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Bakery Wholesale and Retail Pricing

post #1 of 6
9/6/12 at 3:31pm
Thread Starter 

I've started a gluten-free, vegan and refined sugar-free bakery in Los Angeles. It's very new and I currently work out of an incubator kitchen. While the good farmer's markets are proving to be a pain to get into, I've given some sample baskets to a few really popular local coffee shops. I immediately got interest from all of them and was a bit overwhelmed. When I sent them my pricing, they all agreed that the items were a bit out of their price range. 

 

Any recommendations on profit margins for goods like these? Right now the wholesale prices I'm quoting are about 40% higher than that of Cost of Goods. Unfortunately, my ingredients are expensive. An example would be that I'm selling my muffins at $20/dozen (suggested retail $3.50-$4 per muffin). 

 

Any suggestions, insults, questions, etc will be immensely appreciated!!!

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post #2 of 6
9/7/12 at 9:59am
It's a very hard sell.

We have the same problem. Our products are hand made using local ingredients where possible. We typically wholesale our stuff at 20-25% off of our retail, we can't make a profit if we charge less then that.

A lot of the cafes around here have gotten used to purchasing mass produced, mostly flavour-less products from the local equivalent of Sysco, where they can mark up prices by 100+%. That's gotten to be what they think is normal.

So, for the most part, we're sticking to retailing it ourselves. We don't get the huge volumes, but then given things are hand made, scaling up doesn't reduce our costs much.

-roman

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post #3 of 6
9/7/12 at 1:13pm

You will have to find where the upscale clientel goes and then go there. In this economic enviorment and combined with OBamma unemployment fiasco you can't expect the average family to shell out $4.00 for a muffin.  For a 1/2 doz med. size ones yes.

Chef EdB
Over 50 years in food service business 35 as Ex Chef. Specializing in Volume upscale Catering both on and off premise .(former Exec. Chef in the largest on premise caterer in US  with 17 Million Dollars per year annual volume). 
      Well versed in all facets of Continental Cuisine...
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post #4 of 6
9/7/12 at 1:43pm

Either do what ChefEd says, or open your own vegan, gluten free cafe yourself. It wouldn't make it where I live, but I'll bet there are plenty of LA people who are into that. And there are a lot of people that can't eat gluten, there's got to be a niche market for what you are doing.

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post #5 of 6
9/7/12 at 4:18pm
Thread Starter 

Thank you all so much for your advice! This helps to know it's not just me. It's all been a great learning experience for me. I thought the gluten free pastry market seemed untapped. Turns out, cafes just can't afford the product. I think I am going focus my efforts on selling directly to the consumer at farmers market and perhaps build up to my own bakery, or build enough of a name for myself that local shops will be willing to trust the sales of my product. 

 

Thanks again!

Jessica

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post #6 of 6
9/8/12 at 6:53am

Check your PM's I sent you a contact name.

 

mimi

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