Now that 2020 is over, baking industry executives are looking to spin their wheels and leave last year in the dust when it comes to investing in the future of their companies and their operations. That’s the primary takeaway from Baking & Snack’s 2021 Capital Spending survey published in its February issue that gauges how decision-makers plan to spend their hard-earned money for upgrading facilities or adding equipment.
Specifically, bakers reported that their companies spent an average of 8.4% of annual revenue on capital projects in 2020. However, they have earmarked an average of 10.8% of company revenue for 2021 capital spending, signaling clear pent-up demand for investing.
But let’s look at another key data point that further highlights this acceleration in this exclusive industry study in partnership with BEMA. In the survey, conducted by Kansas City-based Cypress Research, respondents were asked how companies’ actual 2020 overall capital investments compared with 2019. Despite the 2020 pandemic and its impact on the economy and bakery operations, the survey revealed that 45% of wholesale baking companies increased their capital expenditures over 2019 levels while 21% held them steady and 34% decreased spending. When asked for 2021 projections compared to 2020 investment levels, the percentage of those planning to boost their spending rises to 52% while 36% plan to keep investment levels the same.
However, here’s the kicker. Only 12% expect to decrease their 2021 capital spending plans from 2020 levels, compared to 34% who expected a decrease in 2020 from their 2019 levels. These findings suggest that baking executives have drawn a new map for navigating success for their companies after a tumultuous year