Economics
With a Monthly Salary of 20,000 Yuan, I can’t “Afford” Bread.

December 18, 2023
Inspur Studio
A studio of Netease. It is dedicated to becoming China's Internet encyclopedia and using rigorous and professional interesting content to popularize knowledge.
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When coffee and milk tea brands are competing in a price war, getting involved in the 9.9 yuan era, their good companion, bread, has started to see a surge in price and has become unaffordable for many. Some people even self-mockingly say, “With a monthly salary of 20,000 yuan, I can’t afford bread.”

Casually entering a popular bread shop with long queues, the prices are ridiculously high. The delicately designed pastries, toasts, and European-style bread in the display window are all priced in double digits, almost equating to the price of a lunch for workers.

How did bread become so expensive? Can common people still afford bread?

When it comes to bread, most people’s breakfast memories can’t do without it. In childhood, a three-yuan pork floss bun or a four-yuan caterpillar bread with a cup of hot milk could satisfy a meal.

Later on, supermarkets started selling sliced white bread for seven or eight yuan per bag, which could be eaten directly, spread with jam or butter, or used to make sandwiches. Although the variety of bread was not rich, it was affordable.

Now, bread shops have been popping up one after another, always dazzling customers who come to buy bread.

For example, there is Japanese-style bread with various styles and soft textures, low-calorie and chewy American bagels, and European-style bread claiming to be “healthy and slimming”… While cultivating more and more “bread lovers,” the prices of bread have been soaring.

We have collected the prices of bread from popular bread shops in different cities on Dianping, and the results show that the prices of most bread are concentrated above 10 yuan. Even in fourth and fifth-tier cities, less than one-fourth of the bread is priced below 10 yuan. First-tier cities are even more exaggerated, with nearly 40% of the bread priced above 20 yuan.

If you live in Shanghai, which is jokingly referred to as having an “independent exchange rate,” you may have a deeper experience of the exorbitant prices of bread.

Every year, the food self-media “Penguin Guide” releases the annual Shanghai bread ranking. The most expensive bread on the list, which was priced at 38 yuan for a truffle croissant two years ago, has now been replaced by a 68-yuan cinnamon pumpkin bread.

Such bread prices have long exceeded the expectations of most people. In October this year, a poll on Weibo titled “How much money can you accept for bread” attracted 344,000 netizens to participate, of which 240,000 chose “below 10 yuan” and 79,000 chose “10 to 20 yuan.”

Thinking of picking some cheap and delicious bread, but ending up with a bill of sixty or seventy yuan, scares people who don’t know whether to pay reluctantly or put it back with a thick-skinned face. The worst part is when you bite the bullet and pay, only to find that the taste is not that great, making you exclaim, “What a disappointment.”

We have collected notes on Xiaohongshu related to “expensive bread,” and the most common complaint is that the price does not match the taste. Clearly spending a lot of money, but being discouraged by strange flavors or finding them average in taste.

Some breads are so small that they are the size of a palm, and one bite is gone. They are not even enough for breakfast, let alone a snack.

Even more outrageous are some popular bread shops where it takes three rounds of queuing, with half an hour each time, from entering, choosing the products, and waiting to pay before you can finally eat their bread.

There are also marketing tactics like hunger marketing and limited supply, which have given rise to many scalpers who double the price of bread. People can’t help but ask, “Does eating this make you live forever?”

In fact, the trend of intensified competition has already reached the bread industry in the past few years. Nowadays, bread looks more like exquisite desserts, piled up with trendy elements from the inside to the outside.

Croissants are sliced in the middle and filled with cream, taro paste, and various popular ingredients, decorated with colorful fruits, and then coated with a layer of chocolate or cinnamon powder, making them visually appealing with plenty of fillings.

Although the soft cream and fruits have overwhelmed the layers and aroma of the croissant, making it sticky and sweet, as long as the visual impact is strong enough, the price can easily surpass that of plain croissants.

Among the popular products in the bread shops we surveyed, nearly 40% of them have two or more fillings. The most common fillings are cheese, dairy products, followed by vegetables and fruits such as red beans, taro paste, and strawberries.

Not only with ordinary fillings, but bread shops also come up with various fancy fillings, taking it to another level. For example, you may find matcha-flavored cream, salted egg yolk custard, or even truffle-infused fillings in some high-end bread shops. These unique and luxurious fillings further contribute to the high prices of bread.

Moreover, the rising cost of ingredients and production processes also contributes to the increased prices of bread. High-quality ingredients and meticulous craftsmanship are often emphasized by these bread shops, justifying the higher prices. The use of premium ingredients, such as imported flours, speciality oils, and organic fruits, adds to the overall cost.

Additionally, the expansion of the bread industry has led to increased competition among bread shops. To differentiate themselves and attract customers, these shops focus on creating unique and innovative bread products. This requires investment in research and development, as well as skilled pastry chefs, which further adds to the cost.

