Amy's Bread

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Amy’s Bread

Strengths: Amy’s entrepreneurial spirit; Toy Kim Dupree-excellent right-hand manager; Already has about 50 wholesale customers, plus 30 on a waiting list; Company is finally turning a profit; Positive work environment (5 day work week, better pay than competition, benefits package, 401(k) plan, employees allowed to speak freely, low turnover); Retail business allows for higher profit margins, and now represents 25% of Amy’s business; Good niche product mix-high quality bread products, micro-bakeries; Makes herself available to the press/public, leads to word of mouth advertising; Can now secure bank financing due to Amy’s proven track record; Wholesale business (representing 75% of the business) is more stable than retail business.

Opportunities: Much higher profit margins in high-end breads (black olive, apple walnut rasin-$2.40 wholesale, $3.40 retail profit with the high-end breads vs. $1.71 wholesale, $2.60 retail without high-end breads); Retail business (currently 25% of business) allows for higher profit margins and payment is only in cash; Hiring another manager could allow Amy more time to run the company; Buying 31st street location would allow for production facility expansion and the ability to cater to customers currently on the waiting list; Leasing the 15th street location could allow both retail and production expansion.

Weaknesses: Bakery industry is highly competitive with low wholesale profit margins; NYC locations are very expensive; Higher labor costs due to hand-production techniques (35% of CGS); Ingredient prices are volatile; Ingredients are more expensive than the competition’s; CGS is 65% of net sales; Competitors can enjoy better economies of scale due to automated production and cheaper ingredients; 75% of the business is through lower-profit wholesalers; Current production location is too small to meet growing demand.

Threats: Dieting trends (i.e. Atkins diet) could affect consumer demand for bread....
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