Artisan Bakery -- Good time to own?

[Rich In Bunly Goodness]

I am looking at the possibility of buying the artisan bakery where I work, together with a coworker. It is a relatively small operation now, but we make really good breads and pastries. The demand is there for us to sell a lot more, but the current owner didn't really want it to grow, so he kind of kept the lid on the volume.

I'm wondering what you all think--is this a good time to be in this business?

Obviously, location is very important. We're in a good city for this, but the location within it is horrible. So moving to a better place more conducive to retail sales would be our first priority. We have put a lot of thought into it and have a number of other ideas as well for growing the business.

What do you think?

[tmriga]

I would say since the demand is there, go for it.

But I also question why you would want to move, if the location already provides for higher demand than the current owner produces? Perhaps in the 10-year plan, but for now, I would concentrate on building the client base up more, then moving to another location. Perhaps just a storefront, and bake only out of the first location? There's a local bakery here that does that - they bake out of the primary location, and sell out of two other store fronts. They've been in business since forever, and selling out of the three stores for at least 50 years.

Theresa

[Pam R]

If you want to buy it to move it, what are you buying? Equipment? It might cost you more to buy and move than to just start from scratch in the new location.

[Rich In Bunly Goodness]

I don't want to say too much about it, since I don't want to give away the name of the bakery, but we are selling very little out of the front of our bakery right now. The type of people who buy artisan bread/pastries just do not live near our bakery. Yet, we are paying retail-level rent for our production facility. We sell mostly to restaurants, coffee shops, grocery stores and farmers markets.

We would be buying a lot more than just equipment. There's a lot of "blue sky" value in an existing business. People know our product. We have some very valuable wholesale clients. We'd be turning a profit on day 1.

[P1800Girl]

We'd be turning a profit on day 1.

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Rich,

There is certainly a lot to be said for that! It sounds like a great opportunity!

-sabine

[piazzola]

I am looking at the possibility of buying the artisan bakery where I work, together with a coworker.  It is a relatively small operation now, but we make really good breads and pastries.  The demand is there for us to sell a lot more, but the current owner didn't really want it to grow, so he kind of kept the lid on the volume.

I'm wondering what you all think--is this a good time to be in this business?

Obviously, location is very important.  We're in a good city for this, but the location within it is horrible.  So moving to a better place more conducive to retail sales would be our first priority.  We have put a lot of thought into it and have a number of other ideas as well for growing the business.

What do you think?

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Visit Dan Lepard forum he has a lot of info on professional artisan bakeries

Yet if I well remember he does not visit this forum anymore

Edited May 25, 2009 by piazzola (log)

[Rich In Bunly Goodness]

Let me ask another question:

Fact or Fiction: The Atkins diet fad has forever altered the food landscape in the US and artisan bread bakeries have to adapt by offering pastries, pan breads or less artisanal products.

[pringle007]

Let me ask another question:

Fact or Fiction: The Atkins diet fad has forever altered the food landscape in the US and artisan bread bakeries have to adapt by offering pastries, pan breads or less artisanal products.

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I have been on Atkins/Keto diets for the past 14 months. I have lost almost 140 lbs, so this question is right up my alley.

I dont think Atkins has changed much of the way people eat. People, especially those in the Low Carb community, still splurge. When they do, they hit bakeries. I am a member of countless Low Carb/Keto/BB forums and sooo many people hit up bakeries on their carb days. However, if you are worried about that nitch, add low carb or sugar free cookies, cakes, etc to your menu.

[zoe b]

I think if it's a good business at a good price it IS a good time to have an artisan bakery--a nice loaf of bread is a relatively affordable treat even on a tight budget.

I do wonder about moving right away, too--what about selling at a farmer's market to increase retail business--this would be cheap and easy to do--then think about moving down the road in a year or so.

Zoe

[Rich In Bunly Goodness]

I do wonder about moving right away, too--what about selling at a farmer's market

We are doing the farmers' market and we basically do the max possible given our equipment on market days, double what we do on week days.

[chezcherie]

If you are pondering the low-carb impact, you should probably consider the impact of gluten-free baked goods, now, as well. Don't know if it's possible to bake gf in the current configuration , due to cross contamination issues, but if you take on another space, it's something to consider.

