An increasing number of bakeries are unable to maintain their businesses amidst skyrocketing costs and burdensome bureaucracy in Germany. Bakeries are also suffering in the UK, with up to 18 thousand retailers forecast to go out of business this year.

Dwindling number of bakeries in Germany

At the end of 2022, a little more than 9,600 bakeries were listed in the so-called handicraft register, the German public media reports. That was around 3.6 per cent less than the year before.

By comparison, there were around 12,600 bakeries in Germany in 2014, almost 3,000 more than today. 780 bakery companies disappeared from the market last year, with only 422 new ones established in the same period.

It is good news that young entrepreneurs in particular are taking their future into their own hands and starting new companies. Nevertheless, the staggering costs of setting up shop and maintaining operations quickly destroy enthusiasm and limit opportunities. Energy costs and raw material prices are making life markedly more difficult for bakeries.

This month, the Central Association of the German Bakery Trade again called for a reduction in bureaucracy. „We discussed the issue with companies, and we heard an increasing number of them saying that the bureaucratic burden has become overwhelming in the past years and is no longer acceptable,”

the German public media quotes the association’s president. As a first step, the bakers would like to see the current bureaucratic burden reduced by around 30 per cent, saying that this is the only way they can operate economically. Unless this happens, a growing number of bakeries are likely to leave the market and in fact, the entire handicraft sector is suffering a similar fate in Germany.

Earlier, one baker disclosed that it is not uncommon for him to work for weeks on a single dossier, compiling all the information required by law, which causes disruptions in the work process. Baker Hans Wucherer complained that every single day, he had to deal with a great number of documents that no one ever looked at, no one ever checked and no one ever really cared about.

„I didn’t become a baker to fill in forms and do paperwork, but to work creatively. This is very frustrating,”

he told the public media. The baker estimates that the red tape costs him up to 40 thousand euros a year.

Struggling UK retailers

Retailers in the UK are also facing severe challenges. At the end of last year and beginning of this year, almost 50 shops closed for good each day, as the owners were unable to keep the pace with ever-rising maintenance costs, with energy prices soaring the most. More than 17 thousand sites around the UK shut their doors for the last time, according to figures from the Centre for Retail Research. This figure is almost 50 per cent higher than in 2021.

32 per cent of the closures followed insolvency proceedings, meaning that this many firms went bankrupt. The rest were due to larger retailers deciding to close some outlets to cut costs.

This trend is likely to continue this year. The Centre for Retail Research expects that a further 18 thousand stores are likely to close by the end of December 2023.