The UK Bread and Baked Goods Industry
The baking industry is on the rise so there has never been a better time to run your own bakery franchise. In the UK, an average of £82 per person per week is spent on baked goods such as bread, cakes, biscuits and pies, according to the most recent data from Statista. Britain clearly has a soft spot for bakeries! As one of the main segments within dessert franchises, opening your own bakery will set you on the right path to furthering your income potential.
The bread and bakery goods production industry includes companies that produce bakery products such as bread, cakes, bagels, muffins, doughnuts and baguettes. In addition to their main products, bakery franchises typically also serve additional items, such as coffee and tea. Perhaps even sandwiches. Part-baked and frozen products are also commonly included in the general industry statistics.
Per market research company IBISWorld’s 2022 report on the industry, “The reopening of food service establishments, including cafes, in the current year is expected to support industry revenue growth of 2.3%.”
In general, the bread and baked goods industry in the UK has an annual turnover of somewhere between £8 to £9 billion, depending upon the source. The largest companies in the market are: Warburtons Limited, ABF Grain Products Ltd., Hovis Ltd., and Finsbury Foods Group Plc. However, none of the aforementioned companies possess more than an estimated 6.5% of market share. Popular franchises in the industry include: Dunkin’, Cakes & Bakes, Dum Dum Donutterie, Heavenly Desserts, Muffin Break, Cake Box, Treatz Desserts, Bake&Take, and more!
One of the biggest impact factors over recent years is the rise in health consciousness by consumers. According to Paul Whitney of Hallidays, “Industry operators have fared well in responding to rising health concerns by focusing on expanding their product ranges to include healthier products.”
Those working in the industry concur. “There’s a new interest in provenance and ingredients,” says Aidan Monks, co-founder of Cumbria-based Lovingly Artisan, who switched to organic products during the lockdown. “Our tribe is interested in health and wellbeing. We’re playing a part in that.”
In addition to the ingredients and sourcing, the push for healthier bakery products also includes. For instance, bakers can now use specialised food colouring and vegetable powders to tap into this growing consumer desire. Per ADM, a company that manufactures these kinds of products, the colourings and powders assist in “aiding baked goods suppliers to create their own signature display of fresh, naturally multi-coloured breads, buns, rolls and more.”
Another factor having an impact on the industry is the rise in artisanal-style products, which can positively affect your bottom line. “People who favour premium cakes/sweet baked goods show an above-average willingness to pay more for freshly baked, award-winning and ethically sourced products,” according to ADM.
Advantages of a Bakery Franchise over Independent Operation
If you're looking for a business opportunity but—perhaps—lack the experience of running a company from the ground up, you might find the prospect of a bakery franchise very attractive. When you invest in a franchise, you take on the methods of a business that (1) understands its established target market, and (2) has proven itself profitable and sustainable.
Independent companies that go into business without the support of an established partner often struggle to penetrate the market. They often misunderstand what their customers want and how to fulfill that desire. It can take a long time, along with trial and error, for an independent company to get their service offering right.
On the other hand, franchises tend to enjoy more immediate success because the parent company has done their market research. The franchisor has spent time developing their services and products to meet the standards expected by their customers.
When you invest in a food franchise, you inherit not only the immediately recognizable branding of the parent company but the tried-and-tested business model catering precisely to a client base who already know and love their products. You take on the parent company’s hard-earned reputation—and reputations are hard to build in the marketplace. Additionally, franchises often boast an existing supply chain and vendors that already know what the business needs.
Your franchise parent company usually provides an excellent training package for you and your employees to ensure that you can maintain their hard-earned reputation. In addition to training, many franchise partners offer a range of business support functions, including HR assistance and compliance with food, business and employment regulations.
What You Should Look For When Choosing a Bakery Franchise
People buy into franchises for many different reasons. Suppose you are enthusiastic about owning your own business and offering various tasty treats to your community, but can’t quite come up with a business idea of your own.
Or, maybe, you know exactly what you want to do, but the idea of doing all of the legwork in setting of a business – such as brand development, writing a business plan, learning the rules and regulations of the industry, finding how to supplement your existing skills in the area, figuring out marketing, etc. – makes your head spin.
In either case, franchising may be the best method for making your dreams come true.
When deciding which bakery franchise to invest in, you should compare how much and what types of support the franchisors offer on an initial and ongoing basis. The most common services offered by the franchisor include but are not limited to the following:
- Advertising and marketing strategy
- Advice and business support
- Assistance in choosing and developing the franchise location
- A well-known brand name
- Headquarters and field support
- Management training
- Operating manuals
- Quality food standards
- Research and development of new foods and services
With a recognisable brand name and logo, high-quality signage, and other support materials provided by the franchisor, you will be able to focus your efforts on the everyday aspects of running the business. This includes staffing and managing the company and ordering supplies, along with making and selling your baked goods.
It’s important to remember that even with the guidance and support, franchises are independently-owned businesses. Therefore, whether your bakery franchise is a success or failure is based entirely on you and your ability to run the company.
Finding the Money: Franchising vs Independent Businesses
Investing in a franchise is often considered a safer option than creating an independent business from the ground up. This is certainly the case for lending institutions, franchises have been more likely to appeal to banks and moneylenders and draw the necessary capital to start the business since franchises have a demonstrated history of feasibility and market sustainability.
Independent companies often find it a challenge to obtain loans with sensible borrowing rates since they have no evidence that their business will reach potential. This lack of faith from lenders has the potential to jeopardise their company from the start.
Having enough money before you start is important. The first couple of years of any business can bring challenges, placing most independent businesses at imminent financial risk. Without the ability to generate enough revenue to cover initial and operating expenses, independent business owners will likely find the venture unviable. In fact, more than half of all independent start-up companies go out of business within the first two years in the UK.