Micro Bakeries
Anyone out there running a "Micro Bakery" from their home or using someone else's catering kitchen or using a small dedicated bakery area?
I'm interested to understand a few things including:
1. How often do you bake per week, and roughly how many loaves?
2. Who are your primary customers?
3. What roughly were your initial setup costs?
4. What is your realistic profit margin %?
I love bread baking, feel confident in making a variety of good breads and want to consider taking this a step further as a method of partial income now that I am retired from the 9-5 office career.
Micro Bakeries I have emailed seem to have little or no profit margins. Some are doing it for "fun", others expending a lot of hours for very little return. Is there a viable business to be had in Artisan Micro Baking or is this only viable for a full production bakery shifting large volumes of product?
Any views welcomed.
Many thanks
EP
EP, I'm the guy you are talking about. I've been supporting my family for the past 5 years out of a 240 square foot shop in my back yard. That's about as 'micro' as a bakery can get. If you are serious, I'll talk with you.
It isn't easy, but if you love to bake, it is fun.
Hello, thanks for sharing. I am going to see about the local regulations but how simple can you keep it: electric, water, oven, table, storage, wash sink, hand sink and garbage area?
the key thing (where I am) is the ability to clean and disinfect/sterilise. Other things to check include ventilation and a sound ceiling - so nothing can fall down and contaminate food.
-Gordon
Hi there, I came across your post and decided to reach out. Do you still turn a bakery in your backyard? I'm going to be doing the same thing more or less and I have a lot of questions. Do you have the time to chat? Or a better question, are you still around?
I do not want to discourage anyone who has a passion, but from a business point of view, the profit margins in a micro bakery only making bread just are not there. Unlike a micro brewery or micro winery where customers are willing to pay twice or more of average store prices for "micro" quality, bread does not have that type of following. A micro brewery is typically 30,000 gallons per year, how many loaves would be needed to equal that volume? I just don't think a stand alone, bread only micro bakery is anything other than a "cottage industry" that will support ones hobby but never support a family over the long haul. Unfortunately, volume or diversity (pastry, cakes, desserts) are required to make a go of it. A good business model is The Bread Alone Company. Take a look at their web site to get an idea of what they need to do and they have a large metro area they support (NYC) as well as a strong local and internet following. Sorry for the downer, but don't want to see you loose your shirt either.
You could possibly do this as a retirement option to boost your income. nonetheless it is more likely to be successful,if you add other items to your product line.
given the profit margins, you want to offer items for full premium value.
You want to keep your costs as low as you can. first I have solar panels for power. I use my home oven with two pizza decks and a steaming pan, a cookie sheet as my loader, gloves, lame, 1 couche, big spray bottle and a four shelf baking stand. I purchased a commercial level counter top mixer (KA) and a few cambros.
my market at the moment is a luxury or foodie market, but that is because I charge premium value.
best of luck
all the feedback here. Just to clarify I WAS very much including the baking of sweet products like muffins, cakes, etc as well as bread in the venture, I know full well that bread alone can't support the business except in very exceptional circumstances.
So, for those of you that make both breads and sweets, what are your volumes, profits etc as per my OP?
bpezzell feel free to PM me
Is there a viable business to be had in Artisan Micro Baking? I keep asking myself this as well.
i've been baking 10 loaves twice a week for the past few months now, 7 loaves are preordered, the rest feed the family. A few others have recently inquired about buying my bread, i'm not sure though if i want to add a second or third batch to my bake days.
Over the past couple of years, I've put together a pretty decent hobby bakery setup. By keeping a keen eye on the used equipment scene, i've picked up some very good deals. The oven i'm using now has a 70cmx70cm stone baking surface, holds 12 round 700g breads. A second smaller oven with 50x50cm stone hearth holds 6. A mid 60's diosina one armed bandit is serving me well in the mixer dept. These three items all operate on 3phase power. A few months back i had the good fortune to add a super flour mill to this combo. These four items are all in good working order and set me back, in total, less than the equiv. of 1500US dollars. details of this set up are here
My customers are neighbours, friends and friends of friends, i deliver the bread by bicycle early in the afternoon. It's a good social connection that helps to make up for the low profit involved. Everyone wears a big smile when fresh bread comes knocking.
I will probably end up boosting my production to 30 loaves per bake day, by getting my timing down so that the batches are ready to go one after the other, i could possibly make things efficient enough for it to be worthwhile as a side job.
Remaining an insider bread connection or going official is also the big question, every area/country has it's quirks about hygiene certification etc. in any case, it's importent to keep things clean and tidy and to keep that image up front.
