Bakery & Pastry Shops (2024)

Most of the companies are highly profitable for the sector. The weighted average EBITDA margin is 16%, the net margin 13% and return on assets (ROAA) 33%. Profitability is especially high at the companies with relatively small revenue: Tortini, Bela, Dolce Vita and Likastan operated at EBITDA margins of 20%-24% in 2024. This suggests that a well-run, relatively small chain can also be a high-return business.

In comparing these figures, the quality of the companies' reporting matters as well, and it often differs. In many cases the allocation of costs between cost of sales and operating expenses is different and/or unclear. As a result, gross margin and operating expenses as a share of revenue are not fully comparable. That is why, to assess competitiveness, we rely on measures that are unaffected by cost reclassification: operating and EBITDA margins, net margin and return on assets.

In assessing the companies, branch productivity matters too. Here Madart keeps the lead, with each branch averaging ₾16.3 million of annual revenue. Second is Likastan, which earns ₾6.3 million from a single branch. Third on the same measure is Dolce Vita, which has only 2 branches, each generating ₾3.8 million a year on average. Interestingly, Tortini, second by revenue among the companies covered, has 44 points of sale, which gives it the lowest average revenue per branch.

On revenue, Madart remains the undisputed leader of the sector. Its 2024 revenue was ₾65.4 million, and over the past 5 years it has grown 21% a year on average, a high rate for a company of its size. In effect, Madart's additional revenue each year equals the entire revenue of one of its smaller competitors.

Among the competitors covered, Tortini ranks second by revenue. Its 2024 revenue was ₾14.0 million and its 5-year CAGR 38%, the fastest growth in the group. In 2019 Tortini ranked 5th by revenue; from 2021 it began expanding its network actively and moved up to the front of the group.

Bela's revenue is ₾13.0 million and its 5-year CAGR 14%. By revenue the company is close to Tortini, but it lags well behind on growth.

Assorti's 2024 revenue is ₾11.5 million (including ₾2.6 million of "other income"). Among the companies covered, Assorti has the slowest growth, averaging 9% a year over the past five years. Looking at core sales alone, without "other income", growth is lower still — a 5-year CAGR of only 4%.

Dolce Vita's revenue is ₾7.7 million and its 5-year CAGR 16%. The company is relatively small but is growing steadily.

Likastan is the smallest player in the group, with revenue of ₾6.3 million in 2024. Despite its size, the company is growing fast. Its 5-year average annual growth (CAGR) is 24%, the second-highest in the group after Tortini.

As noted, gross margin and operating expenses as a share of revenue are not fully comparable because the companies report differently. We therefore focus on measures unaffected by cost reclassification: EBITDA, operating and net margins and ROAA.

On these the best picture is at Bela, Tortini, Dolce Vita and Likastan. Their EBITDA margins are in the 20%-24% range. Bela has the highest EBITDA margin in the group (24%). Tortini also stands out: while growing fastest, the company has not just maintained but improved its profitability, and it now operates at one of the highest EBITDA and operating margins and even leads on net margin (22%). Dolce Vita and Likastan are small companies but operate at EBITDA margins of 20%-22% and operating margins of ~19%-20%.

Madart's EBITDA margin is 14%, but its absolute EBITDA is the highest, at ₾9.1 million. In other words, Madart is less profitable than its smaller competitors but, thanks to scale, generates the largest absolute profit.

Assorti has the weakest profitability. Its EBITDA margin is 9%, its operating margin 6% and its net margin 5%. Without "other income" the result would be lower still.

The ROAA picture is especially interesting. Likastan operates a single branch on a small, light asset base (37% of assets is cash and only 38% PP&E) and, given its high profitability, its ROAA is 89%, the highest in the group. ROAA is also high at Tortini (43%), Dolce Vita (38%) and Bela (34%). It should be kept in mind that such high ROAA is driven largely by a light asset base (little property and equipment), so it does not directly mean a more efficient business than companies that carry more physical infrastructure (PP&E) on the balance sheet.

Most of the companies have low leverage. At end-2024 Madart had ₾25.8 million of assets and only ₾1.3 million of debt. Debt / EBITDA is just 0.1x. Moreover, the company's cash (18% of assets) exceeds its total debt, which points to strong liquidity. Leverage is similarly low at Tortini (debt / EBITDA 0.2x), Bela (0.1x) and Likastan, which has practically no borrowings.

Dolce Vita's debt is ₾1.0 million, only 0.6x EBITDA. Its debt / assets is 23%, but given the high EBITDA margin this leverage looks comfortable.

The exception is Assorti. The company has ₾3.6 million of debt, 72% of assets, and 2024 Debt/EBITDA of 3.6x. On top of that, only 0.3% of its assets is cash, which points to weak liquidity. Together with its low profitability, this makes Assorti the most leveraged and least liquid of the competitors covered.

With healthy profitability and, in most cases, low leverage, some of the companies distribute cash to owners regularly. In total for 2019-2024, dividends and capital withdrawals at the 6 companies came to about ₾24 million, roughly 48% of combined net profit for the same period.

Total dividends distributed in 2019-2024:

1️⃣ Madart: ₾12.9 million

2️⃣ Tortini: ₾5.2 million

3️⃣ Bela Patisserie: ₾3.6 million

4️⃣ Assorti: no dividends paid

5️⃣ Dolce Vita: ₾1.7 million

6️⃣ Likastan: ₾921 thousand¹

The scale of distributions shows that some of the companies return a significant share of profit to owners instead of accumulating it in the business. This is especially clear at Tortini, which distributed its entire ₾5.2 million in 2022-2024, delivering a significant cash return to owners even in its fast-growth phase. This payout model, together with a light asset base, partly explains these companies' high ROAA: profit does not all stay on the balance sheet, so the companies keep operating on a relatively small base of assets and equity.

The exception is Assorti, which paid no dividends in 2019-2024. That is consistent with its relatively weak profitability and high leverage.

The chart below shows the companies' revenue in 2019-2024. It shows especially clearly Madart's advantage in scale and Tortini's rapid growth: in 2019 Tortini ranked 5th by revenue among the companies covered, and by 2024 it had moved up to 2nd.

1️⃣ Arbo 2009 LLC (Madart)
💼 Owner:
- Davit Chrelashvili: 100%

2️⃣ FOOD 7 LLC (Tortini)
💼 Owners:
- Natia Kozmanashvili: 67%
- Mikheil Tsogoshvili: 33%

3️⃣ Kondi LLC (Bela Patisserie)
💼 Owners:
- Irakli Bochorishvili: 50%
- Beka Bochorishvili: 50%

4️⃣ Assorti-Vere LLC (Assorti)
💼 Owner:
- Nato Tsomaia: 100%

5️⃣ Dolce Vita LLC (Dolce Vita)
💼 Owner:
- Tamaz Makharashvili: 100%

6️⃣ Likastan LLC (Likastan)
💼 Owner:
- Lia Katamadze: 100%