Author: Olayinka Idowu Oladeji

Mail: idowuladeji@gmail.com

Phone: +2347036517306, +2349056742444

Why You Need to Consider Setting-up

a Modern Bakery Now

October 2018
Executive summary

My name is Olayinka Idowu Oladeji. I own a master degree in development Economics from the
department of Economics, University of Ibadan. I had worked as a research assistant under my
supervisor in my post graduate days. This has exposed me to various research techniques and
methodologies. At the completion of my program, I was privileged to work in a very popular
supermarket in the south-west region of Nigeria where, I gained a lot of experience most
especially in the bakery department of the supermarket. I had observed and research to know all
required equipment and all materials needed to produce a very nourishing and delicious bread of
different varieties. The quality and high demand of this type of bread and the new trend in the
bread and bakery business are the reasons why I have decided to write this proposal to open the
eyes of potential business people and to complement one another.
1.1 Introduction

The shift from the old method of bread production in which the bakery will be sited in a distance
place from the consumers, to the new method of locating the modern bakery near the consumers
in order to have a fresh quality bread, has been on the rising. This has also led to the production
and demand for fresh bread at a convenient point like the supermarket, eatery and event centers
in Nigeria and most especially in the South-Western part of Nigeria.

According to a personal research by me in 2018, on ‘the Cost and Benefit of Producing Bread in
a Supermarket’, the cost of setting-up a modern bakery that produce 300 to 400 pieces of bread
in a day in a supermarket ranges from N1.5m to N2.5m depending on other available materials
(like electricity, rent etc.). While, bread production in supermarkets now contribute about 10%
of the total sales and around N2 million per month with profit level ranging from N400000 to
N650000 per month for an average supermarket.

With few or limited number of supermarkets and eatery compare to the rising demand of fresh
bread, the bakery process that we thought has reached its peak evolved into a new and dynamic
path of residential bakery. This new path/ method produce fresh bread very close to the
consumers which is chasing away many bread vendors and is taking over the major part of bread
production in the bread industry. This new development of production has not been fully tapped
into and the right recipe to win the market is not common even among the new bakeries.

2.1 What do I want to offer?

To open the eyes of people to this new development in bread production

To assist them to set-up their own bakery, get the necessary equipment and materials needed
with respect to their limited budget.

To provide them with a recipe/formula that will give them the hedge in the bread market.

2.2 Why are you sharing this?

A saying by Bill Gross that ‘Ideas are important but the timing of the execution of the ideas are
even more important in the business world’. Therefore, keeping this idea will do me no good
since, I have little or no capital to finance this project for myself other than the experience that I
have gained which without the capital is as good as dead. I have therefore decided to present this
to capable investors to invest in it directly and I can work for them as a consultant who will
facilitate the project and render advice when needed with a little compensation. I also wish to
form partnership with other potentials investors who do not have time to supervise the day to day
activities of the business.

2.3 How do I fit-in/ where do I come in?

I have identified 3 major plans by which you could benefit from this development.

1) As a fulltime investor: here, you will be responsible for all the capital required to
finance the project, the employment of staffs, the location of the bakery and the
administrative managements of the business. I will only serve as a consultant to provide
you with adequate information, advice and training program when necessary.
2) As a part-time investor: I believe some potential or interested investors would not have
enough time to supervise and manage the day to day activities of the business. Therefore,
we can work out a partnership plan where I will be responsible for the management of the
business and the returns will be shared on an agreed term.
3) As a partner: unlike the above, here, this plan allows for partners who have little capital
ranging from 100000 to 200000. The common resources will be pulled together to be
able to finance this project. But they will all be a dormant or sleeping partners while each
partner will receive 10% to 15% of their capital as monthly dividend.

2.4 How much will it cost me to start?

For the first two plans, I have developed four different stages of investments that you can engage
in. the tables below explain the equipment and materials needed in terms of both fixed and
variable materials, their associated cost, the daily projected sales and the monthly gross profit.
 Items/ stages Stage 1 Stage 2 Stage 3 Stage 4
Oven

Description 1 step, 2 trays 2steps, 4 trays 3 steps, 6 trays 3 steps, 9 trays

Price N300,000- N320,000 N500,000-N520,000 N680,000-N720,000 N750,000-N800,000
Dough mixer

Description: 12kg, single phase 16kg, single phase 20kg, single phase 25kg, single phase
Price: N200,000 N250,000 N300,000-N350,000 N400,000-N450,000
Bread Slicer