While the rise in bread prices may make it unaffordable for some people, it’s important to note that there are still affordable options available. Supermarkets and local bakeries often offer more reasonably priced bread compared to high-end speciality shops. Alternatively, you can also consider baking bread at home, which allows you to control the ingredients and customize it according to your preferences.

Ultimately, the high prices of bread can be attributed to a combination of factors, including the trend of creating more elaborate and gourmet-style bread, the use of premium ingredients, increased competition, and the rising cost of production. Nevertheless, there are still options available for those looking for more affordable bread choices.

Like a Japanese bakery, they will directly place the Nissin Camellia Pollen in the most prominent position in the store, implying their extraordinary background. French Earl flour and Isigny butter have also become standard ingredients for making croissants.

And all of these will eventually be transferred to the price of the bread, paid by the consumers. Especially this year, the prices of flour and sugar have all increased. Due to the impact of rainfall, the price of wheat has skyrocketed, leading to a collective price increase in flour. The price of sugar has reached a new high in nearly 13 years globally in September.

According to our sampling statistics of bakeries, nearly half of the bakeries claim to bake and sell freshly, showing you the scene of the freshly baked bread being brought out by the masters.

The freshly baked part is true, but not necessarily all kneaded by the masters themselves. Only 27.5% of bakeries advertise handmade bread. Sometimes, the warm bread you see may just be factory-made pre-made dough taken out of the refrigerator by the masters.

And do these labels really make the bread taste better? The answer is not necessarily.

Bread is a very demanding skill. Even if expensive ingredients are used, as long as the dough is not properly fermented, the seasoning is wrong, and the temperature of the oven is not accurately controlled, the resulting bread is probably a “car accident scene”.

When consumers taste it, they will only say, “Is it worth such a high price?”

The premium on bread is becoming more serious, but more and more people are falling for it, which has alerted many young people who are tired of working for others to see the business opportunities.

A small shop filled with the aroma of freshly baked bread seems to be another choice for young people to realize their dreams, apart from coffee shops. On Xiaohongshu you can often come across posts about “opening a bread shop alone and earning 20,000 yuan a month.”

But is a bread shop as profitable as imagined? Let’s do some calculations.

To enter the bread-baking market now, either join a chain brand or open an independent bread shop.

The advantages of joining a chain are obvious mature product systems and supply chains, built-in brand effects and natural traffic, which can save a lot of marketing costs.

Taking joining a certain handmade toast brand as an example, the franchise fee, including technical training and bakery equipment, costs 550,000 yuan, and the store decoration cost for a 60-100 square meter shop is 150,000-200,000 yuan. In addition to rent, operation management, etc., at least 800,000-900,000 yuan is required to prepare for the first year of joining.

Everbright Securities once compared a chain bread shop with other single-store models of chain leisure food and light dining. The bread shop not only has the highest initial capital but also the lowest profit margin and a long payback period.

The reason for this is that the labor and rent costs of bread shops are too high.

Making bread relies on professional bakers, and there is no way to save on labor costs. At the same time, many bread shops adopt a “front-of-house, back-of-house” design, which requires a large store area. If located in the core areas of the city, a considerable amount of rent must be spent.

So what if you only pursue self-sufficiency and open a small and beautiful independent community bread shop? The fact is that independent bread shops face more difficulties and challenges during their journey compared to chain stores.

The first problem to be faced is unsold products and waste. Bread has a short shelf life, so if it doesn’t sell, it can only be sold at a low price or discarded directly, and the cost of this has to be borne by the owner.

Secondly, the “lifespan” of popular products is too short, and independent bread shops have weak innovation capabilities, making it difficult to catch up with the research and development speed of chain brands. Who remembers the once popular “Dirty Bread” (chocolate-covered bread) that was everywhere?

And when faced with a dazzling array of bread shops, who would be content with following just one brand?

According to iResearch, only 11.5% of consumers purchase bread from only one brand, while the vast majority of consumers prefer to try various brands.

Considering all these factors, opening a bread shop is a luxury to expect to make money, and it is fortunate to be able to struggle and sustain the business. After all, the average lifespan of bread shops in China in 2021 was only 18.9 months, and even surviving for two years without closing down can be considered a “small achievement.”

According to data, in the first quarter of 2023, the opening-to-closing ratio of baking and dessert shops in Shanghai was 0.77, which means that while 77 new stores opened, 100 stores closed.

The few that can survive are the trendy bread shops that keep raising prices. For common workers who just want to have a decent meal, even though there are more and more food choices available now, they all seem to gradually become unaffordable.

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Inspur Studio
A studio of Netease. It is dedicated to becoming China's Internet encyclopedia and using rigorous and professional interesting content to popularize knowledge.
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