Although the conference, Business of Baking for Beginners, put on by RPIA the day before the All Things Baking expo began, even business owners who have been in the baking industry for years could have learned something.
The founding members of RPIA have established a Business of Baking for Beginners seminar that helps new bakers and upcoming bakery owners learn some of the important ins and outs of the bakery market. However, a lot of owners who have been in the business for years could have picked up some helpful tips. Rick Crawford, who owned Crawford's Bakery in Indianapolis; Larry Merritt, owner of Merritt's Bakery in Tulsa, Okla.; Randy McArthur, owner of McArthur's Bakery in St. Louis and Mark Atwood, owner of Atwood's Bakery in Alexandria, La., shared some of the best practices, tips and even mistakes they have most beneficial during their combined almost 200 years of experience.
According to Crawford, only about 40 different types of bakeries exist, with the easiest entry to the market being single item business, such as cupcake shops. Cupcake bakeries require low capitol to open and fairly low baking skills are needed. They also are very efficient because of the single product production. At the other end of the spectrum are artisan bread shops, which require a lot of capitol to purchase the necessary equipment and also require a lot of baking skill. Somewhere in the middle are cake shops, which require fairly low capitol to open but do require a great deal of skill to produce.
If you're looking to add a wholesale component to a retail bakery concept, remember that you can't steal from retail to feed wholesale because the profits aren't as high in wholesale. To find the sweet spot in pricing for a wholesale product, you should take the labor and materials (ingredients, packaging, etc.) and add 30 to 35% percent profit. Also, if you're just taking on wholesale to a retail business, make sure you understand what a wholesale order is. Atwood suggested giving a wholesale price to clients when they buy a pallet or more of product. Otherwise, keep that client at the retail price but give them a bonus like free delivery, but don't give them a break on price. He considers these clients "enhanced retail." The experienced bakers also strongly emphasized reviewing wholesale pricing every 60 days.
Another pitfall they warned about was making just what you want, not what your customers want. Remember that you aren't the one buying your product.