Neighborhood bakeries that take out cakes by hanging them by the soaring waters

Dessert prices in the off-season increase in the summer… Suspension of cake production and sales

B2B product impression that public opinion is less noticeable First, self-employed people feel ↑

Risk of closure of Domino business when financial support ends in September

A customer is buying bread at a bakery in a large supermarket in downtown Seoul. ⓒNewsis

Recently, as the price of various food materials has soared, self-employed food service owners are sighing deeply.

This is because the proportion of cost continues to rise but cannot be reflected in consumer prices.

In particular, as the prices of flour, sugar, and eggs have risen sharply, the bakery industry, which uses a high proportion of these ingredients, is said to taste like porridge.

Mr. Lee, who runs a personal bakery in Mapo-gu, Seoul, recently withdrew all cake products from the stand. This is because it is difficult to maintain profitability any longer as the prices of major ingredients such as flour have jumped by more than 50% compared to last year.

Lee said, “Compared to this time last year, the price of a bag of wheat flour (20 kg) has risen by more than 40%. He explained, “There is not a single ingredient that goes into the cake, including eggs, milk, sugar, butter, and whipped cream.”

He also said, “Every time a piece of cake is sold, the packaging box goes up to 400 to 500 won each, so I can’t match the price. “We plan to not sell cakes even this summer alone,” he said.

In general, the cafe/bakery industry classifies the summer months (June to August) as the off-peak season for desserts such as cakes. Therefore, it responds by reducing the number of branches or adjusting production, but this year, as food material prices rise sharply, more and more stores are giving up production and sales altogether.

In particular, unlike franchises, which purchase large-scale purchases from the headquarters and supply them to franchisees, small-scale individual bakeries have a high sensitivity to price increases, so it is not easy to maintain profitability.

In the case of large-capacity B2B products traded in the food market, prices are raised first compared to B2C products purchased by general consumers.

For food companies, this is because it is easy to raise the price of B2B products, which account for a large portion of sales and are less burdened by public opinion due to price increases.

An official from a large food company, who requested anonymity, said, “When raising prices, it is customary to put B2B products first and B2C products last.” It is not easy to raise the price of general consumer goods. Therefore, in terms of price increase, we have no choice but to think of B2B products first.”

Jeongmo, who runs a private coffee shop in Yeongdeungpo-gu, Seoul, said, “Desserts such as piece cakes are received and used, but it seems to have risen by 20% compared to last year.

He continued, “These days, it is difficult to meet the unit price by selling only coffee and beverages. As the days get warmer, orders for desserts are also decreasing.” He said, “I am crying and eating mustard, but I want to get rid of all the desserts in my heart.”

Some in the food service industry also raise the prospect that small businesses such as local bakeries will be difficult to sustain if the current situation continues until the end of the year.

In the end, price competitiveness is the only way to survive the competition with franchises and local bakeries, but if the cost continues to rise, it means that no business will be able to withstand it. It is said that there is no solution to extend the business as it is a situation in which considerable debt has accumulated over the past two years of Corona 19.

An official from the restaurant industry said, “Loan interest rates continue to rise, but when various financial support measures, such as loan repayment, which the government has postponed to respond to the coronavirus, are completed in September, there will be practically no self-employed people who will survive. Domino’s may start closing at the end of the year,” he said.

Meanwhile, according to the ‘Financial Stability Report for the First Half of 2022’ published by the Bank of Korea recently, as of the end of the first quarter of this year, domestic self-employed loans stood at 960.7 trillion won, a 40.3% increase from the end of 2019, just before Corona 19.

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