Price: N180,000-N200,000 N180,000-N200,000 N180,000-N200,000 N180,000-N200,000

Recommendation Not compulsory necessary compulsory Compulsory
Bread Pan type A B C A B C A B C A B C
Quantity needed: 24 30 48 36 60 72 54 90 80 85 120 100
Unit price: 250 220 200 250 220 200 250 220 200 250 220 200
Cost: 6,000 6,600 9,600 9,000 13,200 14,400 13,500 19,800 16,000 21,250 26,400 20,000
Total: N22,200 N36,600 N49,300 N67,650
Heat extractor Not necessary Not compulsory 1 of 12incs is required 2 of 12incs is sufficient
Price: 22,000 44,000
Total FC N522,200-N742,200 N966,600-N1,006,600 N1,231,300-N1,341,300 N1,441,650-N1,561,650
Variable cost analysis
Items/ stages Stage 1 Stage 2 Stage 3 Stage 4
Bread nylon qty 3,000 bread/month 6,000 bread/month 9,000 bread/month 12,000 bread/month
Unprinted/printed 5,000/10,000 7,000/20,000 10,000/30,000 12,000/38,000
Total: 15,000 27,000 40,000 50,000
Wrapping nylon 1000pcs/week 2000pcs/week 3000pcs/week 4000pcs/week
Price 2,000 4,000 6,000 8,000
Provision for 1 week 1 week 1 week 1 week
ingredients
Cost 50,000 100,000 150,000 200,000
Labour Self or one baker Self with one baker Self with two bakers One sales girl and two bakers
Cost N0-N25,000 N25,000 N50,000 N70,000
Total Var Cost #67,000-#92,000 #156,000 #246,000 #328,000
Total Cost #589,200- #834,200 #1,122,600-#1,162,600 #1,477,300- #1,587,300 #1,769,650- #1,889,650
 I have excluded the rent cost. This is because it depends on a lot of factors such as location, population, market etc. This will
be determined by both the investors and the consultant/partner.
 The costs of equipment are collated on the 1/11/2018. Therefore, the cost could be subjected to change overtime.
 Also, the cost could be adjusted to suit the investor’s preference. For instance, in stage 2 the investor may include or remove
the heat extractor to reduce cost and replace with a standing fan.

Projected sales

Below are the projected sales for the 4 different stages with their associated cost and revenue. We also include the monthly profit and
the possible recovery of startup cost.
 Product Stage 1 Stage 2
Projected Cost/Price Total Total Daily Projected Cost/Price Total Total Daily
sales cost/day revenue/day profit sales cost/day revenue/day profit
Small 40 70/100 #2,800 #4,000 #1,200 80 70/100 #5,600 #8,000 #2,400
bread (1 set) (1 set)
Big 36 210/300 #7,650 #10,800 #3,100 75 210/300 #15,750 #22,500 #6,750
buttered (3 sets) (3 sets)
bread
Special 36 220/350 #7,920 #12,600 #4,680 75 220/350 #16,500 #26,250 #9,750
bread (2.5 sets) (2.5 sets)
Daily total 112 #18,370 #27,400 #9,030 230 #37,850 #56,750 #18,900
Monthly #551,100 #822,000 #270,900 #1,135,500 #1,702,500 #567,000
total
Startup 2.2 - 3 2 – 2.1
recovery month months

Product Stage 3 Stage 4

Projected Cost/Price Total Total Daily Projected Cost/Price Total Total Daily
sales cost/day revenue/day profit sales cost/day revenue/day profit
Small 120 70/100 #8,400 #12,000 #3,600 180 70/100 #12,600 #18,000 #5,400
bread (1set) (1 set)
Big 120 210/300 #25,200 #36,000 #10,800 180 210/300 #37,800 #54,000 #16,200
buttered (4 sets) (3.5 sets)
bread
Special 120 220/350 #26,400 #42,000 #15,600 180 220/350 #39,600 #63,000 #23,400
bread (2.5 sets) (2.5 sets)
Daily 360 #60,000 #90,000 #30,000 540 #90,000 #135,000 #45,000
total
Monthly #1,800,000 #2,700,000 #900,000 #2,700,000 #4,050,000 #1,350,000
total
Startup 1.6-1.8 1.5 month
recovery month
I am at your service to provide you with other information in the form of material needed, where
to get them at a reasonable price, ingredient to produce all varieties of bread (buttered bread,
coconut bread, chocolate bread and Tuna bread) and the right formula, to make your bread the
best or one of the best with the minimum cost. I will also supply you with other report of my
findings relating to bread production in Nigeria since I embark of series of researches frequently.

Finally, with Proper marketing strategies and promotions put in place and with the pool of expert
at my disposal who deals with production and purchase of raw materials the projected sale
presented above are realistic and feasible.

3.1 Conclusion

I have been able to expound to you one of the latest and fast moving business in Nigeria which
you can do with less stress and with a huge return. I have also presented about 60% of the entire
requirement needed to carry out this project and proffer solutions in situations of inadequate
finance, management issues, risk bearing and marketing procedure involved. I believe it is not a
mistake that you have read this since you or someone around you could be interested and you
will give me audience to explain more to you personally if you are interested. Together we can
make a difference and together we can do it.

Thank you,

Olayinka Idowu Oladeji

References

Bill Gross (2015), TED Talk www.ted.com/talk.

Olayinka Idowu Oladeji (2018), ‘the Cost and Benefit of Producing Bread in a Supermarket’