An Evaluation of On-Premise and Bake-Off Bakery Departments in Retail Foodstores

Excerpts from the report: The emergence of the modern supermarket has resulted in many innovations in the retailing of bakery products. One significant change has been the development of the complete bakery department, where some type of in-store baking is used to supplement the commercial baked goods section. The two most prominent in-store baking systems, on-premise and bake-off, were analyzed to identify the cost and profit structure of each. An on-premise bakery is a system where products are mixed, formed, baked, and finished for sale on the store premises. In a bake-off bakery, however, most products are mixed and partly formed at a central bakery, frozen, and then delivered to retail foodstores where they are completely formed, baked, and finished for sale. The objectives of this study are: (1) To determine characteristics of bake-off and on-premise bakery systems at their respective low and high levels of volume; (2) to compare total bake-off and on-premise operations at three selected levels of volume; (3) to compare production costs between an identical product mix selected from the two systems; and (4) to develop recommendations for improving both bakeoff and on-premise bakeries.