Building the Bakery Business

bakeryOver the past 12 months, sales of packaged sweet baked snacks and desserts came close to the $13 billion mark, according to a report released by market research publisher Packaged Facts. The report, entitled “Packaged Sweet Baked Snacks and Desserts: U.S. Market Trends,” projects that sales will exceed $14 billion in 2017.

That growth in dollar sales is expected to be fueled by several factors, including higher prices from smaller pack sizes that have higher per unit costs. Smaller sizes and single-serve portions are also anticipated to resonate with consumers who are looking for little indulgences, help with portion control and sizes compatible with a snacking-on-the-go lifestyle.

Figures from Information Resources Inc. (IRI) research organization showed that sales of bakery products at convenience stores overall topped $2.2 billion last year, down 3.84% from 2012. Pastry/doughnut sales were over $1.2 billion, down 1.38%. Cookies, with sales of over $600 million, actually grew more than 6%.

Seizing Opportunities
While convenience store bakery sales have been somewhat down industry-wide, Gus Olympidis, president of the 60-store Family Express chain based in Valparaiso, Ind., has had a totally different experience. Olympidis noted that for retailers who take the bakery category seriously, there are all kinds of opportunities. “At Family Express, bakery is synonymous with our franchise overall and we place extraordinary emphasis on this category,” he said. “For someone who is serious about this category, the prospects are very good.”

Family Express has experienced double-digit growth over a number of consecutive years and Olympidis said he expects that to continue over the next several years.

“We are flirting with the upward capacity of our central production facility,” Olympidis said. “We’re finalizing plans now to expand that capacity to meet the growing demand for our bakery products.”

Renowned for its square doughnuts, Family Express is poised to give Krispy Kreme, Dunkin’ Donuts and Walmart a run for their money when it comes to quantity sales of dozens and half-dozens, according to Olympidis. He views the Internet as a tool for his stores to promote sales of doughnut and other product multiples to individuals, organizations and institutions. The site will allow them to order and pay online, then pick up their doughnuts at their local Family Express store. In the stores, he is realigning the retail format to accommodate doubling the size of the bakery cases. Having more bakery items available will support the stores’ coffee program, making the Family Express locations a stronger coffee contender in their market areas.
While the bulk of the bakery sales occur during morning drive time, Olympidis is also seeing another “strong surge” in the mid-afternoon. In addition to the doughnuts, customers are also buying pastries and the chain’s signature “mega muffins” throughout the day.  ◆

Bakery Snapshot
Though sales slipped a bit in 2013, bakery sales remain solid in c-stores with the category ringing up more than $2.22 billion in sales. Pastries and doughnuts continue to be the largest segment of the category.

Dollar Sales             Sales % Change      Unit Sales      1-Year % Change
Bakery                    $2.22 Bil                       (3.84)                  1.58 Bil                  (1.01)
Doughnuts            $1.26 Bil                       (1.38)                   936.21 Mil              1.09
Cookies                 $615.51 Mil                     6.26                    591.32 Mil             6.08
Bread & Rolls       $280.39 Mil                 (3.69)                  119.35 Mil              (1.16)

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