Local bakery chain shutting down all locations next month

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The Challenges of Sustaining a Small Business

In the past, independent businesses had the potential to grow into successful chains. However, today's landscape presents more challenges than ever before. Competition has intensified, costs have risen, and consumer loyalty is increasingly unpredictable in an uncertain economy. For small businesses to thrive, multiple factors must come together, including a solid business model, a strategic location, reliable funding, and often, a bit of luck. Even well-loved brands can find themselves struggling to stay afloat.

According to a survey by CB Insights, the top reason most businesses fail is due to an inability to secure adequate financing and running out of money. Other common reasons include failing to keep up with product demands, being out-competed, or not adapting to evolving consumer preferences.

Despite these challenges, some businesses manage to overcome them and build successful ventures. One such example is The Chubby Baker, a popular Utah bakery known for its unique sweets and beverages. However, after years of navigating the tough business environment, the bakery will close all its locations on November 9, marking the end of a self-made success story that began during the pandemic.

The History of The Chubby Baker

Founded by Ying Nance in 2020, The Chubby Baker started as a delivery-only bakery in Salt Lake City during the height of the COVID-19 lockdowns. Its creative menu, which included donuts, cakes, croffles, cinnamon rolls, and a mix of teas and coffee drinks, quickly attracted a loyal following. Within a year, the business expanded to its first physical location, eventually growing to three stores across Utah.

However, despite its popularity, operating costs became unsustainable. In an Instagram post, Nance cited the rising cost of goods, payroll, and other expenses, as well as personal reasons, for the decision to close. She expressed that as her family continues to grow, she wants to spend more time with her children. “I am a businesswoman, but I will always be a mom first,” she wrote.

Locations Closing

The Chubby Baker’s three locations will be closing:

• Orem: 1167 S State Street
• Salt Lake City: 317 E 900 S
• Sandy: 9470 Highland Dr. Suite 2

As the bakery’s final days approach, Nance encourages customers to visit the stores while they are still open. The menu will focus on donuts and cakes, with croffles and cinnamon rolls available while supplies last.

Broader Industry Challenges

The closures of The Chubby Baker are part of a larger trend in the food service industry. Many small operators that managed to survive the pandemic now face mounting economic pressures, including higher food, labor, and rent costs, along with reduced consumer spending and foot traffic.

According to the U.S. Bureau of Labor Statistics, about 17% of new restaurants close within their first year, and nearly half fail within five years. JPMorganChase notes that small businesses may struggle during challenging economic conditions, with exit rates typically decreasing as firms age and have more cash liquidity. Historically, the median life expectancy for small businesses has hovered around five years.

Why Small Businesses Struggle

Several recurring factors contribute to the short lifespan of small businesses:

• Rising Costs: Rent, labor, and supplies often require significant upfront investment with little immediate return.
• Limited Financial Cushions: Many small businesses operate on tight margins with limited cash reserves.
• Increased Competition: Larger chains benefit from bulk purchasing power, brand visibility, and marketing budgets that independent businesses cannot match.
• Shifting Consumer Habits: Changing economic conditions and preferences can quickly make once-popular products obsolete.
• Operational Challenges: Owners often juggle multiple roles without the resources for dedicated teams.
• Economic Uncertainty: Inflation, interest rate hikes, and recessions create unpredictable environments.
• Regulatory and Administrative Costs: Compliance can be both expensive and time-consuming.
• Limited Marketing Reach: Without significant advertising budgets, small businesses often struggle to expand beyond their local customer base.

These challenges highlight the difficulties faced by small business owners, who must navigate a complex and ever-changing market. While some manage to succeed, many others find it increasingly difficult to sustain their operations in today's competitive environment.