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The bakery industry in the US includes 2,800 commercial bakeries with annual revenue of $30 billion, along with 6,000 retail bakeries with total annual revenue of $3 billion. The commercial side of the industry is highly concentrated, with the 50 largest companies generating 75% of revenue. On the other hand, the retail side is highly fragmented, with the 50 largest companies generating around 15% of revenue. In the retail industry, most companies operate just one facility. For companies of all sizes, profitability is strongly tied to the efficiency of their operations. Large bakeries are able to reach economies of scale advantages, while small bakeries can compete by offering specialty goods and offering superior local services, (First Research, 2011).
Bakeries as a Share of Total Annual Revenue (US)
Bakeries as a Share of Total Locations (US)
Washington State Bakeries
The table below displays the top 10 commercial bakeries in Washington, ranked by estimated annual sales, (D&B Million Dollar Database, 2011): Top 10 Washington Commercial Bakeries Company Essential Baking Co - Seattle Franz Family Bakery - Seattle Snyder’s Bakery - Spokane Schwartz Brothers Restaurants - Renton Wonder Bread - Lakewood Franz Seattle Bakery - Seattle Pacific Northwest Baking Company - Sumner Hostess Cake Bakery - Tacoma Plush Pippin - Kent Mostly Muffins - Kent Estimated Annual Sales $123,432,300 $84,951,750 $45,612,555 $26,139,000 $26,139,000 $22,871,625 $14,125,525 $13,069,500 $11,790,310 $10,828,741 Employees 180 650 349 200 200 175 44 100 70 98
Center for Economic Vitality
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June, 2011 Additionally, the table below displays the top 10 retail bakeries in Washington, also ranked by annual sales, (D&B Million Dollar Database, 2011): Top 10 Washington Retail Bakeries Company Conifer Specialties - Medina Sara Lee Corp - Kent Krispy Cream Donuts - Issaquah Mrs. Field’s Original Cookies - Milton Macrina Bakery - Seattle Borracchini’s Bakery - Seattle Franz Bakery - Tacoma Buns Master Bakery – Gig Harbor Larsen’s Original Bakery - Seattle Snyder’s Bakery - Yakima Estimated Annual Sales $8,000,000 $4,461,900 $3,600,000 $2,500,000 $2,500,000 $1,500,000 $1,338,570 $1,200,000 $1,200,000 $1,160,094 Employees 75 100 100 75 90 35 30 18 12 26
The chart below displays the breakdown of the 2011 bread production industry in the US, which totaled $35.5 billion, (IBISWorld, 2011): Pies 2% Soft Cakes 8% Bread 32%
Retail Bakery Products 10%
Frozen Cakes 15%
Center for Economic Vitality
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In order to remain competitive in the industry, the following success factors have been identified, (IBISWorld, 2011): Ability to pass on cost increases to the customer: As the price of inputs rise, it is important that the price of the end product reflects that increase and the customer bears some of the burden of increased costs. Secure supply contracts for key ingredients: Part of the risk involved in operations will come from the fluctuation of prices and availability of key inputs. Guaranteed supplies at fixed prices reduce the risk of shortages and helps in planning and budgeting. Close proximity to key markets: Given that baked goods are perishable products and the cost of transport can be high relative to the value of the baked goods, it is important to locate close to customers. Efficient work practices: Realizing efficiencies in labor and production methods will help to increase profits, especially in larger scale facilities that produce more volume. Product differentiation: Due to the mature nature...