Bakery Owners-Help!

Business By joy5678 Updated 1 May 2008 , 3:28am by joy5678

joy5678 Cake Central Cake Decorator Profile
joy5678 Posted 15 Apr 2008 , 6:03am
post #1 of 19

I have been given the opportunity to purchase a long time existing community bakery. It is old but I think it has alot of potential that is not being taken advantage of. The owners are retiring and will probably accept an offer far below its value because they are tired and just want to retire. I would like input from those of you who have your own bakeries. Would you do it again? Is the economy effecting your profit? Any advice, positive or negative that you could give me would be greatly appreciated. This is a huge step for me and I just want to make a wise decision. Thank you all for your input. icon_eek.gif I'm eagerly watching for your feedback.

18 replies
CoutureCake Cake Central Cake Decorator Profile
CoutureCake Posted 15 Apr 2008 , 6:43am
post #2 of 19

One thing I saw with a lot of businesses "Back home" where the owners had owned it for decades and a new person came in to take it over, changed everything right away, and alienated A BIG chunk of their customer base and ultimately the business... Whatever you do, you DO NOT want to alienate the business' loyal customers or change formulas/sizing. There are some things "best left alone" you could say, or as Jeffrey Gitomer puts it "Customer Service is Worthless; Customer Loyalty is PRICELESS"... Chances are good that they've got a successful model that works in that community. You're going to want to have them on board while you take over the business during the transition. They might also like it because it gives them "something to do" because if they're retiring, chances are they're used to going every day all day so the sudden stop is something that they might not take to (we had a florist who retired and w/in 6mo was working at the grocery store floral dept. to get out of the house)

OTOH, you do need to make changes to make the business YOURS. You've got to spend some time working THERE for a while to determine what changes you want to make and learn the dynamic that makes this bakery successful. Then, after you've discovered this you can start to phase in some changes for the better. You never know, they could have BTDT on ALL of the changes you want to make only to find out in that particular community it doesn't have a good ROI. You've also got to factor in that some things may need to be updated by law because you're taking over the business so you're likely want to have an inspector in to let you know some of those things ahead of time (the old business owners may have been "grandfathered" into some of the laws)...

Remember that owning a bakery is a BUSINESS first. You've got to make decisions based on the business. If the ingredient prices are going up on the jelly donut that has a loyal base, chances are good that they'd rather pay more to have the consistently good tasting donut than to have you go with a cheaper quality. OF course, there's the old "slowly shrink the size" while keeping the price the same trick which a bakery here does... Ugh... But honestly, people would rather pay a little more for a quality product if they know it's just an ingredient cost increase that's being passed on rather than a "raise rates for higher profits" change.

One thing you'll want is to go through the business from head to toe before even THINKING of investing into it. Find out how old the equipment is, when it was last maintained, cost of operations, etc. Also, you've got to consider which 80 hours you want to work in the week.

Good luck!!!!!

littlecake Cake Central Cake Decorator Profile
littlecake Posted 15 Apr 2008 , 5:11pm
post #3 of 19

Have you worked in the bakery business before? It is a lot more work than you'd think...and it's very stressful due to time constraints....75% of the work is jammed into the weekend.

I'm still liking it, it is the most stress filled and satisfying job I've ever had.

My son lives in tennessee, north of memphis...there sure aren't too many bakeries where he lives....If you don't mind me asking, where are you?

joy5678 Cake Central Cake Decorator Profile
joy5678 Posted 16 Apr 2008 , 4:19am
post #4 of 19

Thank you both for your input. I have been told that it is a high stress and time taking business (espec. weekends) I've not worked for about 3 years now & feel ready to take on some hard work. I had a wedding/catering business from home for 15 yrs. so, I'm not afraid of hard work but I will miss not having time. I had not thought about the "grandfather" laws. That poses a big ? because most of the equipment is old. Huge gas oven (looks like a monster). The store isn't worth much but the clientel is. 30 yr. old bus. & no other baker around but Walmart. This is really a big decision for me so if you think of anything else--let me know. I live about 20 miles north of Nashville in Sumner Co., not very close to Elvis icon_biggrin.gif . Thanks again for your words of wisdom. I will surely take them to heart. thumbs_up.gif

CelebrationsbyLori Cake Central Cake Decorator Profile
CelebrationsbyLori Posted 16 Apr 2008 , 9:20pm
post #5 of 19

Depending on the building, codes, health dept., etc. you may be ahead to look into the cost difference in just starting up your own storefront. While the clients are valueable, if there is really no other place for them to go when this one closes, they will likely give you a try instead of opting for Wal-Mart. Just a thought, sometimes you get more than you bargain for in an old building that someone has let go. Good Luck either way!

