Boosting Bakery Sales

With sales of packaged bakery snacks down, the allure of fresh- or par-baked items can generate revenue in the coming year if c-store operators handle things correctly.

Jim Schutz, vice president of people assets for Open Pantry Food Marts of Wisconsin, said his chain has two different bakery offerings, muffins and doughnuts, which are supplied by Krispy Kreme.

“We were actually a pioneer in the convenience store business when Krispy Kreme came to Milwaukee. We were the first chain in Wisconsin to get their business, and we maintain it today–it’s still a popular brand and a great draw for our company.”

The muffin program uses prepackaged product obtained through Open Pantry’s supplier partner. It is merchandised in the stores’ Willow Creek Coffee areas and does, Schutz said, “exceptionally well.”

The challenge that should concern c-store operators, in Schutz’s opinion, is that a baked product in general “is a perishable item. We have two sides to us: the sales side, where we want to increase sales, and the operational side, that is always looking out for the spoilage and what that is going to cost.”

Indeed, a doughnut “is no longer a breakfast item,” Schutz said, “and we are being shown that by consumers. We used to put our doughnuts out at 4 a.m., with our display case proudly full and looking good, then by 10 a.m. we’d wrap it up because that was the end of the daypart. That’s not the case anymore.”

As a category, bakery produced mixed results according to Information Resources Inc.(IRI). For the 52-weeks ended Dec. 27, 2009, doughnut sales in the convenience channel rose 3.18% (see chart below) to $497.44 million. The average cost per item increased 16 cents to $1.45. Sales of cupcakes and brownies, however, struggled. They dropped 2.15% to $608.97 million despite having a low price point of $1.20, which was down 13 cents.

Marketing Matters
Experts agree that offering a bakery program requires a multifaceted strategy that begins with marketing fresh products throughout the day.

“Number one, offer products that have appeal across the dayparts,” suggested David Bishop, veteran consultant and managing partner of Balvor LLC in Barrington, Ill. “Bakery is not just simply doughnuts and pastries for the morning daypart. What we see is the ‘stales’ or the ‘unsellables’ languish on the shelf in the afternoon. What that means is that having the accompanying products—whether they be cookies or muffins—that satisfy the other need states during the later part of the day are critical.”

Second, noted Bishop, is that an obviously broader assortment helps widen the appeal to female customers. “It provides a health-and-wellness aspect to the bakery, which traditionally has been skewed to the indulgent if it was just the frosting-covered doughnuts that we’ve typically seen.” Beyond that, Bishop continued, “it fills the case and provides a better presentation throughout the day. It just plain looks better.”

 

Mixed Results for Top Doughnut Brands
The Information Resources Inc. (IRI) research on the convenience channel for the 52-weeks ended Dec. 27, 2009, shows that dollar sales of several doughnut brands showed strong sales increases. However, some well-known brands are going through tough times.

BRANDTOTAL DOLLAR SALES% CHANGEUNIT SALESAverage Price
Total Doughnuts$497,438,6003.18343,092,200$1.45
Hostess Donettes$188,220,2003.98116,260,500$1.62
Krispy Kreme$61,399,0408.9641,079,390$1.49
Little Debbie$51,684,410-4.6968,205,800$0.76
Mrs. Freshley’s$24,032,890-0.1118,812,330$1.28
Private Label$22,730,48022.5821,005,330$1.08
Tastykake$15,711,520-6.876,466,668$2.43
Hostess$14,972,260-6.314,186,435$3.58
Entenmann’s$13,958,8802.953,637,728$3.84
Mrs. Baird’s$13,549,67011.968,754,795$1.55
Mickey$8,826,1537.053,326,710$2.65
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