NATIONAL OPEN UNIVERSITY OF

NIGERIA
BUSINESS PLAN ON BAKERY

(GROUP 7)
Prepared by ten (10) group members

GROUP MEMBERS:

1. ASHIBUOGWU MAGDALENE NOU140002211

2. OGUNBARUWA MARY YETUNDE NOU157936960

3. ADENIJI RAIMOT TITILAYO NOU142181251

4. SHADEOBA GLORIA NOU144802071

5. JOSEPH FOLAKE NOU132739317

6. LAWAL ZAINAB ADEBISI NOU160575237

7. OLADEHINDE SAHEED AKOREDE NOU171057122

8. ODUESO ALLIYAH KEHINDE NOU132143621

9. EDET SALOME EMMANUEL NOU143920035

10. NOFIU GANIYU OLAKUNLE NOU165705889

MAY, 2018.
1.0 EXECUTIVE SUMMARY
1.1 Introduction

Pierre Bakery is a start-up bakery retail establishment located in Ijebu-North Local

Government Area, Awa-Ijebu, Ogun State. Pierre Bakery expects to catch the interest of a
regular loyal customer base with its broad variety of pastry products. The company plans to build
a strong market position in the town, due to the partners' industry experience and mild
competitive climate in the area.

Pierre Bakery aims to offer its products at a competitive price to meet the demand of the middle-
to higher-income local market area residents and tourists.

1.2 AIMS AND OBJECTIVES

Our major objectives are to be in the chain that will:

(1) establish a working storefront for Morningstar bakery.

(2) develop the strong presence in the community needed to support sales goals.

(3) develop a full menu by the end of the second quarter.

1.3 Mission and Vision

Pierre Bakery aims to be a cornerstone in the community creating a Pierre Bakery neighborhood
atmosphere where customers feel comfortable and become instant regulars. We are sensitive to
the often over-looked population of allergy sufferers and cater to their needs for healthy,
delicious baked goods. We seek fair and responsible profit, enough to keep the company
financially healthy for the long term and to fairly compensate owners and investors for their
money and risk.
We at Pierre Bakery tends to use through our medium of baking business in satisfying the people
of Ogun State in achieving its goal of a better nourishment to our customer in its urban and rural
areas of Ogun State.

1.4 Success Indicator

Pierre Bakery offers a broad range and freshly prepared bakery and pastry products at all times
during business operations. Three moderate batches of bakery and pastry products are prepared
during the day to assure fresh baked goods are always available.

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PIERRE BAKERY wants to establish a large regular customer base, and will therefore
concentrate its business and marketing on local residents, which will be the dominant target
market. This will establish a healthy, consistent revenue base to ensure stability of the business.
In addition, tourist traffic is expected to comprise approximately 35% of the revenues. High
visibility and competitive products and service are critical to capture this segment of the market.

2.0 Description of The Organization

2.1 Company Ownership

The company is managed by 10 (Ten) individual

1. Ashibuogwu Magdalene
2. Ogunbaruwa Mary Yetunde
3. AdenijiRaimotTitilayo
4. Shadeoba Gloria
5. Joseph Folake
6. LawalZainab Adebisi
7. OladehindeSaheedAkorede
8. OduesoAlliyahKehinde
9. Edet Salome Emmanuel
10. NofiuGaniyuOlakunle

2.3 Company Location

Pierre Bakery is an indigenous firm located at Awa-Ijebu, Ogun State.

2.4 ORGANIZATIONAL STRUCTURE

The firm comprises of five (5) staffs:

1. Managers
2. Pastry Bakers
3. Sales Representative
4. Secretary
5. Driver
6. Security Personnel

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EQUIPMENTS
1. Mixers - Mixers are the foundation of a productive bakery. A large dough mixer, an
emulsion blender with whisk attachments, and countertop mixers are typically considered
necessary.

Figure 1. An Example of Mixer

2. Oven - Different bakeries will have different ovens depending on what they plan to make.
Stone deck ovens create amazing hearth breads, and convection ovens are good for cakes
and cookies.

Figure 2. An Example of Oven

3. Dough Proofe: Proofers make the dough-rising process simple by optimizing heat and
humidity. Dough is uniformly proofed, which streamlines the production process.

