The Price of Pastry

What are Some Important Rules for Managing Your Bottom Line?

By Jimmy Griffin

We live in a world where the term Cash is King is becoming a distant memory. Cash has been replaced steadily with technology. Firstly, we had cheques, postal orders, bank transfers, credit cards, debit cards, travellers’ cheques and other means of payment for our goods. Technological developments have increased our abilities to make payments, with all the above being slowly replaced these days by phone tapping and even smart-watch tapping at payment terminals to effect payment for our goods. I use the above information to demonstrate that money as we know it has become a hidden thing. No longer is the bulge in your wallet a symbol of your wealth or disposable income on a night out. Cash is becoming a hidden item that is spent in an instant, so the transaction is easily forgotten. When I grew up in the 70s and 80s, you would procrastinate before breaking a $50 bill when shopping and would count and check your change. You then gave thought to the remaining pounds or dollar bills you had to spend. You put your loose change into a large bottle or jar and cashed it in when it was full. You had an awareness of cost, value and what you physically had left to spend for the rest of the day or week.

Money can become invisible and treated without a second thought in our modern society. Convenience spending by Electronic Funds Transfer (EFT) is here to stay and growing year by year. Since the Covid pandemic, the use of EFT has rocketed, as it offers not only convenience, but also removes the unhygienic use of used bank notes from payment transactions. Now that we have an overview of money, and how it can appear hidden, it is now even more important to review and look at costs in the same way and examine those costs as transparently as possible. Why is this topic so important? Many small businesses are going under as they fail to control costs that spiral out of control. We have seen costs to all food producers spiral upwards over the past number of years. The pastry and bakery industry is no exception to this point and there can be many factors that increase costs to businesses. Some, we have no control over, such as :

• Government policies – annual minimum wage increases/holiday pay
• Government policies – working hours and time regulation/overtime
• Government policies – tax and VAT rates on food and hospitality
• Government policies – packaging levies and waste disposal
• Government policies – taxes and VAT on energy, gas, oil and electricity.

These are costs that the producer must take into account.

In running a pastry and bakery business, you must also consider many other costs. As mentioned previously, some are in our control and some are not. Looking at the ones that can threaten our businesses, mother nature can determine which commodities remain affordable and which ones can become really expensive. For close to a decade until 2023, global cocoa prices were stable at roughly $2,500 – $3,000 per tonne. However, prices have risen dramatically since then and in March 2024, hit over $12,000 per tonne on international commodities markets. Prices have since fallen to roughly $7,000 per tonne. But a kilo bag that used to cost around $6 is now roughly $18, representing a threefold increase on prior year levels. Many dessert offerings in restaurants reflect these increases, where dessert items are almost €10.00 per serving today in Europe.

Climate change is being held responsible for the severe weather and storms we experience around the planet. This has had the effect of crop shortages and a spike in the price of chocolate last year due to a global cocoa shortage, driven by extreme weather, crop disease in West Africa where most of the world’s cocoa is grown, and insufficient investment in new crops because of low farmer incentives. This price surge is due to a number of these contributory factors some of which could mean high chocolate prices may persist beyond the short term because of the following main factors:

• European/global legislation
• Lack of incentives for cocoa farmers who face rising prices
• Global deficit of supply
• Weather and climate change
• Deteriorating faith in futures markets

Similar price increases have occurred with staples such as butter and eggs. Significant increases due to high product demand, tightening supply chain and increased labour costs are the new norm. Dairy, coffee, sugar, vanilla, wheat flour, spelt, matcha and other commodities have also risen in price these past few years. I document these as they are basic ingredients used in most pastry products made worldwide. One really interesting phenomena is the price increase of pistachio nuts. The shortage is particularly noticeable in Europe, the Middle East, and parts of Asia where demand has surged. This increase is quite unique as it has been driven by the above factors but also has been driven by a mix of viral social media trends, poor harvests, and increased exports that have caused global demand to outpace supply. To this end, the Dubai Brownie springs to mind.

