ESTABLISHING A BAKERY

Introduction

Bread and Confectionery products are a lucrative business. These, especially bread, are quite nutritive and easily preserved and shelve life can be prolonged. These are products commonly stocked almost by all provision stores. Bread is one common product on people’s dining tables to a sizeable proportion of the urban and semi-urban communities and therefore enjoys a ready market. This is a project to produce bread, cakes, buns, mandazi, doughnuts etc. This proposal will confine itself to the production of bread, but the same equipment is used to produce all the other products except mandazi which may require some additional machines and cooking oil.

 

 Market Analysis

Bread is a household item therefore has a ready market throughout the year. The market traverses the country. This sector has registered a big number of Investors which includes; Hot Loaf, Ntake, Kiddawalime, Denovo, United, among others.


Production Capacity, Technology and Process

For bread :- Wheat flour mixed with salt, sugar, yeast, cooking fat, water and other ingredients that may be necessary and kept for fermentation. The fermented dough is divided into desired weights and sizes and molded appropriately, and left to rest for panning. This is later put into greased metal pans and kept in a proover at 38 degrees and with 88% relative humidity. The pans are finally placed in an oven and baked at varying temperatures between 205 –230 degrees Celsius.


Investment Scale, Capital Requirements and equipment

The investment scale depends on the project set objectives.


Capital Investment Requirements in US$

 Item

Units

Qty

Unit cost

total

Land & Buildings

No

-

-

25,000

Firewood Oven

No

1

3,500

3,500

Mixer

No

1

2,500

2,500

Proover System

No

1

750

750

Doughnut Stove

No

1

50

50

Trays

No

100

10

1,000

Tins (1kg-size)

No

40

11

440

Tins (1/2kg-size)

No

40

10

400

Furniture &Fittings

No

-

2,000

2,000

Delivery Van

No

2

8,500

17,000

Slicing Machine

No

1

1,250

1,250

Other tools

No

-

450

450

Total




54,340

 

Production and Operating Costs
Direct Materials, Supplies and Costs in US$

Cost Item

Units

Unit
Cost

Qty/
day

Prod
Cost/
day

Prod
Cost/
month

Prod
Cost/yr

Direct Costs







Wheat flour

kgs

0.7

1,000

700

18,200

218,400

Salt

kgs

0.63

20

13

328

3,931

Sugar

kgs

1

250

250

6,500

78,000

Yeast

kgs

5.8

20

116

3,016

36,192

Improver

kgs

3.9

20

78

2,028

24,336

Water

Ltrs

0.005

1,200

6

156

1,872

Vanilla

Btls

0.5

5

3

65

780

Cooking fat

bxs

15

20

300

7,800

93,600

Packaging
materials

Pcs

0.03

2,500

75

1,950

23,400

Other materials

-

-

4

100

1,200


Sub-total

5,035

1,544

40,143

481,711



General Costs (Overheads)







Labour

1,188

14,250





Utilities

679

8,150





Selling & distribution

2,388

28,650





Administration expenses

267

3,200





Cleaning & toiletries

192

2,300





Miscellaneous

175

2,100





Depreciation

611

7,335





Sub-total

5,499

65,985





Total Operating Costs

45,641

547,696





 

1) Production costs assumed 312 days per year with daily capacity of producing 2,500 loaves of bread.
2) Depreciation (fixed asset write off) assumes 4-years life of assets written off at 25% per year for all assets.
3) Direct costs include materials, supplies and other costs that directly go into production of the product.
4) Total monthly days assumed are 26-days.
5) The valuation currency used is United States Dollars.

Project Product Costs and Price Structure

Item

Qty/
day

Qty/yr

Unit
Cost

Prod
Cost/yr

Unit
Price

Total
Reveue

Bread-1kg

1,250

390,000

0.95

370,772

1.10

429,000

Bread-1/2kg

1,250

390,000

0.45

176,924

0.55

214,500

Total

780,000

547,696

643,500




 

Profitability Analysis Table

 Item

Per day

Per month

Per year

Revenue

2,063

53,625

643,500

Less: Production and Operating Costs

1,755

45,641

547,696

Profit

307

7,984

95,804