IF you plan to invest in a business, why not put up a bakery?
Baking is a profitable business. Bread, being a favorite breakfast and merienda fare, is a sure seller. Pan de sal, ensaymada, monay and other local favorites are not only delicious, they are also easy to prepare.
And so long as you exercise good business practices and maintain the quality of your products, the bakery is sure to give you a good return. Like all business ventures, however, a bakery business requires that you prepare well for it. It also needs a hands-on manager or owner who is willing to put in the time to oversee the business.
Here are a few basic steps to guide you should you decide to “dough it,” so to speak.
- Learn business-scale baking, which is entirely different from home baking. Do not presume that since you can bake a good chiffon or pound cake at home (using a teaspoon of this and a cup-full of that ingredient), you can produce the same quality once you bake for, say, a hundred people.
In commercial baking, ingredients are measured in percentage compared to the weight of flour. This way, your product will taste exactly the same whether you produce one, 50, 100 or more loaves of bread or a thousand pieces of cupcakes.
Consistency in product taste and quality is what people look for in breads and cakes. You can only achieve that if you use the same formulation your customers have become used to.
Flour mills sometimes have schools or technical centers that offer baking courses as part of their marketing efforts. Pilmico Foods Corp. has a baking school in BF Homes, Parañaque City. Liberty Flour Mills has its Maya Kitchen in Makati City. General Milling Corp. has a baking school in Cebu City.
- Choose a good location where there are a lot of passersby who are all potential customers. A place near a market, church or school, bus or jeepney or even tricycle stations are good bakery locations. Wherever people congregate, there is business.
- Know your market and bake only products that will fly off the shelf. French breads and whole wheat breads are a must for the rich as well as the health and fitness buffs. But your jeepney driver or your everyday Juan de la Cruz prefers pan de sal hot from the oven. Baguettes and Ciabatta may sell if your shop is in a shopping mall. But if your bakery is in Tondo, or Pandacan or any neighborhood corner in San Andres, the best sellers would be pan de sal, monay, and ensaymada.
- Start small, but dream big and grow the business gradually. By starting your bakery in a modest way, you can control losses should you commit mistakes, which is common for aspiring businessmen.
Begin with second-hand equipment from bakeries that have expanded and need to unload their smaller capacity oven, for example. Buy locally made equipment so that technical service would be readily available should the equipment break down. Imported equipment looks good and modern but are expensive, and parts and technical support are not readily available.
DCM is a well-known local oven and mixer manufacturer and they produce good, tough ovens, mixers and kneaders. I should know. I have a 24-year-old DCM oven and it still works while my second-hand spiral mixer—also made by DCM—works just fine.
- Know your costs and control your expenses. The cost of bakery ingredients fluctuate due to demand and competition. It is thus essential that you have knowledge of the cost of your ingredients as they change since this will affect the cost of your products. Use locally produced flour as these are fresher and consistent in quality.
Local mills also provide bakery technicians who can troubleshoot and help you improve your products. Imported flour is cheaper but they are not as good as the local produce.
Here are some numbers to consider. Depending on your formulation and your baking efficiency, a 25-kg bag of local flour may produce about 1,780 pieces of pan de sal weighing 25 grams each. The same flour may produce 98 loaves of bread weighing 450 grams each.
At P2.50 per pan de sal, such flour will give you gross sales of P4,450 per bag. Your 98 loaves of bread, if sold at P36.50 each, would gross P3,570 per bag of flour. From that, you will have to deduct the cost of your ingredients, space rental, packaging, power and utilities, and salaries to get your net income.
- Hurdle the red tape of securing business permits. To secure a City or Municipal Business Permit, you must present a Barangay Permit, Department of Trade and Industry (DTI) registration if you are a “single-proprietorship business,” or a Securities and Exchange Commission (SEC) Registration if you are a corporation or a partnership. Another requirement is a Food and Drug Administration (FDA) License to Operate (LTO) as a “food manufacturer.” And don’t forget to mind your taxes because Kim Henares will surely run after you.
About the author: Ric M. Pinca, executive director of the Philippine Association of Flour Millers, is a graduate of Baking Science and Technology from the American Institute of Baking in Kansas, USA.