If you’re a baker, you’ve got a pretty sweet gig going. You get to experiment with delicious flavors, create treats for happy occasions, and run your own business. But, let’s be honest, it’s tough succeeding in the bakery industry. Between dipping fresh strawberries in chocolate and barking orders at your staff, you’ve got your hands full. And, let’s not get into the logistics of managing your restaurant’s technology stream, a huge headache on any given day. However, all is not lost: This is where online ordering systems come in.
The Business Side of Baking: You Can Have Your Cake and Eat it, Too
Make one less-than-optimal business decision, and you could come off as half-baked. Not only do you have to address supply chain challenges efficiently, but you also have to keep your eye on the single most significant business factor — growth. Don’t get us wrong. The bakery industry is popping. Growth is around 5.5% a year. Meanwhile, the average consumer spends just under $400 annually on bakery goods, and cakes and cupcakes alone constitute a $700 million dollar a year business.
Still, the bakery business is no cakewalk. Even if you manage to get a handle on growth, you still have to compete with thousands of other artisan bakeries (there are over a hundred in NYC alone). Also, you have to watch out for commercial bakeries that can leverage economies of scale to cut down on production costs and offer more efficient delivery options.
Luckily, growing as a bakery doesn’t require you to spend tons of cash or make the world’s best cupcakes (even though you already do). By plugging into the digital food ecosystem, you can generate increased profits, grow, and remain vitally competitive in a vibrant marketplace.
Below, we talk about online ordering systems and how they can single-handedly transform your bakery business.
Understanding Online Ordering Systems
Let’s be honest: You have to have online ordering if you want to grow. Otherwise, your profit trajectory will be as flat as a pancake. Sure, you could rely on walk-in orders; many NYC bakeries do. Word-of-mouth plus a little creative kitchen magic can certainly keep you afloat. However, if you want to grow, you’ll need online ordering. That’s not a pie in the sky hypothesis, either.
Heres why: 60% of consumers order delivery or takeout once-a-week. And 31% of consumers use online ordering apps more than three times a week. Online ordering is no longer a niche factor in the food business. It’s the elephant in the room.
Five years ago, we would have called online ordering “future-proofing.” And that’s still true. 24% of Gen Z orders food online more than three times per week. However, we would be as nutty as a fruitcake to underestimate the power of online ordering. The pure growth power trapped in the online market is staggering. Brands like Insomnia Cookies have swelled into 100+ location Goliaths driven almost exclusively by apps and digital ordering.
And, they’re far from alone. Even commercial bakeries like Walmart are jumping aboard the online ordering train, spurred by popular consumer demand.
Want to know how your bakery can leapfrog over the competition? Here are some actionable strategies that your bakery can implement TODAY to start boosting profits.
5 Actionable Profit-Boosting Bakery Strategies
1. Get Healthy
Over 50% of people choose healthy mixes when they’re shopping for at-home baking projects. State of the Industry reports show that commercial baking operations are increasingly targeting healthy niches to grow profits. In short, consumers want healthy options, and bakeries that are willing to provide those options will tap into new (potentially lucrative) revenue streams.
Modern consumers are a lot more health-conscious than their Baby Boomer parents. Not only do they want fewer artificial ingredients in their food, but they’re also willing to pay for organic bakery items. In fact, the annual 2018 Food and Health Survey found that 40% of consumers are willing to pay significantly more for clean food, while 20% are willing to pay double or more.
Bakeries should lean on their traditional styles and established taste palettes to create new organic treats. There are plenty of options out there. You could throw together ancient grain muffins (there has been a 24% increase in sales of ancient grain bakery goods over the last year) or jump aboard the keto train with low-carb options. Or, you could simply “Fiberfy” (that’s an actual brand of digestive aid) your cakes and pies. Over HALF of consumers want more fiber in their cakes and pies.
2. Think Smaller
Bite-sized desserts are definitely in fashion. These small, delectable bites give consumers a guilt-free entryway into trying new, fresh flavors at a low price-point. 28% of consumers say that the availability of smaller portions would entice them to purchase more treats.
The world of mini-desserts opens up some significant profit streams. Not only can you play with interesting flavors, but you can also stretch ingredients further — and increase your bottom-line. Consumers are happy to pay premium prices for mini-sized baked goods. They can indulge their sweet tooth cravings while maintaining portion control. Bite-sized desserts make it easy for them to feel good about their diet choices.
So, play that to your advantage.
