Mini bakery business plan

* The calculations use the average data for the World

1. SUMMARY OF THE PROJECT

The aim of the project is the opening of a mini-bakery for the production and sale of bakery products in a city with a population of more than 1 million people. The main source of income is the profit from the sale of bakery products.

For the implementation of the project, a room is rented in a residential area of ​​the city, in close proximity to houses and a busy street. The total production area is 100 m2.

Bakery products are positioned as “healthy and wholesome food”, therefore, only high-quality ingredients and a unique recipe are used in bread production, which makes the bakery stand out on the market.

The target audience is people who prefer a healthy lifestyle and choose high-quality and healthy bakery products.

The main advantages of the baking business:

- stable demand for products, almost independent of the crisis;

- flexibility of production, allowing to adapt to the tastes of consumers and market trends;

- Prospects for concluding supply contracts with shops and restaurants, as mini-bakeries are considered more profitable suppliers.

The initial investment in the opening of the bakery is 885, 000 rubles. Investment costs are directed to the repair of the premises, the purchase of equipment, the initial purchase of raw materials and the formation of working capital, which will cover the losses of the initial periods. The bulk of the required investment is in the acquisition of equipment - 66%. Own funds will be used to implement the project.

Financial calculations cover a three-year period of operation of the project. It is planned that after this period the institution will need to expand production and the range of products. The net monthly profit of the bakery upon reaching the planned sales volumes will be 278, 842 rubles. In accordance with the calculations, the initial investment will pay off for the seventh month of work. The return on sales in the first year of operation will be 27.8%.

Table 1. Key performance indicators of the project

Payback period (PP), months

7

Discount payback period (DPP), months

eight

Net present value (NPV), rub.

24, 993

Return on Investment (ARR), %

8.0

Internal rate of return (IRR), %

18.35

2. DESCRIPTION OF THE INDUSTRY AND COMPANY

    Bakery products are a daily product. Bread is one of the three leaders in the list of the most popular products among Russians. According to the results of a social survey, 74% of respondents consume bread daily. It follows from this that this segment of the food market is quite stable.

    Picture 1 . Frequency of bread consumption in Russia

    On average, per capita accounts for 46-50 kg of bread per year. Moreover, the indicators in each region are different. The maximum consumption is observed in the Southern Federal District - 50 kg per person. Figure 2 illustrates the dynamics of bread consumption per capita. In Russia as a whole, consumption of bakery products is declining. Experts attribute this decline to the trend of a healthy diet, which excludes bread from the daily diet of Russians. As a result, the output of bakery products in Russia over the past decade has decreased by 1.4 million tons: by the beginning of 2016, this figure dropped to 6.6 million tons.

    Figure 2 Supply of traditional types of bread per capita, kg per person per year

    Today, manufacturers of bakery products adjust to the trend of consumption and increase the production of bread, which is positioned as a healthy product - functional additives, cereals, and vitamins are used in its manufacture. Most of these ingredients come from abroad, so we can say that the modern baking industry is dependent on imports. There is also a growing trend in demand for long-term products and frozen bakery products.

    The dynamics of the development of the bread market is also affected by economic crises. For example, in 2008, due to a decrease in the income level of the population, there was an increase in demand for bakery products and, accordingly, their production increased. After the stabilization of the economic situation, the demand for these products began to fall again.

    The dynamics of the demand for bread also depends on the economic crisis: a decrease in the level of income of the population entails an increase in demand for bakery products. Stabilization of the economic situation reduces the consumption of bread.

    According to network trade statistics, at the beginning of 2016, the grain turnover exceeded 675 billion rubles, while there was a shift in consumption to the budget segment.

    Table 2 presents the market structure of bakery products, with which you can track how the distribution of production between different forms has changed. There is a tendency towards a decrease in the share of industrial bakery and an increase in the share of craft bakery.

