This was originally posted on 24 September 2023. I provided some updated details in a blog post called more on costs on 7 February 2024.
I make artisan bread at a very small scale. This is not great business because you need to sell a LOT of bread to make any money.
In the interests of transparency what follows is a breakdown of the costs of making a loaf of Merton simple. I sell the Merton simple for £4 at COGS although I get £3.30 of that and COGS gets 70p.
Each loaf weighs 680g before it is baked and about 590g after — they lose a lot of water as steam during the baking process.
|Strong white flour
|Brown rice flour
That’s a total of 52p per loaf.
It gets a little trickier from here as what follows are estimates.
Energy (electricity) 2p per loaf. This is based on 20p per hour, 1.75 batches of bread per hour, and 6 loaves per batch: 0.20/1.75/6. My oven only takes 6 loaves at a time and, along with kitchen space, oven size is one of the major limiting factors of the economics.
Active production time (labour) £1.81 per loaf. Active production time refers to time spent producing the bread that I can’t spend doing other things. Sourdough is not particularly labour intensive and in a regular bakery I’d be able to spend time inbetween turning and shaping the dough doing other bakery things! The calculation of £1.88 per loaf is based on paying myself £15 per hour with each batch taking a total of 1.45 hours active production time (Therefore: (15 x 1.45)/12 loaves per batch). This is an underestimate. Hand-mixing a batch takes about 20 minutes, and even cleaning up takes at least 30 minutes. Note that I made the batch size 12 because I normally mix 12 loaves at a time. The active production time is the value that I have the most control over but in such a small kitchen it’s very difficult to adjust this time … although I am getting quicker.
Other costs 20p per loaf. These costs include water, rent, equipment, equipment repair, packaging, other energy costs, wastage, water disposal. Etc. 20p is more or less a guess.
In summary (per loaf):
|Active production time
|Sale to COGS (30% margin)
The economy of scale is very difficult at the level I am operating. With more space, bigger equipment, easier access to facilities (etc) I could keep bringing that active production time down. But for now, I’ll keep finding ways to make the process at home in my kitchen more efficient.