Independent routes across different industries are vital for manufacturers, stores and consumers alike. Route franchisees deliver products to fulfill orders and keep shelves stocked. There’s a particular demand for route franchisees in the bread industry.
Whether you’ve heard of others becoming independent franchisees of bread routes before or you’re unfamiliar with this opportunity, it’s worth learning more. Operating an independent bread route is a worthwhile income opportunity. You generally work independently and build equity in your own business. You plan your service schedule and work hours, and your hard work determines how much you can make. If you think being an independent bread route franchisee is right for you, learn more about the opportunity in this blog.
What Are Independent Bread Routes?
If you’re interested in this potential income opportunity, you first need to know — what is an independent bread route? An independent operator purchases a route territory with rights to deliver a manufacturer’s bakery products within a geographically defined territory. They then own that bread route, deriving income from it and building equity as an on-going and growing business enterprise.
Independent bread routes are a mutually beneficial relationship for both the independent franchisee distributors and the manufacturer. The franchisees earn an income running their own business, and the manufacturer gains increased distribution territory for their products. The bakery manufacturer’s industry reputation and the product brand recognition they offer are critical, as is the amount of support bakeries offer route franchisees, such as depot staging, marketing promotions, sales efforts and merchandising materials.
How Do Bread Routes Work?
The best way to answer the question, “What are bread routes?” is to understand how they work. The process begins with finding a bread manufacturer that has routes available for franchise ownership in your desired work location. From there, one could follow these steps:
- Research and understand franchise ownership: Buying a franchise is a complex investment. Any prospective owner should perform background research to better understand owning a franchise. Available resources include the Federal Trade Commission’s (“FTC’s”) “A Consumer’s Guide to Buying a Franchise,” which can help you understand Franchise Disclosure Documents, as well as a franchisee’s rights and responsibilities when owning a franchise. You can also visit the FTC’s home page at ftc.gov, or contact the FTC at 1-888-FTC-HELP for additional information. Call your state franchise agency or visit your public library for other sources of information on franchising.
- Decide how you’ll purchase an independent route: To own an independent bread route, you must buy it from either the bakery manufacturer or the current franchisee. Depending on the bread route being sold, you may be able to contact the seller directly or go through a route broker. Brokers market routes at different levels and can help you through the buying process.
- Purchase a route: How much you need to offer to buy the franchise route will depend on the bakery or manufacturer. You’ll likely have to provide a down payment on a route, which could range from 10% to 20%. Many bread companies and third parties offer financing for both the downpayment and the remaining amount owed. Bread manufacturers determine route values in different ways, but they often take the average weekly sales for a set period and multiply that by an amount determined by the local market value. The result is the asking price of a route. After buying the route, the new franchise owner signs a Distribution Agreement with the bread manufacturer for the purchased route territory.
- Understand your accounts: When you buy a route, you own distribution rights to various accounts within a specified route territory. The accounts you have in your territory will depend on your location. In some locations, chain grocery stores make up a significant portion of account sales. These stores generally require either a “dropship” or “guaranteed full rack service” program. A “dropship” program requires no in-store service by the distributor while giving the distributor a guaranteed profit on all delivered product. Under a “guaranteed rack service” program, the distributor services an Outlet by maintaining an adequate and fresh supply of bread products on the Outlet shelves, rotating the product on the shelves to promote their sale, and promptly removing all stale from the Outlet. Typically, the Outlet receives a percentage credit from the distributor for all stale products. Many chain customers also have promotional programming that the bread manufacturer supports. The route territory may also have local accounts, like delis, schools, offices, convenience stores, restaurants and independent grocery stores. The route franchisee will service these locations often based on arrangements that the franchisee negotiates. Adding these accounts will increase sale volume and the resale value of a route.
- Visit the depot: Once you’ve bought into a route, it’s time to service it. The actual workday typically starts at the bakery manufacturer’s depot. There, you’ll load your orders onto your truck. You or the customer themselves generate orders, depending on the nature of the bread program. Orders are generally consistent but fluctuate based on promotions, the season, or the weather.