    Table 2. Segmentation of the baking industry

    Segment

    Bakery market by years, %

    2007

    2008

    2009

    2010

    2011

    2012

    2013

    2014

    2015

    Industrial bakery

    83

    79

    75

    75

    73

    71

    72

    73

    73

    Craft Bakery

    14

    17

    20

    nineteen

    nineteen

    20

    18

    17

    sixteen

    Baked goods

    2

    3

    3

    four

    five

    6

    6

    6

    7

    Other

    one

    2

    2

    2

    3

    four

    four

    four

    four

    The segmentation of the baking industry as of 2016 is presented as follows: 71% of the total market is produced by large bakeries, bakeries in supermarkets - 14%, small bakeries - 12%, others - 3%. At the same time, market participants predict a decrease in the share of large bakeries and the development of a small baking business. Already today, economy-class bakeries and cafes and chain boutiques are gaining popularity, where you can not only purchase bakery products, but also have a good time. This format counts on 2-3% of the bread market share. By 2018, the share of small bakeries is expected to increase - from 12% to 16% and a further reduction in the share of large bakeries.

    All bread produced in Russia can be divided into two types: traditional and non-traditional. The share of traditional bread production is 90% of the total market. Traditional bread includes cheaper products. Non-traditional bread is products according to original recipes, national varieties of bread. The non-traditional bread category is developing dynamically - in 2016 its growth amounted to 7%, while traditional bread grew by only 1.3%.

    Thus, the main tendency of the bakery market can be distinguished: unconventional bread, which is positioned as a “healthy product”, is in demand. The modern bakery market places high demands on the manufacturer. Today it is not enough to produce massive, traditional varieties of bread. In order to successfully operate in the market, it is necessary to form a wide range of products and take into account the tastes of consumers.

    According to the research of the Institute of Agricultural Marketing, by the end of 2015, prices for bakery products of premium flour rose by 5% on average in Russia. The maximum price increase was noted in the Northwestern Federal District and in the Volga region - about 10%. Minimum growth was recorded in the Southern Federal District and the North Caucasus.

    Experts predict that the greatest prospects for the consumption of bakery products are expected in the Southern Federal District - it is in this region that bread production is in demand.

    Figure 3 The rate of change in prices for bakery products of premium flour in the Federal District in 2015, %

    The advantages of creating a small bakery:

    - always fresh bread, which ensures the demand for products;

    - flexibility of production, allowing to adapt to the tastes of consumers and market trends

    - stable demand, almost independent of the crisis;

    - Prospects for concluding supply contracts with shops and restaurants, as mini-bakeries are considered more profitable suppliers.

    Thus, the constant demand for bakery products, the trend towards the popularity of mini-bakeries and the development prospects and advantages of the baking industry allow us to talk about the investment attractiveness of such a business.

    3. DESCRIPTION OF GOODS AND SERVICES

    This project involves the opening of a mini-bakery with the goal of producing and selling bakery products. Bakery products are positioned as “healthy and wholesome food”, therefore, only high-quality ingredients and a unique recipe are used in bread production, which makes the bakery stand out on the market.

    The product range for a small bakery is recommended to be formed from 5-8 headings. It is planned that the bakery will provide the following types of products:

    - branded bread with cereals and seeds, designed for consumers who adhere to a healthy diet;

    - traditional wheat and rye bread;

    - Italian ciabatta bread;

    - French buns and croissants.

    The percentage of production of various types of bakery products is shown in Figure 4.

    Figure 4 - The share of each type of product in total production

    In the future, it is planned to expand the range of bakery, based on the taste preferences of consumers and market trends.

    4. SALES AND MARKETING

    The bakery's target audience is people who prefer a healthy lifestyle and choose high-quality and healthy bakery products. The target audience can be divided into two segments: 80% of consumers are residents of nearby houses, and 20% are random passers-by and regular customers.

    The competitive advantages of the bakery include:

    - product quality: fresh baked goods, high-quality and healthy ingredients, a unique recipe;

    - the price of products: traditional bread is sold at a price below the average market. The loss from price reduction is offset by a higher price for branded bread;

    - the presence of a window in the shop: by providing such a layout of the establishment, you can earn the trust of customers who can observe the process of making bread;

    - branded product presentation: each product is sold in a separate paper bag with a product description.

    To promote the bakery, you can use various marketing tools: the installation of billboards and signs; distribution of business cards, flyers or brochures with product descriptions; media advertising; radio advertising; participation in food exhibitions and fairs; stocks and so on.

    The use of a particular tool depends on the target audience of the institution and the project budget.

    For advertising a bakery it is planned:

    1. Tasting of products dedicated to the opening of the bakery. The action will last two days and involves free tasting of all types of bakery products, as well as the purchase of bakery products with a 25% discount. Costs will amount to 5000 rubles.

