ESTABLISHING A BAKERY

• Manufacturing
• Bakery and Confectioneries

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