The rewards are many, it could be a splendid retirerment project, but more than likely wouldn't involve a substantial income for your efforts. It's wonderful to pull a good batch off and cut off a slice, but even more rewarding to know that the same loaves have taken their place on the cutting boards of others.
cheers
daniel
Very interesting seeing your "setup". The loaves shown on your blog look fantastic. Really consistent shaping and crumbs. It saddens me so much that such great creations from artisan bakers can not command a higher price for what they are and thus sustain a viable business. Something is very very wrong with the world and supermarkets have so much to answer for ! There must be an answer to this. Many thanks.
Daniel your diet is very nice and I envy you your oven! Breads are fantastic!
Hi EP,
I bake "full-time" from my home kitchen for a couple local restaurants, supply desserts. I bake bread for individual customers. I cannot produce the amount of bread the restaurants need on a regular basis.
When I was baking only for farm markets and individual orders, it was not really that profitable. But it allowed me to meet great people and start baking for the restaurants. This a bit more secure income but it still would not support my family. It is supplemental.
As far as volume, I bake anywhere from 2 - 4 cakes per day (or every other day depending on the season), and its at least six days a week. The bread baking varies. At one point we offered a Bread CSA, and it went well but it was a lot of work for one person baking. This coming summer I am going to try baking bread more regularly and selling it through yourfarmstand.com. I can control volume and keep it manageable.
I hope you found some of this helpful. good luck!
Marci
Thanks for your input. Interesting to hear how your work progressed. So can I conclude that once you started supplying restaurants you were able to make some kind of profit? Are we talking 10% or less? Sorry if that's too personal.
Hi,
Yes, once I started supplying restaurants the baking was/is more profitable. Couple things - there is not as much waste because I know what desserts are needed at the restaurants. With the markets, it was a guessing game and some days I just had too much left over (Breads, pies, desserts etc...) Also, one mistake I made was from the beginning I did not price as high as I should have. For the markets I priced with more consideration for what I thought people would pay, than for what I should have actually received to make a good profit.
Supplying the restaurants has allowed me to slowly get my prices more in line and comparable to what other bakers are doing (there are several great local bakeries, and other home bakeries in my area). But I still have a couple loss leaders in the mix. Its hard to give an overall percentage for profit margin. At the end of the year, Its not very much, but its sustainable.
Marci
Hi,
On the Bread Bakers Guild Events page there is a flyer for a workshop titled "Starting a Micro-Bakery"
http://www.bbga.org/files//FlyerMicroBakery.pdf
Even though I can't attend, its encourging that such a workshop exists. It indicates there may be a viable business model for such a bakery, although I'm not quitting my day job yet!
Thanks Bob
Taking a look at this now . . .
Ah ! It's in MInneapolis lol, a bit far from the UK. Must be something similar here.
Hi, ElPandero
Andy (ananda) is a TFL member who lives in northumberland - UK. He bakes for farmer's markets and is a professional consultant for bread baking. Why don't you send him a private message , and he may help you out.
Many thanks
will make on Social Security when I turn 65 in 3 years, If I made 20% profit on a $5 loaf of bread, I would only have to sell 12 loaves an hour, 8 hours a day, 5 days a week to equal my SS gross income. That is only 96 loaves a day,480 loaves a week and 25,000 loaves a year. I can't make it on my SS alone, even in retirement with no debt but maybe making twice as much would help?
Happy Micro baking
20% is ambitious! Nevertheless 480 loaves per week is not in the realms of "micro baking" imo. That's the domain of a full production artisan bakery.
Last August I began selling at one farmers market. When you sell at the farmers markets one important issue is to get your prices right the first time - easy to drop, difficult to raise.
The artisan breads are premium and often luxury items, especially because of the long duration and hand-made aspects. I don't have a bread that I sell for under $6.00 (sourdough) and most are $7.00. My profit margins depend solely on reducing my costs and labor. So my average margin is upwards of 46%. On the whole, however, working alone I can only produce 40-50 loaves in my home oven ( I did do up to 100 but that was when I baked for 12 hours straight, not including clean up time) so this limited volume reduces my overall profit.
Retirement is supposed to be fun! Ha!
the 46% is net margin after taxes, interest and depreciation but nos salary for you. Averaging $6.50 sales price a loaf gives you a profit for 50 loaves a week would be $149.50 a week or $7,475 a year. A real bump in retirement earnings. The average SS payment is 1250 a month and this side job is worth $647 a month increasing the average SS take home by almost 52% Assuming that you only spend 20 hours a week doing this then your take home pay before taxes is $7.48 about the same as minimum wage and way much more fun since you don't have to answer to anyone!