Figure 3. An Example of Dough Proof

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4. Bakeware: Quality bakeware is essential because it is used heavily each day. Cutting
costs early may result in bakeware that dents or warps easily. Always look for quality
bread pans, muffin tins, cake pans, etc.

5. Smallwares: In
Figure 4. An Example of Bakeware
addition to necessities like spatulas, spoons and
mixing bowls, you’ll also need pastry knives, icing tips and flour sifters. It’s wise to make
a list so nothing is forgotten.

Figure 5. An Example of Smallwares

6. Dough sheeter: Planning to open a pastry shop? Rolling out dough by hand is time
consuming. A dough sheeter can standardize the process and save tons of time.

Figure 6. Dough Sheeter

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7. Bread slicer: Planning to offer fresh breads? Many patrons will want the option to have it
cut. If bread is your business's focus, a bread slicer is a necessity, as it will allow you to
quickly cut uniform slices for easy bagging and sale.

Figure 7. An Example of Bread Slicer

8. Sheet pan racks: All those delicious baked goods you’ll be making need space to cool.
Research the wide range of sheet pan racks available to match your space / capacity
needs.

Figure 8. An Example of Sheet Pan Racks

9. Dry storage: Dry ingredients are the foundation of many baked goods. Proper storage is
essential for ingredients like flour or sugar, but also for the wealth of smallwares found in
the kitchen.

Figure 9. An Example of Dry Storage

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10. Refrigeration: Eggs, milk and cream are key ingredients in many baked products. Make
sure they are safely stored in the correct refrigeration unit.

Figure 10. An Example of Refrigeration

11. Doughnut cake fryer: Want to be part of the current designer doughnut craze? Doughnut
and funnel cake fryers are necessary to create those sugary, tasty treats no one can resist.

Figure 11. An Example of Doughnut Cake Fryer

12. Display case: Visibility of products is essential for any bakery's FOH. Tantalize
customers as they walk in the front door with a quality glass display case to showcase all
your baked goods.

Figure 12. An Example of Display Case

13. Wood Top Work Table: A wood top prep table is the best surface for bakers to refine
their craft. Ideal for kneading dough, flouring, and other various prep tasks, the wood top
can be a baker's best friend when working.
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 Figure 13. An Example of Wood Top Work Table

3.0 THE PRODUCT AND SERVICES

3.1 Description of the Product/Service

Pierre Bakery provides non-gluten baked goods and pastries to diet-conscious and wheat-allergic
consumers. Special considerations are made for all common food allergies such as dairy, yeast,
wheat, and eggs.
3.2 Product/Services Uniqueness
Spelt breads, muffins and pastries
Spelt flour is the most common wheat-alternative flour as it has the same characteristics as wheat
which provides similar taste, consistency and behaviors creating goods that are just as good as
any wheat baked good.
Yeast-free breads
Many people have an allergy to yeast, or have been warned by their doctors not to eat it. We
provide a line of yeast-free breads.
Dairy-free muffins and pastries
Most breads do not require any dairy products, so they are not a consideration. Muffins and
pastries most often require butter. To avoid this, we use a soy substitute.
Egg-free breads, muffins and pastries
Eggs are most common in muffins and pastries. Applesauce can be used as a substitute as it
provides the same amount of moisture that is required.
3.3 Trend of sales
The mode of sales for the product is through direct contact from the retailer to the final
consumers.

3.4. Fitness
We are offering the customers a completely new experience and far higher quality product.
Nowhere else will they find a professional chef preparing gourmet desserts right in front of

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them. The amazing popularity of the Food Network is proof of the public's new-found interest in
being a spectator in the kitchen.
3.5 Future of the service
Pierre Bakery is incorporated in Awa-Ijebu area of Ijebu-North in Ogun State. It is equally
owned and managed by its 10 partners. The company intends to hire two full-time pastry bakers
and six part-time to handle customer service and day to day operations.
4.0 Market analysis
Our target market includes people who are health conscious and/or have common food allergies.
This is a niche market since most bakeries do not cater to these needs with the exception of high-
fiber diets.

