I know a few Nigerians out there with the financial capacity to set up a state of the art bakery or at least a functional one but the question many always ask is how lucrative and worthy of investment is the bakery business in this part of the world. In this article, we will take time to explain in simple terms how you can start bread bakery business anywhere in the country; we will also discuss the profit potential as well as the potential risks in the bread bakery business.
It goes without saying that the best product to deal with is the product that is in high demand in the market and bread happens to be one of such product.
In one day, about 10 million loaves of bread are reportedly consumed in Lagos, Nigeria. In America alone, about 53 pound of loaves are sold every year. Each French citizen is believed to eat an average of 3 loaves of bread daily. Approximately, 36 billion loaves of bread can only feed the entire world for just two weeks.
These statistics suggests how much bread is appreciated and consumed not only in Nigeria but around the world.
Bread bakery is not extremely difficult to setup once you have the financial capacity and able to meet the requirements and regulation by the authority.
The Profits in Bread Bakery Business
Total cost of producing one standard sliced bread in Nigeria is about Eighty naira only N80.00 ($0.50). The bakers sell at the rate of N130 to the suppliers and gain a valuable N50 from each loaf. The suppliers then sell to retailers at the cost of N170 and make N50 gain per loaf of bread they supply while the retailers sell at N200 to N220 to the final consumers. So, approximately N50 is the minimum profit made by each individuals that participate at any Stage between production of the commodity and final supply.
An exemplary standard bakery with ideal supply network manufactures and sells 50,000 loaves of sliced bread weekly on average. If multiplied by 50, the result is your potential gain for the weekly production and supply which is N2.5million.
Apparently, the production cost has been taken care of by the N80. Simply Subtract the running costs to get your final profit. Lets say you spend the whole N500,000 for the running cost
- Cost of gasoline for your generator for the week – N50,000
- Cost of maintaining the supply vehicle – N100,000
- Labour and staffs weekly welfare – N100,000
- Miscellaneous expenses – N50,000
When you take out all these from your N2.5 million, what will be left is N2.2 million as your income for the week. It is now easy to Understand why bread bakery business is considered one of the most profitable business in its bracket?
How To Setup Your Bread Bakery
Let’s proceed to discuss how to get your bread bakery setup and the materials you need.
- Decide On The Kind Of Bakery You Want:
The Kind Of bakery you may run will be dependent on your skills, your resources, time, goals and budgets. You may decide to run an online bakery which doesn’t necessarily require a store, you only need to work from the comfort of your home by putting up good pictures of your work on your website where customers can place orders. Many Nigerians run online bakeries by websites and instagram pages. You can run a counter service bakery which involves getting a commercial store where customers come and buy from the counter. It is the commonest form of bakery in Nigeria.
You can also choose to run a specialty service if you specialize in a certain kind of service like wedding cakes, bread and snacks for diabetic patients and for fit family. You get to choose whether to operate from your home or rent a shop. There are very many specialty shops in Nigeria; some are online while most of them operate in stores.
To become a professional baker, you need training in bakery and Food processing. Some people get their training by getting attached to a bakery to learn all the skills of baking from first hands experience. If you are fortunate to have worked in Bread Bakery, that will make things lot more easier as you must have learned the skill while working. Look for a professional trainee who will train you in the art of bread making. Your success in this business depends on how much you know; do not trade knowledge for anything.
- Prepare Your Business Plan
As they say: If you fail to plan, then you plan to fail. You have to come up with a detailed plan that defines your business goals, source of funding, expenses, and customer base. You can prepare it yourself or pay a professional to do it for you. Don’t merely assume you have everything in your head, lack of proper clearly written out business plan can make a business crumble within a short time
- Source of Finance/Capital
Bread Bakery business is a capital intensive business especially if you are starting it big. If you hope to attract large patronage, then you have to start big to be producing quality bread that will attract good patronage. And starting big requires some good amount of money. Once you have the required capital to invest in this business, you are halfway done. Make sure you budget 7/12 months working Expenses; this is the time you will require to gain ground before the profit starts flowing in. At this point you’ve started following your business plan.
- Choose Location
This is important but not critical. It is important in the sense that it allows retailers to come in and buy without having to travel distance, you can make up to this with good marketing and supply mechanism. However, if your product is good, well branded, and marketed effectively, people will find you no matter where you are located. With this in mind, weigh the situation carefully and look for suitable location that you think will be good for your business. Property cost higher in the major cities but is well worth your business.
- Build Your Factory
Here you need to engage the services of expert too. Your factory have to be properly planned and executed in other to meet NAFDAC approval requirements.
Let’s now take a look at the needed Bakery Equipments You Need To Acquire.
- Baking Oven
You may need to go for the industrial baking oven if you can afford. This is what professional bakers who plan to produce bread in commercial quantity use. The cost price is a little expensive but they are well worth the price and will make your work a lot more easier.
- Flour Mixer
This equipment mixes the flour and other ingredient into pastry and ready for baking. There are local mixers and standard electronic mixers. Go for the one that is suitable according to the standard of bakery you are setting up.
- A Slicing Machine
This is important if you intend to slice your bread. Sliced bread is the most popular and most appreciated in Nigerian market. Therefore, slicing machine is compulsory here.
- Baking Pans
Some heavy ovens normally come with baking pans but that may not be suitable to preference. You may need to buy or design baking pans according to your specifications.
- Bread Wrapper Supply
You need a well branded bread wrapper in constant supply. Make arrangements for this in advance before production commences.
- KVA Generator
Any ideal bakery would always need a standby power supply. I’d recommend you go for a big one that can supply power to all your baking equipment simultaneously.
- Supply Vehicle
A supply truck will help in your marketing. There is no way you will be able to market effectively if you don’t have at least one supply vehicle.
Get NAFDAC Approval For Your Bread Bakery Business
Before you produce anything, you must obtain NAFDAC approval First if you are in Nigeria. If you are in other country, seek for the appropriate authority to get your approval.
It is very sad that no bread currently produced in Nigeria passes international health standard according to experts report. Everything shouldn’t be money first; do the right thing and then money will come and even surpass your expectation.
Currently, there is a challenge of unhealthy and unethical competitors whose warfare is price reduction. These bakers substitute ingredients like sugar (which is the most expensive ingredient) with saccharine because it is far cheaper to do so, without considering the health hazards of saccharine.
Endeavor to meet international standards in your bakery business. When all these requirement are put in place, you are ready to excel in the bakery business.