Automation is the key to success for bread bakery business plan. Runumber recommends: amount of investments – $65k, payback period – 3 years, profitability – 25%.
Overview of Bread Bakery Business
A boom in the growth of bakeries began in the first half of the last century simultaneously in all European countries and the United States. Presently, private small bakeries dominate state-owned enterprises there. In the United States, the share of private bakeries exceeds 60%. French bakers practically eliminated the state bread baking companies and account for 80% of the country’s bakery products. In Germany this indicator is slightly less than 80%. In Russia, private bakeries emerged at the early 1990s, with the advent of private cooperatives. However, high production costs, unprepared target audience and lack of stable quality resulted in a bankruptcy of 90-95% of the small firms that could not stand the competition with large bakeries.
Peculiarities of Bakery Business
Before starting elaborating business plan on bread baking, you need to select a market segment and evaluate the prospects as well as the geography of sales. Each kiosk in any district of a small city sells about 50 loaves of bread every day.
The bakery market is clearly differentiated:
70% of the market belong to traditional products like rye bread, breadcrumbs and bagels;
15% belong to non-traditional products, i.e. national types of bread (pita bread, khachapuri), puff pastry, pies and rolls;
10% belong to diet products;
5% belong to elite bakery products.
You must bake at least 1000 loaves of bread per day to withstand competition with large bakeries. This volume allows to cover up to ten districts of the city or even distribute throughout the region. The final price of bread should be lower than the market one to satisfy the economic interests of retailers. The wholesale price also includes shipping costs.
Another alternative is to start business in a large city or open a bakery in a supermarket.
Equipment for Bakery
Before starting elaborating the bread bakery business plan, you need to realize that a mini-enterprise with a productivity of 600-1000 kg per day can generate a good profit.
To produce such volume of bakery products, a full automation of technological processes is required, which is provided by the following basic set of equipment:
- dough mixers;
- dough divider;
- tape chambers;
- dough filling machine;
- carts for dough pieces;
- ovens for baking bread.
A complete set of equipment costs from $2,000 (the cheapest Chinese semi-automatic set). Automated lines cost up to $45,000.
Peculiarities of Advertising Bakery
Viral marketing campaigns are a widespread instrument of promotion for bread baking business plan. But their effectiveness directly depends on prices and the quality of products. In order to get a point of sale, it is necessary to establish personal contacts with its owner. Sometimes, it’s necessary to crowd out a competitor with the bonus payments to the sellers or decrease wholesale prices.
The most effective business option is to rent a room in the supermarket and sell products there. Depending on the size of the city, the rental price can range from $300 to $5,000 per month.