Business and Operations
Concepts for Success: Six Mistakes that Bakeries Make
By Diane Chiasson
How to avoid bankrupcy and keeping your product lineup in check.
By Diane Chiasson
Opening your own business is one of the biggest risks one can take in life — especially in the foodservice business. It’s a sobering fact that more bakery and foodservice operations fail than succeed. But if you do succeed, it can be very rewarding.
In this article, we will take a look at a few key areas to concentrate on to improve your chances of success!
1. Not Calculating Food Costs Properly
Take the time to cost out how much each and every single product you use and purchase for your bakery will be, how much it costs to produce every single item in your bakery and whether or not you are making a profit on each item. Once you have analyzed your food costs properly, you may need to adjust your recipe, change the packaging, or remove that product from your bakery altogether.The point of owning a business is to make money, so if the product isn’t making you a profit, it’s not worth it to sell it!
2. Sourcing Products at the Retail Level
Avoid purchasing any of your food items or supplies from supermarkets and retail stores. In order to save money, you must purchase all your supplies in bulk from wholesaler and distributors. Take the time to research your suppliers properly, and ensure that you are getting the best price on the market.
3. Not Having Any Capital Investments
It’s hard to start a bakery operation already, and even harder if you start one without any money in your pocket to invest in the proper equipment. Perhaps spending a few thousand dollars on a machine that will produce more loaves of bread doesn’t seem like it makes sense in the beginning, but when you factor in time and labour costs to do the work manually, the math will add up in the end. Having capital will also allow you to purchase in bulk, which, in the long run, will save you money.
4. Throwing Out Perfectly Good Food
Avoid throwing out anything that can be reused or recycled into another product. For example, the tops of cakes can be used to make cake sand, or pressed together to make cake pops. Extra frosting can be used for fillings. Being innovative with your leftovers will help you turn a profit instead of literally throwing your money into the garbage.
5. Poor Management Skills
What most new bakery owners don’t realize is that having great tasting products and good service are only half the battle in running a successful business. The other half is marketing and managing the business. It is crucial to collect data and analyze the buying habits of your customers. You need to know how many people are coming into your bakery and buying products each day/shift/hour, which items they are buying, how many of each item they are buying, what is the gross profit of those items, what is your labour compared to your budget, how many labor dollars you spend per sales dollar, what your sales are compared to what they should be and what is your profit and loss per week.
6. Poor Marketing Skills
The biggest mistake new bakery owners make is relying on “word-of-mouth” to market their bakery. Of course, it’s great to have word-of-mouth, but the best way to market your bakery is by collecting data from every single customer who walks through your door, and then market to them. Marketing to existing customers is a much greater opportunity than to spend time and money to try to reach new customers.
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