Retail Bakeries

Industry Snapshot

According to the U.S. Census Bureau, there were more than 38,000 firms categorized as retail bakeries or snack and nonalcoholic beverage bars within this industry during the late years of the first decade of the 2000s. Retail bakeries control about 45 percent of the market, while the doughnut shop segment represents less than 33 percent and the bagel shop segment just over 6 percent. According to a 2009 D&B Marketing Solutions report, the industry was valued at over $7.6 billion.

The top bakery in the United States late in the first decade of the 2000s was Panera Bread with 1,300 stores spread across 40 states. Panera expanded rapidly during the mid- to late decade, opening over 300 new stores and nearly doubling sales, with revenues jumping from $640 million in 2005 to $1.3 billion in 2008. Despite the recessive economy, which saw a decline in how often consumers ate out, Panera was one of the few food service companies that increased revenues in 2008, up 3.4 percent from 2007. The company battled for customers by increasing its hot food selection, cutting costs, and increasing prices of some items. Other leaders in this segment include Au Bon Pain, Atlanta Bread and Corner Bakery Caf�.

Einstein Noah Restaurant Group was the largest bagel shop operator in 2008. The company, which has 640 outlets (420 company owned and 220 franchises) in 35 states, reported 2008 revenues of $413 million. Brands include Einstein Bros. (which accounts for more than 80 percent of brand sales), Chesapeake Bagel Bakery, Manhattan Bagel, and Noah's New York Bagels.

The doughnut segment of the industry was led by Dunkin' Brands, which operated more than 1,300 stores in 40 countries, including about 6,000 stores in the United States. The privately held company reported $5.3 billion in revenue in 2007. About 65 percent of Dunkin' Donut store sales are generated by beverages. While its beverage competitor, Starbucks, scaled back operations by closing non-producing locations, Dunkin' Donuts announced a massive expansion plan in 2009, with the goal of increasing its presence in the United States to 15,000 stores by 2020. The company, which continued to face stiffer competition from fast food establishments such as McDonald's, kept its focus on mid-priced, quick-serve items, but also had plans to add a line of DDSmart food items, aimed at more health-conscience consumers.

Meanwhile, competitor Krispy Kreme Donuts, Inc., based in Winston-Salem, North Carolina, struggled badly during the first decade of the 2000s. Share prices dropped from $108.50 in November 2000 to just $1.01 in February 2009. The company's revenues fell off steadily, from $709 million in the fiscal year ending January 2005 to just $384 million for the fiscal year ending January 2008. Among other economic issues, also at stake for Krispy Kreme was accounting credibility among investors and analysts after the U.S. Securities and Exchange Commission began a probe in 2004 into the company's accounting practices. The inquiry, which was settled in March 2009, unnerved the investing community and led to upheaval at the helm of the company, which had four different chief executive officers in less than five years. However, by mid-2009, the company was posed to attempt a comeback based on smaller store formats and expansion into Asian markets.