When we first launched Little Rae’s in 1996, one of the first major decisions we had to make was whether to become a wholesale bakery or a retail bakery. At first, we tried to do both by primarily catering to a wholesale market while also offering customers the ability to place personal orders online. Eventually, we determined that adopting a fully wholesale model was the best option our small, independent business.

If you don’t know the difference between a wholesale and a retail bakery, you’re not alone. If you’re looking to open your own shop or just want to learn more about how Little Rae’s operates, read on to find out what some of the key differences between the two are.

Wholesale Bakeries (That’s Us!)

Wholesale bakeries sell their product in bulk to restaurants, grocery stores, and other establishments like coffee shops. This business model comes with a unique set of pros and cons, such as:

Pros

• A more stable income from standing orders, and the ability to plan ahead for the amount of product needed to meet demand
• No need for an attractive storefront
• More options in terms of location

Cons

• A delivery truck is required to transport goods to local customers, and being part of a distribution network is required for deliveries that are further afield
• Higher upfront costs compared to a retail bakery
• Additional staff may be required to manage high-volume production, meaning overhead costs may also be higher

Retail Bakeries (Not Us!)

Retail bakeries sell their product directly to consumers. As such, they often don’t produce their goods in the same quantity that wholesale bakeries do (unless producing for many store locations). This lends itself to its own set of pros and cons, which include:

Pros

• More direct customer interaction and natural community
• Opportunity to design a unique and alluring storefront
• Upfront costs are usually lower

Cons

• Income fluctuates depending on how many customers come in each day
• Walk-ins vs standing orders make it more difficult to know the exact amount of product needed
• Additional employees needed to manage the storefront
• Location matters – which may lead to higher rent so that the store can be in a high-traffic area that attracts customers

We often receive questions from customers who want to place personal orders directly through our bakery. And while we’re flattered by all the requests, that’s not a service we currently provide. We do, however, have several large retailers that carry our products across the country, including Whole Foods, Metropolitan Markets, and Community Markets. To find a retailer near you, click here.