Running a Wholesale Bakery Vs. Running a Retail Bakery


There are many types of bakery operations out there, from cupcake shops to pie bakeries to traditional bread bakeries. Each requires its own skilled bakers, specialized equipment and unique ingredients, but usually they fall into one of two categories: retail or wholesale bakeries. Both retail and wholesale bakeries have their advantages and challenges.

Running a Wholesale Bakery

A typical wholesale bakery sells baked goods to restaurants or grocery stores and rarely to individual customers. In a wholesale bakery, all the work takes place behind the scenes as there is not typically a store front for customers to visit. There are no bakery display cases or cake stands around; this type of kitchen is built for production.

Advantages of a Running a Wholesale Bakery

Work tables and supplies in a bakery

  • The daily orders are consistent and predictable. Wholesale bakeries usually sell their goods to local restaurants or grocery stores rather than individual customers. They sell many items at a time to a few consistent clients. Bakers and managers are able to anticipate their weekly requirements for food orders, labor and deliveries.
  • No storefront required. Wholesale bakeries do not need to be pretty. In fact, many run out of a warehouse-like environment. They are clean of course, but they rely on function more than frill.
  • Minimal labor required for customer service. Since wholesale bakeries do not always require a storefront, they rarely need customer service personnel to run a cash register or pour coffee for waiting customers. They usually only require someone to answer the phone and visit prospective clients with samples of baked goods. Some wholesale bakeries do have a retail counter.

Challenges of Running a Wholesale Bakery

  • Bakeries rely heavily on consistent clients. Wholesale bakeries usually have a set of consistent clients who agree to get all their bread, cakes or pies from them in particular. If one of these clients should drop away, chances are that a good chunk of income could fall away with it.
  • More difficult to find new business opportunities. Many wholesale bakeries work out of an industrial park because rent is lower. In order to find new business, you need to take the time to visit local eateries or grocers to offer samples of your goods and try to attract a new client.
  • Delivery truck or delivery service required. Most likely, your clients run their own businesses and will need you to bring your goods to them. This requires some time and labor, as well as a vehicle equipped with the space and temperature control capabilities to haul your baked goods around town as often as every day.

Running a Retail Bakery

Operating a retail bakery is similar in many ways to running a wholesale bakery, only the items are designed to be sold individually to customers rather than in bulk to restaurants or retail stores. A retail bakery is its own retail store. Running a retail bakery has many advantages, but as with any business, has its share of challenges as well.

Advantages of Running a Retail Bakery

A bundt cake decorated with a flower

  • Your storefront is a marketing tool. For retail bakeries, location is of prime concern. Your storefront is a way of marketing to prospective customers walking or driving by. If you have an attractive sign, eye-catching lights and a great location, you are bound to get curious passersby coming to you looking for a sweet treat.
  • Your goods are constantly on display. When your items are in an organized, well-stocked and all-together mouth-watering exhibition in a glossy bakery display case or on beautiful cake stands, you have a good chance at selling items simply by how they look. Wholesale bakeries typically do not have the advantage of visual displays.
  • You can sell items one by one. Retail bakeries have the advantage of making special cakes, pies or cookies in smaller portions and still making the sale. You have the option of selling cookies one by one to people who stop by your store after lunch, for breakfast or for a late night dessert, depending on your hours. Wholesale bakers rarely have this option and usually need to secure accounts for bulk sales.

Challenges of Running a Retail Bakery

  • Walk-in business is unpredictable. Unlike a wholesale bakery, you cannot typically anticipate exactly who will come in and order a muffin or loaf of bread each day. You may be challenged to know how much to bake every day, since some days are bound to be slower than others.
  • Storefront look and design is important. Retail bakeries need to bring in customers to be successful. In order to gain loyal customers who want to come back into your shop, your storefront must be clean, comfortable and attractive at all times. This must happen in addition to keeping your kitchen up and running.
  • Labor must be budgeted for customer service. Customers in a retail bakery usually interact with an employee at a service counter, and not usually the bakers themselves. You need to manage extra people and extra labor hours in order to actually sell your goods over the counter to walk-in customers.

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  1. I am retiring in a few years and my wife and I are considering opening up a bakery. We are trying to decide if we want to go the retail or wholesale route. Currently I think we love the retail side of things. This way, we can make new loaves of bread each day and put them in the display case.

    • Nicole Castellano
      Nicole Castellano on

      That sounds like a wonderful idea Bryan! Putting your bread on display brings in more customers and can spark up more conversation about your business. Plus it just looks delicious. :) Good luck with your retirement and future endeavors. If you need anything else, we’re here to help.

  2. I never even realized there was much difference between retail and wholesale bakeries. It actually sounds quite awesome to work wholesale because you just have clients rather than customers for your products. I’ll have to see if that is something for me, sounds awesome!

  3. I am trying to evaluate a wholesale bakery for possible purchase. Is there a standard multiple of sales or net operating income that is typical for this industry? The seller tells us they are the preferred vendor for 5 distributors. However, they have not turned over their sales numbers. Thanks!

    • Nicole Castellano
      Nicole Castellano on

      How exciting! If I were you, I would consult your seller or a business adviser to resolve any confusion. Good luck!

  4. We are a gaggle of volunteers and opening
    a brand new scheme in our community. Your website provided us with valuable info to work on. You’ve performed ann
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  5. This is very interesting, I really had no idea what the difference between these two kinds of bakeries was, but it’s nice to have at least some idea now. It seems to me that a wholesale bakery might be the more practical solution since they have predictable daily orders and don’t need to look as good. I do see the benefits of running an individual retail bakery though, especially since they would probably have a much larger and more variety in their customers.

    • Simon, we are so glad you found this article helpful! There are a lot of factors one must consider when opening a business.

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