The Dubai Brownie is a model for us all; this delicious creation demonstrates that if you make and market a premium product well, it is possible to get a good price. It also reminds us of the power of social media and how essential social media is to business success today. However, we need to remember that we need to be accurate. In managing costs of our raw materials, labour and overheads to ensure we get our margins and generate profit. So how much should you charge? Well, the answer is, as much as you can get. Having said that, pricing needs to be:

• Competitive
• What the market will bear

A good example of this, for example, is that in most bakeries and coffee shops in Europe, a croissant or standard Viennoiserie pastry will cost roughly €2.00 – €3.50 as a takeout item and up to double that if consumed as an eat-in item in a café. You can realize a greater margin by having a seating area at your premises, where food can be served to your clients and should be a consideration where possible. Full tables draw more customers, increasing sales and profitability with the possibility of an additional take-out sale if the customer enjoys their offering. I recently taught a class of students Viennoiserie in the U.K. during the summer, and some of them went to Paris shortly after the course. They were both amazed and shocked by the prices being obtained for Viennoiserie pastries at a celebrity and world renowned bake shop where coloured and filled pastries can command the incredible price of between €18 – €25 each. As mentioned in one of my previous articles, Viennoiserie is becoming the new Patisserie and price is not an issue once reputation and quality are there. Communicate the value of your pastries clearly on labels and menus to justify this pricing.

Now that we’ve touched on the topics that can affect the costs involved in producing fine pastry items, and also drivers which can influence the price that can be achieved for products, it is important to reflect on what we can control as producers and factors that can reduce costs in businesses.

• Good stock control procedures – monitore ingredient prices regularly
• Efficient process control – maximize batch to labour ratio, lowering manufacturing costs per unit produced
• Waste elimination – work towards a “0” ingredient waste production model for all product items
• Efficient stock control and stock rotation of finished products
• Energy appraisal – shop around for the best deal for all energy forms. Install day/night meters for better electrical rates
• Insurance pricing – review annually and don’t settle for the old reliable insurer
• Waste disposal – seek competitive quotes.

Calculating the Cost of Each Dessert or Pastry

Dessert/Pastry Cost Calculation

To find the total cost per dessert/pastry, add together the ingredient cost, labour cost and miscellaneous overhead costs. For example, $2 ingredients, $1 labour, and $0.25 overheads: total cost = $3.25 per pastry.

Profit Margin – Setting Goals

The pastry and dessert industries use a common profit margin equation, in which profit goals are between 30% and 50%. To set an appropriate selling price, multiply the total cost by (1 + your desired profit margin). Using the earlier example with a 50% margin: $3.25 x 1.5 = $4.87

Look at ways of reducing waste in your enterprise, starting with food waste, personnel waste (good management of time and efficiency), packaging waste and leftover food waste. Program ovens with timers to switch on and off at designated times in order to save money. Finally, the biggest cost to most enterprises is labour cost. I do realize that I have mentioned this as a cost factor earlier, but I do wish to share the following: During the Covid pandemic of 2020, many enterprises changed their business models from opening seven days per week and all the hours they could open, to a more streamlined model. Hospitality embraced this change and abandoned the rat race of opening every day. They chose to open only four days per week with no split shifts and no bank holidays, embracing a business model that worked years ago. This action meant that these enterprises would retain staff by offering better working conditions, better working hours and structured days off to spend with family and friends. Reduced labour costs because of reduced operating hours, reduced energy, waste and waste-disposal costs. All the above contributed collectively to bringing down the costs of manufacture and therefore the price of pastry.

To conclude, once you have factored in the cost reductions you can achieve through cost controls, you can then look at pricing your products to generate an acceptable profit margin. This way, the price of your pastry items will continue to support your business goals, objectives and profitability. There is an old and wise saying that reads: “The pennies that mount are the pennies that count.” Remember, each dollar saved is a dollar in your pocket.

Jimmy Griffin is a 6th generation baker and lecturer at TU Dublin, Ireland, with a Master’s in Food Product Development and Culinary Innovation. He teaches globally, including in Germany, the UK and Japan, and is a renowned international bakery judge. A competitive baker, Griffin won bronze at the 1997 Coupe D’ Europe de la Boulangerie and coached the Irish bakery team. He is also a licensed pilot, judo blackbelt instructor and author of six acclaimed books, including “The Art of Lamination” and “Panettone – The King of Bread.” He was recently named a global ambassador for Anchor Butter and taught in Japan to more than 4400 students.

(This article appeared in the Fall 2025 issue of Pastry Arts Magazine)