How to Open a Bakery

Start Your Own Bakery

How about we start with getting to know what does the concept of Bakery imply? To begin with, the bakery is a great way to enter a food industry without a culinary background.

Even though the meaning of the word “Bakery” seems pretty obvious, there are different types of those. Mainly, there are two groups: retail and wholesale bakeries. Retail bakeries sell their products directly to customers, while wholesale ones sell their goods to other businesses, like grocery stores, cafes, and restaurants.

Wholesale bakeries are mainly larger than retail ones, as they are working with commercial customers, so they need to produce higher volumes of goods, and as a result, there is a need for bigger space and different equipment. Obviously, those facts make the initial startup cost of a wholesale bakery higher.

This business is also interesting because it can be opened anywhere: in a residential area, at a bus stop or train station, in a shopping or business center, and even 10 meters from a competitor. Any location with good traffic will do. You can also bet on a secluded place in the city center, but then you will have to spend a lot of effort on promotion so that people recognize the “secret” place with delicious coffee and pastries. When you come up with your own recipes and bet on, for example, sweet croissants and focaccia, the nearby bakery with sausages in dough and pies will not hurt you: you will have a different target audience.

For a bakery, first of all, the quality of the product and its freshness are important.

Start with preparing a decent Bakery business plan.

There it is necessary to point out the type of your bakery, its structure, the goods you will be selling, as well as marketing and financial projections. Make sure to include a detailed company overview and description. Advertising and marketing plans should also be prepared and included in the bakery business plan.

The business plan is the very foundation for your business and a key that helps you get strong funding and makes the opening process easier.

Obtaining startup capital and loans.

At this point, it is time to consider all the insurances, fitting equipment, staff hiring, and training, to be able to predict all the expenses and cover them in the future. There are 3 ways to get funding from commercial loans, business lines of credits, and small business loans.

Another option can be to open a Bakery with a partner. Here it is up to you to decide on the split quantity.

Location choice

This is the next step when opening your own Bakery. Here everything depends on the concept of your bakery and the type that you chose. For example, for retail bakeries, we should consider the space in the central location close to their target customers. While wholesale bakeries can be located quite far from the city center. At this point obtaining licenses and permissions is the next difficulty you may face, so you will definitely use the help of a lawyer.

If you are planning to open a bakery in a medium or small city, and not in a capital or a million-plus city, the main criterion for you is a location on the street with a good flow of people. Baked goods and coffee should be as fresh as possible.

Your products have a very short shelf life, which means you need to sell your products as soon as possible to avoid leftovers and write-offs.

Preparing design layout and equipment choice.

The latter depends directly on what type of goods you will be selling. For this, it is a great idea to research trending baked goods. As the choice is really numerous, for example, buns and doughnuts, alcoholic desserts, and non-traditional fillings.

Many people approach the assortment choice too lightly, but the success of the bakery business most often depends on it. You need to think it over even at the stage of drawing up a business plan, before searching for premises and selecting equipment. The choice of location, the volume of products, and the target audience will depend on what you will cook in your bakery. Of course, the wider the assortment of products, the better: this way you reach a larger audience and make your establishment stand out from the competition.

Unfortunately, this is difficult for a small bakery, so it is better to concentrate on specific unique positions and diversify them with the filling.

It is worth focusing on the requests of your potential customers. For example, if you plan to open a mini-bakery near a bus stop, metro station, or train station, where it is important for people to have a quick and hearty snack, without any special frills, you should add more pastries with meat or vegetable filling to the assortment.

If your bakery is located near a shopping center (or inside it) or in the central part of the city, then the assortment should be expanded by adding baked goods with a wide selection of sweet fillings, which are ideal for coffee drinks.

How quickly does bakery capital investment pay off?

The payback period for a mini-bakery is from 1 to 1.5 years.

The profitability of a mini-bakery that only sells baked goods is usually no higher than 20%, and the payback period can be 2–3 years. The sale of coffee and drinks and a small number of seats reduces this period in half.

Finally, we would like to share some insights on opening a Bakery from entrepreneurs from all around the world for you to know what to expect.

1. It takes more time than you expect. No matter how good your control skills are, there is always something to go wrong and make you push the opening out a few weeks.
2. Things are going to be different from your imagination and plan. Perfection is never reachable, as there are numerous concepts and ever-changing ideas on the market.
3. Set up your team’s work-life balance. People your work with, have to be as motivated and energetic as you are. For this, rest is the best remedy. So it is highly important to think thoroughly about the schedule, to make sure no one is working extra hours.
4. Plan your finances beforehand, taking into account the concept and niche you are taking. There are a lot of platforms to make this part of your business easier than it seems. Just imagine, that instead of calculating every sum manually, you can just use a financial model designed specifically for your type of business. Moreover, it is able to calculate the profit, no matter the season. All you need is to input your data into the system and observe everything be calculated for you.
5. Advertise your bakery in advance. You need to start advertising a new establishment at least a month before the official launch when preparations are just underway for the opening of a bakery. So that your potential guests start getting used to the fact that a mini-bakery will appear here soon.