Homegrown bakery chain to expand outside of Cebu

After more than two decades of bringing fresh bread to Cebuanos, homegrown bakery chain San Jose Bakeshop is looking at growth areas outside Cebu as well as diversifying its product line to stay afloat in the growing competition.

San Jose Bakeshop is one of the many homegrown bakeries in Cebu operated by a Cebuano family.

After more than 23 years of operation, San Jose Bakeshop has grown into 16 company-owned branches within Cebu.

This December, a new branch will be opened at the Archbishop Reyes near the Pag-Ibig building in the Cebu Business Park.

Jojo Tiongko of San Jose Bakeshop shared that they were able to keep the business confided within the family throughout these years because they did not venture into franchising.

Right now, Tiongko owns six of the branches while his father owns the rest.

However he said that they are already structuring their franchise system so that they can soon go into this kind of venture to also expand their business outside Cebu.

“We have received a lot of queries from interested parties regarding the franchise but we want it to be structured well enough first so that we can also protect and serve our franchisees. We don’t want to go into franchising without making sure that we can support our franchisees in terms of HR training, research and development, management, and other needs” he said.

Right now San Jose Bakeshop is still operating within Cebu and it has branches as far as Tabunok in the South and Liloan in the North.

Tiongko said that the bakery industry in the city is already very competitive compared to several years back because of the mushrooming of new players.

“The market here is already very saturated but there are still some places that can still accommodate us but it has become hard to position ourselves because a bakery business is very easy to start and there are a lot of new players in the market already,” Tiongko stressed.

He said that location is one major factor in the competition and most of the time when a bakery opens in a particular location, 80 percent is risk while 20 percent is computed risk.

Tiongko said that price war exist in the industry because most players are competing for a small margins.

So to stay afloat in the competition, Tiongko revealed that next year they will launch several changes in their business.

He said that they will be doing backward integration for their expansion plan and they will diversify their products and existing operations.

“There is just so much competition that we need to do a customer-oriented change. We have to make our own market to set ourselves apart from the rest of the competition,” he said.

But aside from competition, high production cost is also one of the challenges faced by bakeries these days because even if prices of flour and sugar went down, other ingredients like milk and butter and other basic bread ingredients are still as high, said Tiongko.

 He said that for those who are looking at investing in the bakery industry, opening a bakery will cost around P800, 000 to P1.2 million these days.

“Making bread is not as quick as cooking food. And the bakery business is not always easy because of the competitive playing field and the price conscious market so you have to always stand out. But it is still lucrative if you have the right location and better service from other players,” Tiongko advised.