Exeter-based independent bakery Cake or Death has vowed to keep the prices of its vegan-friendly brownies and bakes stable for at least nine months.
It comes at a time when many other businesses are increasing the prices of their products because of rapidly rising ingredients and energy costs.
“Rising costs have of course affected my profit margin,” said director Katie Cross. “I have found that ‘just in time’ purchasing on smaller amounts of ingredients and materials like boxes is no longer viable as I must buy in bulk to access lower prices and continue to make Cake or Death profitable.
“I also have to be aware that my staff are facing higher cost of living and balance the need to protect profit, with the need to increase wages on an annual basis. I am now looking much more carefully at monthly costs and trimming anything that could be unessential, just as households are doing.”
While bulk buying is a core part of the strategy, Cake or Death has also assessed staffing needs and looked closely at where ingredients are purchased from to secure the best prices.
Here’s a breakdown of how Cake or Death has achieved this:
- The bakery team was reduced by one member due to overstaffing. Remaining staff received salary increases which Cake or Death said were ‘well above the National Living Wage’ to help manage the rising cost of living
- Extra storage has been hired for ingredients and packaging purchased in large quantities
- Bulk buying cardboard – which has seen price rises of 30% – for its letterbox-friendly packaging has seen the cost reduce almost to 2021 prices. This, noted Cross, has saved the business “thousands” despite the extra cost of storage
- Buying large quantities of chocolate has helped to mitigate the ingredient’s 10% price increase
- Most suppliers don’t deal directly with small businesses due to small purchases; one palette of peanut butter for example. Wholesale bulk ordering saves £2 per kilogram on peanut butter
- However, some ingredients are cheaper to purchase from supermarkets due to the premium wholesale distributors charge for service and delivery. Cake or Death is saving £1 per litre on soya milk, of which 50 to 100 litres is purchased each week
- In other areas of the business, Cake or Death is maintaining 2021 pricing on delivery charges by switching to a Royal Mail corporate account.
Looking forward, Cross said “the future of the business certainly does concern me” particularly as it’s unclear how high energy prices will rise – a big chunk of any bakery’s cost base.
“But luckily, Cake or Death is in a strong financial position. We weathered the pandemic without furlough or taking on any debt and I am confident the business has the strength to come through a recession with careful management,” she added.
Offering advice to other businesses, Cross urged them to “take a granular look at all your costs and interrogate which are necessary and whether you can save money by going to alternative sources”.