Sales
50
40
30
20
10
0
The Allergy Group The Doctor Diet Group The Diet Craze Group

Sales

4.1 Market segmentation

Our target market consists of three groups:
The Allergy Group
According to Health Magazine, one out of five people suffer from a common food allergy,
however many bakeries do not cater to their needs.
The Doctor Diet Group
For health reasons, many people are warned off certain foods by their doctors becau.se of high
cholesterol and blood pressure. Currently the main killer in the U.S. is heart disease according
the American Heart Association. Many Americans aged 50+ are going on special diets to prevent
heart disease.
The Diet Craze Group
According to Self Magazine, the year 2000 saw 20 new diet fads that discouraged certain foods
such as wheat and dairy. The bestselling book on the New York Time list for health was the
"Blood Type Diet" which encourages readers to eat only non-gluten flours such as spelt, and to
avoid dairy. While this target market is quite large, it is ever fluctuating since most people who
diet yo-yo between different diets (Self Magazine September 2000).

4.2 Strategy For Target Market Segmentation

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In our target market, we will mainly focus on the "allergy group" since they are the most
prevalent and steady of customers. We expect that the "doctor diet group" and the '"diet craze"
group will make up a smaller portion of our customers. We have not listed "regular customers"
as a target group since the customers who do not fit into any of our groups are too varied to
segment. We are specifically filling the needs of the "allergy group" so we expect the most
business from this group.
4.2.1 Consumers Needs
Pierre Bakery competes in the Food Services Industry. In addition to competing with other
organic and non-wheat bakeries, it competes with all restaurants, bakeries and supermarkets for a
share of its customer's food. Pierre Bakery is most concerned with competitors who differentiate
their products and services with a healthy, organic focus. Because this group is so large, Pierre
Bakery has chosen to limit its analysis to other gluten-free bakeries.
4.2.2 Markets trends
Our trend focuses on serving a niche market with quality goods. We are determined to become a
part of the community - an establishment that becomes as much of the community as a church or
local grocery store. To achieve these goals, we will provide the following:
 Friendly, Pierre Bakery neighborhood-feel atmosphere.
 Quality baked goods for everyone to enjoy at a fair price.
 Special diet menus in relation to the advice of local healthcare providers.
4.2.3 Market Growth
One thing is certain when it comes to bakery business, if your business is strategically positioned
and you have good relationship with retailers in the neighborhood, you will always attract
customers and that will sure translate to increase in revenue generation for the business.
We are well positioned to take on the available market in Awa-Ijebu, Ogun State and we are
quite optimistic that we will meet our set target of generating enough profits from our first six
months of operation and grow the business and our clientele base.
4.3 Break-Even Analysis
Pierre Bakery Break-even Analysis is based on the average of the first-year figures for total sales
by units, and by operating expenses. These are presented as per-unit revenue, per-unit cost, and
fixed costs. These conservative assumptions make for a more accurate estimate of real risk.
Pierre Bakery should break even by the fourth month of its operation as it steadily increases its
sales.

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4.3.1 Strength:
Our strength lies in the fact that we have state of the baking equipment and flowers that have
positioned us to meet the demand of our clients even if the demand tripled over night or if we
have a massive order to meet and emergency need.
4.3.2 Weakness:
We do not take things for granted for the facts that we have weaknesses. In fact, the reality is that
we are setting up a bakery suppler company in a town with other bakery suppliers and it might
pose a challenge for us in breaking into the already saturated market in Awa-Ijebu area of Ogun
State in Ijebu-North district. In essence our chosen location might be our weakness. But never
the less, we have plans to launch out with a big bang.
4.3.3 Opportunities:
The opportunities available to us are unlimited. There are lot of people who are willing to
patronize out product around Ogun State and the whole south west geo-political zone all what we
are going to do to push our products to them is already perfected.
4.4 Strategy for E-Marking and Technological Challenges
 Introduce our product by distributing fliers to the neighborhood.
 Open our business with a party so as to capture the attention of residents who are our first
targets
 Advertise our products in community based newspapers, local TV and radio stations
 List our business and products on fliers
 Leverage on the internet to promote our product.
 Engage in direct/indirect marketing and sales
 Encourage the use of word of mouth marketing (referrals)

