Bakery overhead costs affect your business’ profitability, and ultimately, its success or failure. Reducing expenses can help you earn more, but you want to cut excess in the right places. We can help you determine how to effectively lower bakery overhead costs without harming your operations.
Pricing Your Baked Goods Comes Down to One Simple Formula
You’re savvy enough to know that before you increase the price of your baked goods, you need to see where you can reduce costs internally. The price of your baked goods is determined by this formula: cost of ingredients + cost of labor + other overhead costs + profit.
Before you immediately boost the profit category, is it possible to lower costs in other categories?
Calculating Overhead: Count Both Fixed and Variable Costs
Overhead — it’s how much it costs to run your business. Overhead can be broken down into two categories: fixed and variable.
Fixed costs are bills that are the same every year, regardless of how much product you sell. Your store’s rent, waste disposal charges, insurance — these are fixed costs that do not change month to month.
Variable costs are categories that change depending on certain conditions. For instance, your labor costs may be higher in November and December, but business slows down in January so you may lay off a worker. Similarly, you might buy more ingredients when you’re selling more, but less once business slows down.
Where to Cut Back
Some bakery overhead costs you simply can’t lower, like rent. The price of ingredients likely won’t go down either. But some categories you have control over.
First, look at your utilities. Could you switch to energy-efficient appliances to reduce power bills? Could you change to LED lightbulbs and spend less on electricity? Don’t overstock refrigerators and freezers — it makes them work harder to keep inventory cool. And don’t run half-loads in your dishwasher — it’s a waste of hot water.
Where Investing Pays Off
Do you find yourself paying more than you’d like for appliance repair throughout the year? When your commercial baking equipment breaks down, you don’t just pay more for repairs, you’re also losing out on productivity.
It always pays off long-term to invest in quality commercial baking equipment. High-end machines help you create a quality product, they’re covered by lengthy warranties and you will spend less on maintenance and repairs.
How Dough Tech Can Help
When your bakery needs a high-quality, long-lasting dough mixer you can depend on for years, Dough Tech can come through for you. We offer Escher mixers for both commercial and industrial use, products we stand by and that bakers like you prefer.
Contact us today to learn more about how investing in durable, high-performance equipment can help lower your long-term bakery overhead costs. We want to help your business succeed.