo (Mexico), West on Foods
(Canada), and Yamazaki Baking (Japan).
T he US bakery product s indust ry includes about 2,800 commercial
bakeries wit h combined annual revenue of about $36 billion, along
wit h about 6,000 ret ail bakeries wit h combined annual revenue of
about $3.8 billion.
COMPET IT IVE LANDSCAPE
Demand is driven by consumer pref erences and by t he ext ent t o
which grocery st ores choose t o operat e t heir own bakeries rat her
t han buy f rom commercial bakeries. Prof it abilit y f or individual
companies is det ermined by ef f iciency of operat ions. Large

companies have scale advant ages in procurement , product ion,

and dist ribut ion. Small companies can compet e by of f ering
specialt y goods or superior local dist ribut ion services.
In t he US, t he commercial side of t he indust ry is concent rat ed: t he
50 largest companies generat e 75 percent of revenue. T he ret ail
side of t he indust ry is highly f ragment ed: t he 50 largest companies
generat e about 15 percent of revenue, and t he t ypical company
operat es just one f acilit y.
T his Bakery Business market research report summary is f rom IBISWorld
which also sells a f ull version of t his report .
According t o IBISWorld, f irms wit hin t his indust ry manuf act ure f resh and
f rozen bread and baked goods, including cakes, muf f ins and croissant s
but excluding cookies and crackers. Ret ail and commercial
est ablishment s sell t hese product s t o downst ream supermarket s,
convenience st ores and f ood-service providers. Many bakeries also sell
t heir product s direct ly t o t he public.
As t he economy recovers and disposable income increases, revenue is
expect ed t o grow at an average annual rat e of 0.6% wit hin t he next f ive
years t o $39.9 billion. Consumers are expect ed t o cont inue t o t rend
t oward healt h eat ing and increase demand f or it ems like f ort if ied
breads, glut en-f ree loaves and sprout ed and organic sweet s.
Indust ry prof it abilit y will slight ly improve over t he next f ive years as t he
cost of primary ingredient s st abilizes. During t he next f ive years, bakers
will more easily ant icipat e price f luct uat ions and adjust product prices as
t he cost of ingredient s cont inues t o rise. One boon t o prof it abilit y will be
an annualized 1% decrease in wheat prices over t he next f ive years.
Merger and acquisit ion act ivit y is expect ed t o f urt her enhance earnings
and product ivit y.
Ext ernal compet it ion has increased over t he past f ive years and import s
will cont inue t o grow at an annualized rat e of 7.1%. However, growing
demand f or t his product out side of t he count ry will increase export s by
9.8% per year over t he next f ive years.

Retail Bakery Customer Demographics

T he f ollowing f act s are f rom Best Cust omers: Demographics of Consumer
Demand, which provides det ailed inf ormat ion on consumer demographics f or
many indust ries. T his resource, and ot her demographics and market ing
mat erials are available f or purchase f rom New St rat egist .
Cakes and Cupcakes: T he largest households, which are t hose wit h
children, are t he best cust omers f or cakes and cupcakes. Six in t en
married couples wit h children spend more t han t he average household
on cakes and cupcakes, wit h t hat rat e increasing t o almost t hree in f our
f or people wit h school-aged children. Hispanics spend about 17 percent

more t han average on t his product and Asians spend an even great er
amount at 25 percent more. T he average household spending on t his
product f ell by more t han one f if t h bet ween 2000 and 2006. T he cake
and cupcake sect or of t he baking indust ry t hen st abilized bet ween 2006
and 2009.
Cookies: T he largest port ion of revenue f rom cookies is derived f rom
households wit h children. A household wit h a married couple and children
will spend 54 percent more t han t he average household on t his product
wit hin t he baking indust ry. If t he children are school-aged, t he household
will spend 73 percent more t han average.
Spending on cookies f ell by over t wo t ent hs bet ween 2000 and 2006, but
has held st eady since t hen.
Prepared Dessert s: T he oldest consumers as well as married couples
wit h school-aged children or older children at home are t he best
cust omers f or t he prepared dessert s segment of t he baking indust ry.
Couples wit h school-aged children spend over a f ourt h more and t hose
wit h adult children spend more t han 54 percent more t han t he average
household on t his product . People aged 65 years or older spend 12 t o 17
percent more t han t he average household on prepared dessert s. An
increase in consumer pref erence f or t he convenience of prepared
dessert s has led t o an 18 percent increase in household spending f rom
2000 t o 2009.
Pies, T art s and T urnovers: Households wit h children are t he best
cust omers of pies, t art s and t urnovers. T hose households spend 47 t o
71 percent more t han t he average, while single parent s spend just
above t he average on t his product . People aged 35 t o 54 spend around
t wo f if t hs more t han t he average household and t ake up 47 percent of
t he market .
Sweet rolls, Cof f ee Cakes and Doughnut s: Households wit h children are
t he best cust omers f or sweet rolls, cof f ee cakes and doughnut s and
spend about 52 t o 69 percent more t han t he average household on t his
segment of t he baking indust ry. Household spending on sweet rolls,
cof f ee cakes and doughnut s f ells 23 percent bet ween 2000 and 2009,
and will cont inue t o decline as t he baby-boomer generat ion exit s t he
best cust omer lif e st age.

