Going wholesale boosts sales and brand recognition, but it comes with new challenges. Learn from been-there-aced-that wholesale veterans.
To successfully go wholesale, bakeries have to budget for more equipment and higher labor and transportation costs.
"Distribution is the hardest piece of the puzzle," says Wendy Achatz, owner of Achatz Handmade Pie Co. in Michigan. To sustain growth of partnerships with grocery stores, Achatz bought two refrigerated trucks. Solid planning ensures bakeries can forecast expenses, budget accordingly and avoid unexpected costs.
Sonia Chang has wholesaled granola to the L.A. Arboretum’s Peacock Cafe, as well as local coffee shops and restaurants. The owner of My Sweet Cupcake bakery and Chef Sonia’s California, a cottage food operation, both in Southern California, says, "Start with the places you already patronize. You know the owners and what they sell, and they might be more likely to talk with you since you support them."
Wholesale orders fluctuate as much as retail sales. Achatz says pie sales in January may be 10 percent of her November and December totals. However, deliveries require the same amount of gas, car maintenance and driver pay. To ensure each drop-off breaks even, Achatz set a minimum order of $125.
Clustering deliveries also helps. "I can do five deliveries in one area on Monday and three in the next area on Wednesday," she says.
Closely monitor processes to pinpoint and eliminate potential slowdowns.
Achatz worked backward—from distribution to packaging to production. "Our bakers can bake 80 pies at a time, with one hand tied behind their backs," she says. "But we only have one production line for gluing together boxes. We were making a pile of pies and they weren’t going anywhere, because we could only box one pie at a time."
Some stores expect bakers to buy back unsold product. Bakeries that agree to buybacks should have input into how products are stocked and displayed, Achatz says. Those that decline may need to be flexible to secure partnerships.
When bakeries outgrow their retail locations, many mistakenly move to larger retail spaces. Rent for an industrial location can be one-fifth that of a retail space, Achatz says. Delivering from industrial spaces can be easier, too.