The bad part, like all business owners without employees is that this is a 52 week a year job and there is no vacation allowed:-)
$7 USD equates to £4 in uk money. Unless you lived in a very affluent area I don't think people would be prepared to spend this much for a loaf of bread given the cheaper options at the supermarket. Don't get me wrong, the 2 products are a world apart but the British psyche is unfortunately fairly well established and changing it takes a long time. Take for instance it's Post Office. Brits for years have had the luxury of a state funded postal service and thus have been able to stick a little stamp costing 30p on a letter and have someone cart that letter from one end of the country to another. It's simply expected that they can do this. However if you thought it through rationally, you can see that it's a nonsense. Would YOU take a letter for me and deliver it 500 miles away for 30p? Nope. With the Post Office privatised all this will change, but it will take ages for the British population to adjust to that reality. If they had to pay £2-£3 to send that letter they simply wouldn't bother.
If you can get $7 per loaf where you are then more power to your elbow. I suspect however that for many artisans, even those with full production bakeries can't get away with £4 per loaf. Mostly it's £2-£3 that I see. Maybe I need to revisit that and check around? It seems to me that volume is a primary concern for any wouldbe baker as it's the bulk scaling up of process that brings efficiency. It's not economical for example to heat the oven up to make 5 loaves is it? Make 50 and it's better, make 500 and it's much better. Same goes for raw ingredients. Large bulk buying of flour, salt, seeds etc saves money but I presume you need to be working through them swiftly to keep things as fresh as possible. My local bakery buys 25kg sacks of flour by the palette and presumably gets a decent discount for that volume. I couldn't buy the same quantity if just making 50 loaves per week. Home or micro baking seems to be a difficult business as far as I can determine because the primary factor of volume is restricted.
ElPanadero -
Purchasing in bulk is critical to profit margins....I live in Hawaii thus, everything must be shipped in by boat or air. As very little is inexpensive in Hawaii I think the more affluent people are willing to spend for a good product.
You are right about the affluent neighborhood. I sell in just such an area and do ok and I've tried to sell in an area that is less affluent and less well traveled and prefer white bread and pastries, and haven't done well. However, I'm not trying to sell to everyone - I want to sell to those people who appreciate good bread. To those who are curious about my breads, I tell the story of the bread - how its made, how long it takes to make the bread, why I chose to make these breads, I tell them that they are vegan breads, that there are only three basic ingredients, etc. etc. By the time the story is completed and after they've tasted the breads, they have become regular customers. And that is what I want - the repeat customers.
In growing any business - but especially the artisan bread business - you must be willing to take losses until your customer base is large enough to produce volume. In this business many if not most people are completely unaware of what bread could taste like. They have grown accustomed to what I call "air bread." So I educate each of my customers. Some of them are unsure and hesitate so they take the most familiar bread - a baguette or a sourdough (I used to call it country bread, but that was too unusual for many). Once they've done that they come back for more.
Micro baking is a difficult business if you can't get efficiencies. But I believe there is a niche for micro baking and what that niche is is different for each and every baker. The baker must develop his/her own market and business model. There are a few 'tried & true' ways that you can go but ultimately the baker makes those decisions based on his or her customer base, capacity and resource. For many I believe the micro-baking business is simply a step up to the next business level.
Tomorrow I'll be testing a new market and I'm hoping they will love my bread!
Hi Allan
I have been fortunate because I have been able to use a MIWE steam injection 2 deck oven. Using this oven reduces my time and ultimately reduces my cost. But - and this is a big but - right now I'm not being charged to use this oven and if I were to return to baking in my home oven my power bill is nil because we have solar panels and produce more electricity that we use.
So, that being said, a micro artisan bread baker will likely need other lines to improve the over all profit margin. I am limited by the farmers markets 'rules' on competition, but I have developed chutneys, preserves, etc. as well as a line of granola to fill in the profit. I would love to do some other items just because I think they are fun and may sell well. In comparing my sales at one market (60-80 pieces a week) to three local markets I can tell you that I am competitive. Only the big box discounter is way ahead in sales numbers.
But ultimately, right now I look at the farmers markets as research & development labs. I'm trying to decide whether to pursue this beyond the micro bakery stage, or whether I want to sell only a few items on a larger scale.
While I don't have a vigorous internet presence I am beginning to improve it - see my facebook page at Moya's Bake Shop and my website at www.artisanalbreadsandbliss.BlogSpot.com
What I think you need to think about is to whom will you sell your breads? You can do it organically and sell to neighbors and friends, or you can jump into a farmers market to determine whether your breads are desired.
