Sweet success: Most profitable bakery items

With so many goodies on your menu, it’s tough to know which ones will really bring in the dough. But, with a smart approach, you can whip up a menu that keeps customers coming back for more and your profits looking sweet. In this guide, we’ll break down the most profitable bakery items so you can bake smarter, not harder.

• Why some baked goods are profit gold, and others, not so much

• Which bakery items really rake in the cash

• How to price your custom creations

Understanding the bakery industry

In 2023, the US bakery market was valued at a sweet $78.96 billion, and it’s set to rise to $86.93 billion by 2029. That’s a steady growth of 1.62% – not too shabby for an industry that’s been through a lot.

The introduction of delivery and takeout options allowed bakeries to remain operational during the pandemic, and as conditions have normalized, customers are eagerly returning for their favorite treats. Additionally, the rising demand for healthier options and dietary preferences (like plant-based and gluten-free baked goods) is providing bakers with new opportunities to meet consumer preferences.

But it’s not all cupcakes and rainbows. It’s important to acknowledge that the industry is not without its challenges. Labor shortages and increasing costs resulting from supply chain disruptions have prompted bakers to adopt innovative strategies. Many businesses are raising wages and enhancing employee benefits to retain staff and maintain productivity.

To successfully navigate these fluctuations, it is really important to focus on the most profitable items in your bakery. Our next section will highlight these key offerings.

Most profitable bakery items

Now that you have an understanding of the bakery industry and its impressive scale, let’s get into the delicious offerings that can significantly enhance your profits. Whether you’re catering to everyday customers or special events, certain popular bakery items consistently deliver better profit margins than others. Here are the bakery products that can boost your bakery sales faster than you can say “fresh out of the oven”!

Custom cakes

Think weddings, birthdays, and anniversaries. Customers are often ready to spend a little extra on a cake that’s tailored just for them. Unlike the usual vanilla sponge or chocolate cake you'd find everywhere, these specialty cakes are all about creativity.

You can experiment with unique flavors, intricate designs, edible art, and personalized touches, transforming each cake into a true work of art. This level of customization comes with a hefty price tag, which is great news for your bottom line! According to Butter Studio, custom cakes can range anywhere from $50 to over $500, depending on their size and complexity.

Artisan bread

Artisan breads, such as sourdough, ciabatta, and multigrain, are another highly profitable item for bakeries. There’s something irresistible about the smell of freshly baked bread, and it appeals to health-conscious consumers as well as bread aficionados. Because of its perceived value, a bakery owner can often sell these loaves at a premium price.

A recent survey found that half of American shoppers are looking to eat healthier, and low-carb options are especially in demand. Fresh bread is perfectly positioned to thrive in this environment as people seek out unique flavors and healthier choices. Plus, with more folks wanting to indulge at home, there’s a strong appetite for quality baked goods.

While the higher prices of artisan bread might seem challenging, bakers who prioritize quality ingredients and craftsmanship will find the investment pays off.

Cupcakes

Let’s not forget the classic cupcake! These beautiful and cherished bites have long been a favorite for customers of all ages. Offering fresh, well designed cupcakes can elevate your bakery’s appeal. You can put them front and center in your bakery window, with designs that draw the eye, and there are lots of ways you can innovate with ingredients, too. Cupcakes with jam or caramel fillings, topped with nuts, oreos, or classic garnishes like cinnamon, orange, and ginger, then given a beautiful topping can sit in your window drawing in customers before flying off the shelves and driving up your numbers.

Muffins

Similar to cupcakes, muffins are the kind of product many customers are hoping to see when they walk past your window. The soft, top layer of a muffin that bulges out of the wrapper immediately makes you want to take a bite (in fact, if you want to go the extra mile, you can sell the muffin tops by themselves, and people will pay more for them!).

The secret to muffins is how simple they are to prep. Muffins are mostly milk, eggs, and flour. Add your sugar and some vanilla extract, and then it's a case of adding something extra, like blueberries, that make the eyes pop and the flavor light up on the palette.

Moreover, North America loves muffins, with NA sales accounting for 43% of the global market! So you'd be crazy not to sell them in your bakery.

Cookies

Ah, the classic chocolate chip cookie. These baked goods are simple to make but have a huge profit margin. With basic, low-cost ingredients like butter, sugar, and flour, you can whip up large batches without breaking the bank. And because chocolate chip cookies are a timeless favorite that customers can’t resist, they’re an easy way to bring in consistent sales. Whether fresh out of the oven or displayed in your bakery, their enticing aroma will have customers lining up.

Coffee

Naturally, coffee isn't the first thing anyone thinks of when you say the word "bakery". But in terms of volume of sale, profitability, and return on your investment of both time and money, coffee is top of the pile!

