Breakfast bakery took pandemic-related hits, now seeing rebound
Supermarkets are dealing with inflation, packaging issues, and effects of the pandemic
October 31, 2022
TOP TAKEAWAYS
The breakfast segment in the bakery department started to rebound in early 2022, but still the category is down approximately 4%
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Breakfast may be the most important meal of the day in some circles, but for grocery, it’s been a challenging two years of trying to entice shoppers to come in and buy fresh baked breakfast items in their stores.
The breakfast segment in the bakery department started to rebound in early 2022, with more stores seeing a return of customer interest in items like bagels, donuts, and muffins. However, higher prices due to rising costs are hurting some stores—especially with specialty items.
In addition, changes made during the pandemic remain. Stores find themselves balancing packaging and display ideas (that came to fruition during the pandemic) with what customers were used to previously.
Liz Aquino, director of bakery at Sprouts Farmers Markets, a Phoenix-based specialty grocer with more than 380 stores in 23 states, noted that one strength of the breakfast is consumer mentality around the category. Breakfast, she said, is still seen by consumers as a treat and an indulgence.
“Year to date we have seen better-than-projected results driven by seasonality and new alternative options,” she said. “Core muffin and pastry varieties continue to be popular with our consumers as they look forward to the changing seasonal selections and new flavor profiles. Consumers continue to look for alternative better-for-you options where they can still indulge however feel better about doing so.”
Scott Fox, vice president of bakery operations for Dorothy Lane Market, a gourmet chain based out of Dayton, Ohio, noted in 2022, the breakfast pastry category is down approximately 4% with croissants and muffins losing some steam.
In his opinion, it’s not pandemic related, but more the result of inflation.
“More than anything, I’m seeing that it’s the price increases that we’ve had to make to try and keep some of our margins that are the main factor,” he said. “Our costs have increased so much, we had to raise our prices, and people are starting to think more about those decisions.”
For instance, at Dorothy Lane Market, a premium Danish is almost $4.
“And we’re not going to skimp—we use clean ingredients and give the best we can—but that causes the price to go up, and people are thinking hard about whether they want to spend that much,” Fox said. “We’re seeing the same thing in the bakery department with bread. Flour costs have gone from $16 to $26 a bag and we are forced to raise prices.”
Another factor playing into decreased sales is a trend towards working from home—which translates to less people making a stop at the store on the way to work to pick up fresh bakery items.
In fact, a recent International Dairy Deli Bakery Association report noted that work from home continues to remain elevated versus pre-pandemic times, and that has the greatest impact on breakfast and lunch sales—especially when it comes to grab-and-go items like donuts, bagels, and muffins.
Marketing matters
Dorothy Lane Market hasn’t done a great deal of marketing for its breakfast bakery items this past year outside of some social media mentions, highlighting the fact that the store changed up its Danish and croissant program to make it more European.
“We’ve added fresh fruit to a lot of the Danish,” said Fox, who added that they’ve also stopped putting icing on the Danish and are now just using a glaze. “It’s a new breakfast set for us. We also introduced a savory scone and we’re looking at bringing in plant-based croissants and Danishes in the next year.”
At Sprouts, the store ties its marketing campaign for breakfast bakery items by focusing into seasonal and fun social media holidays like “National Muffin Day,” utilizing the “fresh baked in house daily” phrase to hang its hat.