[Holly Moore]

Let me ask another question:

Fact or Fiction: The Atkins diet fad has forever altered the food landscape in the US and artisan bread bakeries have to adapt by offering pastries, pan breads or less artisanal products.

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It is more than Atkins. Anyone with Type II diabetes is interested in bakery products that have a low glycemic index.

[MikeJ]

But pastries, pan breads etc. tend to be higher on the GI, right?

[Holly Moore]

Think whole grain whole wheat flour and 75% chocolate. Build from there. For fruit: cherries, apples, pears. Maybe even a dash of Splenda.

Edited to add peanuts and walnuts. The ingredients are there. And type II diabetics are one of the fastest growing food segments out there.

Bakers who can adapt their recipes and, like chefs accommodate vegetarians, and add at leat low glycemic index dessert to their dessert menu will be ahead of the curve as the high fructose corn syrup generation comes to pass.

Pastries should not just be for "splurges."

Edited May 26, 2009 by Holly Moore (log)

[Michael Gillen]

Fact or Fiction: The Atkins diet fad has forever altered the food landscape in the US and artisan bread bakeries have to adapt by offering pastries, pan breads or less artisanal products.

Fiction.

I try to eat Atkins diet however I don't know anyone else that does so I think I am a very small minority. And I would never look for low carb in a bakery. If I go into a bakery, it's to eat carbs (splurge) not seek out the low-carb alternative to a splurge.

My $0.02 worth.

Michael

PS: Best of Luck!

[pringle007]

I toyed with a low carb online bakery last winter. Between online sales and sales from a few forums I posted to, I was doing around $125/week in sales. Not bad for something I didn't put much thought into, so the market is there. One thing to watch.. Many of the sweetners, like Splenda, contain alot of carbs. I beleiev Splends has like 24 carbs/cup.

[OliverB]

if you pay retail rent but there's no retail to speak of, then I'd move the thing somewhere cheaper (industrial) and eventually think about opening a store (or delivering to delis and other such stores) plus the market, restaurants, etc.

If you move to where there's more foot traffic, your rent most likely will go up like crazy, and if you move the whole operation you'll need a space that's mostly used "industrially" but costs high retail rent.

I'd probably try to run it first for a while and get a better feel for the entire operation (unless you're already very involved in everything) and then see what makes most sense.

I would LOVE to have a bakery outlet (and a real butcher and a ....) instead of the supermarkets. They carry great things now but the whole shopping experience is not the same and a dedicated bakery store can concentrate on good quality and also offer some more unusual things a supermarket could not feasibly stock.

I'd also do some research in the area you are in right now. Why don't those people buy your bread? Artisan bread is more expensive, is it a low income area? An area with mostly people from elsewhere that are not used to your kinds of breads? Are there local options to expand by offering maybe one or the other product to that community? Maybe find out about local markets, festivals, things like that and see if you can somehow have your product there. Maybe people just don't know about you? I drive by a lot of stores every day and would have no idea what they sell, people on their way to or from work have other things on their mind. Try to get the word out, spread some samples around, you never know, people might like your products and start flocking in!

Unless you only bake very expensive things (meaning cost to you) that you have to sell for a lot more than what bread at Safeway costs - in which case you might want to look at your line of products and maybe make adjustments there - I can't quite imagine why people would not buy from you. Is there parking? Important. Maybe look into offering some additional things (spreads, cheeses, things that go with breads) too if you have the room?

And take a good look at the business plan and the accounting. More expensive breads are nice, but people that lost their job probably won't go for an $8 loaf right now.

As a bakery , you should be able to adjust to different demands relatively easy, it's not like you have to re-build your assembly line to make smaller breads :-)

good luck, I'm jealous, I'd love to own a bakery! I've played with that idea many times.....

[K8memphis]

I am looking at the possibility of buying the artisan bakery where I work, together with a coworker.  It is a relatively small operation now, but we make really good breads and pastries.  The demand is there for us to sell a lot more, but the current owner didn't really want it to grow, so he kind of kept the lid on the volume.

I'm wondering what you all think--is this a good time to be in this business?

Obviously, location is very important.  We're in a good city for this, but the location within it is horrible.  So moving to a better place more conducive to retail sales would be our first priority.  We have put a lot of thought into it and have a number of other ideas as well for growing the business.

What do you think?