    2. Print advertising - distribution of flyers with a coupon for a free bun upon purchase. Costs will amount to 5, 000 rubles, including the creation of a layout of an advertising flyer, printing of advertising material and the salary of a promoter;

    3. Every day in the morning “hot hours” will be arranged, when customers can purchase yesterday’s products at a discount;

    4. A bright signboard is used as outdoor advertising, the cost of which, including installation, is 20, 000 rubles.

    According to a consumer survey, advertising of bakery products slightly affects the decision to purchase this product. The most important criterion according to which a consumer chooses in favor of a particular bread producer is the freshness of the product. Therefore, the key tool of advertising is the quality, taste and freshness of the products.

    The sales plan is calculated based on the production capacity of the mini-bakery. It is estimated that the bakery will produce 550 kg of bakery products in 8 hours of operation. The average selling price will be 50 rubles per kilogram of products. The planned sales volume is calculated based on the productivity of the equipment and 90% of the products sold: 550 * 0.9 * 50 = 24750 rubles per day or 742500 rubles per month.

    5. BAKERY PRODUCTION PLAN

    Opening a bakery and organizing production involves the following steps:

    1) The location of the bakery and the premises. Properly selected premises for a bakery with its own bakery is important not only in terms of marketing, but also in the context of the requirements of regulatory authorities. The premises of the bakery must fully comply with the requirements of SES, namely:

    - have separate workshops: a warehouse for storing flour, eggs, sugar and other ingredients; production and storage area; if sale of products is provided, then the trading floor;

    - the room should have hot and cold water, ventilation, sewage, tiled walls, waterproof floor, air conditioning systems;

    - there should be additional facilities for bathrooms, a place for storing industrial waste, a room for staff.

    Particular attention should be paid to electricity capacities, since food equipment consumes a lot of electricity.

    To accommodate the necessary production facilities and take into account all the requirements, an area of ​​70 to 200 m2 is required - this depends on the format of the bakery.

    A lot of money will be needed to equip the bakery. Therefore, it is worth paying attention to the fact that it is better to have a room in the property than to rent it. In the case of a lease, there is a risk of termination of the contract and a change in the place of production, which will entail additional costs. If your own funds do not allow you to purchase the premises, then it is worth considering the option of a long-term lease for a minimum of 3 years or a lease with the right to redeem it.

    When choosing a place, you should also consider the presence of competitors nearby. It is advisable that there are no direct competitors around.

    The bakery should be located in a crowded place: markets, near shopping malls and office centers, on the main streets. Since a sufficiently large area is provided for the organization of production, the cost of such premises in the center will be quite expensive. In order to optimize the costs of the ongoing project, it is planned to rent a premises for a long term in a sleeping area of ​​100 m2. For the production facilities allocated 90 m2.

    Since, in addition to bread production, the project provides for its retail implementation, the area allocated for the trading floor in the bakery is 10 m2 enough to accommodate the cash register and display case.

    The leased premises comply with all sanitary standards and rules specified in SanPiN 08/18/2019.545-96 “Production of bread, bakery and confectionery” and are intended for food production. The rental price is 50, 000 rubles / month. It is planned to spend 100, 000 rubles on the repair of the premises, including the arrangement of the trading floor.

    2) Recruitment. The staff is determined based on the format of the bakery and production facilities. Since the project provides for the opening of a mini-bakery that produces 500 kg of bread for an 8-hour shift, the organization of the work process will require:

    - 2 bakers-technologists (shift schedule);

    - Manager, responsible for the purchase of raw materials and organization of work of all personnel;

    - 2 sales clerks for the trading floor (shift schedule);

    - cleaning lady;

    - accountant.

    In this case, it is necessary to conduct preliminary training of personnel, familiarize them with the recipe, safety procedures and the production process, as well as to monitor compliance with all norms and requirements of sanitation. Bakers must have the appropriate education and experience, since it is precisely on their professionalism that the quality of the products depends in many respects.

    3) Equipment. An equally important component of the production process is quality equipment. When choosing equipment for the bakery, you need to clearly understand what competitive advantage you plan to get - a wide range, quality, quick retooling of equipment for the production of other types of bread, etc. Today the market offers various options for bakery equipment, the most famous brands are ABM, FoodTools, Sigma, Unox, Miwe, Vitella. It is recommended not to save on basic equipment.

