We all love bakery’s flour-based food products like pastries, pies, cookies, cakes, and so many other delicious items. Just thinking about bakery products makes your mouth watery. However, other industry businesses also serve bakery items like coffee shops, tea houses, cafes, and small shops. Bakery shops also offer and produce many confectionary items.
According to an estimate, there are roundabout 6000 retail bakeries and 3000 commercial bakeries in the USA. The estimated annual sale and profitability is 423 billion US dollars of bakery products, according to a statistical report by American Banker Association. However, the annual profitability is 3 billion and 31 billion dollars of retail bakeries and commercial bakeries respectively.
Top bakery food products are; Barmbrack, Soda Break, Scones, Break, Cookies, Crackers, Cupcakes, Biscuits, Croissants, Pretzels, Cakes, Biscotti, Brownies, Kalakukko, Tarts, Cornbread, Crumpets, Pandesal, Pies, Pumpkin Bread, Pastries, Pita, Buns, Sourdough, Pizza, Potato Bread, Muffins, Bread Rolls, Flatbreads, Bagels, and Doughnuts.
There are many worlds’ leading bakery brands. Some of the main are; Aryzta Switzerland, Grupo Bimbo Mexico, George Weston, Finsbury Food Group UK, Hillshire Brand, Hostess Brands, McKee USA, Monginis India, Yamazaki Baking Japan, Pepperidge Farm USA, and BreadTalk Group.
Today, we’ll study the swot analysis of the bakery shop business. It would analyze the internal environment (strengths, weaknesses) and external environment (opportunities, and threats) of the business.
Here is the swot analysis of a bakery shop business is as follows;
Table of Contents
Strengths of a Bakery
A variety of baked food items in your bakery shop plays a significant role in attracting the attention of customers. You have to make sure that your shop is offering all the basic bakery products like pumpkin bread, crackers, pita, pandesal, bread, biscuits, sourdough, soda bread, cornbread, pretzels, kalakukko, and others. The more products you add to your portfolio, the easier it would be for you to satisfy the needs of customers.
Perhaps you would have noticed various types of cream designs on birthday cakes, pastries, cookies, and others products. Such unique artistic designs add value to the bakery products and make them better presentable. Time has changed now, people don’t want just food products, and they want better-looking food items. Most importantly, it provides you a competitive edge in the market.
If you’re a bakery shop, then it’s necessary for you to have all the baking equipment and kitchen tools. Like sieve, fine-mesh, chef knife, rolling pins, paring knife, kitchen scissors, square/rectangular baking pan, whisk, pie plates, pastry brush, wire rack, metal turner, muffin pan, rubber spatula, baking sheet, wooden spoon, hand mixer, spoons, measuring cups, and many others.
Having all the tools and equipment is one thing, and skillfully making use of all of those tools and equipment is a completely different thing. Therefore, it’s significant to learn the usage of various tools efficiently.
You should develop contacts with big hotels and restaurants and offer them the service of immediate delivery of bakery items whenever they need it. Make sure that you have sufficient workforce and expertise to deliver various orders on time. It means quick access to the raw material, an efficient supply chain network, and speedy food process capabilities.
The thing that matters at the end of the day is the skilled workforce and experienced staff. They would help your business in many ways like the preparation of better quality products, less wastage, and increased customer satisfaction. That’s why it’s important that you should pay attention to the training and development of the skill/expertise of your employees.
Weaknesses of a Bakery
Far off Bakery Location
Having a bakery shop in the crowded food street or the busy market is a great competitive edge. It comes in the form of the high rental cost and not every new business is in a position to afford such a location. If you’re a new shop owner, then you would prefer a low rent and easily available shop out of the market than a high cost and difficult to buy a shop. However, the downside is that the growth rate of out-of-market shops is very low.
New in the Market
It takes a lot of time for a new business to win the trust of customers and earn the reputation of being an established brand in the market. If a bakery shop has started its operations, then you should consider investing a lot of resources in the marketing and promotion of your business. However, it may seem a costly option, but this is the only you have got to reach new customers.
Factors like high fuel prices, strict SOPs, costly transportation, and supply chain have increased the overall price of the final product. When the production cost and various other direct/indirect costs increase, then bakery shop owners have to increase the retail price in order to meet the expenses. However, customers don’t like the increase in the price of daily food items, because they buy it casually every day.
Opportunities for a Bakery
You should conduct market research and check the feasibility of various bakery products that has a potential for growth. After that, you should add all of those products to your portfolio, and advertise them by using various channels. If you have done everything correctly, then it would help you to attract new customers to your shop.
Bakery food products contain a high level of oil and sugar. Both ingredients cause high cholesterol levels, high BP (blood pressure), obesity, and cardiac attack. Gen Z and millennials have shifted their attention towards healthier products.
If you’re in the bakery shop business, then you should produce less oily and low sugar products in order to make the bakery products healthier. Such steps would allow you to target the health and diet-conscious customer market.
If your bakery shop is processing big orders and you need more working hands to finish the work quickly. You should advertise for trainees without pay, it would be a win-win situation for both parties. It allows you to get more workers at a lower cost and finish the work on time, and the trainees would get an opportunity to have work experience and learn on the job.
Threats to a Bakery
If you’re a small business owner, then you would have to face competition from the worlds’ leading chain brands. Those brands spend billions of dollars on the marketing and promotion of their products and services. They have established a large database of loyal customers, and it would be very difficult to change the minds of those customers.
YouTube and Social Media Platforms
Another worth-mentioning threat of a bakery business is YouTube and other social media platforms Instagram and Facebook. A lot of cooking experts and newbies share their recipes with their subscribers and followers and encourage views to try these recipes at home.
The pandemic of covid-19 has caused the worldwide global economic recession to leave millions of people unemployed. The buying power of the ordinary working class has declined significantly, and they have tightened their spending on everything. Resultantly, the sales of bakery shop owners have declined during and after the pandemic.
You have to follow the safety and health regulations for the production of bakery products. Since it’s a food business, the production process and quality of food matters a lot to the customers. You should set high standards for your bakery regardless of the visit of food authority members; it would show your commitment to the business you are in.