Hospitality

Opening A Bakery Business | Bread Company

Bake A New Life

You can find bakeries of all shapes and sizes worldwide. They have been prevalent in society for thousands of years because they serve an essential need in the community- almost every family buys baked goods once a week. The retail bakery business can be very lucrative for those with a creative mind and passion for cuisine. But before you find a bakery for sale, decide on names or print out your business cards, let’s look at some data to give you a better idea of where to start opening a bakery business. A bakery rarely fails today. However, this does not mean that opening a bakery business has no challenges- they exist; the issues differ from what one faces with other companies. So if you are considering opening a bakery, here are some excellent practical tips.

Open A Bakery – Retail Bakery

Before opening a bakery, it is vital to know the business from the inside, including customers, products, services, and daily functions. The best way to gain good experience is to spend some time at a bakery. Getting educated can provide invaluable practical knowledge that can make your bakery successful. There are also classes in the bakery business that one can take; besides, there are fantastic online videos about the bakery business.

Here is a list of some online pastry chef courses

Bakery Business Ideas – Bakery For Sale

Most people have no idea that there are two major types of bakeries- retail and wholesale. Although both bakeries are involved in selling baked foods, the customers for each are very different. The majority of people become involved with a retail bakery business, and even in this section, there are several subtypes of services which include the following:

Bakery Cafe

This bakery combines a cafe with baked foods like cookies, bread, pastries, and pies and serves tea, coffee, and juices. Most bakery-cafes have indoor and outdoor seating and a friendly, welcoming atmosphere for customers to dine. Overall, most bakery-cafes are open in the daytime and are busy from morning till after lunch.

Counter Bakeries

Counter bakeries only sell baked goods and do not have any seating facilities. The customer enters the bakery, selects the baked food, pays for it, and departs. Most of these counter bakeries sell different products. Bread, scones, rolls, sandwiches, etc. They tend to be busy from morning till evening.

Food Truck Bakeries

Food truck bakeries have become the latest trend in the world of bakeries. People will sell baked foods from a mobile truck, which helps lower the business’s overall cost. The baked foods are baked in a physical kitchen and then loaded onto the specialized truck. The food truck may service residences, office complexes, conventions, and small public events. The car often sells beverages, including coffee, tea, and fresh juices.

Specialty Bakeries

These bakeries specialize in baked food like wedding cakes, gluten-free products, desserts, cupcakes, etc. There is a significant demand for specialty cakes and desserts, which also cost much more than the usual baked goods.

Home Bakery

Today, many individuals are operating a bakery out of their homes. These individuals usually take small orders from the public and offer their services to corner stores, schools, office parties, and shops. Because the home kitchen is small, there are limitations. But with no overhead on space, it can bring enough money to pay the bills.

Wholesale Bakeries

Wholesale bakeries usually make a vast quantity of baked foods and then sell them to retail stores. They tend to serve restaurants, delis, grocery stores, and cafes. They require a large amount of money to start. Wholesale bakeries tend to operate from large spaces and need dozens of large appliances, including trucks, for transport.

How Much Profit In Bakery Business

Overall, most bakeries that begin operations remain open and make decent profits. The average revenue for even the smallest bakery is between $300K-$500K a year. After deducting all expenses, the take-home pay is about 20%. Data from the Bureau of Labor reveals that a retail bakery takes home about $70K a year.

Bakery Business Plan

Once you have acquired knowledge about the business, you’ll need a plan to guide you and help you anticipate future concerns. The plan should include the following:

Where will I open my bakery?
What will I name my bakery?
How will I fund my bakery?
How big will my bakery be?
What baked goods will I offer?
How many employees will I hire?
Will I offer home delivery?
What are my startup costs?
What are my maintenance costs?
What are the negatives of operating a bakery?
Who is my competition?
Do I need a license or permit to operate a bakery?
What equipment do I need to run a bakery?

There are business plan services available online

Some business plan templates that you should consider:

Do I Need A License For A Bakery?

There are no specific licenses or permits required to open a bakery, although handling food may require local government approval. Also, one will need to learn the following:

Get to know the area’s zoning laws where you plan to open the bakery. City inspectors will usually inspect the building to ensure it is safe for occupancy. The local fire marshall will also need to check the property for safety before it is cleared to open.
You will also need to register for both state and federal taxes.
Obtain EIN
Register for workers’ compensation insurance if you have employees
Obtain a food certificate from the local Department of Health. Once inspected, you can obtain this certificate. If you plan to use a deep fryer, there are additional requirements.
Get Insurance

Bakery Permits And Licenses

Food services are highly regulated in every state, so some permitting and licensing may be necessary. So, you will have to check with the local Chamber of Commerce to determine the required permits and licenses.

Bakery Business Financial Plan

You will require some funding to start a bakery. One needs funding to cover the costs for 2-3 months after opening. The funds are required to rent a physical space, insurance, and appliances, outfit the location to function as a bakery, hire and train employees, buy the raw ingredients, and pay for the utilities. In most cases, your budget will come from a bank loan. However, before you go to the bank, you need to have a sound business plan to show to the lender. Also, you must have a good credit score and have at least 10%-20% for a downpayment.

