At the heart of concerns for stakeholders in the bakery sector lies the rising costs of energy. What solutions are available for their diverse problems ?
In 2022, 2,538 businesses opened, compared to 2,527 closures, including 674 due ton bankruptcy. This figure increased by +124 % compared to 2021, although it may me tempered by pre-Covid levels (an average of 1,000 bankruptcies annually).
By expanding their offerings towards trendy coffee shop-style dining, demonstrating their ability to capture various consumption moments or snacking needs of consumers (representing 48% of establishments), for the most part. Others are focusing on high value-added products that are healthy and local, capitalizing on a transparency approach, supported by communication through social media.
Dominique Anract, President of the French Bakery and Pastry Confederation (CNBPF), noted during a roundtable discussion in which he participated that, despite numerous closures, independent artisans have also been very dynamic in opening new shops. By expanding their offering toward trendy coffee shops, showing their capacity to capture various consumption moments or consumer snacking needs (representing 48% of establishments), for the majority. Others are focusing on high-value, healthy, local products, capitalizing on a transparency approach, supported by communication through social networks.
However, 2023 did not start with great momentum: in January, 116 cessation procedures were recorded, compared to 58 during the same period in 2022. Charges related to energy, coupled with recruitment difficulties, and complex negotiations between buyers and sellers, likely contributed to this slowdown.
Add to this the increase in loan repayments, rising from €19,270 to €23,223. State-guaranteed loans (PGE) contracted during the period of health restrictions must now be repaid, adding an additional constraint for artisanal bakery businesses whose profitability has dropped from 13 to 10% for structures subject to income tax.
Managing and Innovating
The state of the industry is a miracle considering what bakers sacrifice (decreasing profit margins, increasing working hours), in addition to the price increases (raw materials, energy) suffered by the profession, which is primarily composed of very small businesses, some with significant fragility.
60% of bakeries still have fewer than 5 employees, and only 2.6% exceed 20 employees. Not all have strong financial foundations, requiring rigorous management and local roots. Capitalizing on these strengths, or even strengthening them, to secure business operations, is a reasonable first approach to the baker's survival kit for 2023.
Innovation to save energy is a major component of this kit, as meeting the government's target of a 10% reduction in energy consumption is essential. This can involve investing in dishwashing machines adapted to the volume of dishes generated by a bakery-pastry activity in the era of reusable containers, for example. Or reconsidering production tools. There are now less energy-intensive refrigeration equipment and smart ovens that save time, hence energy, and cooking parameters that ensure product consistency, thus customer loyalty. Many bakers have also revised their work organization to reduce costs by changing cooking times and opening hours, reducing the number of opening days, and offering quality ranges in controlled volumes.
Seeking Assistance
Numerous aids helped alleviate the burden of bills in 2023. There was the tariff shield until May, which concerns small businesses with an electrical meter power of less than 36 kilovolt-ampere (kVA). The electricity cushion for bakers with fewer than 250 employees, the "gas and electricity" aid, and the reduction in electricity and ARENH taxation, as well as the support of a departmental advisor to identify all the obligations required by these various aids, are elements of the social and fiscal aid schemes unlocked by the State. The price cap mechanism at €280/MWh for small businesses will be extended in 2024. It will be extended even to small professional consumers with a subscribed power below 36 kVA, for all contracts signed before June 30, 2023. The electricity cushion will be maintained with changes to parameters to better protect high-price contracts and cover 75% of the bill, compared to 50% in 2023. Additionally, local authorities and their groupings, as well as structures whose revenues come mostly from public funding, will be able to benefit from the electricity cushion in 2024, without size limits, as in 2023.
