Before totally revamping the way you run your bakery, take stock of your business, says Sabrina Parsons, a small-business adviser and CEO of Palo Alto Software in Eugene, Oregon. “The more you know about your business, the more you can improve planning, control costs and successfully create a roadmap for new revenue streams,” she says. Parsons recommends reviewing monthly financial statements for the past three years to validate assumptions about slow periods. This is also a good time to work with an accountant or a financial adviser to get a handle on expenses, gross margins and other key performance indicators.
Mickey’s Pastry Shop in Goldsboro, North Carolina, has been a family-run bakery business since 1946. When in-store supermarket bakeries started eating into the bakery’s share of market in the 1980s, co-owner Jerry Ray launched the bakery’s wholesale business. Today, wholesale accounts for 60 percent of sales, with Mickey’s supplying cupcakes, tarts, pies, cakes and long johns to 100 stores in eastern North Carolina.
The steady nature of wholesale helps the bakery weather the ups and downs of seasonal sales. “We’re slow in January after the holidays and in June and July, after the graduation season, but our wholesale business is consistent throughout the year,” says co-owner Melanie Daniels.
Focus on consistently reliable quality when launching a wholesale program. The bakery’s workflow ensures whoever mixes the yeast-raised dough or cake batters controls quality, Daniels explains. That person is responsible for recording room temperature and humidity and making adjustments to water or water temperature, as well as proofing time, if needed. Specific gravity is used to measure the aeration of cake batters, and the person mixing cake batters is responsible for obtaining specific gravity within the bakery’s acceptable limits before depositing batters.
Focus on consistently reliable quality when launching a wholesale program.
While these established roles exist, that’s not to say the wholesale business isn’t a team effort. All of Mickey’s staff dedicates some portion of the workday to wholesale. Retail staff members are trained to handle wholesale orders that are called into the bakery. When retail is slow, staff members pack and price wholesale items. They’re also responsible for icing cupcakes and half cakes, and that can add up to 40 percent of wholesale work on some days.
Another key ingredient to doing wholesale right is personal relationships, Daniels says. Two drivers also fill the role of outside sales staff and take the following week’s order upon each delivery.
Recently, Mickey’s began offering party trays—a mix of best-sellers and new items—to each wholesale location. “You’ve got to feed the clerks in the stores and let them start talking to their customers about your products,” Daniels says. This marketing tactic also serves to introduce Mickey’s to new audiences—after seven decades in the community, the shop’s customers are aging, too. “At some point, we have to replace those customers with new ones,” says Daniels. “And wholesale has done that for us.”
Pro Tip: “Cost out your products carefully—down to the penny—and be sure to include things like labels and gas mileage,” Daniels says. She regularly updates costs in an inventory-tracking program as price of ingredients and packaging fluctuate.
Kelly Lynch, manager of Scafuri Bakery, an Italian bakery and cafe in Chicago, says business slows down in January and February, and then again in June and July, as students from the nearby University of Illinois’ Chicago campus leave for the summer. Last year, after several customers ordered whole quiches to serve at office lunches, Lynch decided to expand into catering to even out seasonal dips.
She first focused the catering menu on items staff already knew how to prepare. Then, she rounded it out with breakfast daypart items, such as yogurt, fruit and granola. Because she started catering as a trial run, initial marketing efforts were grass roots: calling on nearby offices and dropping off fliers and bakery samples.
Back at the bakery, Lynch created a formal process for taking and fulfilling orders to ensure a consistent experience for customers. She also hired an outside delivery service to ensure no employees—that is, her labor force—have to leave the shop.
A year in, catering remains a small but mighty part of the business. Community feedback has been positive, and Lynch says there is potential for more growth. “When the students leave for the summer, the offices and hospitals still have meetings,” she says.
Pro Tip: Before jumping into catering, forecast costs and complexity, Parsons says. If you’re not fueling an expansion with a bigger staff, be sure you have enough employees—with the right skills—to make it work.
Donating baked goods to charity may seem counterintuitive to driving profit, but during slow months, it’s a worthwhile way to market your bakery. Amber Barros, co-owner of The Good Cookies & Beyond, a gluten-free bakery in Torrance, California, says she fields at least one donation request a day, either for gift cards or for products for an event. For her, the key to profitability was limiting donations to causes that align with her bakery’s brand or those that she feels personally connected to, such as celiac disease and autism.
Barros offers local businesses a 10 percent discount year-round and hosts charities that she cannot donate to due to budget constraints. She has to carefully choose which companies she donates products to based on a few factors: whether the gifts fit within her bakery’s annual budget, if she expects a worthwhile return and if the request comes from an existing customer.
Donating baked goods to charity may seem counterintuitive to driving profit, but during slow months, it’s a worthwhile way to market your bakery.
The payoff is clear. For a local corporation’s recent fundraiser, the bakery provided $2,000 worth of bite-sized desserts. By Barros’ estimates, that turned into $10,000 in business from customers who work for the company or attended the event.
Marilyn’s Bakery in Hobart, Indiana, has also profited from doing business with a charity. The bakery is located on the grounds of Johnson’s Farm, which closes for the season at the end of October and sharply impacts the bakery’s business, says Barbara Tracy, Marilyn’s president. To cover expenses for the three-week gap between then and Thanksgiving, when orders pick up, Tracy started offering unbaked frozen pies for $9.50 each to community groups, including schools and church groups. The bakery suggests a resale price of $15, with the profit going to the organization. Marilyn’s now works with more than 35 groups, expanding the bakery’s reach well beyond farm customers. “Last year, we made 10,000 pies in three weeks,” says Tracy. “We made more pies for fundraising than for Thanksgiving. It covers our overhead, we still make a profit, and we don’t have to downsize then rehire staff for the holiday season.”
Partnerships with local businesses, artists and leaders can help you reach new customers and increase revenue streams.
That’s what Barros of the The Good Cookies & Beyond learned when, earlier this year, the bakery started piloting partnerships. It teamed up with a local winery to co-host a wine and dessert night, and with a local craft brewery for a donut and beer night. About 20 to 30 people attended each event, and Barros says she saw a 10 percent increase in sales the week following week. “We found these events bring in a different type of customer—someone who is not necessarily gluten-free but loves our products,” she says.
Scafuri Bakery uses another seasonal tactic. In the summer, to take advantage of evening foot traffic around nearby restaurants, the bakery stays open late on Friday nights to host a series of BYOB live music events, featuring local performers who play for free or a small fee. “We wanted to catch the before- or after-dinner crowd looking for place to have a drink or dessert,” says Lynch. “They can’t find us if our space is dark.” For bakeries with fair weather year-round, this is a no-brainer for January and February.
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