The domestic bakery franchise market has maintained growth in recent years.
For example, total bakery sales are estimated to reach approximately KRW 7.57 trillion by 2022. However, the franchise bakery sector is also facing challenges such as brand concentration, declining profitability, and intensifying competition. While the number of franchise brands is declining, the market share of top brands remains very high. According to data from FileMK, the average operating profit margin of bakery specialty stores is approximately 15.0% , which is lower than that of coffee specialty stores (21.6%).
This industry has a complex structure of "bakery + cafe sensibility + franchise network," and how the headquarters, supply chain, and franchisees collaborate is a key factor in determining competitiveness.
division | Main items | characteristic |
|---|---|---|
| raw materials | Flour, sugar, butter, heavy cream, raw milk, baking mix | The premix market is also growing. ( H&I Global Research ) |
| equipment and devices | Oven, fermenter, refrigerated showcase, cutting machine | Need for facility upgrades |
| Packaging and Logistics | Bread containers, shopping bags, room temperature packaging, refrigerated delivery | Risk of increased distribution and logistics costs |
| IT/Operating Systems | POS, inventory management, and store ordering systems | Ensuring efficiency is important |
| Interior and store operations | Store design, dessert cafe-style interior, lounge-style store | Location and branding have a significant impact |
While the franchise headquarters operates the brand and franchise network, suppliers are responsible for raw materials, packaging, equipment, and logistics. Reliability, delivery times, and quality control are key factors in B2B transactions.
For example, reports indicate that a small number of major brands account for a significant portion of franchise bakery brand sales. On the PileMK
supplier side, premix suppliers, baking equipment manufacturers, and packaging material suppliers play key roles. Recently, the introduction of eco-friendly packaging materials and automated equipment has been attracting attention.
Trend | detail |
|---|---|
| Increased bread consumption | As consumption of dine-in bakeries increases, demand for both "meal replacement" bread and dessert bread is growing. ( Farmers' Newspaper ) |
| Health and Premiumization | The growing preference for premium bakeries, including gluten-free, additive-free, and locally sourced breads. ( Goover ) |
| Brand convenience | Increased accessibility due to increased number of franchise stores and strengthened takeout and delivery services. |
| experiential stores | The rise of cafe-style lounges and dessert/bread combo stores |
| Store sustainability risk | There are indicators of a decline in the number of franchise bakery brands and an increase in the closure rate. ( File MK ) |
Advanced equipment such as automatic fermentation and baking equipment and smart ovens
Automating inventory, sales, and ordering through POS and ERP integration
Introducing eco-friendly packaging and refill systems: Franchise brands are switching to reusable containers and eco-friendly materials.
Store Operational Efficiency: Reduce store operating costs through unmanned pickup zones, smaller stores, and dessert and coffee combo stores.
The current investment and profit structure of franchise bakeries carries a somewhat higher level of risk compared to coffee shops.
For example, the operating profit margin of bakeries is around 15.0% , and some analysts suggest that the initial maintenance, labor, and distribution costs are significant. To improve the profitability of FileMK
franchisees, headquarters and suppliers need to focus more on cost reduction, logistics efficiency, and premium product development.
Eco-friendly packaging, carbon reduction, the use of local wheat, and refillable bread packaging are also key topics in the bakery industry.
As consumers become increasingly sensitive to health and the environment, franchise brands are strengthening their policies on these issues.
Furthermore, the sustainability of raw materials used in the supply chain (e.g., eco-friendly butter, organic flour, etc.) and store energy efficiency are also gaining increasing attention.
Risk factors | influence | Response strategy |
|---|---|---|
| Increase in raw material unit prices (flour, butter, etc.) | Deteriorating profitability | Diversifying suppliers and developing alternative raw materials |
| Rapid increase in labor and store operating costs | Decrease in operating profit margin | Expansion of small-scale stores and unmanned facilities |
| Brand saturation and intensifying competition | Increased risk of new entrants | Product differentiation and local collaboration brand strategy |
| Increase in distribution and logistics costs | Cost increase | Logistics sharing and regionalization |
| Quality and hygiene issues | Declining brand trust | Strengthening the headquarters quality management system |
characteristic | Δ(increase/decrease rate) | analysis |
|---|---|---|
| demand | +5~6% | Focusing on growth in healthy and convenient bakeries |
| Raw material unit price | +3~5% | Impact of rising global grain and butter prices |
| Unmanned/small store adoption rate | +15~20% | Expansion of operating cost-saving store models |
| ESG certified brand ratio | +20~25% | Strengthening reflection of environmental and health trends |
The franchise bakery market has entered a mature phase, and the key challenges are supply chain efficiency, product premiumization, and brand differentiation .
In the three-tier structure of headquarters-supplier-franchisee, the reliability of the supplier (delivery time and quality) and the efficiency of the headquarters' store operations determine competitiveness.
Over the next two years, growth is expected to focus on smaller stores, unmanned/automated operations, eco-friendly materials, and local bakery brand partnerships .
Data integration and matching between suppliers, headquarters, and franchisees through the BizHub platform can provide a real competitive advantage.