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5.0 FINANCIAL ANALYSIS

Consultants N 150,000

Insurance N 927,100

Bakery Ingredients N 70,000

Other N 200,000

TOTAL START-UP EXPENSES N 5,408

Start-up Assets

Cash Required N 12,092

Other Current Assets N0

Long-term Assets N 175,000

TOTAL ASSETS N 187,092

Total Requirements N 192,500

5.1 MARKET ANALYSIS

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Potential Customers ‘000 Growth ‘000 Growth ‘000 Growth ‘000 Growth ‘000 CAGR
The Allergy Group 32,000 15% 36,800 20% 44,160 35% 59,616 25% 74,520 23.75%
The Doctor Group 19,200 15% 22,080 15% 25,392 45% 36,818 25% 46,023 25.00%
The Dieters Group 48,000 15% 55,200 25% 69,000 60% 110,400 40% 154,560 35.00%
Total 99,200 114,080 138,552 206,834 275,103
5.2 START-UP REQUIREMENTS
Start-Up Expenses

Legal N0

Stationery etc. N0

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 Brochures N 25,000

Consultants N 150,000

Flour N 90,500

Equipment N 1,700,000

Insurance N 150,000

Bakery Ingredients N 70,000

Other N 200,000

TOTAL START-UP EXPENSES N 2,385,500

Start-up Assets

Cash Required N 3,735,500

Other Current Assets N0

Long-term Assets N 1,800,000

TOTAL ASSETS N 5,535,500

Total Requirements N 7,253,500

Start-Up Expenses

Legal N0

Stationery etc. N0

Brochures N 25,000

5.3 START-UP FUNDING

Start-up Expenses to Fund N 2,385,500

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Start-up Assets to Fund N 5,535,500

TOTAL FUNDING REQUIRED N 7,921,000

Assets

Non-cash Assets from Start-up N 1,800,000

Cash Requirements from Start-up N 3,735,500

Cash Balance on Starting Date N 3,735,500

TOTAL ASSETS N 9,271,000

Liabilities and Capital

Liabilities

Current Borrowing N0

Long-term Liabilities N 1,800,000

Accounts Payable (Outstanding Bills) N0

Other Current Liabilities (interest-free) N 3,735,500

TOTAL LIABILITIES N 5,535,500

5.4 PERSONNEL PLAN

YEAR 1 YEAR 2 YEAR 3

Managers N 100,000 N 105,000 N 110,250

Pastry Bakers N 40,800 N 42,840 N 44,982

Baristas N 120,000 N 126,000 N 132,300

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 Other N0 N0 N0

TOTAL PEOPLE 10 10 10

Total Payroll N 260,800 N 273,840 N 287,532

5.5 BREAK-EVEN ANALYSIS

Monthly Units Break-even N 17,255

Monthly Revenue Break-even N 38,336

Assumptions:

Average Per-Unit Revenue N 2.22

Average Per-Unit Variable Cost N 0.35

Estimated Monthly Fixed Cost N 32,343

5.6 PRO FORMA PROFIT AND LOSS
YEAR 1 YEAR 2 YEAR 3

Sales N 491,000 N 567,105 N 655,006

Direct Cost of Sales N 76,750 N 88,646 N 102,386

Other N0 N0 N0

TOTAL COST OF SALES N 76,750 N 88,646 N 102,386

Gross Margin N 414,250 N 478,459 N 552,620

Gross Margin % 84.37% 84.37% 84.37%

Expenses

Payroll N 260,800 N 273,840 N 287,532

Sales and Marketing and Other Expenses N 27,000 N 35,200 N 71,460

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 Depreciation N 60,000 N 69,000 N 79,350

Utilities N 1,200 N 1,260 N 1,323

Payroll Taxes N 39,120 N 41,076 N 43,130

Other N0 N0 N0

Total Operating Expenses N 388,120 N 420,376 N 482,795

Profit Before Interest and Taxes N 26,130 N 58,083 N 69,825

EBITDA N 86,130 N 127,083 N 149,175

Interest Expense N 10,000 N 9,500 N 8,250

Taxes Incurred N 3,111 N 12,146 N 15,650

Net Profit N 13,019 N 36,437 N 45,925

Net Profit/Sales 2.65% 6.43% 7.01%

NOTE: The monthly net profit can be lower or higher than this depending on the market turn
out.

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