littlecake Cake Central Cake Decorator Profile
littlecake Posted 16 Apr 2008 , 9:28pm
post #6 of 19

some of that old equipment just lasts those old hobart mixers.

when i was buying my stuff a couple years ago, one of the bakery supply dealers has a bunch of old antique looking stuff in the back that he was shipping to mexico, he told me people in the states wouldn't buy it because it wasn't "pretty" anymore...and it wasn't!...but anyhoo, he said that stuff had years and years of service left in it.

good luck in whatever you decide to do...let us know!

joy5678 Cake Central Cake Decorator Profile
joy5678 Posted 16 Apr 2008 , 9:42pm
post #7 of 19

Thank you all so-o-o-o-o much for your comments. I am taking them all into consideration. Kinda leaning in one direction after hearing from you all. If you think of anything else keep your comments coming. I will keep you posted on what I decide to do. So much helpful info on CC - LUV IT!

indydebi Cake Central Cake Decorator Profile
indydebi Posted 16 Apr 2008 , 9:56pm
post #8 of 19
Originally Posted by joy5678

The store isn't worth much but the clientel is. 30 yr. old bus. & no other baker around but Walmart.

Please don't put a lot of weight on the clientele. Nothing will guarantee the clientele will stay after the current owners are gone.

I know 2 busiesses that didn't work when this happened. To the clientele, the current owner IS the business. Many of them aren't going to XYZ, Inc. ... they are going to Sally's place. When Sally is gone, there's no reason to go.

I know a lady who started a restaurant. She had to sell it 2 years later due to the health of a family member. It was a very steady business with very devoted customers (I was in there almsot everyday, so I could see that for myself).

I stopped going there after she sold it. I ate there because the lady was my friend. She wasn't there anymore ... no reason for me to go. New owner was out of business in about 6 months. Those devoted customers were devoted to the original owner, NOT to the business.

A business person I admire very much once told me "Never buy 'a business' ... you can buy the equipment, buy the vehicles, buy anything that's on an asset sheet ... but the seller can't guarantee the customers he has today will be your customers tomorrow. So you never buy a business ... you buy their 'stuff'."

Just some thoughts to consider.....

joy5678 Cake Central Cake Decorator Profile
joy5678 Posted 17 Apr 2008 , 4:26am
post #9 of 19

Thanks Indydeb,
I have thought alot about that because the "stuff" inside the shop isn't worth a whole lot. In fact I would probably get rid of alot of it. The place really needs a good cleaning from top to bottom and updating too. I'll have to paint, new floor in showroom, new signage, etc. I have so many ideas to make it a more welcoming & joyful place to come into to. I've been told by a friend of mine that its kinda like being in love--someone can warn you that he's the wrong man but if you're in love you just can't hear what they are saying until its too late! icon_cry.gif I don't want to be that way so I'm trying very hard to listen objectively and weigh the pros & cons out. Whew icon_surprised.gif just making a decision may be the hardest part of the whole thing! If you think of anything else, please jump in again. I appreciate all your help and advice.

littlecake Cake Central Cake Decorator Profile
littlecake Posted 17 Apr 2008 , 5:05am
post #10 of 19

Would you be buying the building too?....If not it may not be as expensive to start from scratch as might think.

I'm renting the shop right now, so to get started it cost me under 30K.

I bought about half my stuff used.

joy5678 Cake Central Cake Decorator Profile
joy5678 Posted 17 Apr 2008 , 6:14am
post #11 of 19

littlecake, I would be renting the building, not buying it. I am thinking I could get started from scratch with about the same amount of $ as buying the shop that is already set up with customers. Not sure yet what my offer on the business will be if I make one but I know that they want out "yesterday" and will probably take any reasonable offer? Thanks

cupcake Cake Central Cake Decorator Profile
cupcake Posted 17 Apr 2008 , 7:50pm
post #12 of 19

I have a friend whose father owned a bakery for 50 years, when the father was no longer able to work, my friend took over his fathers business. It was never the same. When the father left, the business died.
My friend then decided to close that shop and reopen in another town, that still had clients that patronized his fathers place, he got a few folks, but had to basically build a new clientele. He advertised that his recipes were from the original" such and such shop" to lure in the old customers, but to no avail. In the long run, he had to close completely. Opening up any business is a product of your personality and willingness to go that extra step. This is one area that you really need to research. Perhaps going in the business while the owners are still there might be an option, in other words they might be able to soften the blow with their clientele, sometimes owners will offer to stay on to help you get acclamated. In the end, only you can make this decision. Good Luck.

