5 minutes

Increasing the contribution margin - opportunities for the "old" bakery products

The bakery trade is one of the most important economic factors in Germany. Unfortunately, the industry has to deal with constant challenges. According to industry experts, the number of businesses will decline to around 8,000 in the next few years*(businesses that are giving up will be taken over and integrated into the branch network of larger bakeries). If the trend towards higher return rates with growing business size continues in the future, it is to be feared that the quantities of surplus bread and baked goods could increase further.

In Germany last year 2020, more than 10,000 bakery trade businesses sold around 1.68 million tonnes of bread and baked goods and generated a turnover of 14.45 billion euros*(Central Association of the German Bakery Trade). Unfortunately, every 5th loaf of bread produced did not make it onto the customer's plate.

In our last article we wrote about returns in bakeries and what causes them. In this article we will talk about possible measures such as customer communication and employee training that can help you reduce food waste. Modern tools such as software solutions can also help to optimise the evaluation of the return rate and the automation of orders. 

Where to put the stale bread?

Good returns management that limits surpluses makes economic sense. Because the issue of food waste is not just something for ecologists. The baked goods losses in Germany caused by returns amount to about 600,000 tonnes per year. In the meantime, many bakers know that high returns cause high costs . Even if for many the ethical, ecological and social reasons do not always come first, it makes sense from a business point of view to optimise the ordering of goods and to reduce the return rates. For small bakeries, it is the high production costs that are higher when there are high returns, and for large branches, it is the high transport and disposal costs that arise when there are more returns.

Whether small or large bakeries - where to put the unsold bread?

It is not possible to completely eliminate bakery returns, but with a systematic approach you can optimise your returns management and thus achieve higher contribution margins. We have prepared a few approaches on how you can avoid returns in your bakery business: 

  • Avoid a very wide range of products towards the evening. Do not neglect good presentation.
  • Concentrate on quality instead of quantity. Offer a smaller assortment, design the presentation well, don't leave any gaps, vary the arrangement.
  • Thinking and acting in product groups. Despite looking at returns, you don't want to miss out on sales. Position yourself correctly in the product groups to avoid this.
  • Best leftover bread. Sell bread from the day before at a lower price or offer it in special branches ("day before shop", "second bakery"). Better to sell for 60% of the price than to waste 100% of the production costs. 
  • Rework. Using old bread to make new bread.
  • Donations. For example, to the food bank.
  • Customer communication
  • Train employees. Give your staff systems that optimise ordering, for example.
  • Returns analysis

If employees choose the right communication towards customers, they can also understand why the entire assortment is no longer available 5 minutes before closing time. How can such a communication look like? It is possible, for example, to tell customers why breakfast croissants are no longer available after a certain time. By asking questions, you get into conversation with the customers and if you explain to them that you want to throw away less goods, many customers understand that. With the right staff training and communication to customers, you can raise customer awareness. This is a good way to argue that even bread from the day before has its place on the shelf. For example, the taste of rye bread only really develops after the 2nd day and not when it comes straight out of the oven. Bread can also be donated. However, due to overproduction, a lot of bread remains lying around at the German food bank and has to be disposed of accordingly. Other possibilities for the reuse of stale bread are rework technology, the production of electricity in biogas plants or even the production of schnapps* (ARD media report ). An innovative start-up from Holland even manages to produce beer from saved bread scraps - "upcycling unsold bread into beer". 

Rework technology, on the other hand, shows how to reduce the production of bread waste by reusing the leftover bread. According to the Swiss Innovation Center Bühler, up to 10% of the bread produced (off-cuts, shortages or overproduction) is disposed of directly before sale. However, especially for larger companies, the reuse of leftover bread can lead to cost reductions. Tests have shown that reused bread not only has a positive effect on the taste of the end product, but also increases the dough yield by up to 10% . The researchers found that very finely ground, dried leftover bread eliminates the need for prior slurrying. In addition to the higher dough yield, the total baking loss could thus also be reduced by around 5%.

The quality of the dough can be increased by processing leftover bread.

But these creative ideas unfortunately have their limitation, as only a part of the returns can be reused. Snacks or confectionery cannot be used as animal feed and have to be disposed of directly because of their short shelf life. Moreover, not every bakery has a grist machine to process the old bread into bread flour or the resources to sort and shred the bread manually. And the farmer with his biogas plant may not be in the immediate vicinity, which then results in additional costs for the transport or disposal of the returns. 

While it will not be possible to completely avoid wasting bakery products in the future, bakers now have a range of options to reduce returns. Only a new appreciation of our food throughout the food chain can bring about a turnaround in waste and a rethink in the minds of consumers. And that's where modern tools like software solutions can help. We can help you there to evaluate return rates and to automate and optimise orders. This way, an increase in the contribution margin is possible!!!

Who wouldn't want to save money and do something good for nature at the same time?
We will also tell you how you can do this in our webinar on 24.06.21 - registerright here.

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More profit.

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Less Food Waste.

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More time for customers.