Interest rates are low and have been for years. That means that more people than ever have been looking for ways to invest their wealth aside from savings accounts, which now offer a poor return on investment. There are all kinds of investment opportunities around, of course, from stocks to property, to gold, and countless others.
One that you might not have heard of is bread routes. What is a bread route? A bread route is a distribution route for bread (yes, the kind that you can eat) within a specified area or territory.
They are most often owned by small, independent businesses that have been contracted by a bread supplier and given the right to distribute and deliver that company’s bread in that area. These contractors will order bread from the supplier as necessary and deliver it to stores and supermarkets that buy it.
So, are they a good investment? Well, it’s a complicated question and the answer depends on a range of factors. Let’s have a look at bread routes in more detail so you can decide for yourself.
How do you make money from bread routes?
In the introduction, we mentioned that the owner of a bread route buys bread from a bread company and then supplies it to the stores that have agreed to buy it. This is where the profit comes in. Because you’ll be buying the bread directly from the manufacturer, you’ll be paying rock bottom, wholesale prices.
This allows you to sell the bread on to the stores at a mark-up. You keep the difference between the purchase price and the selling price, with the rest going to the manufacturer. This is called commission. The amount of commission can vary but is usually in the region of 20%.
This means that if you buy $10,000 worth of bread from, say, Nature’s Own and sell it on to Wal-Mart for $12,000, you’ll have made $2000 in commission for yourself.
Are there different types of bread routes?
Yes, there are, and it’s important to know the difference between them. The two kinds are protected and unprotected routes. What’s the difference? If a route is protected, it means that you are the only contractor for that distributor who has permission to deliver bread in that area.
The obvious benefit of this is that it gives you exclusivity – you won’t have any competition. With unprotected routes, this is not the case; other contractors can also operate in the area. While this does mean you’ll have competition, it’s not all bad because it generally also means that your rate of commission will be higher, netting you a bigger income.
However, make sure you read the fine print when you sign the contract. Routes that start out protected can become unprotected under certain conditions if the bread company reserves the right to change the status. Also, you might only have protected status within a certain part of the overall area while being unprotected in the rest of it.
What costs are associated with bread routes?
If you’re looking to get into the bread route game, there are costs you’ll need to cover. You’ll be pleased to know that this usually doesn’t include the delivery truck itself, which is generally included in the cost of the route. However, the cost of buying the route can vary wildly depending on the location.
This price is determined by the average weekly sales volume multiplied by a certain number based on the density of the area.
This number is generally in the range of 15-25 but can be higher. So, if your route makes $2000 per week, then you’re looking at a minimum of $30,000 to purchase it. Somewhere around 10% – 20% of that needs to be made as a down payment.
However, many providers are able to offer financing options to help you come up with the rest of the money. Remember that completing the purchase can take a while – up to ten weeks in some cases – so make sure you have enough cash to cover the time lag.
Past the cost of actually buying the route, there will be various other expenses such as vehicle repairs, insurance, computers, account and route tracking software, and others.
Can bread routes provide passive income?
The short answer is “yes”, but the longer answer is a little more complicated. If you hire people to drive and administer the route, then all you’ll need to do is pay them to do the work for you and sit back, collecting the profits. Paying them will cut into your income, of course, but you can use the time you’ll save to make more money elsewhere.
However, this is another situation where reading the fine print is an absolute must. Some bread routes will require you to work it yourself, meaning that hiring staff to do it for you won’t be an option. There can be heavy penalties associated with breaking this rule where it exists. Sometimes, you might even have the entire route taken from you without any compensation.
Will a bread route make you rich?
Yes, it could. Of course, it’s not that simple – bread routes are not a guaranteed money maker. However, it is possible to large amounts of money if you know what you’re doing and keep your wits about you. They’re also quite easy to expand once you’ve got started, and more clients will mean more money.
Are bread routes stable sources of income?
Yes, and this is one of their major advantages. Once you get the route up and running, major changes to the business are quite unlikely. Bread is one of the products least vulnerable to changes in fashion, taste, and circumstances. We’ve been eating it for 10,000 years, after all.
Bread routes are even regarded as recession-proof. Even in a recession, bread is going to remain the most important and basic staple foodstuff for just about everyone. That means that bread is always going to need to be delivered, and this is where you’ll come in as a bread route owner.
Is owning a bread route hard work?
Not always, but it certainly can be. This question follows on a little from the last one because it depends on whether you hire staff to help out. If you’re running the route by yourself, then you’re going to be making all the deliveries, loading and unloading crates of bread.
There is sometimes some flexibility in when you can do this, but it’ll have to be every week. You might be able to arrange cover if you want a vacation, but that’s often easier said than done. If you’re expecting to just sit back and watch the money roll in, think again. As said before, however, this can change if you hire others to manage the route for you.
However, whether you hire staff to help or not, an important thing to remember is that you’ll be your own boss, which is in itself a hugely liberating experience. You’ll be able to choose which products you sell and, within certain limits, choose your own working hours too.
For a lot of people, this easily beats the 9-to-5 office grind. Your workload will also remain fairly stable week-to-week unless you’re actively looking to expand. If you find a level that you’re happy with and stay there, you’ll be doing fine. If you want to expand, you can do it at whatever pace makes you comfortable.
How easy is it to sell a bread route?
Thankfully, if you decide the bread route business isn’t for you, selling it will in all likelihood be pretty easy. The market for them is very active and even routes in fairly quiet areas tend to have lots of willing buyers. This means that it’s easy to cash out if and when you want to move your money elsewhere.
In fact, if you’ve managed to increase the value of the route while you were running it, then you might be able to sell it for a lot more than you paid for it originally, making yourself a tidy profit.
Final thoughts: are bread routes a good investment?
To sum up, we’d say that bread routes can definitely be a good investment as long as you know what to expect and plan accordingly. If you’re looking for a simple commodity to buy and wait while its value increases with no effort from you, then a bread route is definitely not what you’re looking for.
If, on the other hand, you’re willing to treat your bread route as a business and work hard at running it, then you have every chance of making a substantial profit. Think long and hard about what kind of commitment you’re willing to make and whether it would suit your lifestyle. You might be just the sort of person who can thrive running a bread route. If so, then go for it!
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