Retail bakers share their "magic" formulas for finding the sweet spot for their products' prices.
In this session at All Things Baking, Paul Sapienza, Sapienza Pastry, Elmont, N.Y.; Christian Merritt, Merritt’s Bakery, Tulsa, Okla.; and Dennis Stanton, Swedish Bakery, Chicago shared some of the tips they use in their bakeries to make sure their products are priced profitably.
Stanton cautions that the panel could only give general advice because all bakeries are different, but “remember you’re not a charity, you’re in business to make money.” The biggest key is to pay attention to your percentages. For example, Swedish Bakery tries to keep ingredients at 19 percent of sales, labor that he breaks down is about 40 percent-bakers, 15 percent; support staff, 4 percent; sales staff 17 percent. “If these key percentages get out of whack, you’re in trouble,” Stanton said. He looks at the numbers once a month even though he only makes price adjustments at most three times a year.
For Sapienza, his percentages differ slightly: labor is 25 percent, ingredients are 21 percent and packaging is 4 percent. “These three categories have to add up to less than 50 percent for us to be successful,” he said. Sales staff labor accounts for 9 percent, administration is 10 percent and overhead is 10 percent.
Merritt suggested looking at your 10 key ingredients every week and tracking the costs so you can determine trends to see if prices are continually going up or are there flukes that you don’t see again. He also recommends watching the price of gas in your area as well as the cost of crude. Crude will affect your packaging costs, and packaging really helps sell product. It can be hard to raise prices, he said, “but our craft is worth something and we have to believe that first before our customers will.”