Customers at a bakery franchise having a tasting of the Vivari brand, on Gran Via in Barcelona, this week. Albert García
Within 300 meters of Fleca Balmes – a bread oven founded in 1908 on this street in Barcelona and always run by the Crespo family – there are up to nine franchises of well-known brands that combine the sale of bread with the cafeteria- Activity: three from 365, three from Vivaris, two from El Fornet and one from Pannus. The same thing happens around the Forn Sarret – founded in 1898 by the Sarret family, continued since the 70s by the Vidal family and, with its modernist decoration, located at the intersection of the renovated Girona and Consell de Cent streets: in In In the same three-block Within the radius of the Eixample there are five 365s, two El Fornet, a Vivari and an Espan’s, the latter next door to the old Rand. The proliferation of these types of establishments has been underway for years, causing tensions with traditional ovens as well as with restaurants and bars that accuse them of unfair competition. Add to this the fact that bread is fashionable, and investment funds have been paying attention: they have jumped into both the franchise model, where bread is just an aspiration, and that of artisanal brands dedicated to the search for excellence have in quality.
The bread sector has several realities that differ from each other, although they have the same product at their core. The most prevalent are the brands that have flooded the city with their franchises. According to the Barcelona City Council, 397 bakeries or pastry shops with tasting, that is, with cafeteria service, opened between 2013 and 2022 (there is no data on those that have closed). Some examples are the 365 brand, founded in 2000 by Emilia Castro and Juan Antonio Tena, which has 150 stores in Barcelona and surrounding areas; Vivari, whose co-manager is Chenxiao Ji, has 100 stores in the area; or the giant Granier, whose majority shareholder is the founder Juan Pedro Conde and which was founded in 2009 with two stores of its own but today has more than 300 franchise branches in 10 countries, including 109 in Catalonia. Xavier Vallhonrat, president of the Franchise Association of Catalonia, explains that there are about 11 bread franchises in Catalonia, including the family-owned Valero and Pannus, and that some have integrated investment funds. “The consumer completely assumes that they not only buy bread in the bakery, but that they also drink coffee and open the computer there,” he emphasizes.
But you not only have to look at who is behind the brand, but also who is investing at each location. The profile of the franchisee of these brands is usually “someone who is often of foreign origin, who may have previously opened a dry cleaner and has now realized that bread is more important and necessary,” explains Vallhonrat. The necessary investments to open a store are between 150,000 and 200,000 euros. The relationship between franchisees and franchisees has sometimes been contentious, as was the case with the fraud lawsuit that 17 franchisees filed against Granier three years ago because they said they had not achieved the promised profitability. The lawsuit was dismissed, but a bakery chain owner who knows the industry well explains that making a profit from franchises is not that easy: “It only works if it’s a whole family, all of them works and makes it their lifestyle.”, or if they somehow reduce personnel costs. Many franchisees suffer from this. These chains are a type of company that needs to grow in the number of branches otherwise they will go under, and they have taken advantage of the fact that people have lost purchasing power and have to buy bread or drink coffee there.” Daniel de Armas, Granier’s commercial director, points out that his franchisee is usually an “entrepreneurial person with a strong sense of independence” and that the family business was able to grow so much without these franchisees having to enter. to means.
Franchises have also attracted attention from their competitors, both because of the quality of the products they serve – usually frozen and which they buy from a supplier and can therefore sell cheaper in the store – and because of the competition they offer to bakers offer. Traditional and restaurateurs. “The franchise model doesn’t have to be bad, but we have to differentiate between bakeries that have their own bakery, be it centrally or in each of their branches, and bakeries that buy the product from a third party.” And then there is the difference between brands where bread and pastries are the main products and may have a tasting area, and business models where bread is just a claim and which are actually restaurants,” concludes Carles Cotonat. Union of the Province of Barcelona.
This is where the dispute over activity licenses comes into play: bakeries “with tasting” are allowed to provide a space of a maximum of 20 square meters for the consumption of the products, coffee and non-alcoholic drinks can be served, but lunch and dinner menus are not. This license is looser than what restaurants and bars need: it is only achieved by communicating it to the city council, and the latter can apply the bakery collective agreement, which reduces the costs for each worker by about 700 euros compared to the hospitality agreement. “It is a very unfair situation that has existed for many years. We are faced with abuses and unfair competition because many establishments do not even respect what the tasting license requires: they have larger rooms, they serve salads and menus or alcohol.” . And the city council looks the other way,” says Roger Pallarols, director of the Barcelona Restaurant Guild: “The consumer is not aware of these differences, but it is what kills many bars.” In 2019, the union filed two complaints for non-compliance of around 70 premises and, according to Pallarols, the council had confirmed these in most cases, but no significant action had been taken.
The funds go into the artisan ovens
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The other reality of bread is that of artisanal ovens, which have managed to follow the trend of the consumer with greater purchasing power, who no longer sees bread as something useful and strives for greater quality. These are bakeries that do not follow the franchise model, but rather have their own shops, some with tasting facilities, and several establishments under a unique gastronomy concept. This is the case of Turris (two workshops in Madrid, 26 in Barcelona and 7 in other Catalan cities), Baluard (eight workshops and three points of sale in El Corte Inglés, all in Barcelona), Bou (13 stores in Barcelona, etc.). metropolitan area) or Mistral (three shops in the city). The first two companies have joined investment funds to address this rapid growth: Madrid fund Relanza Capital bought the majority of Turris in mid-2022, while Carpathia Investments, also from Madrid, became majority partner of Baluard just a month ago. Both the founders of Turris (Xavier Barriga and Manel Sellarés, former managing director of Europastry) and Baluard (Anna Bellsolà, heiress to a bakery line) remain responsible for day-to-day business as minority shareholders.
Another reality is that of brands that promote the quality of their products and operate on the franchise model, with stores that have a tasting room, although they do not necessarily have an in-store workshop. Investment funds are also targeting them, such as the Santagloria chain, one of the Foodbox Group brands, which was part of the family frozen dough company Europastry. The sale of Foodbox to the Nazca Capital fund in 2015 led to the growth of all brands, including Santagloria, which grew from 35 stores to over 100. Seven years later, the BlueGem fund bought the group. During this time Europastry remained the supplier of the product. “We decided to invest because people are now willing to pay more for bread and because offering cafeteria services means you get served more often. Then we were able to develop a very profitable franchise model: a large factory produces the necessary product and then the finishing touches are made in the store’s ovens, it is very easy to use,” explains Juan López de Novales, partner of Nazca . Capital city. He points out that in this sector the investment fund typically stays in the company for four to five years and aims for a return of 25%. Another franchise of this type is Levaduramadre, which has 130 branches, 11 of which are in Barcelona, served by two workshops. “Catalonia is the master of bread, because of the many artisanal bakeries and the knowledge there. And there was a gap for quality artisan bread that had been lost with the emergence of lower quality places,” explains Rafael López, partner at GED Capital, who joined the company in 2021.
At the center of these two phenomena, that of artisan bakeries that grow with investors and that of franchise chains with canteens, are the traditional neighborhood ovens, which also compete with the sale of bread in supermarkets or gas stations. The owner of the bakery chain, who does not want to be named, explains: “It is very difficult to compete with all this, and even more so with the current costs.” A lot of fringe is falling. Funds are fixed on bread and it is impossible to grow like that because profit in the industry is what it is.”
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