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The bakery business especially bread is tough tough tough, with very narrow margin for profit, labor intensive long arduous hours.

Maybe your boss knows there's little to be gained for the extra work involved. More sales means more work too. He's in business to do business but there's the brick wall of reality too.

To me the only way to do something like this is to either have it be a second income in the family, where someone loves you and will keep the roof over your head while you kill yourself trying or if you have a lucrative for real business like a lunch counter or something to sustain your passion to bake. Baking alone seems to need steroids to stay afloat.

Say you sell a loaf of bread for $10--you have to have beaucoups of folks willing to buy daily to hit it. Look at decorated cake--from a hundred to several hundred dollars a pop--how many people even the most budget minded folks might be celebrating and have funds set aside for a special cake. You have a better chance with a higher priced item is my point.

Get your kitchen and rent it out when you're not using it is another option.

Partner with another business maybe if you can find something compatible.

We had a lovely artisan bakery here in Elvistown. Wonderful place. I always wanted to approach them about doing decorated cakes for them but never got the nerve up. I mean to piggyback and run my business parallel with theirs. I'd always wanna see someone's books first and that would be pretty awkward so never approached them. Shocked that they were gone in a few months after that.

Pay for a good market plan and draw up your business plan from those figures. Don't sidestep this important first investment.

Just my thoughts on the subject. I do wish you the best. It is a penny business--you make little for much work.

[devlin]

The bakery business especially bread is tough tough tough, with very narrow margin for profit, labor intensive long arduous hours.

Maybe your boss knows there's little to be gained for the extra work involved. More sales means more work too. He's in business to do business but there's the brick wall of reality too.

To me the only way to do something like this is to either have it be a second income in the family, where someone loves you and will keep the roof over your head while you kill yourself trying or if you have a lucrative for real business like a lunch counter or something to sustain your passion to bake. Baking alone seems to need steroids to stay afloat.

Say you sell a loaf of bread for $10--you have to have beaucoups of folks willing to buy daily to hit it. Look at decorated cake--from a hundred to several hundred dollars a pop--how many people even the most budget minded folks might be celebrating and have funds set aside for a special cake. You have a better chance with a higher priced item is my point.

Get your kitchen and rent it out when you're not using it is another option.

Partner with another business maybe if you can find something compatible.

We had a lovely artisan bakery here in Elvistown. Wonderful place. I always wanted to approach them about doing decorated cakes for them but never got the nerve up. I mean to piggyback and run my business parallel with theirs. I'd always wanna see someone's books first and that would be pretty awkward so never approached them. Shocked that they were gone in a few months after that.

Pay for a good market plan and draw up your business plan from those figures. Don't sidestep this important first investment.

Just my thoughts on the subject. I do wish you the best. It is a penny business--you make little for much work.

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Well, I didn't want to say it, but k8memphis did and she's absolutely right on. If I were you, I'd be adding wedding cakes or some bigger ticket item such as that to the business. Otherwise, I honestly don't believe bread alone is enough to provide a single income. I'd also be taking a hard look at why the business is up for sale in the first place.

Edited June 3, 2009 by devlin (log)

[Holly Moore]

For what appears to be a very successful model, research Metropolitan Bakery in Philadelphia.

[Rich In Bunly Goodness]

If you move to where there's more foot traffic, your rent most likely will go up like crazy, and if you move the whole operation you'll need a space that's mostly used "industrially" but costs high retail rent.

Actually, our rent is now about 80% of the highest rent in the county, without the benefits. So it couldn't go up like crazy.

I'd also do some research in the area you are in right now. Why don't those people buy your bread? Artisan bread is more expensive, is it a low income area?

I live in a high income area in the midwest, a university town with a lot of transplants. So comparatively speaking, this is the type of small city where an artisan bakery should be able to thrive if they do things right. I do believe that most people have just never heard of our bakery.

[Rich In Bunly Goodness]

Say you sell a loaf of bread for $10--you have to have beaucoups of folks willing to buy daily to hit it. Look at decorated cake--from a hundred to several hundred dollars a pop--how many people even the most budget minded folks might be celebrating and have funds set aside for a special cake. You have a better chance with a higher priced item is my point.

