Nearly 95% of those who start a retail bakery fail within five years, so it is imperative that bakery owners have a well-defined business plan, The RPIA Group executives told a group of about 100 attendees at the Saturday RPIA session, “Business of Baking for Beginners,” at IBIE 2019.
“A bad plan will not stand the test of time,” said Randy McArthur, national technical sales for Dawn Foods and a founding member of RPIA. “We hope to get you focused in a finer direction to help you make more money.”
McArthur shared the tale of a failed business, New York City-based Crumbs Bake Shop, which went public in 2011 and at its pinnacle operated about 70 retail locations. In 2014, the company announced plans to close all stores. Citing a Forbes article, McArthur said the writer, Adam Hartung, reported, “Customers care about their needs. Rather than being a benefit, passion is a negative because it will cause you to overinvest in your passion … You are likely to invest in your passion until you burn through all your resources. Like Crumbs.”
Rick Crawford, RPIA managing partner, echoed this sentiment to the audience: “Do what your customers want, not what you want.”
McArthur said a solid business plan requires many traits: the ability to learn and listen, capital, merchandising, passion, work ethic, and knowledge.
“You have to be a bit of a master of everything,” he said.
First, be brilliant at the basics and learn from successful retailers like Los Angeles-based Porto’s Bakery & Cafe, which operates five Southern California locations and serves 10 million customers a year, said McArthur, a former retail bakery owner in St. Louis.
“One of the biggest issues I learned from owning a bakery was to work in your business, not on your business,” he said. “As entrepreneurs, we can expect our staff to know what we know, and they don’t. Unexpressed expectations will not be met. A great plan needs a great team.”
There are more than 40 types of bakeries, like donut shops and bakery cafes, and it’s key to open the right type in the right location.
“You need a system in place to track trends because times are changing at lightning speed today,” McArthur said. “How you go to market depends on who you are