The Rise of Specialty Bakeries

One of the most compelling changes in the retail bakery business over the course of the past decade involves the rise of specialty bakeries. These niche shops specialize in a specific product category, such as cupcakes or donuts, and often cater to higher end clientele.

Price points starting at $3 for a gourmet cupcake or donut change the way consumers view the category. Early on, bakery owners worried that higher price points might chase customers away, and in isolated cases this proved true. But there is overwhelming evidence that redirecting the consumer away from looking at bakery products as a commodity and more as an indulgent treat is an effective strategy for success among the new breed of specialty bakeries.

Our 2017 Retail Bakery Operations Study reveals a changing face of the specialty bakery. Among specialty bakeries that participated in our study, 63 percent are female owned, compared to 42 percent female owned in full-line bakeries.

The specialty bakeries surveyed have been in business for 19 years on average; full-line bakeries have operated for 35 years on average. Three-fourths (74 percent) of specialty bakeries make products from scratch and concentrate a higher percentage of sales than full-line bakeries on cupcakes, coffee and sandwiches. For the specialty bakery overall, cakes, cookies and cupcakes are top sellers. Most important, specialty bakeries reported an annual revenue increase of 8.2 percent and profit margin increase of 3.3 percent in 2016.

By comparison, the overall sample of bakeries in our survey reported a revenue increase of 7.2 percent in 2016. Full-line bakeries had it toughest, reporting 5.2 percent revenue growth.

As a case study, Bisous Bisous Pâtisserie in Dallas is widely regarded for having among the best French macarons in Dallas; it’s been their signature specialty since opening in 2015. Owner Andrea Meyer carries at least 12 flavors on hand every day, sometimes more.

They also make viennoiserie by hand in a small kitchen. This led to a unique hybrid pastry creation (the cruffin) that helped put Bisous on the local map. “We have utilized all of our trim from our croissant production to make our own version of a cruffin (croissant muffin), which has been wildly popular for us. We have a ham and smoked gouda, and a raspberry version every day, and we also throw in some seasonal varieties, too, as we dream them up.”

The basis of the business is rooted in traditional French pastry options, “so I’d have to say we don’t feel the pull of food trends that strongly. That said, our French macarons are gluten free, which continues to be a focus for our customers who increasingly are looking for that.”