Opening and Operating a Retail Bakery By Rick Douglas Crawford

Chapter 1 Early Steps and Key Decisions

"Be brilliant on the Basics" Concept to Reality What Are Your Specialties? What Type of Bakery Is Yours? Franchises Failure Is An Option Types Of Business Organizations Your Job As A Bakery Owner Timeline---Introduction

Concept To Reality Identify the concepts that interest you most. Begin to identify the skills in yourself to see if you can and want to do it Clearly express your goals for a baking operation Learn what tools you need to make progress in getting it done Evaluate the marketplace to see if there is a need.

What Are Your Specialties? What will my customers relate to best? Will I be excited to represent this to my customers? Do I have additional insight that will help me succeed? Is there an honest need for the product/service in the area I plan to locate?

What Type of Bakery Is Yours? Who are going to be your customers? Fad or Fashion? Fads are shops that might be the most popular trend at the time. Fashion are shops that cater to all markets (think traditional bakeries) Here are guidelines to help you answer the fad or fashion question: Closing: If three or more shops are closing, that sends you a message.  Maybe the fad is slowing down, so be careful. Expansion of product lines: Use the Rule 3; if three companies are expanding product lines, there might be a message there.  However, the message may be that there is opportunity and the companies are reacting to the marketplace. Check it out with great care. Shops openings: Good sign of a healthy market, but in any rapidly expanding market, it will over expand and the last three shoppes to open are usually the first three shops to close.   Local or franchise: Franchise chains do a lot of research before opening and try not to follow fads.  However, some move on to the "next big thing".  So if the "big guys" are planning for the end of one product line, you need to think about it!

Fad or Fashion? Cupcake Shoppes Donut Shops Specialty Retailers Gluten Free Baking

Fad or Fashion? Specialty Retailers (Continuation) Sugar Free Cake and Wedding Cake Shops Organic and Health baking Shops

Specialty Retailers (Cont..) Full-Line Bakery Pet Treat Bakery Bread Shops

Day Parts??? What is it? Day Parts Is a section of time during the day that you and your customers think you should be extra busy.   Day part examples Picking up pastries on the way to work The time when people expect to eat: breakfast, lunch, dinner Afternoon cake pickup- on-the-way-home type of thing Minor day parts Happy hour or after work Morning break Afternoon tea

Bakery and X The X part of a bakery-plus store requires an explanation as to why the operation should be a combination store.  There is a lot of value by adding additional business lines to a bakery.  Most of those reasons are about day parts. Example: Bakery/Deli Carry-out bakery Eat in cold breakfast Coffee break and a treat Lunch- huge Cake pick up Tea time breaks –Small Catering- huge lunch orders

Bakery and X cont... Day part time Example: Bakery/café Bakery Myths To-go bakery 6am to 7 pm Dine in breakfast -full -service  6 am to 10 am Dine in lunch 10:30 am to 3 pm To-go cakes and pastry 7 am to 8 pm Happy hour 3 pm to 7 pm Dinner 5 pm to 9 pm Dessert (European Café)/Dine in 11 am to closing Catering- any hour- off site Private meeting room- Free WIFI helps guarantee that it is always booked Bakery Myths Donuts only sell in the morning. The last hour the store is open, sales are always bad Customers do not purchase from empty showcases.

Franchises Always an area to consider The industry considers franchises "business with training wheels." They have a lot of the issues worked out and have a better success rate that going at it alone. However, always check the litigation records between the franchisee and franchisor. If they are being sued in 30 states, it will not have the resources to service you.

Franchise: Weighting your reasons Pros Cons Proven concept Operations training Support Economies of scale Established product line Limits on innovation Royalties- 6% or more go to the franchisor Bound by contract- what you wear, sell, display, and sometimes price are all in your contract in a franchise. Your purchasing is sometimes a hidden profit center- The franchisor receives rebates on your purchases from approved suppliers and equipment purchases What support is not there when you need it?  Make sure you understand the franchisor's specific responsibilities to you, the franchisee.

Failure is and Option The failure rate in the retail baking industry based on 5 years is 95%!!  Why do most bakeries fail? (the 8 main reasons) Lack of capital Costly mistakes Poor location Poor production Poor merchandising Staff turnover Lack of controls Situations beyond your control

Types of Business Organizations Sole Proprietorships You have several options tax wise, but the gist is that you own the company 100% and company profits are your income. Partnerships Two or more people own the company.  (Get paperwork done very early) Limited Liability Companies (LLC) These give you some of the tax benefits of a partnership with the protection of a corporation. Sub Chapter S Corporation (IRS Form 1120s) A limited number of shareholders and the ability to avoid double  taxation of a "C" Corporation are the key benefits. FMLA and PPACA C Corporations This is the full-blown corporation with all the rights and restrictions

Your Job as A Bakery Owner Here are some truths about the job: Self-employed people are by nature very busy people Leadership is a learned skill, not a gift at birth.  Practice, practice, practice. One of your biggest issues will be working IN your business, not ON your business Good Communication skills are learned and must be practiced Good training is Priceless, Bad training is worthless!