Believe me, although I love every minute of making bread, this is physically demanding work. I will have to hire help soon to tote those four 50-lb bags of flour I buy every 1.5 weeks! And there goes my profit!
I know this is an old thread but I thought I'd just add some notes. I started last July with a small market baking only organic sourdough baked goods, and breads. The most I baked at one time was about 20 loaves plus a few pastries. It's winter season, that market closed and I was encouraged to signup with a much larger market. I've been there a couple months and the most I've brought is 40 loaves of bread and 40 scones (because it's just slow right now). I do everything by myself out of my home using a basic kitchen oven using only sourdough starter. Scheduling is everything, refrigerated bulk fermentation and retarding is a huge part of it. It is a lot of hard work but you have to love it. I get a lot of satisfaction knowing I'm providing a very healthy product to the people that buy it. I start some of my doughs on Sunday and do batches each night through Thursday, bake all day Friday and sell all day Saturday. I do work another job from home that brings in extra $$ and allows me to juggle my time. I buy flour and supplies in bulk. When I do larger batches I can breeze through a 50# bag of flour in a week. I also use a couple of the Oster Extra Large toaster ovens. I use baking stones in my regular oven on two shelves so depending on what I bake I can do up to 7 free style boule loaves in my oven at one time, 6 sandwich loaves in Lodge cast iron loaf pans. Hope some of this info can help someone considering doing this. Texas has a cottage industry which allows me to do this, but you are restricted to equipment in your home kitchen. So, I can dream about a deck oven, but that's about all I can do :)
Must have missed this thread when I first joined here, but I have chatted with ElPanadero on the subject..
I'm in the UK and do the micro/home bakery thing. I think our systems here are much more flexible in that regard - all we need to do is notify the local heath authority and have an inspection - and hopefully they say yes! (they did for me), then it's inspections every 3 years. I also hold a food hygiene certificate - gained after a one-day course and again that's a 3-yearly thing.
Then its just a matter of finding an outlet - I have 2 local shops and am looking at a local farmers market and veg. box delivery scheme. My current limit is some 24 loaves a day although that's Saturdays only right now - most days it's 6-10 loaves depending on who wants what.
Almost all sourdough, but I have had some good recent success with overnight yeasted breads too. 9pm knead, 7am scale/shape/prove and into the shop by 9:30 usually. The sourdoughs could prove a little longer though, but it's currently a balance between getting them to the shop and getting up at a what I consider a reasonable time....
Hmmm .. Scones at the farmers market ...
Cheers,
-Gordon
I bake my boules in an Oster toaster oven and love it. I found a 2-quart Lodge dutch oven which fits right in. Mine has bake, broil and warm modes. You can have the top or bottom elements only, or both. It uses about half the energy.
The Oster will hold two 2 quart Lodge and after the lid comes off the boules brown beautifully...better than my regular oven. The back does brown faster so I have to rotate whatever I bake in it. The two Lodge loaves that fit I have to cover loosely with foil and remove the foil about three-fourths through the bake cycle to prevent them getting too dark. Glad you brought that up.
I have a work shop space at the back of my property and I'm hoping to convert it to a micro bakery to bake for my immediate local community. The idea is that the bakery will be community focused rather than profit focused. However I would still like to bake about 100 loaves over a two day period (actual oven time). Does anyone have any advice on what kind of oven I should look for? The space used to be a pottery studio so it already has a high voltage outlet for a kiln. I'm hoping to find a used oven that could take the place of the kiln.
Plus does anyone know of a good flour supplier in central Texas?
Many thanks
However that's easy for me to say as I have one!
High voltage - US terms, I presume that's 240V give or take - the standard single phase voltage in the UK where I am. Or do you have three phase? Three phase will lend itself more readily to a deck oven though.
The Rofco is a 3.1Kw oven. (13 amps @ 240V) It will bake 12 large loaves at once in a 45-minute period, so to get your 100 loaves, then its 9 loads or 7 hours of constant use. (I know a chap in the UK who has 2 Rofcos and bakes 1000 loaves a week in them - eek!)
But basically it's power and space. If you have three phase and the space, then go to a deck oven of some kind - unable to recommend a make as it's outside my zone, otherwise I think the Rofco is the only one that's close to a deck oven in the single phase range.
There are other commercial ovens though - mostly fan (convection) types. Some are 4.5Kw (~19 amps) I also have a Lincat EC08 which is also 3.1Kw - I retro fitted that with steel plates which improved the bake by quite a bit.
-Gordon @moorbakes in Devon
Many thanks for the advice