The biggest concern for bakery is the cost of distribution

The cost of delivery is usually based on the MOQ (minimum order quantity), in other words the volume of product that the customer would like delivering to their business. This cost is ever increasing due to the obvious rises in labour, vehicle renewal, more efficient emission operated vehicles, more cities wanting a congestion charge. The list goes on and on.

If a customer only requires, for instance, 10 loaves of bread, that leaves you with an approximate profit of £1.30. You can see for yourselves that the true cost of delivering is a lot higher, in fact it costs nearer to £3.33p. This is based on the vehicle and all the vehicle costs, staff etc and the vehicle making 40 calls a day on his route 6 days a week. Obviously the cost to deliver will come down if the customer has a higher quantity. ie. if the delivery is 30 loaves a drop using the same costs then the cost to deliver is still the same, but there is a small profit now of 57p.

The supermarket chains have different problems to smaller businesses. They buy in larger numbers, reducing their cost base, and they also sell on to a consumer cheaper , but they more likely to be making multiple purchases of different products. Let’s face it hardly anyone goes to a large supermarket for a loaf. Even their online offering usually has a delivery charge, and frequently makes charges for orders below a certain value.

How do we get around this?

Given that most packaged bread has at least 5 days’ shelf life, a solution is to take deliveries only 2 or 3 times a week. It means that you can technically take on more deliveries using the days that you don’t use the vehicle , therefore using 1 vehicle instead of 2. For example, a van goes out Tuesday, Thursday and Saturday on one route, and the same van goes out Monday, Wednesday and Friday on another route.

The other choices are that the shop takes in more products to help ease the cost of delivery, or they pay more for the service. Greggs have just started online but there is a delivery charge for their £1 sausage roll of £2.50 and you also have to place a minimum order of £10.

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