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Bakeries (Retail)

We have years of experience in this industry for the valuation of the business, equipment and real estate. Let us help you with our valuation consultation in all areas of the valuation of retail bakery businesses. Below is a brief synopsis of the industry.

Description of Business

Establishments primarily engaged in the retail sale of bakery products. The products may be purchased from others or made on site.

General Industry Information

According to the recent US Census, there were 7,485 retail bakery establishments in operation. The total industry receipts for the year amounted to $2.8 Billion, making the average sales per bakery $374,000 annually.

High levels of sales are often attributed to either a solid retail customer base or successful negotiation of contracts with markets, hotels, caterers, or other high-volume bakery products customers. Often, bakeries will try to maximize profits by selling gourmet coffee or ancillary products.

Although the forms of indirect competition have increased in recent years, the trends remain positive for this industry. Since 1997, the number of retail establishments has increased, along with the aggregate revenues. Nonetheless, additional competition could prove costly for some retailers, which are up against supermarkets and warehouse stores.

Red Flags and Risks

During any due diligence period, a buyer should check for existing lease agreements. Baking and storage equipment should also be inspected to ensure proper condition. The expenses of possible employee injury should concern any reasonable buyer. Potential on-the job injury can include burns or other body harm caused by baking and kneading equipment. Safety precautions should be employed and enforced. Lastly, this business can have significant financial difficulties if the price of key inputs rises. Recently, bakers have struggled to pay for the rising costs of wheat flour, after a drought cut supplies. Rising materials costs are particularly harmful to this business which already has slim profit margins.

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