Big brands like Cinnabon are already leading the way. Guided by internal customer data, Cinnabon recently launched its BonBite miniatures, which turned out to be its best selling product launch in decades.
3. Do Sweat Presentation
Humans are visual creatures. 72% of people admit that their purchasing behaviors are impacted by packaging designs. And 40% of people like to share packaging designs on social media, especially when it’s eye-catching and perfectly exemplifies the values of a brand.
Bakeries have always been on the cutting-edge of packaging designs. Cute, colorful packaging is crucial in this industry. However, if you want to kick things up a notch, try to create attractive packaging that’s hyper-branded. Brands like Voodoo Donuts use packaging that fits its oh-so-pink brand naturally.
4. Be Nutritionally Transparent
Let’s face it: bakery products are more about taste than health. Sweet treats filled with sugary deliciousness aren’t supposed to be healthy, right? They’re supposed to light up your day. However, with Americans on a full-blown health kick (45 million Americans are dieting right now), it can be tempting to mask your calorie bombs. Don’t do that!
The majority of Americans read nutrition labels, and over half of them are turned away when the label is confusing or if design elements obfuscate key ingredients. It may seem strange to think that proper nutrition labeling could boost profits. But, hear what Scott Davis, CCO at Panera, has to say about this: he tells the Washington Post that, ever since his company slapped nutrition labels onto their products, the brand’s stock value and profits have soared.
Whether nutrition labels will single-handedly bring in massive amounts of sales is up-in-the-air. However, it will almost certainly attract consumers who are health-conscious.
5. Make Online Ordering Systems Your Bakery Business Partner
Let’s loop back around to online ordering. Tapping into the online ordering well is a tremendous opportunity for bakeries. However, many will simply choose to sign up for 3rd party apps (think UberEats or GrubHub) and call it a day. And that may work for a time.
You will get customers from 3rd party delivery apps. However, you probably won’t rake in higher profits by doing so. We dived deep into their pricing structures in a previous post. So, be sure to check it out. The average 3rd party app takes 25% right off. Not off of profits — off of the entire order!
With the largest and most-profitable bakeries on the planet having a profit margin of 20% or less, that means losing money on EVERY online order. And that’s a problem. Because beyond the appeal of a fancy app, these companies are making money off of YOU. That’s not sustainable in an industry that operates on tight margins.
Leveraging your own online ordering system frees you from the shackles of 3rd party delivery platforms. Of course, you can still leverage their popularity to draw in some customers. However, you should try to convert them to your in-house ordering system so that you have complete autonomy over your marketing campaigns, costs, and menu selections.
Now, with the modern framework of online ordering comes a new consumer trend — same-day-delivery. Traditional bakeries took orders days in advance. However, that old-school model is losing sustainability and the interest of modern customers.
Why Your Bakery Should Seriously Consider Offering Same-day Deliveries
Consumers order bakery products online for a variety of reasons. Perhaps, they don’t have space in the back of their car to haul a big, fancy cake. Or, they’re busy and are unable to make the drive to the bakery. And, of course, some customers simply want to watch Netflix in their underwear and wait for a bunch of baked goods to arrive on their doorstep. This is why 57% of Millennials love online delivery.
Between all of these reasons, there’s a simple statistical factor in play — over half of consumers expect same-day delivery for baked goods. However, that’s easier said than done. You need the right internal infrastructure to support the logistics of same-day-delivery. After all, if you’re still relying on the traditional bake-as-requested method, you’ll need to significantly change your workflows to accommodate this emerging delivery trend.
That means predicting consumer requests before they walk into the shop. It may mean hiring a delivery person, but this could also mean higher profits for you. Customers who are binge-watching The Crown want cupcakes NOW. If you tell them the delivery of their favorite binge-watching snack will take at least a couple of days, they will almost certainly find a local competitor who offers same-day delivery.
The good news is that 70% of customers want to order their food directly from you. That said, they’ll be doing an online search to see if your bakery’s online ordering portal is up and running.
Here’s a tip that’s as sweet as honey: Bakeries can combine an online ordering system and same-day-delivery to boost profits. Are you ready to get in on the game?
Are You Looking for the King of All Online Ordering Systems?
At 9Fold, we know that being a baker is hard work. The last thing you need is to share your slim profit margins with a bunch of 3rd party delivery apps. Our intuitive, branded, personalized online ordering system doesn’t take money off the top of all of your orders, and it gives you control of your marketing strategy. That’s just the way the cookie crumbles.
If you’re ready to experience the 9Fold difference, contact us to schedule a free demo of our powerful online ordering platform.