Saving 14 jobs in a local bakery
A family bakery was losing liquidity due to rising electricity prices. We changed the cost structure and sold one property, which provided funds to pay off the working capital loan.
The Szymańscy Family Bakery faced the prospect of closing its doors after 29 years of operation. Rising utility costs and debt at the level of 284,300 PLN required immediate cost-cutting. Within 132 days, we restored the company's profitability and peace of mind.
The challenge
In January 2024, the situation was critical. Energy costs jumped by 342% compared to the previous year, which completely ate up the margin on bread and rolls. The company was behind on payments to ZUS and three main flour suppliers. The bank terminated the working capital loan agreement, which cut the bakery off from cash for daily raw material purchases. The owners considered laying off all 14 employees and declaring bankruptcy by the end of March because debts were growing with every bake. We have a plan for Tuesday, but here we had to act on Monday morning.
Our approach
Our work at Capital and Logic started with hard data. For the first 9 days, we analyzed the margins on each of the 42 types of baked goods. We discovered that the production of sweet rolls at current sugar and electricity prices resulted in a loss of 22 groszy per piece. We calculate with cold logic, so we immediately recommended withdrawing unprofitable products. We focused on freeing up cash frozen in assets that hadn't earned money for years. We negotiated a 4-month suspension of principal repayment with the bank, which gave us time for staffing and sales moves.
The solution
We recommended selling an unused garage and a small warehouse on the outskirts of Kartuzy, which brought in 312,000 PLN in net cash in April. We shifted the baking schedule to night hours, using the G12 tariff, which reduced electricity bills by 18.4%. We gave up 5 of the least profitable products, which simplified logistics and reduced raw material waste. Zero fluff, just facts: the bakery stopped paying extra for the business and started generating a monthly surplus of 12,450 PLN.
Results
The bakery not only survived but is now making money. The entire bank debt was paid off, and the staff remained in full. The owners regained control over the wallet and are planning development again, but this time we make sure every zloty is counted before being spent. Debt is not a life sentence if you have the courage to cut unnecessary costs.
Timeline
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February 6, 2024Start of cost and product margin audit.
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February 19, 2024Decision to sell redundant property and listing advertisements.
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March 12, 2024Signing the settlement with the bank and main flour suppliers.
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May 28, 2024Finalization of the warehouse sale and repayment of all arrears.
"We were afraid that we would lose everything we worked for for 30 years. Capital and Logic pulled us out of the swamp with concrete decisions. Selling the warehouse was painful, but it saved the people and the company."