Taipei-based bakery chain Wecare Foods Development Co (惟客爾) unexpectedly closed down after its bankers bounced checks of between NT$400,000 (US$12,000) and NT$500,000 earlier this week, leaving its suppliers and consumers with vouchers infuriated.
A series of raw material price hikes over the past few months are thought to be behind Wecare's already slow business becoming insolvent, bakery industry insiders said.
Established 12 years ago, Wecare operated 11 stores in the greater Taipei area and offered home delivery services nationwide, its Web site said.
Telephone calls to the company's headquarters in Jhonghe (中和), Taipei, went unanswered at press time yesterday.
"Steep markups on diary products, flour, drinks and even personnel costs have had a great impact on bakeries, especially those operating on a smaller scale," Jacky Yang (楊欲奇), marketing director at 85oC (美食達人), which runs 300 coffee, tea and pastry stores nationwide, said during a telephone interview yesterday.
Costs of raw materials have surged by 20 percent over the past three months. Even 85oC has suffered an 8 percent to 10 percent increase in purchase costs.
A former Wecare employee said the chain's business started taking a downturn in 2004 when cafe and cake shops like 85oC began to snatch 20 percent of its market, a Chinese-language Apple Daily report said yesterday.
The firm has not paid employee salaries for last month, the report said, and speculated that its funding gap could exceed NT$100 million.
The Consumer Protection Commission called on Wecare to detail compensation measures for consumers who still hold vouchers.
If the firm fails to do this, consumers are advised to telephone the commission's hotline number, 1950, to make a complaint. The government would then step in to seek a solution, it said.
Meanwhile, the Fair Trade Commission (FTC) said yesterday it set up a task force on July 19 to monitor the synchronized fresh milk price rise, which took effect on Wednesday.
It launched an investigation between July 23 and July 26 into the nation's major milk producers -- Kuang Chuan Dairy Co (光泉牧場), Wei Chuan Foods Corp (味全食品) and Uni-President Enterprises Corp (統一企業) -- which together command an 80 percent share of the market, to understand the reasons behind the price hikes.
In addition to the Council of Agriculture's decision to raise prices for raw milk, higher prices for other raw materials have also led to increased packaging and transportation costs, the FTC said in a statement, citing the three major firms.
"Despite the upstream price hikes, most supermarkets and hypermarkets have launched promotions amid fierce competition. Consumers should make comparisons before making purchases," it said.