Business coach Doug Winnie shares tips for boosting profits in the bakery at All Things Baking.
"It's easy to miss something you're not looking for," said Doug Winnie, business coach for ActionCOACH, during "The 5 ways to great profits in your baking business" educational session at All Things Baking.
Winnie outlined five simple ways to boost profitability, a few of which often cause bakery owners to cringe.
- Lead generation--get customers in the door
- Conversion rate--get them to buy products
- Number of transactions--increase frequency of visits
- Average sales--boost ticket averages
- Profit margins--grow overall profits
Winnie stressed the importance of establishing a unique selling proposition (USP) to get customers in the door. "You all have something unique about you. Your personal story is very powerful--use it," he said.
To boost conversion rates, he noted that bakers shouldn't shy away from offering guarantees just because they're afraid customers will take advantage of them to the bakery's detriment. Those types of customers are very small minority, he said, noting that guarantees can actually help build sales by allaying customer fears and establishing consistency. "Create guarantees and then a system for delivery. In your industry, customers are worried about quality freshness and time. Eliminate that by promising those things or they get their money back. You'd be surprised how much this can boost business."
Offering free product is another simple way to grow a bakery's customer base at a minimal cost to the operator when compared to the longterm return. "Often when I tell bakery owners to do this, they tell me, 'I don't want to give away a $4 eclair.' And I'll say, 'How much does it actually cost you to make?' '70 cents.' That's basically nothing and the return you get is significant."
Another area that evoked a collective moan among operators was creating scripts, though Winnie stressed that they are critical to encouraging sales and don't take long to put together. "People don't like (scripts), but they're important. Your team might not remember your USP or your guarantees."
Winnie also encouraged bakery owners to revisit prices, noting that customers aren't as price sensitive as operators tend to think. "When is the last time you raised your prices?" he said. "Your customers don't buy on price; they buy on value." Other tips to boost margins include renegotiating prices with suppliers, renting out idle space, reviewing phone costs, getting rid of "C and D" clients, who don't pay on time and complain often, he added. "Give them to your competitors," he said, laughing.
"Knowledge only becomes valuable when acted upon," he said at the close of his presentation. "Act on what you learned at this conference."