- Deliver the orders: When you service your route, you’ll drive to an account location with an order during receiving hours. There, you may have to pull any stale product from shelves and provide credit as negotiated. For customers that don’t communicate their order in advance, you’ll build an order based on existing inventory levels, available shelf space, and your understanding of the customer’s business and trends. You then fill the shelves with new product, rotating the product so that older products are toward the front and later-dated product toward the back. You may have to check and fill special displays as well.
Depending on the demands of your route, you may need assistance. A merchandiser or stock worker can go to busy accounts to stock shelves after your delivery. Whether you can hire employees or independent contractors will depend on the Distribution Agreement. Check the details of your contract to see what is permissible.
As a bread route franchisee, you may need help during particular busy times. Summer, for instance, is a demanding time for manufacturers of hot dog buns and hamburger rolls since consumers are grilling often. Thanksgiving is busy for bakeries that offer products to make stuffing.
What Do You Need to Operate a Bread Route?
Owning a bread route requires a few extra necessities, including:
- A delivery vehicle: As an independent franchisee, you need your own vehicle or lease a vehicle for deliveries. You’ll have to insure it as Some distributors include a delivery vehicle in the initial cost of the route, but that will depend on the bakery or manufacturer you work with.
- The appropriate license: Certain vehicles require a commercial driver’s license (CDL) to operate legally. Whether you need a CDL will depend on the vehicles you operate, so be sure you have the correct license and class certification.
- Essential skills and traits: You may not need prior route experience to own and operate bread routes. Owning a bread route is an entrepreneurial effort, and the income and equity generated is a direct result of your talent and the effort you put forth. Therefore, a professional attitude, the ability to work hard, and the motivation to boost sales is a must. You should also have excellent communication skills and a willingness to collaborate with businesses on your route.
- Flexible schedules: Many stores and businesses have early morning receiving hours for product delivery. You’ll have to be flexible with the businesses on your route, adjusting to their times and seasonal needs.
How Do Bread Route Owners Get Paid?
Bread company franchisors have different models for how independent distributors obtain revenue. A prevalent model has a manufacturer sell bakery products to route franchisees at one cost, who then resells the products to retailers at an increased cost that the franchisee determines. Independent franchisees in this system are essentially masters of their own profit margin and can make whatever the market will bear.
There are also commission-based systems where the independent franchisee and the manufacturer split the profit. Look into your commission rate to understand how much you could earn.
Generally, independent distributors are responsible for collecting from cash accounts and are owed money from the bread company for chain stores serviced. Reconciliation usually happens weekly.
Is Owning a Bread Route Worth It?
Owning a bread route can be a worthwhile investment if you have the energy, acumen and desire to grow your business. If you work hard and apply a shrewd business mind, you can generate a good weekly income, much of it in cash, all while growing equity in your route. And there are more advantages to owning a bread route:
- Demand: Families often keep bread and baked goods available in their homes, meaning stores must keep the products available on their shelves. That demand can translate to independent routes generating business.
- Buy-in price: Buying into an independent bread route can cost a lot less than buying into other business opportunities. You can earn a return on your investment sooner with a lower buy-in price.
- Growth: As an independent bread route franchisee, you have many ways to grow your Add new accounts, and you will earn more money. Saturate your existing route with additional trucks and hire employees for better distribution and increased volume. Or buy and expand into other areas.
- Selling your route: Eventually, you can sell your entire route for capital gains. Or, sell a portion of your route for money and keep the other portion for further development, or legacy your business to a loved one. Develop your own route and build the future you want while being your own boss!
Purchase a Bread Route From Gold Medal Bakery
When you’re ready to become an independent owner, partner with Gold Medal Bakery. We have independent bread routes for sale that let you work independently but receive our products and support. At our start over 100 years ago, we were founded on the ideals of using the highest quality ingredients and providing timely, courteous service. In the following decades, we’ve continued our dedication to those principles by providing the best quality products for sellers and consumers.
Purchase a route from Gold Medal Bakery today to begin partnering with us. If you have any questions about our independent bread routes, complete our contact form, and we’ll get back to you as soon as possible.