South Wales-based bakery Ferrari's, which employs about 600 people, has gone into administration.
Ferrari's has some 60 shops across south Wales
The bakery, whose headquarters are in Hirwaun, near Aberdare, has 60 shops in south Wales, as well as wholesale foods business Celtic Savouries in Swansea.
Management called staff together on Monday afternoon and told them that the company was in administration.
Ferrari's parent company, Cleary Foods, said that "lower sales and higher costs" had led to the decision.
The company said administrators had been appointed to control Ferrari's and Celtic Savouries, which will continue to operate while buyers are sought.
A statement read: "The companies' sales are, in common with others in our industry, down on the previous year, which itself was down on 2004/2005.
"Costs are up, particularly due to higher fuel costs, increases in the minimum wage, and higher materials prices.
"The combination of lower sales and higher costs has meant that the margins have been squeezed.
"In view of the foregoing, further substantial financial support is required for the companies and it is not available."
Welsh Conservative enterprise spokesman Alun Cairns AM said it was worrying news which "could not have come at a worse time of the year".
Mr Cairns claimed it was "yet another example of a Welsh business feeling the brunt of both UK and assembly government economic policies".
"I very much hope that a buyer can be found quickly to take on Ferrari's employees and its network of shops," he said.
Plaid AM Leanne Wood said her thoughts were with the workers and their families.
"This many job losses would be yet another devastating blow to the area," she said.
"I have written to the government minister asking him to look into the situation and to do all in his power to help the Ferrari workers."
Meanwhile, Rhondda Cynon Taff Council said the authority was intending to prosecute Ferrari's for environmental health breaches at its Hirwaun bakery.
George Jones, from the council, said: "We can confirm that we have carried out routine food hygiene inspections at Ferraris Bakery.
"As a result we did lay information for prosecution. This prosecution is yet to be heard."
A spokeswoman for the Welsh Assembly Government said Ferrari's refused its offer of "significant financial support" earlier this year.
She added: "Assembly government officials will be meeting the administrators as soon as possible to see what support any potential buyer can be offered."