The bakery business at risk as production cost soars

Diane Badmus is the founder and chief executive officer of Modees Kitchen – a start-up in the confectionary business.

She shared with BusinessDay how the continuous surge in flour, sugar and other key inputs has become a nightmare. Below are the responses:

How are you coping with the rising input costs ?

It has been very difficult to cope because of the increase in baking items, thus making the prices of my products high because I have to change prices of my products every week too. The worst of it is the price of flour and sugar. Prices of both commodities keep changing and this is the key input for my business. When we also increase our prices, clients are complaining. To ensure we do not lose our customers, we introduced smaller size cakes we market on social media and that has helped in keeping us in business.

Are you making much more money compared to before?

No. We are not as our sales are yet to record any major growth since the continuous surge in inputs.

Are people buying your products?

Yes, but we are not making as much sales as before. Nigerians purchasing power is reducing owing to inflation and many are cutting costs. People who usually buy cakes for the weekend for their children no longer do that and this has impacted our sales drastically.

How is the worsening power supply affecting your cost of production?

Due to the worsening power supply, we cannot work in advance. We work with products that need to be persevered and the worsening power supply is making this becoming impossible. With the surging diesel price now, generator is not an alternative for us because we are trying to reduce our production cost.

Read also: Bread crisis: Expert urges bakers to adopt cheaper substitutes, become creative

What strategy did you adopt to survive the pandemic?

Our retail stores were inoperative during the lockdown. However, after the lockdown, we introduced smaller-sized cakes and I also kick-started another business. These helped us survived the difficult moment of the pandemic.

Is the Nigerian business environment improving?

The Nigerian business is not improving because the government has not created an enabling environment for SMEs. To access grants is difficult; interest rate for banks is killing, we can’t access dollars easily to trade, immigration services are slow and cost of clearing goods is high, buying accessories we use to work is very difficult. Office rent and bills are on the increase, youths don’t want to work and be paid a meagre sum. They prefer the easy and fast way out, hence getting good staff is difficult now.

Get real time updates directly on you device, subscribe now.