No small buns: Four success factors for the professional reorganization of bakeries

Baking is en vogue: since the lockdowns, when mainly flour and yeast were sold out in supermarkets, another habit has been established: People are buying more from their friendly baker next door, whereas the bakery-restaurant sector has declined.

The "culprit" is the home office and resulting less crowded city centers, train stations and airports. The figures speak a clear language. And the signs? The signs are still clearly pointing to change.

What opportunities should bakeries seize now, and how do they succeed in reorganizing operations professionally? Dr. Tim Bauer, Managing Consultant at enomyc, reports on four proven success factors.

For more than two decades, long before the pandemic, the  bakery trade  had been undergoing fundamental change. If we look at the last eight years, there were over 13,000 there were over 13,000 businesses in Germany in 2013. Seven years later, the number has shrunk by almost a third to 10.000, according to a recent  press release  by the Zentralverband des Deutschen Bäckerhandwerks e. V. (Central Association of the German Bakery Trade). Sales, on the other hand, have risen almost across the board: more than 15 billion euros in 2019 – a record figure. This positive trend is likely to continue again in 2020 and 2021 following the pandemic-related decline in sales.

What remains to be said is this: As sales increase, the number of operations continuously decreases, while the size of each individual operation increases. In some cases, bakery chains achieve annual sales growth of over ten percent over several years. How? Primarily by expanding their branch network. In only a few cases has the organization of these companies adapted to the size of the company. The result is typically an overstretched and increasingly inefficient organization. These companies are not sufficiently resilient to drastic changes, such as the Corona pandemic.

In addition to growth-related factors, a dynamic market is influencing bakery operations. While consumers' shopping habits had already changed before the pandemic began, Corona has further accelerated that change. One effect is the trend toward home offices. It leads to less frequented city centers, train stations and airports. At the same time, delivery services are experiencing a boom. The food sector is facing new challenges that mean not only risks but also opportunities for bakery producers.

What do successful bakeries do differently?

They proactively adapt to a dynamic environment. They recognize and seize opportunities as they arise while continuously developing their organization. Failure to do this will sooner or later affect profitability in the competitive marketplace and threaten their very existence. The need to reorganize operational processes is not the result of past bad decisions: reorganization speaks to far-sighted corporate management that aims to increase competitive advantage, expand market share, and secure operations in the long term.

This is holistic reorganization

Adding a few new attractive products to the range and giving the stores a contemporary look is not reorganization. Baked goods manufacturers can only successfully establish their position on the market if the reorganization of operations happens holistically from administration to production to logistics.

Let's take the example of changing eating habits: introducing a vegan product range affects not only distribution, but also purchasing, production and quality assurance. After all, certain raw materials must be completely replaced. And what about modern means of payment? Customer cards, payment by app and other applications must be integrated into the existing IT infrastructure. This ensures a successful implementation in the market.