Bakers caught in a bind: Rising costs lead to fewer customers

 

Al Mujida Ali Musa showcasing her cakes at a booth at an event last year.

KOTA KINABALU: The prices of goods across the country have been steadily increasing and small businesses, including bakeries, are not spared from paying more for raw ingredients.

With the price of raw ingredients such as cocoa powder, flour and dairy products set to increase even more this year, bakers say they may have to raise their prices again.

Food prices have gone up an average 6.1% in Malaysia this year and bakers said they have no choice but to raise their prices to stay afloat.

“I raised my prices three times last year and will have to revise them again next month. I cannot absorb (the increase in costs) any more,” said baker Al Mujida Ali Musa.

The former engineer who left her job to fulfil a lifelong dream to open her own bakery in Kota Kinabalu said the never-ending changes in the price of her cakes have caused many customers to look for cheaper alternatives.

“I did not raise my prices by a lot but consumers are also more cautious with their spending due to inflation.

“Cakes are not a necessity except maybe during special occasions like birthdays or anniversaries. Coupled with stiffer competition, it is really denting profit,” she said.

In August this year, research by Grant Thornton, an assurance, tax and advisory firm, found that inflation was a key concern for businesses in the country.

Their surveys found 82% of businesses raised their prices to cope with inflation while the rest chose to absorb the added costs to avoid losing customers.

Agnes Rajah at a baking class conducted by her company in Kuala Lumpur.

Kuala Lumpur-based baker Agnes Rajah said she makes fewer cakes these days.

She only increased her prices once last year despite the huge increase in the cost of ingredients like butter, eggs and cheese.

“But my customers are still not happy. Many of them have decided to go for a lower quality option instead,” she said.

Rajah said she will not change her ingredients because doing so would jeopardise the taste and quality of her cakes and cookies.

“I do not believe in lowering the quality due to costs because for me the taste and value of my products are important for my business,” she said.

However, she said she would have to seriously think about revising her price again if the prices of ingredients keep increasing this year.

“For now, the costs are still manageable,” she said.

Ain Mizani with some of her cupcakes at Noy Cupcakes in Papar, Sabah.

At Noy Cupcakes in Papar, Ain Mizani said they are also making fewer cakes and cupcakes.

“Two years ago, we were restocking almost every day. But now, we are more careful because if we make too many and they remain unsold, we would have wasted our energy and the expensive ingredients in making them,” she said.

She said business costs had skyrocketed to the extent they had to take some items off the menu, while modifying the recipes for other items to maintain the sale prices.

“There is no problem with supply so far but it’s getting harder to find the best deals. We don’t like changing recipes but sometimes it is unavoidable,” she said.

Since its opening three years ago, Noy Cupcakes have yet to increase their prices despite the rising cost of ingredients.

“We will try to ride the inflation storm next year. As much as possible, we will avoid raising the prices,” she said. -FMT