How Efficiently Is Your Bakery Run? A Guide to Reducing Bakery Costs and Improving Efficiency
A recent State of the Baking Industry report highlights strong growth across the food manufacturing sector, with bakery products leading the way. One of the most significant trends revealed is that consumers are increasingly willing to pay more for high‑quality bakery goods.
But while customers may pay a premium for quality, how much are you paying in operational costs?
Running a bakery is an intensive operation. Savings must be found at every opportunity to offset the rising costs of specialist equipment, utilities, and high‑quality ingredients – without ever compromising productivity or quality.
In this article, we identify some of the biggest operational cost sinks bakeries face and explain how they can be mitigated. Below are five practical ways to manage and reduce bakery costs while potentially increasing profits by up to 20%.
The Head of Operations at Bakers & Baristas highlights how management software can significantly improve efficiency:
“Bizimply has saved us hours of work each week by storing all important documents in one place – from rosters to sales and labour spend.”
1. How to Balance the Price of Bakery Goods vs. Production Volume
Broadly speaking, there are three types of bakeries:
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Artisan bakeries
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Local or regional bakeries
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National‑scale operations
Each typically produces goods at a volume relative to its size and market.
Artisan bakeries, for example, often spend considerable time crafting a single cake or loaf. These products require care, skill, and bespoke attention – often for individual clients. National bakeries, on the other hand, mass‑produce goods, employ large teams, and rely on assembly‑line processes to meet widespread distribution demands.
Understanding exactly how much you can produce on a daily or weekly basis is critical when setting prices. Production volume also reflects ingredient quality: specialised flours or premium ingredients that can’t be ordered in bulk dramatically increase costs and limit scale.
By controlling costs in line with production output, you can set the right expectations for customers. The correct pricing strategy attracts the right audience, aligns demand with capacity, and ultimately supports stronger profits.
While lowering prices may seem counterintuitive, demand may dictate it. Selling higher volumes at a reduced margin can still generate greater overall profit than selling fewer items at a higher margin. In foodservice, profit margins are often as low as 3%, making accurate pricing and cost control essential for long‑term success.
2. How to Control Bakery Operational Costs Through Ingredient Management
If you want to calculate the true cost of a recipe, tools such as Pricing Baked Goods – a free ingredient cost calculator can help. These tools allow you to see the cost of each ingredient based on quality and quantity purchased.
This provides a clear picture of the gross cost of producing a single item. Whether costs are driven by ingredient quality, volume, or both, it’s vital to control ingredient usage at a sustainable and measurable level.
Tracking ingredients also leads to more efficient inventory management. This helps prevent last‑minute restocking, over‑ordering, or waste caused by unused stock – all of which unnecessarily increase operational costs.
3. How to Reduce Labour Costs in a Bakery Without Sacrificing Quality
Labour typically accounts for 20–30% of a bakery’s total operating costs. When mismanaged, it can quickly become one of the biggest cost drains. Ensuring the right people are working in the right roles, at the right times, is critical.
Make sure staff take breaks when required and for the correct duration. Track whether employees arrive early or late and ensure scheduled hours are adhered to without unnecessary overtime.
Artificially reducing labour cost percentages by increasing product prices is rarely sustainable – customers will only pay so much for baked goods.
So how can labour costs be reduced organically? One of the most effective approaches is centralising workforce management. This allows managers and executives to review attendance, productivity, and performance in real time.
With proper workforce management, opportunities to reduce expenses quickly become visible. A specialised solution like Bizimply can support this process.
Dermot, CFO at Bakers & Baristas, explains:
“We can proactively manage our staff and centrally control labour expenses, which is yielding real savings.”
Bizimply simplifies workforce management for multisite hospitality and retail businesses by optimising the entire employee journey. Staff can view shifts and hours worked directly from their smartphones, while managers save hours creating schedules with an intuitive drag‑and‑drop tool.
Attendance tracking is reliable thanks to GPS and photo capture, and timesheets are generated automatically for payroll. Managers also gain full visibility over key metrics such as sales per labour hour, while maintaining full compliance with labour laws. The system is fully customisable, with dedicated support available whenever needed.
4. How to Reduce Bakery Overhead Costs and Utility Expenses
Do you know exactly what overheads your bakery is paying for?
Utilities such as electricity and water are essential, but they should be closely monitored. A detailed review of usage may reveal inefficiencies, excessive consumption, or outdated equipment driving up costs.
By analysing where and how utilities are used, you may uncover opportunities to streamline processes or justify repairing or replacing inefficient machinery – reducing long‑term operational expenses.
5. How Production Time Impacts Bakery Profitability
Production time can be calculated by combining labour costs with the price of goods sold.
For example, if you sell a high‑end cake for £500 and aim for a labour cost target of 20%, your labour budget for that product is £100. If the average wage is £10 per hour, that equates to 10 labour hours.
This naturally leads to important questions, such as: Does this cake truly require 10 hours of labour? Once you begin asking – and answering – these questions, you’re well on your way to uncovering meaningful cost savings.
How to Improve Bakery Efficiency and Reduce Costs Overall
There are countless ways to improve operational efficiency without sacrificing quality. By understanding your costs, monitoring performance, and leveraging the right tools, bakeries can protect margins while continuing to delight customers.
How Does Bizimply Help Bakeries Save on Labour and Operational Costs?
Bizimply is a powerful shift and workforce management solution designed to streamline operations and reduce unnecessary expenses.
Optimised Scheduling
Ensure the right number of staff are scheduled based on demand, avoiding over‑ or understaffing.
Labour Cost Insights
Real‑time visibility into labour costs as a percentage of sales allows managers to stay within budget.
Reduced Time Theft
Accurate clock‑in and clock‑out tracking eliminates buddy punching and ensures you only pay for hours worked.
Streamlined Payroll
Time and attendance data integrates directly with payroll, reducing errors and administrative effort.
Minimised Compliance Risks
Maintain proper records and comply with labour laws to avoid fines and penalties.
Improved Employee Retention
Clear schedules and easy access to shifts improve employee satisfaction and reduce turnover costs.
Enhanced Productivity
Centralised workforce management saves managers time, allowing greater focus on revenue‑generating activities.
Bizimply is a leading workforce management platform helping bakeries streamline operations and control costs. With faster scheduling, accurate time and attendance tracking, simplified payroll, and centralised document storage, bakeries gain the insights needed to improve performance and profitability.
If you’re ready to save time and reduce costs, book a demo with Bizimply today – and start increasing your bakery profits.