    The equipment necessary for a mini-bakery includes:

    • flour sifter - 25, 000 rubles;

    • mixer operator - 100, 000 rubles;

    • dough sheeter –30, 000 rubles;

    • proofer - 40, 000 rubles;

    • a table for working with dough - 30, 000 rubles;

    • oven - 300, 000 rubles;

    • baking trolleys - 15, 000 rubles;

    • refrigerator - 35, 000 rubles;

    • dishes and kitchen equipment - 10, 000 rubles.

    As a result, a set of specialized equipment for a mini-bakery will cost approximately 585, 000 rubles.

    4) Organization of supply. Before opening the bakery, it is necessary to establish supply channels for raw materials and determine suppliers. It is necessary that all the ingredients used comply with the requirements of GOST.

    When negotiating cooperation with suppliers, you must familiarize yourself with all the conditions specified in the contract. As a rule, transportation costs for the supply of ingredients are borne by your production. To reduce this cost item, you need to choose suppliers that are closer to your establishment.

    The main raw material of the bakery is flour. It must be top grade and properly stored. It is recommended not to make large stocks, as the flour may deteriorate. In addition to flour, you will need: yeast, eggs, fresh milk, sugar, salt and other raw materials.

    Drawing up a technological map of cooking products will accurately calculate the required amount of raw materials. At the same time, it is important that the formulation of bakery products comply with GOSTs or separately accepted specifications.

    6. ORGANIZATIONAL PLAN

    The initial stage of opening a bakery is to register a business with government agencies and obtain permits for food production. In order to produce and sell food products, an enterprise must obtain a permit from the SES for production, an SES conclusion for finished products and a certificate of conformity. Prior to the start of production, the conclusion of the fire inspection and environmental supervision should also be obtained.

    In order to conduct business, an IP with a simplified taxation system is registered (“income” at a rate of 6%). Types of activity according to OKVED-2:

    • 10.71 - Production of bread and flour confectionery, cakes and pastries short-term storage;

    • 47.24 - Retail sale of bread and bakery and confectionery in specialized stores.

    More details on the legal side of bakery activities are consecrated here.

    The bakery's work schedule is different for the production hall and the sales area. The work of the production workshop is from 6:00 to 16:00 with an hour break from 11: 00-12: 00. The trading room is open from 8:00 to 20:00.

    Bakery technologists work in shifts: 2 days of work after 2 days of rest. Their responsibility includes monitoring the production process, maintaining cleanliness in the workshop during the production cycle, timely disposal of spoiled products, maintaining a hood cleaning journal, and keeping track of the raw materials available.

    There is also a shift schedule for sales clerks: a day of work and a day of rest, since their working day lasts 10 hours. Responsibilities of the seller: customer service and work at the cash desk, maintaining cash and transaction records, supported by the presence of receipts, acceptance of finished products from the shop, window dressing.

    The manager is responsible for cooperation with counterparties and the purchase of raw materials, organizes the entire work process, monitors the work schedule of the staff, forms the staff, pays wages.

    The accountant maintains financial statements and works through outsourcing.

    The cleaning lady is responsible for cleanliness in the production hall and sales area.

    Table 3. Staffing and payroll mini-bakery

    Position

    Salary, RUB

    Number of people

    PHOT, RUB

    Administrative

    one

    Manager

    20000

    one

    20000

    2

    Accountant (outsourcing)

    7000

    one

    7000

    Industrial

    3

    Technological baker (shift schedule)

    20000

    2

    40, 000

    Trade

    four

    Cashier seller (shift schedule)

    15, 000

    2

    30000

    Auxiliary

    five

    Cleaning lady (part-time)

    7000

    one

    7000

    Total:

    104 000.00 ₽

    Social Security contributions:

    $ 31, 200.00

    Total deductions:

    135200.00 ₽

    7. FINANCIAL PLAN

    The financial plan takes into account all the income and expenses of the bakery, the planning horizon is 3 years. It is planned that after this period the institution will need to expand production and the range of products.

    To start a project, you need to calculate the amount of investment. To do this, you need to determine the costs of repairing the premises, purchasing equipment, the initial purchase of raw materials and the formation of working capital, which will cover the losses of the initial periods. The bulk of the required investment is in the acquisition of equipment - 66%. Own funds will be used to implement the project.

    Table 4. Investment costs

    Name

    Amount, rub.

