Led by Millennials, time-pressed consumers continue to turn away from sit-down breakfast options in favor of more portable snacks they can eat while on the go.
Instead of grocers and baked good shops, customers more and more are drawn to convenience stores that boast diverse bakery offerings, including single-serve and snacking options. Whether it’s premium breads and sandwich rolls or breakfast muffins, doughnuts and bagels, bakery is generating real dough for a growing number of retailers.
When Euromonitor International forecasted revenues for the baked goods category for 2015, the international research firm estimated that they would reach over $61.8 million. For 2016, that number is expected to grow to almost $62.5 million and going forward into 2020, bakery revenue is projected to pass $65 million.
In its report “What’s In Store 2016,” the International Deli-Dairy-Bakery Association of America (IDDBA) noted that the channels garnering the greatest share of the in-store bakery market are convenience stores and Starbucks. According to IDDBA, there are a number of ways retailers can enhance their connection with customers through their bakery offerings.
C-stores can bolster bakery programs by including single-snacking options such as individual cake slices, cake pops and mini cupcakes, indulgent products, seasonal and fruit pastries, and ethnic specialties.
In-store bakery products have experienced dollar sales increases every year since 2008. These gains will likely continue through 2017, according to Packaged Facts.
Valparaiso, Ind.-based Family Express has had a “strong year of same-store volume growth” in the bakery category, said Dimitri Olympidis, the company’s director of marketing and central enterprises.
“We have seen growth across the board on our fresh bakery products,” Olympidis said. “Doughnuts, cookies and muffins have seen significant growth in the last year.”
About a year and a half ago, Family Express tripled the production capacity of its central bakery, which supplies its 65 stores with baked goods, and is already very close to outgrowing this new capacity, Olympidis said. Additionally, the company has doubled and, in some cases, tripled the display area in the stores to draw attention to the baked goods. To accommodate rising sales and meet the stores’ future needs, management is conceptualizing an even larger facility.
“We have successfully become the bakery destination in the markets that we serve,” he explained.
Olympidis attributes much of the bakery products’ growth to Family Express’s proprietary square doughnuts as well as fritters and cinnamon rolls, all of which are “hot glazed” for better coating, encapsulation and appearance. Hot glazing keeps the products fresher longer so that customers can buy them to take home.
The bakery avoids the potential for “menu fatigue” by constantly developing new recipes. In addition to refreshing the product mix with new items, Family Express features limited time offers (LTOs) to keep customer interest high.
Stay tuned to Convenience Store Decisions‘ March issue, where we delve into 38 in-store categories to identify emerging trends and garner retailer analysis to forecast what operators can expect for 2016 and beyond.