When you go to the border of Kenya and Tanzania at a crossing called Tarakea you will find Supa Loaf bread that has been baked in Nairobi a few hours ago on the same day, that bread costs 50 bob there, 245 KM from Nairobi, that same bread costs 50 Bob in Zimmerman and Kiambu town. How do these people cover the costs of transportation to far flung areas?
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The Grammes indicated are less in reality.the Raw product LSU see eg sugar they use sacrin an industrial sugar which is cheap .so their production cost is very low
It’s not from Nairobi, they have CO - bakers in different regions…
I suspect ni locally made then packaged in Supa Loaf bags, but isn’t that counterfeiting which is illegal?
Mimi mambo ya mikate sijui.
Kshs 3 profit multiply na customer base ya around 10M(guessing)=30m per day.Hiyo inatosha hizo expenses
surprisingly those companies hardly go down.
Correct
The logistics costs are included in the price, about 10 shillings per loaf. Those of us who live close to a bakery pay 42 bob for the same loaf.
Lecture ya Operations Research/Management Science mlikua mmelala class
so you assume we all went to college…to study management science?
Simple economics
Costs of production < costs of transportation
It’s like tissue business, distributors make max 3 bob per tissue. The profit is in the numbers. Bread business is profitable that’s y supermarkets ventured into it n despite the competition bado oldskul companies haven’t closed shop
There are different bakeries for different zones
A 400gm loaf costs like 15 bob to bake. Even if you allocate 20bob per loaf for operating expenses, the fuckers still make some good profits. Economies of scale allow them to make profits even if the loaf is sold 300kms away. There are people who sell 400gm home-baked loaves in low income neighborhoods at 40 bob per unit, complete with printed packaging (they buy them huko River Road at 1 or 2 bob a piece). They sell to retailers at 35 bob. So if someone who’s operating at such a small scale is making profit at 35 bob, wharrabout a huge ass professional bakery?
they usually have mini bakers across the country
Economies of scale + Retailers buy a large quantity from their suppliers at a very cheap price+Add to the middlemen that get a cut from making the supply chain work-Don’t be surprised that the price of bread is 15 to 20 Kshs when it leaves the main supplier
Mkate iko na mini bakers,how about Newspapers.6:30 asubuhi pale Busia na uko na both the Standard and Nation.
Kuna nini ya kuargue hapa… if bread costs the same all over the country (50 shillings), then it means bread companies make maximum profit from customers that are near the factories due to low distribution costs, and low profit from customers in far flung areas.
For example, if the bread factory is in Nairobi and the cost of making the bread is 35 shillings, then the company will spend an average of, say, 3 shillings per bread to distribute the bread to Kiambu and the metropolitan area around Nairobi, for a total cost of 38 shillings. This means that the company will make 12 shillings profit per bread for these areas.
If the bread is distributed to Nakuru, the distribution cost is higher due to the increase in distance, so the company may make profits of only 7 shillings per bread from its Nakuru customers.
There is an early edition printed before midnight that is dispatched upcountry, the Nairobi edition is released to vendors just before 5 am.