West Midlands bakery Firkins has gone into administration with the loss of 140 jobs and the closure of 21 shops.
Last-ditch attempts to save the struggling firm managed to secure 30 shops but failed to avert the closure of the least profitable stores.
Staff arrived for work yesterday morning to find the shop doors locked shut.
Ian Bolderston, managing director, said: “This is an awful position to find ourselves in. In the past year, the price of ingredients, electricity and gas have soared, meaning the business overheads have become crippling.
“We have battled to keep the business afloat and had agreed in principle to additional investment but when the financial wheels came off the banking system over the last two months the funding package could not be agreed.
“This meant that we have been searching for the funds required but have finally come to the conclusion that in its current format the business could not survive,” Mr Bolderston said.
“We are very sorry to the staff and suppliers who will lose out because we could not make the business work.”
Mr Bolderston took over the 138-year-old bakery in April 2006 when it was facing bankruptcy. The company had 54 stores throughout the West Midlands but fierce competition on the high street made trading increasingly difficult. Supermarkets took away business and high street giants such as Starbucks and Subway branched out into goods traditionally offered by local bakers.
While Newcastle-based bakers Greggs have proved resilient to the credit crunch, finding that their no-frills pasties and sandwiches are popular among cash-strapped office workers, other high street bakers have not been so fortunate. Welsh bakery chain Ferraris made 40 people redundant last week after Liverpool bakers Sayers shed 450 jobs on July.
On Friday a family bakery in the Scottish town of Dunbar - believed to be the oldest high street bakery in the country - announced it was to close after 155 years of trading.
Mr Bolderston has been forced to make tough decisions since he took over the helm of the company. The West Bromwich firm spent £2.5 million revamping its stores throughout the West Midlands, hoping to lure in new customers, but the business still struggled.
In February this year four bakeries closed, and last month staff were told they would be paid in instalments as money was not available.
Employees were told about the closures yesterday afternoon. “It’s awful - and just before Christmas,” one 51-year-old worker from the Sandwell branch said. “For the past few months we’ve been paid in dribs and drabs.
“ We’re supposed to be paid on Friday and it doesn’t look like that’s going to happen. It’s disgusting what they’ve done.”
But the owners hope that in sacrificing 21 shops they can keep the remaining stores going, and ensure the survival of the well-known local brand.
“The 30 shops and the bakery that the new business has re-acquired means more than 200 jobs will be saved and the business can be built up from a stronger base again,” Mr Bolderston said.