Drinks are, across the hospitality industry, more profitable than food. They're cheaper to make, and they have high margins, and as coffee is ten times as popular as tea in the US, that's clearly the go-to drink for your bakery.

On a single cup of coffee that takes no more than a minute to make, you can expect a profit margin of roughly 250%. On a $4 cup, less than a $1 for good quality beans, $0.10 or $0.20 cents on milk and sugar, and a few more cents to heat up some water.

In short, coffee is a no brainer, and if your bakery is too focused on your brilliant baking, you're leaving change in your customers' pockets.

Donuts

With giant brands like Krispy Kreme leading the way, and 2024 sales for the US just shy of $4 billion, the donuts position as a bakery favorite is very safe. A big part of that success is how popular donuts are with kids, with 64% of parents reporting buying donuts recently.

There are two ways of making profitable, popular bakery items. One is to make lots of money on those you sell, the other is to sell more of them! With donuts, you can do both. People often buy donuts in much larger numbers than they do other bakery treats. The Krispy Kreme model lets customers buy all sorts of combinations in boxes of half a dozen, a dozen, or even more! Even if you lower the sale price to entice customers, how can you fail when you sell so many?

Pastries

Pastries (such as croissants, donuts and cinnamon rolls) are bakery must-haves that can be sold at high prices due to their buttery goodness and flaky perfection. These fresh bakery products are ideal for breakfast crowds or coffee shop pairings and cater to customers seeking a quick but indulgent treat. From sweet fruit-filled danishes to savory options, pastries provide bakery owners with another highly profitable item that can attract customers with simple ingredients and high-quality craftsmanship.

Cinnamon rolls

When anyone walks into a bakery, one of the first smells they'll be on the sniff out for is cinnamon. Baked cinnamon goods are among the bakery-lovers top picks, with NYC bakery Hani's reporting cinnamon rolls were their top seller!

Cinnamon rolls offer customers that sense of indulgence they often want when they go to a bakery for a treat, which they don't necessarily get from a croissant. They're also tied to festive seasons, and daily traditions like the Swedish Fika where you pause, take a break, and reconnect.

With the need for a sweet cinnamon sauce, the production cost on a cinnamon roll may be marginally higher than for something like a donut, but cinnamon rolls are having a moment, so don't go forgetting them when you write up your bakery menu items!

Vegan and gluten-free baking

Depending on where you are in the US, the percentage of vegetarians and vegans could vary significantly. Across the country, vegans account for around 4% of the population, with many of these people falling into younger demographics. Vegans can have tough time trying to find dairy-free baked goods, which means when they find one they love, they'll buy it again and again! Just having one or two vegan bakery products on your menu can win you a lot of these customers and earn you a lot of repeat sales, making vegan baking well worth a try!

When it comes to gluten-free diets, as many as a third of Americans wish to reduce the amount of gluten they eat, though fewer than 1% suffer from celiac disease, with roughly 5-6% intolerant. However, with so many wishing to consumer less gluten, and so many bakeries failing to offer gluten-free options, catering to these people offers bakeries the chance to win loyal customers who will come back time and again, knowing they'll can find something for them!

Strategies for success

By now, you should have a few ideas about which products you’re going to start selling at your bakery business. Here are some winning strategies that can help you rise to the top of the bakery world game.

Use cost-effective ingredients

Knowing the costs of your bakery items is crucial for understanding their profitability. If you can pinpoint which items are cost-effective, you can make informed decisions about pricing and menu offerings.

Start by determining the total cost to produce a batch of each item. Include all ingredients (flour, sugar, eggs, etc.), packaging, and any other overhead costs. For example, if you're baking chocolate chip cookies, list all the ingredients and their prices, then calculate the total cost for a batch. After you know the total batch cost, divide that by the number of items produced to find the cost per item. This will help you understand your profit margins.

If you find that a particular item is costing too much to make, think about adjusting portion sizes or ingredients. For example, if your large cookies are not selling as well as smaller ones, consider offering a smaller, cheaper version that still satisfies customers.

Top tip: Regularly review and update your recipes and costs as ingredient prices fluctuate, by change the cost price on your Epos Now products list. Then, check your sales reports for profit margins on each product and make changes whenever necessary, ditching any products that are holding your business back!

Optimize production efficiency

Not all popular items are profitable. When certain items become too costly to produce, they can drag down your overall profitability regardless of how many you’re selling.

Keep an eye on ingredient prices and costs for your popular items. If an item’s costs have increased beyond acceptable limits and sales haven’t kept up, consider discontinuing it. Use data from your POS system's sales reports to help make this decision. For instance, if your sales reports show that while artisan breads are popular but the cost of making them has skyrocketed, it may be more beneficial to remove them from the menu.

