Bakery owner serving a customer

Source: Getty Images

Rising ingredients and energy costs, as well as cost of living pressures on consumers are the top three threats to small bakery businesses, a new report  by the Open University (OU) has revealed.

Recruitment and retention of skilled bakery employees was also found to be a major challenge by the report called Sustaining Small Bakery Businesses

Conducted by OU with support from the Craft Bakers Association and Real Bread Campaign, it found that the number of UK bakery businesses making fresh bread, pastries and cakes has risen by 45% from 1,874 since 2008 to 2,720 in 2021. Of these, 2,540 were small firms with fewer than 50 employees.

More than a third of small bakery businesses that participated in the study are less than five years old, with 17% having been founded since the start of 2020.

While small businesses account for a minority of the overall UK market for bread and fresh bakery products, in recent years there have been signs of increased demand for bread made on a smaller scale using handcrafted methods. The estimated retail value of bread categorised as ‘artisanal’ rose from £600m in 2005 to £700m in 2015, the report stated.

When asked to rank the threats to their businesses over the next 12 months, more than three quarters (78%, 77% and 76%, respectively) listed the price of ingredients, rising energy costs and the cost of living crisis as their top three.

Emma Bell, professor of organisation and leadership at the OU Business School, said that while highlighting the economic plight that small bakeries are in, the report also shows just how important they are to local communities.

“Small bakeries enrich our food culture by using craft skills to make bread in local, traditional and sustainable ways,” she added. “In recent years, consumer demand for these artisanal products has increased and the number of small bakery businesses has grown. Now, in the face of soaring costs and a shortage of skilled bakers, we need to find ways to support these innovative small businesses and make sure they continue to survive and thrive.”

The report suggests that bakery owners work together with policy makers, educators and suppliers to build more resilient supply chains, improve training and career pathways for bakers and enhance customer awareness about the benefits of locally made, fresh bread and bakery products.