Top 6 Reasons To NOT Buy A Bread Route
Ready to buy yourself a job that starts at 2 am and never lets you take a vacation?
What Even Is A Bread Route?
Usually, the people telling you that owning a bread route is a great idea are the people who sell bread routes!
You've probably seen bread trucks driving around your city. Most are owned and operated by independent contractors who bought a bread route as a business.
Despite its many disadvantages, bread routes are enormously popular with prospective buyers once they are smitten with the bread route dream. No matter what you say, if someone gets the bread or delivery route bug, you won't change their mind.
What is a bread route? Bread routes are a business model where you are paid as an independent contractor to sell and deliver bread in your protected territory. Business brokers make a lot of money by telling you how you can be your own boss and enjoy financial freedom as an owner. At any given time, there are hundreds of bread routes for sale on the business portals.
Before we begin, it is worth noting that we respect the men and women who deliver bread, as they have taken the initiative to start their own businesses and provide a vital service. Some people have built up larger routes, have multiple employees, love their business, and make good money, but a bread route is not for everybody.
How Much Does A Bread Route Cost?
As a very general rule, a route can sell for a multiple of weekly sales. So if you see a number like 20:1, that means the route is selling for a 20 times multiple of the weekly sales. As an example, if weekly sales are $10k with a 20 multiple, the business would list at $200k.
Some routes, like Pepperidge Farms, can sell for a premium and can go up to a 40:1 listing or even higher for good routes. Keep in mind, though, that most of the routes for sale are not great routes. These listings are often people who had the bread route dream and couldn't make it work. If you keep track, you can see the same bread routes for sale repeatedly on the same listing sites, and the only people getting rich are the business brokers.
Many of the routes may demonstrate acceptable gross revenues; however, after calculating expenses, they might yield an owner's profit between $40,000 and $100,000. Many people would call that "buying a job" and not a very high-paying one at that. Which brings us to drawback #1 of a bread route...
Why Bread Routes Aren’t the Sweet Deal They Seem
1. Limited Growth Potential
The business is not very scalable. The majority of bread routes are operated by one truck and one owner-operator, and you will always be trading your time for money, limited by the hours in the day. Can you grow to multiple trucks and scale? Possibly, depending on your territory and your abilities, but this is not an ideal business for scaling, and there will always be a finite ceiling to your growth.
2. One Account Can Sink You
If you are considering an existing bread route, always examine its customer base. In some cases, if there are many small accounts and one large account, losing that single big account can crush the business overnight. Suppose a route has many small accounts, such as convenience stores, that are spaced widely apart. That's more time and gas expense than a bread route with only 6 large accounts that are within a 4-mile span. However, with larger accounts, if you lose one, you will be disproportionately affected.
3. Early Mornings, Long Days
Hard work and even harder hours. If you are not a morning person, a bread route is not for you. It is not uncommon for deliveries to start between 2 and 4 am. Are you planning on taking a vacation? Do you trust someone to drive your truck and handle deliveries and not mess up and lose your accounts? Can you even afford to hire someone, given your tight margins?
You will also be required to lift and bend throughout the day, every day. Are you prepared to do that? Also, rain or shine, high winds, 110 degrees, people need their bread. Also, be prepared to calculate how much bread your stores need, such as on special days like July 4th. If you place a huge order and then it rains or there is inclement weather, you are left with dozens of loaves, which brings us to…
4. Stale Inventory Problems
Unsold inventory. A bread route owner doesn't just pick up the bread at the depot and deliver it; they are also responsible for taking back any bread that is not sold. If you know what you are doing, you can rotate your product from slow-selling stores to fast-selling stores, but at the end of the day, you are responsible for all stale, unsold bread.
5. Profits Eaten By Costs
The bread route will be your business, so all costs are also yours. You need to buy and maintain a truck, which isn't cheap. This comment on Reddit sums up how things can go badly quickly: Getting up at 2 am, working an entire summer, and basically having all the profit eaten up by repairs. This person walked away from the business, was sued by the company, and subsequently declared bankruptcy.
6. Constant Customer Interaction
It isn't an introvert's dream. People think you pick up the bread and drop it off, just drive around, and don't have to speak with anyone. No. You have to deal with managers of the stores constantly, often when they are unhappy about something you did. This is a highly competitive business, and there is always someone trying to win your accounts, so you must always maintain a strong rapport with your customers. If you want to build your business, you also have to get out there and sell. Owning a bread route is more human interaction than you might think.
How Much Can I Make With A Bread Route?
In most cases, an average of 20% on all products sold is the industry standard. If you live in a big city with dense population centers and high demand, this number can be profitable. But if you are in a rural area with many small stores spaced widely apart, that can be a challenge. How fuel-efficient is your truck? Keep in mind that you are now responsible for all the expenses associated with running that business, including insurance, licenses, an accountant to handle your books, fuel for the vehicle, and truck repairs. So, even if you are making half a million gross and $100,000 in margin, that $100,000 gets a lot smaller when you back out all of your expenses.
One final question. Do you think the companies that sell these routes said to themselves in a board meeting, "Boy, John, we are making so much money delivering the bread, why don't we sell these bread routes to people?"
No! They discovered that this aspect of the business is highly complicated, requires a significant amount of planning, and the truck repairs and fuel costs are both expensive and increasing. Additionally, there are thousands of people who want to own their own business, and they will think this is a great opportunity. Hence, a never-ending cycle of these bread routes being sold and resold repeatedly.
What's the Takeaway?
For the right person, in the right area, at the right time, a bread route can be a good option. However, in many cases, this results in taking a mediocre-paying job, while also incurring all the expenses and risks associated with owning a business.
If you must consider a bread route business, always go on the route with the owner for at least a few days before you commit. Additionally, consider other options, as dozens of business opportunities are available in that price range that might be a better fit for your business goals and operational preferences.
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