joy5678 Cake Central Cake Decorator Profile
joy5678 Posted 18 Apr 2008 , 3:11am
post #13 of 19

You all have really given me some food for thought. Thank you so much for your input. I knew I could count on all you cake heads! icon_smile.gif
If you think of anything else - bring it on!

joy5678 Cake Central Cake Decorator Profile
joy5678 Posted 30 Apr 2008 , 2:30am
post #14 of 19

Hi it's me again & I still have a huge decision to make. icon_rolleyes.gif I thought that it was over & I had made up my mind to start from home, but the shop owners daughter (the realtor) called me today. She said that her dad would accept a rock bottom offer (under 26K) & they would stay with me for 2 mo. to train. If I don't want to accept, he is going to close down & sell off everything. His wife physically needs to retire. Now, I'm not sure what to do again! I am going to do the things you all suggested. I don't believe I could start my own business for less than this, do you? Whew--I'm in a tizzy. Any more advice? I want to make a decision one way or the other by the end of this week, so I can get moving in a direction "somewhere"? HELP! icon_eek.gif Watching for more of your experienced answers. Thank you in advance!

littlecake Cake Central Cake Decorator Profile
littlecake Posted 30 Apr 2008 , 5:32am
post #15 of 19

i started for 28K...soup to nuts...that included my first 1000.00 food order and close to that much to buy everything from scratch from deco pac.

their daughter is the realtor? Hmmmm

and i bought a brand new comm. oven and a brand new double freezer....the other stuff i got used.
30 quart mixer...(almost new) 1800.00...if i had it do do over again i wouldn't have bought the cold case for 1000.00
did ya ever think of just buying the stuff he had left that was any good?...when he sells it off?

what exactly is in that place? besides the huge gas oven?...maybe it's just a bunch old junk you don't need?

what's the rent like on the building?

i looked at a place to buy to put the bakery in once, made an offer then backed out...they called we for a couple months making the offer lower and lower...i just didn't want it anymore...then they called again acting like i could get it for a "song"...aurgh....i don't like that kinda's like they are trying to confuse ya.

Mike1394 Cake Central Cake Decorator Profile
Mike1394 Posted 30 Apr 2008 , 9:36am
post #16 of 19

Since it is a full operating bakery. Do you know how to make all the items? Do you want to? The reason I ask. If your looking for a place to do cakes. You don't need the monster oven, a fryer, sheeter, if they have those things. It depends on what your end product will be. Do they do a large output of bread? Do you know how to make a great loaf of bread? Are you prepared to make 100 eclairs for display, and sell only 20, and see the rest hit the dumpster?


justducky Cake Central Cake Decorator Profile
justducky Posted 30 Apr 2008 , 12:12pm
post #17 of 19

Call your local fire and health dept and inquire on the grandfathering of the equipment. I helped a friend open a place and the first thing the inspectors did was nix the stove and ovens as they were the old gas system and no longer safe.

TheButterWench Cake Central Cake Decorator Profile
TheButterWench Posted 30 Apr 2008 , 1:17pm
post #18 of 19

you can buy the place and then sell off the equipment and use the little bit of money to brighten up the floors and paint and maybe lease new equipment for a year to see how it goes.

If he's offering to stay for 8 weeks that will help ease the transition.

also, if you can afford it, you can hire a baker to do all the case items to give you the freedom to smooze the customers.

I find that is one aspect of my place that is lacking, since I have to do everything now I'm never out in the front and when I hear the door chime I have to quickly get rid of the hairnet, gloves and apron. Wasting a lot of gloves in the process. lol

joy5678 Cake Central Cake Decorator Profile
joy5678 Posted 1 May 2008 , 3:28am
post #19 of 19

Wow, littlecake this is putting a big squeeze on my brain! We figured today that there is about $17,500. in equipment & inventory in the store. Huge walk-in cooler, floor Hobart mixer & table Hobart mixer plus stainless tables, freezers, cooling racks, tons of baking pans etc. & ingredients for baking. Rent runs $800 mo. Spoke to previous owner who said it was a great place w/low overhead & he did well when there for 15 yrs. I asked him why he left - burn out. Now working for a grocery bakery. Will be getting their financial statements & tax return tomorrow & will go from there to see what happens! AUGGGH! I feel pretty good about it but still checking & searching for everything that I can to make sure. How long you been in business? Would you do it the same way again?

Quote by @%username% on %date%