The recession has been a reality check for many in the specialty coffee and tea business. With consumers spending less and industry giants like Starbucks and McDonald's aggressively pursuing the morning coffee and breakfast business, it's no longer good enough to simply focus on the quality of coffee and tea. The challenge for independent coffeehouses and tea rooms is to look for opportunities across the entire business to broaden their customer base, increase high margin sales and distinguish themselves from the competition.

Create a Competitive Advantage

One key area of opportunity that is often overlooked is baked goods. In a competitive market, serving freshly baked, gourmet pastries means increased sales, higher margins and repeat business.

Yet, while many operators take great care to serve the perfect latte or pot of tea, their pastry cases are littered with leftover muffins in plastic wrap, pre-packaged food items from the local discount store, or a limited selection of pastries from the local bakery that is no different from every other shop in the area.

Industry data shows that sales of baked goods typically contribute 25% of a shop's annual gross revenue. For many shops, the addition of freshly baked pastries to the menu during the morning hours, when coffee and tea sales are strong, can result in 40-50% increases in incremental sales with gross margins of 60-70%.*

It's not surprising. Who can resist the aroma of freshly baked pastries? In fact, industry surveys confirm that the availability of freshly baked pastries is a significant factor in customers' choice of where they have breakfast. The data shows that consumers are willing to pay more for freshly baked products and visit the shops that serve such products more often.

Starting Your Own In-Store Baking Program

Traditionally, establishing an in-store baking program meant hiring a professional baker to bake from  scratch. Preparation required a mixer, a proofer, a large convection oven, one or more refrigerators and freezers and a variety of bowls, baking pans and other utensils, as well as ventilation and fire suppression systems required by local building codes.

But new compact convection ovens and the availability of improved baking products have made it possible for a coffeehouse, tearoom, bed & breakfast inn or other small foodservice operation to set up a profitable in-house baking operation for less than $1,000.

Thaw and Bake

The thaw and bake category includes the frozen pastry dough, pre-formed frozen pastries or par-baked breads and rolls.

Using frozen pastry dough eliminates an initial step in preparation of the products, but may still require a trained baker as well as all of the facilities and equipment required in a bakery where the products are prepared from scratch.

Pre-formed frozen pastries are popular because they eliminate the need for a trained baker and simplify the preparation process. For a small operation certain frozen pre-formed products, such as croissants, which require special ingredients and are difficult to make, or cookie dough, which is neither convenient nor cost effective to prepare in small batches, are ideal additions to an in-store baking program.

However, since such products are delivered frozen (usually on trays) additional freezer space is necessary. Preparation also involves proofing (i.e. allowing the product to thaw and rise under low heat), increasing the equipment and space required. Moreover, product costs are generally higher, minimum purchase requirements are larger and the number of flavors is limited.

Using par-baked products (i.e. partially baked frozen products) generally offers the same advantages and disadvantages as frozen pre-formed products, but with a shorter baking time. However, if the operator serves sandwiches or pannini, par-baked bread and sandwich rolls that bake up like freshly baked bread are usually worth the extra expense and equipment cost.

Scoop and Bake

Scoop and bake product, as the name implies, is prepared batter, frozen in 5 gallon pails. To serve, the pail of batter must be thawed, then scooped onto baking sheets. The problem here is that the number of flavors is limited and, once thawed, the shelf life is about a week. Unit costs are lower, but additional freezer space is required to accommodate the 5 gallon pails.

Baking Mixes

As a manufacturer of baking mixes, we believe there are several reasons why they are the preferred product for a small in-house baking program:

(1) they are shelf-stable and don't require expensive, space consuming refrigerators, freezers, proofers or ventilation systems;

(2) they are easy to bake. . . just add one or two ingredients, mix and bake. . . and produce better tasting, consistent products every time;

(3) with a wide variety of flavors in convenient size packaging you can bake what you need, when you need it. . .reducing inventory cost and minimizing waste;

(4) unit costs are generally lower with cost of sales under 40%;

(5) mixes are more versatile and can be used as standard grab-n-go morning pastries; mini scones or cupcakes for those who want variety but fewer calories; hors d'oeuvres or tea sandwiches for afternoon tea; trifles or bundt cakes for upscale desserts;  or the shop can create their own signature pastries.

Put it all together and you have a low cost, high margin gourmet baking operation that even the smallest business can afford.

For information on how you can use our award-wining, all natural mixes to start your own in-house baking program for less than $1,000 visit our wholesale web site or contact us toll-free at 877-712-2777.

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* See Better Baked Goods, Fresh Cup magazine, 11/07; and Mixing It Up and In-Store Baking, Specialty Coffee Retailer, 01/10.