Bakery businesses honing online gameplay

Inviting people crossing the streets with happy colors and cosy interiors, there has been a sudden rise in pâtisseries and gourmet bakery brands across India. Especially in major cities, the bakery business is on a rise moving ahead from mom and pop neighbourhood cake shops. As per the website of Expert Market Research, Bakery Industry in India stood at a value of nearly USD 7.60 billion in 2020. The market is further estimated to grow at a CAGR of 8.5 percent between 2021 and 2026 to reach a value of USD 12.39 billion by 2026. But veterans believe that the Covid scenario changed the whole aspect of having a cup of coffee with freshly baked cakes in bakery outlets.

Talking numbers, the average profit margin for a bakery depends on the overhead and materials cost of producing bakery goods. But, bakery owners should make at least a 30 percent profit margin to cover operational costs and earn income. A speciality bakery that uses more labour-intensive techniques and high-quality ingredients to produce goods could make a 50 percent profit margin or more with a price markup of 100 percent. In normal cases, the bakery businesses mostly depended on walk-in customers, because guests would like to have their cakes and pastries at the shop. But with life moving towards virtual reality, can patisserie businesses survive the online battle? 

The online gameplay

Aditi Handa who owns The Baker’s Dozen brand feels that the pandemic triggered the digital and e-commerce turning point, hence the bakery business and pandemic bakers witnessed great success and growth considering the business model had to be all digital to help mitigate the economic downturn caused in the situation. 

“One of the reasons is also the change in consumer habits and preferences, as we were confined to our homes, we have gotten used to receiving our products at our doorstep. Besides, with work from home, consumers were also finding joy in experimenting with their daily essentials and indulgence, while keeping a check on their health, this further helped online Indian bakery brands and bakers to grow and simultaneously widen their product portfolio,” she added.

Adding to Handa, Shivan Gupta, Founder of Cafe Monique commented that pâtisseries, in general, have always had a soft corner in people's hearts, from their being their go-to place for desserts to being their comfort space in times of stress and anxiety. The pandemic might have impacted the business temporarily but with the changing industry dynamics, pâtisseries have evolved and established their online presence. 

Advantages of going online

The reasons are very intriguing and made a lot of positive impact on the growth of the food industry. The online business generates more sales, as this helps in catering to a wider audience through digital presence. 

“Higher on demand ordering facilitates and smoother availability of the products which results in better customer experience. Also, there are hassle-free customisations.  Businesses get 24/7 business which eventually boosts their revenue and allows a person to order at his/her convenience without any physical effort. Patisseries businesses make exciting offers, promotions for the consumers and also messages can be conveyed at one click of a button. Due to the pandemic, it is an easier way of communication and avoids unnecessary public visits,” Chef Arjun Sethi, Co-Founder of Kneed listed out some advantages.

People further have an option of subscriptions as they can enjoy hassle-free deliveries by placing orders for a longer period of time. This ensures customers retention and makes it easy for customers to enjoy baked goods on daily basis.

The sudden growth of patisseries

There are multiple factors behind the sudden hike, one of the primary reasons being the quick and easy purchase process with brands being accessible on various marketplaces. The second driving force is the desire for visually appealing baked products, today the consumers are not just looking for treating themselves but also how they can optimize the “instagrammability” of their consumption/ordered products. Lastly, customers are seeking authentic and products with high-quality ingredients with a desire to pick a healthy lifestyle and indulge in guilt-free consumption on a regular basis giving rise to vegan options.

The Baker’s Dozen for instance is experiencing a phenomenal success rate, at their recently launched experiential store ‘The House Of Sourdough’ in Delhi. “We have already touched 250 percent growth this year earmarking the revenue of INR 17 crore and we further expect this to go to INR 30 crore by the end of the coming year, and 100 crore by FY25. We are right now serving our country with five brand experiential stores and approx. over 40 micro fulfillment units, our future plan to expand this network is to enter the North market in the coming year with six more stores and close the final presence tally to 100 stores pan India in the next 8-9 months,” Handa informed. 

Cafe Monique has also experienced a massive amount of growth since May after they initiated during the peak time of the pandemic. 

However, physical business is here to stay with people wanting to spend time in bakeries which has given a rise to the launch of many high end, up scale patisseries across cities. Bakery-turned-cafe Honey & Dough still believes in the traditional business as the company didnt witness a good response through online sales. The brand has decided to expand through a physical route aiming 30 outlets by 2022.