Having a small bakery? Don’t hesitate. Know the facts: small bakeries have a unique magic that a factory-line donut shop simply can’t match. 

But here’s the hustle: the demand for “local” and “authentic” is now higher than ever. And the big chains are your competitors in the bakery market. Thus, you need to stop operating like it’s the 80’s and get with the times.

But how can small bakeries compete with big bakery chains in the market? 

Let’s learn more about the reasons many small bakeries fail and how to compete with those bakery giants!

Why Do Small Bakeries Fail, and What Makes Them Fail? 

They fail because of the poor quality of their baked goods; that’s not the case at all. 

Most bakeries fail due to:

• Rising ingredient costs
• Poor location choice
• A lack of digital presence

What are the 4 Challenges of the Bakery Industry?

Every industry comes with challenges. Speaking of the bakery, there are 4 challenges you’ll have to face. 

What are they? 

• Bakeries’ Shelf-Life: Baked goods can go bad due to unexpected factors over time. Make sure you control your inventory and only bake a few to reduce wasted ingredients.
• Consumer Preferences: Consumers have “moody” bakery preferences you should manage.

Tips to Compete with Large Chain Bakeries

Big chains dominate through volume and low prices. However, they lack soul. This is where you should keep in mind that you aren’t just selling bread; you are selling delightful oven-made creations. 

Here are some effective tips to compete with large bakers (and eventually win). 

Build a Unique and Compelling Bakery Brand

Your brand is your promise. Don’t just be “The Bakery.” Instead, you should be the “Heritage Sourdough Lab” or “The Cupcake Boutique.”

To build a unique, compelling bakery brand, do these:

• Define Your USP: Know your unique selling point by answering what the one thing your bakery does better than anyone else?
• Niche Down: Target your market specifically according to your skills.   
• Visual Identity: Create a unique logo, use consistent colors, and simple fonts.

Take Advantage of Digital Marketing 

This is a booming digital world. In other words, if your bakery is not available online, you don’t exist. Hence, it’s the time when you should take advantage of digital marketing to perform successful branding strategies. 

For example: 

• Capture Instagram-Ready Images 

Every bakery brand surely has its own unique menu. What’s yours? New recipe of pastries? Selling a delightful cinnamon? Try capturing a picture of your signature cinnamon in appealing cinnamon roll packaging boxes. Make sure they look beautiful and branded. When customers post “unboxing” videos on TikTok, your packaging does the marketing for you.

• New Sales Channels

Make your business easier by using Shopify for pre-orders or DoorDash for local delivery.

• Local SEO

Claim your Google Business Profile. This way, your bakery name will show up when local people search for “fresh bread.”

Offer a Signature Bakery Line

Let’s admit it, every bakery shop needs a “Hero” product. Whether it’s a special muffin or a secret-recipe cookie, you should give customers a good reason to get to you.

How?

Try offering your specialties for a limited time, like “Only last 48 Hours”, for example.

Invite More Customers 

How to invite more customers to your bakery shop? 

Decorate and renovate your bakery shop! 

After all, people who visit a bakery would likely make a purchase. 

What to do with your bakery shop? 

• Try sensory marketing: The smell of fresh bread is your best advertisement. Bake some signature, delightful croissants. Then, let your bakery’s door open. See how its scent hits every passerby.
• Give customers a ‘warm’ service: Try remembering your customers’ names and greeting them warmly every time.
• Reward them: Provide a loyalty program, a small gesture to appreciate your customers. 

Engage with Community 

Chains are corporate; you are a neighbor. To build a successful bakery business, you should be the heart of the community. 

Try these tips:

• Arrange fun activities: Organize baking sessions or “doughnut decorating” classes for children.

Profit Figures of the Bakery Industry

With all the hassles, now you might be thinking: Are small bakeries profitable? 

Let the numbers speak: The US bakery market is expected to reach USD 148.98 billion by the end of 2032.

Quite impressive, but wait, what’s the average profit margin of a small bakery, actually?

Still wondering about the profit? Here’s to calm you down: The average small bakery can earn profits from 5% to 15%. The key to increasing your profit is to control the “Cost of Goods Sold.”

But hold on. Maximizing your bakery’s profits means you should manage waste and schedule staff effectively. Sounds difficult? 

Not really. Implement the tips above so you can increase your bakery’s profitability.

Wrapping Up

Indeed, the demand for “local” and “authentic” is stronger than ever. This is where your small bakery business should shine side-by-side with the big guys.

Given the expected market size of the bakery market, which is expected to be a staggering USD 148.98 billion by 2032, it is necessary that your business competes effectively with the large chain bakeries.

In order to compete with these large bakery chains (and ultimately succeed), it is important that you create a unique bakery brand, provide a signature bakery line, utilize digital marketing for your brand, create a memorable customer experience, and get involved with your community.