Case 03 Food and beverage · 2024
Four points of margin, found in the product list.
Flour and energy prices had eaten the group’s margin. The answer was not another cost round but a shorter product list and discounts with rules.
- Client
- A family-owned bakery group with 420 people
- Services
- Margin and cost
- Duration
- 15 weeks
- Team
- Georgi Petrov, Oliver Reed
What changed
Illustrative outcomes for a fictional client.1
21.4%25.6%
Gross margin
640410
Products in production
6.8%3.9%
Waste, share of output
The story
The situation
For two years, ingredient and energy costs rose faster than the group could pass them on. Gross margin fell from 26% to 21%. Two rounds of cost-cutting had already removed the obvious savings, and morale in the bakeries was low.
What we found
There were 640 products in production, and 410 of them earned 97% of the gross profit. The long tail took a disproportionate share of line changeovers and waste. Separately, retail customers were receiving discounts that had been agreed by phone and never reviewed.
The margin came from what the group stopped doing.
What we did
We built a profit view by product and customer, agreed a rationalisation plan with the sales team product by product, and introduced discount guardrails with a simple approval threshold. Production planning was then rebuilt around the shorter range.
What changed
Gross margin recovered to 25.6% within three quarters and waste fell from 6.8% to 3.9% of output. No bakery closed and no role was cut: the margin came from what the group stopped doing.
Timeline
15 weeks
- DiagnoseWeeks 1–3
Profit view by product, customer and channel.
- DesignWeeks 4–5
Range plan agreed with sales, line by line.
- ImplementWeeks 6–13
Discount guardrails live; production replanned.
- Hand overWeeks 14–15
Monthly margin bridge owned by finance.
The team
- Northbridge and this client are fictional. Figures are demo content written to show how outcomes would be reported, not results of a real engagement.