Now, if you do decide to remove an item, let your customers know. You could explain that you're focusing on high-quality ingredients and better pricing for the items that remain on the menu. This transparency can maintain customer loyalty.

Be sure to replace the removed items with new, potentially more profitable options. Introduce these items gradually and promote them to gauge customer interest before fully committing.

Seasonal items

Every October thousands of people around the world head to Starbucks for their infamous Pumpkin Spice Latte. The warming spice of the cinnamon and nutmeg just makes you feel toasty on a cold Fall day. A few months later and that cult-favorite drink is no more. It’s been replaced with the not-as-popular, but still adored Gingerbread Latte. To get consumers into the holiday spirit. Seasonal drinks are so popular that  Starbucks reported that an impressive 10% of its annual sales come from seasonal drinks. But why is this?

Well, firstly, it gives you that nostalgic feeling when you’re eating or drinking an item that reminds you of a certain season. Because these items are limited edition, it also gives consumers the feeling of FOMO (fear of missing out). They don’t want to miss the opportunity of trying these products before they’re taken off the shelves. 

With this in mind, we recommend introducing seasonal pastries to your menu. You could make gingerbread cookies for Christmas, chocolate-covered eggs during Easter, bake with summer fruit pies or tarts as the weather gets warmer, or serve pumpkin pie in Fall.

Top tip: Use your Epos Now POS reports to check previous year sales to see which of your seasonal products had the biggest impact!

Upselling and bundling

A quick and easy way to increase revenue at your bakery, is to bundle your most popular items with your not so popular items. Maybe your brownies are winning all of the popularity contests. Customers are constantly coming in for their gooey goodness. But you've found that your drinks are less popular.

You could bundle these items. For instance, if a brownie is $3, why not offer a $5 lunch deal where customers get a brownie and a coffee. You'll then train your brilliant team to upsell this deal. So whenever someone asks for a brownie, they could showcase the deal. Or, if they ask for other desserts they may be swayed by the deal.

Subscriptions

Repeat custom is valuable for any business, and your bakery is no different. Subscriptions are one of the best ways to get regular visits from customers.

Starting a "cookie club" where customers can get their weekly fix of your cookies for a reduced price can help give your business a great foundation to work from, all while building customer loyalty.

Businesses put all kinds of bakery products in subscription packages, from special treats that one-off customers can't find, to a one-of-everything "see what you like best" bundle.

Reduce overhead costs

Running a bakery isn’t cheap, but keeping overheads low can make a huge difference to cost effectiveness.

Start with your utility bills. Are you using energy-efficient ovens, fridges, or lighting? Switching to energy-saving options might feel like a big upfront cost, but it can save you loads in the long run.

Think about your staffing too. Make sure you’ve got enough people on during busy times but avoid overstaffing when it’s quiet.

It’s all about smart scheduling. For ingredients, buying in bulk can save you money, especially for essentials like flour and sugar. Building relationships with local suppliers can also lead to better deals. Finally, take a look at your bakery layout. Could rearranging your workspace make things faster and more efficient?

Small changes like these can really add up, helping you save money without cutting corners.

How can a bakery POS system help?

A bakery POS system can really make a difference for your bakery. It helps you run things smoothly, makes customers happy, and can even boost your profits. Here’s how:

1. Fast order management: With a good POS system, your staff can take orders quickly. This means shorter wait times for customers and better service overall.

2. Easy inventory tracking: Keeping track of your ingredients and baked goods is essential. A POS system helps you see what you have in stock, so you know when to order more and avoid wastage. This is key for keeping your bakery expenses in check.

3. Sales reports and insights: The best POS software gives you access to sales reports. With POS software, you can find out which items sell best (and calculate profits on each product). You can spot trends, monitor business performance, and understand what customers like. This helps you make smart decisions about what to sell and how to price things, increasing your overall profitability.

4. Simple payment processing: Accepting payments should be hassle-free. An integrated payment processing system allows you to handle various payment methods, such as credit cards and mobile payments, making transactions faster and more convenient for your customers.

5. Building customer relationships: Many POS systems help you keep track of customer purchases. This means you can offer special deals or loyalty programs to encourage them to come back. Happy customers are likely to return!

6. Staff management made easy: Managing staff schedules can be tough. A POS system often includes tools for scheduling and payroll, making it easier to have the right number of people working during busy times. This leads to better service and a smoother operation.

By using a bakery POS system, you can improve how your bakery runs, cut down costs, and give your customers a great experience. Check out Epos Now's bakery solutions to find the right fit for your business.