A new UK report by Baker & Baker has highlighted the significant impact the cost-of-living crisis is having on businesses such as bakeries, convenience stores, higher education caterers, pubs and coffee shops.
The research, which involved a survey of more than 250 businesses, was conducted over the summer months by Sapio Research. The standout finding from the research is that 59% of businesses say that trading has been down on the previous 12 months.
According to the company, however, this was the tip of the iceberg and there were other interesting findings. When asked ‘what price increases have had the biggest impact on their bottom line?’, for example, the top three answers were:
- 74% – product price increases, driven by rising ingredient costs
- 69% – utilities
- 40% – facilities (mortgage, rent etc) and packaging
Other key findings showed that the cost-of-living crisis has caused a decrease in overall sales of fresh sweet bakery: 45% of businesses have experienced a slight decline in sales while 10% have experienced a significant decline; 3/5 of companies have also seen a decrease in average spend per customer compared to the previous 12 months; 86% have seen an increase in the number of customers switching products and, finally, businesses are looking at the format of products to remain competitive, and while there is movement across many formats such as scratch and mix, respondents have increased the usage of frozen unbaked products (50%) and frozen baked products (47%).
“These are certainly unprecedented times. And it looks like we’re in for a bit more pain before things start to improve. When we posed the question ‘when will the cost-of-living crisis end and things return to some sort of normality?’, more than half (54%) expect things to improve by the end of the year, and nearly a third of businesses (29%) are either unsure or think it will be later than summer 2024 before we start to see light at the end of the tunnel,” commented Helen Sinclair, UK Marketing Manager at Baker & Baker.
Also included in the report is independent analysis by Sapio Research alongside tips on how businesses can remain competitive during these challenging times. These include making sure products look the part, utilising multi-product baking and leveraging different formats.
More Bakery Bites reports will be published throughout 2024 looking at other key issues impacting the bakery industry.
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