    The property

    one

    Room repair

    50, 000

    Equipment

    2

    Set of equipment

    585, 000

    3

    Equipment for the sales area

    50, 000

    four

    Fire-fighting equipment

    40, 000

    Intangible assets

    five

    Starting advertising campaign

    30, 000

    6

    Certification

    30, 000

    Current assets

    7

    Raw material purchase

    20, 000

    eight

    Current assets

    80, 000

    Total:

    885 000 ₽

    Variable costs consist of the costs of the ingredients used in the preparation of bakery products, as well as the payment for the capacities consumed in the production process (water, gas, electricity, sewage). To simplify financial calculations, cost variables are calculated based on the average check amount and a fixed trade margin of 300%.

    Fixed bakery costs consist of rent, utility bills, payroll, advertising costs, taxes and depreciation. The amount of depreciation is determined by the linear method, based on the useful life of fixed assets of 5 years. Fixed costs also include tax deductions, which are not presented in this table, since their amount is not fixed and depends on the volume of revenue.

    Table 5. Fixed costs

    Name

    Amount in months, rub .

    one

    Rent

    50, 000

    2

    Advertising

    10, 000

    3

    Communal payments

    10, 000

    four

    Depreciation

    11250

    five

    Payroll deductions

    135, 200

    6

    Other

    10, 000

    Total:

    221 450 ₽

    Thus, fixed monthly expenses of 221, 450 rubles were determined. The volume of planned revenue is 742500 rubles per month.

    8. EVALUATION OF EFFICIENCY

    The payback period of the bakery with an initial investment of 885, 000 rubles is 7-8 months. The net monthly profit of the project upon reaching the planned sales volumes will amount to 278, 842 rubles. It is planned to reach the planned sales volume for the eighth month of work. The return on sales for the first year of operation will be 28%.

    The net present value is positive and equal to 24, 993 rubles, which allows us to talk about the investment attractiveness of the project. The internal rate of return exceeds the discount rate and is equal to 18.35%.

    9. POSSIBLE RISKS

    To assess the risk component of the project, it is necessary to analyze the external and internal factors. External factors include threats related to the economic situation in the country and markets. To internal - the effectiveness of managing the organization.

    The specifics of the baking industry determine the following external risks:

    • rising prices for raw materials, unscrupulous suppliers. In the first case, there is a risk of increased costs and, as a consequence, the selling price, which can negatively affect demand. In the second case, the risk is associated with interruptions in production. It is possible to reduce the likelihood of these threats with the right choice of suppliers and the inclusion in the contract of all necessary conditions that provide for the liability of the supplier if they are violated;

    • reaction of competitors. Since the bread market is quite saturated and the competition is high, the behavior of competitors can have a strong influence. Price pressure of larger market participants is not ruled out, which will negatively affect sales. To minimize this risk, it is necessary to form your own customer base, constantly monitor the market, develop new offers that are not presented on the market;

    • increase in rental value or termination of the lease. The probability of risk is moderate, but the consequences of its occurrence can significantly affect the cost and production process. This risk can be reduced by concluding a long-term lease agreement and choosing a reliable, conscientious lessor;

    • seasonal decline in demand. The probability of this risk is rated as average. Nevertheless, measures should be provided to minimize it: to ensure the competent distribution of production capacities, to develop an effective strategy for promoting products on the market;

    • changes in regulatory acts governing the baking industry. The probability of risk is low, but when it occurs it is almost impossible to avoid influence;

    Internal risks include:

    • failure to meet planned sales. It is possible to reduce this risk with an effective advertising campaign and competent marketing policy, involving various promotions and bonuses;

    • equipment breakdown and production downtime. The risk will be mitigated by regular maintenance of equipment in order to maintain its operability;

    • staff problems, which implies low qualifications, staff turnover, lack of employee motivation. It is easiest to reduce this risk at the stage of personnel selection, recruiting employees who meet all the requirements (specialization, work experience), as well as building a system of training and advanced training for employees;

    • decrease in the reputation of the institution in the circle of the target audience with errors in management or a decrease in product quality. It is possible to mitigate the risk with constant monitoring of the production process and product quality.

    10. APPLICATIONS

    Evgenia Yurkina

    (c) www.clogicsecure.com - a portal to business plans and guidelines for starting a small business 08/18/2019


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