Meagre profits, high sales and low costs is a business model that has stood the test of time.
Photo by Wu Rong
By WU Rong
Two-yuan bakeries have popped up along the streets of cities all over the country as cheapness becomes the watchword of everyday life in urban China.
With a simple store model, a low set-up costs, mom-and-pop bakeries are an attractive option for many.
Opening a two-yuan bakery in Guangzhou’s shining metropolis costs a bit more than 60,000 yuan (US$8,300). With daily sales of up to 2,000 yuan, a store can break even in about three months. Though affordable rent will be key to success.
The product range is small and it’s hard work making small profits from high sales, so bakeries are obsessed with cutting costs.
Raw materials are basically flour, and the quality of baked goods depends on the quality of the flour, though the taste is basically bland. Store decorations are next-to-non-existent. Nothing is wasted in terms of space, materials, or time.
The biggest cost is labor as stores both make and sell the product. Typical two-yuan bakeries have one baker and two ordinary employees. The baker is usually the owner or part-owner, and the employees are often apprentices, family members, or both.
“Although the working hours are long and hard, they (apprentices) are willing to learn and work. Hiring them can further reduce wage costs,” said one floury-handed merchant.
In the long run, the sustained profitability of two-yuan bakeries hinges on the same factors that have kept bakeries at the center of local life for countless generations: giving people a good, affordable fresh product when and where they need it, and making sure they come back for more the next day.
It’s hard for any business to survive today without an online presence, and many of these micro-bakeries use social media to support their operations and run promotions. Lotteries, discounts and other goodies during live-streaming keep customers coming back for their daily bread.