This is an option we're considering. My business partner is good at cakes. But it would be very tough to do from our current location. And we probably need to change the name of the business, as it is very clearly a bread-specific name. But changing the name is something that I'm convinced will be best for us in the long run in any case, given our desire to do lunch, catering, etc.

Pay for a good market plan and draw up your business plan from those figures. Don't sidestep this important first investment.

I have an MBA in Entrepreneurship, so doing this myself is right up my alley. The only thing is the long hours are very draining and it is slow going doing this 2-3 hours per day, but we are working on this, as part of our complete business plan.

[Chocolot]

Just a question here--If you are wanting to relocate and change the name, and most people don't know about the business, what is it you are buying?

[Rich In Bunly Goodness]

Just a question here--If you are wanting to relocate and change the name, and most people don't know about the business, what is it you are buying?

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Very legitimate question. Here's what we would be buying:

1. Non-trivial sales volume.

2. equipment.

3. The rights to a spot at the farmer's market. (Have to apply in fall for a spot the following year.) This is the most lucrative part of the business in terms of profit margin.

4. Very good reputation with the people who do know us, few though they be.

If my partner and I were to leave and start up on our own, it would take approximately the same amount of initial capital, and we'd be looking at several months or perhaps a year before we'd be breaking even, esp. without the market until next year. In my opinion, the risk is much higher starting from scratch compared with buying this company.

Plus, it would be a crippling blow to the owner of the company if the two of us would leave and start up a new company. He'd take that as a personal kick in the crotch and would probably do anything possible to discredit us. We have a good relationship with him and wish to carry that forward so that we can use him as a consultant and someone who'll put in a good word for us with our key restaurant customers.

[K8memphis]

Say you sell a loaf of bread for $10--you have to have beaucoups of folks willing to buy daily to hit it. Look at decorated cake--from a hundred to several hundred dollars a pop--how many people even the most budget minded folks might be celebrating and have funds set aside for a special cake. You have a better chance with a higher priced item is my point.

This is an option we're considering. My business partner is good at cakes. But it would be very tough to do from our current location. And we probably need to change the name of the business, as it is very clearly a bread-specific name. But changing the name is something that I'm convinced will be best for us in the long run in any case, given our desire to do lunch, catering, etc.

Pay for a good market plan and draw up your business plan from those figures. Don't sidestep this important first investment.

I have an MBA in Entrepreneurship, so doing this myself is right up my alley. The only thing is the long hours are very draining and it is slow going doing this 2-3 hours per day, but we are working on this, as part of our complete business plan.

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Unless you are going to employ dozens of folks and have a big mighty operation, honestly, you've already lost your focus. Doing artisan bread, decorated cake, doing lunch and catering. Huge huge huge undertaking.

I mean you got retail sales, catering, and lunch counter sales.

I mean to me when someone says the breathtaking words artisan breads--it's a labor of love. Carefully controlled batches of goodness--lots of time time time. Aritsan bread to me means doing it yourself or painstakingly training someone and keeping a close watch. I mean so you go for a pastry chef and you gotta ramp up the pay scale and pump out the product--the product you make pennies on.

We just had an Atlanta Bread company go out of business--nice bakery breads and ok pastries, they did breakfast and lunch, served ok coffee and poof out like a light. They were there for 5 years-ish, they had the location location location down too. They were a few blocks from the only artisan bread company I ever heard of around here that went out of business maybe five years ago. But Panera just came in down the street from that--never been there though.

Factor in tons of people like me who don't even eat carbs like that anymore or have cut back considerably. If you're gonna get me to buy you're gonna have to market it to me somehow. Convince me your stuff isn't going to collect on my thighs. Got a sledge hammer?

Sure there's a market but is it enough? I don't know, many have tried many have died--and the cemetary is over flowing with freshy turned dirt. I'm not really trying to discourage you. But you need a lot more than a degree and a loving hands at home marketing analysis.

Mom & Pop neighborhood small potatoes bakeries have been a dying breed for several decades.

Honestly, the phrase

several months or perhaps a year to break even

is small buysiness 101, a complete given and you would be a summa cum laude in this brittle brutal economy if you could do that. Dude, if you could stay in business for several months to a year that's a cum laude in itself.

But you work with restaurants too so you're also wholesaling? This must be a very large undertaking?

Those long hours double on the light sunny days of ownership. On the rough tough days of ownership...