There are also small business loans available that provide startup capital. These loans usually have low-interest rates and are also offered to individuals with borderline credit. The only downside is that the loan application process takes time and often requires collateral.

Here are a few of your bakery funding options

Small Business Administration

The Sma ll Business Administration, SBA has a program to fund new startups, and it is worth a look.

What Products Should I Sell In My Bakery?

If you plan to open a retail non-specialized bakery, then some of the foods you may want to sell will include:

Variety of bread
Muffins
Pies
Bagels, rolls, buns
Cookies
Desserts (cakes, cheesecake, cupcakes
Donuts, Danish, cinnamon rolls
Coffee cakes
Variety of sandwiches
Beverages- tea, coffee, juices

Bakery Location

Opening your bakery in a central location is crucial for easy access. Since many people regularly go to grocery stores, we recommend locating your bakery in the same plaza as the local grocery store. Plus, it should be away from your competition and have ample free parking.

Bakery For Rent

The cost of renting a bakery location depends on the size of the bakery rental. Even the smallest bakery may require $4,000-$7,000 a month. Your startup costs vary from $20K to $50K for a small bakery when renting.

Here is a list of some popular commercial real estate companies:

Bakery For Lease

Once you find a suitable location, you will need assistance from a lawyer to negotiate the lease. It is vital to read the lease thoroughly and specify how long you want to use the building. Plus, you have to ensure that it clearly states who will pay for any utility bills and potential renovations or repairs.

Here are a few legal services available online

After leasing the space, you must design a layout that meets your services’ requirements. While there are many ways to organize a bakery, the four key sections that every bakery must have to include the following:

Storage
Cooking
Meal preparation
Cleaning

Also, there should be space with a service position where you can deliver food to the customer.

Bakery Business Marketing Plan

Before opening the bakery, you should initiate an advertising campaign and get the word out. Some of the ways to market your bakery include:

Create a website showing the location, types of baked goods, contact information, ordering online, etc
Bakery business cards
Distribute flyers in and around the local community
Place an ad in the local newspaper
Create a social media presence
Offer free samples like cookies, and desserts to people on the street, office buildings, and other businesses.

Build Your Own Bakery Website

Your bakery domain name protects your website address on the internet. You can register a domain name with a hosting company.

Here is a list of options for building a regular website.

Some of the common domain registrars include:

Here is a list of drag-and-drop page builders for WordPress.

How Can I Make My Bakery Successful?

Offer competitive prices
Offer a consistently good product
Use fresh ingredients
The customer should be your priority
Diversify to beat the competition
Continue to market
Hire worthwhile employees

The Pitfalls Of Baking Companies

The bakery business is very competitive and requires long hours, early mornings, and intense labor. Plus, you depend heavily on your staff- if they do not show up, you’ll need quick crew replacement, especially if your head pastry chef is out for the day. So the key is to keep the team happy and pay them decent wages.

Failing Bakery Business

Having no plan
Little or no experience in running a bakery
Too much overhead
A constant turnover of staff
Poor location
Inferior product

The first reason for many bakeries closing is the unsatisfactory product. Thus, it is vital to make tasty and clean baked products.

Equipment Needed To Start A Bakery

The equipment you need for a bakery depends on what type of baked foods you will be making, but in general, the following equipment is standard:

Bakery business cards

Adjustable work tables
Baker’s Rack/Shelf Rack
Bakery supplies bowls, whisks, bread knives, saran wrap, flour,
Baking Pans
Cash registers / POS
Commercial blenders and mixers
Decorating Equipment/Pastry Bags
Disposable gloves, apron
Display cabinet
Dolly
Dough scales, dividers, and sheeters
Food cart
Food Processor
Holding cabinets
Mixing Bowl/Spoon/Spatula
Oven
Packaging material
Proofing cabinets
Retarder/proofer combos
Refrigerators

Sink and cleaning supplies (mop, sponges, scrubbers)
Stand Mixer/Hand Mixer
Storage bins
Storage cabinets
Trash collector
Truck to transport products
Utensils, plates, knives, forks,
Washing station

Bakery Staff

The number of people you employ will depend on the bakery’s size and the baked goods you make. Will the most basic bakery need a minimum of 2-4 staff? For example, someone will be at the front of the house to take orders and work the cash register, another person may help with cleaning and bussing tables, and the rest of the staff may be in the back preparing and baking your offerings. Plus, you will need someone to clean and wash the dishes. We recommend that at least 1-2 of your workers have prior experience working in a bakery to oversee the rest of the employees.

If your bakery offers specialty foods, you will need a professional pastry chef. For example, you may need someone to make a wedding cake or a birthday cake; in such scenarios, a cake decorator will be necessary.

Bakery Grand Opening

Once you are ready, make it a grand opening. A successful grand opening can quickly create loyal customers and get you off to a good start. But remember, it would help if you didn’t make the grand opening on the same day. Other events are happening nearby. Make sure you advertise the grand opening several weeks ahead of time. At the grand opening, offer significant discounts and specials to your new customers. You may also want to give away free cupcakes or provide free samples of your baked goods to convince customers to make purchases.