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Bakery Business 2014

Learn about trends in the Bakery Business and where to find more info about how to open a Bakery. Don’t forget you can receive free or low-cost training and free professional business advice, from your local SBDC. your local Small Business Development Center!

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Retail Bakery Business Overview & Trends, 2014

SIC Code: 5461, NAICS Code: 311812

This Bakery Business industry summary is from First Research which also sells a full version of this report.

Companies in this industry make fresh and frozen bread as well as cakes, pies, and doughnuts. Major companies include Flowers Foods and McKee Foods (both based in the US), along with ARYZTA (Switzerland), Grupo Bimbo (Mexico), Weston Foods (Canada), and Yamazaki Baking (Japan).

The US bakery products industry includes about 2,800 commercial bakeries with combined annual revenue of about $36 billion, along with about 6,000 retail bakeries with combined annual revenue of about $3.8 billion.


Demand is driven by consumer preferences and by the extent to which grocery stores choose to operate their own bakeries rather than buy from commercial bakeries. Profitability for individual companies is determined by efficiency of operations. Large companies have scale advantages in procurement, production, and distribution. Small companies can compete by offering specialty goods or superior local distribution services.

In the US, the commercial side of the industry is concentrated: the 50 largest companies generate 75 percent of revenue. The retail side of the industry is highly fragmented: the 50 largest companies generate about 15 percent of revenue, and the typical company operates just one facility.

This Bakery Business market research report summary is from IBISWorld which also sells a full version of this report.

  • According to IBISWorld, firms within this industry manufacture fresh and frozen bread and baked goods, including cakes, muffins and croissants but excluding cookies and crackers. Retail and commercial establishments sell these products to downstream supermarkets, convenience stores and food-service providers. Many bakeries also sell their products directly to the public.
  • As the economy recovers and disposable income increases, revenue is expected to grow at an average annual rate of 0.6% within the next five years to $39.9 billion. Consumers are expected to continue to trend toward health eating and increase demand for items like fortified breads, gluten-free loaves and sprouted and organic sweets.
  • Industry profitability will slightly improve over the next five years as the cost of primary ingredients stabilizes. During the next five years, bakers will more easily anticipate price fluctuations and adjust product prices as the cost of ingredients continues to rise. One boon to profitability will be an annualized 1% decrease in wheat prices over the next five years. Merger and acquisition activity is expected to further enhance earnings and productivity.
  • External competition has increased over the past five years and imports will continue to grow at an annualized rate of 7.1%. However, growing demand for this product outside of the country will increase exports by 9.8% per year over the next five years.

Retail Bakery Customer Demographics

The following facts are from Best Customers: Demographics of Consumer Demand, which provides detailed information on consumer demographics for many industries. This resource, and other demographics and marketing materials are available for purchase from New Strategist.

  • Cakes and Cupcakes:  The largest households, which are those with children, are the best customers for cakes and cupcakes. Six in ten married couples with children spend more than the average household on cakes and cupcakes, with that rate increasing to almost three in four for people with school-aged children. Hispanics spend about 17 percent more than average on this product and Asians spend an even greater amount at 25 percent more. The average household spending on this product fell by more than one fifth between 2000 and 2006. The cake and cupcake sector of the baking industry then stabilized between 2006 and 2009.
  • Cookies:  The largest portion of revenue from cookies is derived from households with children. A household with a married couple and children will spend 54 percent more than the average household on this product within the baking industry. If the children are school-aged, the household will spend 73 percent more than average.
    Spending on cookies fell by over two tenths between 2000 and 2006, but has held steady since then.
  • Prepared Desserts:  The oldest consumers as well as married couples with school-aged children or older children at home are the best customers for the prepared desserts segment of the baking industry. Couples with school-aged children spend over a fourth more and those with adult children spend more than 54 percent more than the average household on this product. People aged 65 years or older spend 12 to 17 percent more than the average household on prepared desserts. An increase in consumer preference for the convenience of prepared desserts has led to an 18 percent increase in household spending from 2000 to 2009.
  • Pies, Tarts and Turnovers:  Households with children are the best customers of pies, tarts and turnovers. Those households spend 47 to 71 percent more than the average, while single parents spend just above the average on this product. People aged 35 to 54 spend around two fifths more than the average household and take up 47 percent of the market.
  • Sweetrolls, Coffee Cakes and Doughnuts:  Households with children are the best customers for sweetrolls, coffee cakes and doughnuts and spend about 52 to 69 percent more than the average household on this segment of the baking industry. Household spending on sweetrolls, coffee cakes and doughnuts fells 23 percent between 2000 and 2009, and will continue to decline as the baby-boomer generation exits the best customer life stage.

Retail Bakery Startup Costs

Bakery Business Startup Costs from Entrepreneur Magazine:

  • Total Startup costs: $10,000 – $50,000
  • Franchises available? Yes

Bakery Business Startup Costs from The Start Your Own Business Bible (F+W Media and Adams Media):

  • Total Startup costs: $2,000 – $5,000
  • Potential Earnings: $2,000 – $5,000 per month

Retail Bakery Business Plans

Bakery Business Articles

Bakery Business Media Outlets

Bakery Business Associations

Trade associations often are excellent sources of information on an industry. Here are some relevant industry associations:

Bakery Business Employment Trends

Here is a Bakery Business labor market summary from the Bureau of Labor Statistics.


The median annual wage for bakers was $23,140 in May 2012. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $17,200, and the top 10 percent earned more than $36,980.

Nearly 1 in 3 bakers worked part time in 2012.

Grocery stores and restaurants, which employ more than half of all bakers, sell freshly baked goods throughout the day. As a result, bakers are often scheduled to work shifts during early mornings, late evenings, weekends, and holidays.

Work Environment

Bakers held about 167,600 jobs in 2012. About 6 percent were self-employed.

The work can be stressful because bakers often work under strict deadlines and critical, time-sensitive baking requirements.

Bakers who run their own businesses often spend long hours managing all aspects of the business to ensure bills and salaries are paid, supplies are ordered, and the business is profitable.

Bakeries, especially large manufacturing facilities, are filled with potential dangers such as hot ovens, mixing machines, and dough cutters. As a result, bakers have a higher rate of injuries and illnesses than the national average.

Although their work is generally safe, bakers may endure back strains caused by repetitive lifting or moving heavy bags of flour or other packages. Other common hazards include cuts, scrapes, and burns. To reduce these risks, bakers often wear protective clothing, such as aprons and gloves.

Job Outlook

Employment of bakers is projected to grow 6 percent from 2012 to 2022, slower than the average for all occupations.

Population and income growth are expected to result in greater demand for specialty baked goods, such as cupcakes, pies, and cakes, from grocery stores, bakeries, and restaurants.

However, employment growth of bakers will be limited as manufacturing facilities increasingly use more automated machines and equipment to mass-produce baked goods.


For the full text of any content in this Small Business Market Research Report from SBDCNet, the link has been provided for the report publisher, while a database article can be obtained from the local public or academic library or purchased from a document delivery service for a nominal fee.

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