Retail Bakery Startup Costs

Bakery Business St art up Cost s f rom Ent repreneur Magazine:
T ot al St art up cost s: $10,000 $50,000
Franchises available? Yes
Bakery Business St art up Cost s f rom The Start Your Own Business Bible (F+W
Media and Adams Media):
T ot al St art up cost s: $2,000 $5,000
Pot ent ial Earnings: $2,000 $5,000 per mont h

Retail Bakery Business Plans

Bakery Caf e Business Plan
Dessert Bakery Business Plan
Specialt y Baker Business Plan
Delicat essen & Bakery Business Plan
Pie Bakery Business Plan

Bakery Business Articles

American Bakers Associat ion Economic Analysis
7 Business Lessons f rom Gourmet Cupcakes
Glut en-f ree Gaining Globally
Consumer Price Index f or Baked Goods Rises
T op Baking T rends f or 2014
Fresh Bakery is in Fashion
Bakery T rends of 2014
Bakery Indust ry Analysis

Bakery Business Media Outlets

Baking Business
Snack Food & Wholesale Bakery
American Cake Decorat ing Magazine
Bakers Journal
Bake Magazine
American Societ y of Baking eNewslet t er

Bakery Business Associations

T rade associat ions of t en are excellent sources of inf ormat ion on an indust ry.
Here are some relevant indust ry associat ions:
American Bakers Associat ion
Ret ail Bakers of America
Progressive Baker
Independent Bakers Associat ion
American Societ y of Baking
American Culinary Federat ion

Bakery Business Employment Trends

Here is a Bakery Business labor market summary f rom t he Bureau of Labor
St at ist ics.
Pay

T he median annual wage f or bakers was $23,140 in May 2012. T he

median wage is t he wage at which half t he workers in an
occupat ion earned more t han t hat amount and half earned less.
T he lowest 10 percent earned less t han $17,200, and t he t op 10
percent earned more t han $36,980.
Nearly 1 in 3 bakers worked part t ime in 2012.
Grocery st ores and rest aurant s, which employ more t han half of all
bakers, sell f reshly baked goods t hroughout t he day. As a result ,
bakers are of t en scheduled t o work shif t s during early mornings,
lat e evenings, weekends, and holidays.
Work Environment
Bakers held about 167,600 jobs in 2012. About 6 percent were self employed.
T he work can be st ressf ul because bakers of t en work under st rict
deadlines and crit ical, t ime-sensit ive baking requirement s.
Bakers who run t heir own businesses of t en spend long hours
managing all aspect s of t he business t o ensure bills and salaries
are paid, supplies are ordered, and t he business is prof it able.
Bakeries, especially large manuf act uring f acilit ies, are f illed wit h
pot ent ial dangers such as hot ovens, mixing machines, and dough
cut t ers. As a result , bakers have a higher rat e of injuries and
illnesses t han t he nat ional average.
Alt hough t heir work is generally saf e, bakers may endure back
st rains caused by repet it ive lif t ing or moving heavy bags of f lour
or ot her packages. Ot her common hazards include cut s, scrapes,
and burns. T o reduce t hese risks, bakers of t en wear prot ect ive
clot hing, such as aprons and gloves.
Job Outlook
Employment of bakers is project ed t o grow 6 percent f rom 2012 t o
2022, slower t han t he average f or all occupat ions.
Populat ion and income growt h are expect ed t o result in great er
demand f or specialt y baked goods, such as cupcakes, pies, and
cakes, f rom grocery st ores, bakeries, and rest aurant s.
However, employment growt h of bakers will be limit ed as
manuf act uring f acilit ies increasingly use more aut omat ed
machines and equipment t o mass-produce baked goods.

Sources

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Responses/T emplat es/Cit at ion List Nov 2011
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phot o by: t inyf roglet