What’s driving Bakers Delight’s consistent growth?

The brand has seen compound growth of more than 30% since 2020.

In 2020, Bakers Delight joint CEOs Elise Gillespie and David Christie said they plan to make a sizeable investment in digital loyalty. Fast forward almost four years later, this investment has paid off.

“We launched our digital loyalty platform Dough Getters in July 2021. We have about a million members on the platform now. It represents about 30% to 35% of total sales at the moment, and continues to grow,” Elise told QSR Media in a quick catch-up about the brand’s milestones and goals in the next few years.

Bakers Delight has experienced sustained sales growth for several years. “Our 4-year compound like-for-like sales growth is approximately 30-35%. Last year, it was 5% to 6% but before that, we had a couple of years of double-digit growth.” 

Bakers Delight has a massive network of bakery chains. In Australia alone it has 520 stores, around 180 in Canada, 20 in New Zealand, and recently has set its sights on its US expansion, opening three bakeries bringing its total to five.

Innovation and value

According to David, the trend towards healthier choices has been a growth driver for them, spurring the brand to be more innovative.

“We introduced some new products in that [healthy range]. Recently, we just launched a high-fibre wholemeal loaf,” David said.

David said they noticed consumers respond well to value.

“In our space, we see that they (consumers) are still happy to pay for quality but they do want to be valued and rewarded for their loyalty which has been why our Dough Getters loyalty programme has been so successful. It’s simple to earn points and get rewarded,” David said.

Another trend is the increase in demand for more speed of service. Elise said they updated their store designs to reflect this. 

“We’ve got a dedicated space in the bakery and wall units for customers to grab a pre-packaged sliced loaf of bread or pack of mini savoury rolls so they can get in and get out faster,” Elise said.

“We redesigned our bakeries a couple of years ago which has been very successful and well-received. We do have small-format stores that are in a number of locations that just have a much smaller area which allows us to bake on one site and retail on another site. We’re finding more opportunities for this format but currently, it isn’t a big part of our growth and expansion plans. We still see opportunities to continue to bake and serve bread at one location close to the customers,” David added.

Cost pressures have also been a catalyst for some innovation at Bakers Delight. David said at the moment some of their key focus is getting equipment to automate some of the manual processes within their operations.

Elise added that energy-efficient equipment is a big focus as well.

“Given we bake everything on site, fresh every day, our business is quite energy intensive. Our ovens are quite energy-heavy. So the latest designs of our ovens, particularly our rack ovens are far more energy efficient. Our suppliers are also coming up with innovations to solve some of those challenges, particularly in energy efficiency. If we can reduce our energy consumption, it is commercially better and is also better for the planet.”

Tackling pricing

As value gains more importance in a tight economy, pricing strategies have also been an important conversation. Elise said aside from considering input costs and competitor pricing, they also weigh the differences between discretionary spending versus everyday spending.

“For example at the moment, with the cost of living pressures that many families are under, we’re really cognizant of keeping a value offering for moms and dads to keep buying our bread for the school lunch box but then perhaps some of those more discretionary items like a sweet treat, we might price that a little bit higher knowing we might lose a little bit of volume,” Elise said.

For Elise, this strategy is a mix of both art and science.

“As we work through each price adjustment, we look at the trend of each SKU and we make assumptions around how much elasticity is there in a particular product and try to hit that sweet spot where we don’t start losing volume. It’s just a fact of life that every business needs to put up their prices each year. The trick is by how much and which lines you move.”

This is where Bakers Delight loyalty programme comes into play. David said that they use their loyalty programme to reward and give back to loyal customers. For example, under the programme reaching a certain number of points will often award members a $5 voucher to use in-store. Additionally, ensuring quality and making more innovative products is part of Bakers Delight’s strategy to present themselves as the better choice for consumers.

“We see value as a combination of all of those factors and what allows us to price some of our products higher than some of our competitors is how good the product is, the service, the freshness, the quality and the ingredients. And we just got to make sure we stay ahead of our competitors at all those spaces,” David said.

Not much use for tech

In the bakery space, aside from their loyalty programme helping predict consumer demand, Elise said they haven’t quite unlocked a better digital convenience play

“We knew transaction data but we didn’t know out of 100 transactions how many were unique shoppers? That has been very helpful to make better decisions, particularly around range, price, and campaigns.” Elise said.

One of the things that they tried that did not work for them was self-service checkouts.

“We found that customers only use it when it was really busy and they didn’t want to wait for somebody to serve them. There just wasn’t a return.” 

David said that currently, they use technology on the supply chain side, particularly in being able to predict ingredients they are going to need and in what volumes.

Growth plans

For the future, David said he sees a potential to reach 700 stores in Australia over the next few years. With the borders opened up, they see a potential for more sites in Brisbane, Sydney, and Melbourne.

“In Canada, we will continue to open 20 stores a year, we’re just ramping up our growth rate there. In the US we have plans to reach 10 stores and to ensure that the model is working well. There are always opportunities. We think the product offering that we have is a cornerstone of a lot of diets which is great. We think the investment we put into innovation in our brand over the last 40 years put us in a strong position but we are also very conscious that if you don’t continue to evolve, invest, and innovate, you can fall behind,” David said.

“I think the main challenge for any business is to not think that the successes of the past will be the same successes of the future. You have to always be looking at what will the customer base want in 10 or 20 years. What will our workforce look like in 20 years? What technology will be available in the future? You have to build a plan to support that,” Elise added.