Are you a pastry chef wanting to do something of your own? A home-baker wanting to take things official? Or just a baking enthusiast wanting to test waters professionally?
Well, then now is the time. Baking has evolved into a category of its own in the past few years. With successful food businesses innovating bite-size desserts, macaroons, fusion desserts. The scope is endless.
Bookmark this article as your comprehensive resource to plan an all-new bakery business of your dreams. Let’s whisk it up!
Is a bakery business profitable in India?
Yes. We have facts to back this up:
The Indian bakery market reached a value of US$ 7.22 Billion in 2018.
And further, the market value is projected to exceed US$ 12 Billion by 2024. When done right, the bakery business is easy to scale form your first location or home-setup to multiple outlets.
A tip for profitability:
“Compete on quality, not price. It is your quality and range of products that should justify the price you charge. It’s the only thing that will make people choose you over your competitors and bring more business.”
– Ann Bailey, Founder, Mrs Blueberry
So where do you start when wanting to open a bakery?
First, select a type of bakery:
A bakery-cafe provides sit-down option and a community space for its customers. Most bakery-cafes have an opportunity to offer a larger range of food and drink items to encourage more sales. Though, they require a large investment as you’ve to select an easily accessible location and design your shop to catch attention.
A home bakery is an ideal alternative for people who want to first test what it is like to run a full-fledged bakery business. They can start with a small menu and gradually grow from home to shop.
Delivery Kitchen/Cloud Kitchen
Cloud Kitchens are a great way to start a bakery for people who have a low-investment budget. You just need a back-of-house/kitchen to bake stuff and lesser client-facing staff as there’s no to very low client interaction.
How much money does it take to open a bakery in India?
Let’s look at the cost break-up for starting up a bakery in India:
- Location: Depending upon your model the rent for a cloud kitchen space can be around ₹25,000-₹40,000 per month and for a full-fledged cafe it can be ₹70,000-₹1,50,000 per month.
- Equipment: The various equipment according to your menu requirement can cost anywhere between ₹5,00,000-₹10,00,000
- Licensing: All the required licenses and permits will cost you about ₹30,000
- Staff: You’ll need to hire a few staff members and pay for their uniform (if any), and salaries. This figure can vary with the number of people you rope in, but assuming you take in 4 people (head chef, manager, support chef and housekeeping person), you’d need about ₹1,20,000 in India (per month) for salaries and additions.
- Billing & POS: Using POS is an important part of running a bakery business. A good POS that acts as a central unit for your outlet can cost between ₹24,000 – ₹50,000, in India.
- Marketing costs: Marketing is vital for your bakery. This would include both online and offline marketing. Using marketing methods suitable for your business would cost you almost ₹40,000-₹60,000 (per month).
Make a business plan for your bakery
For your bakery business plan, the first step would be to analyse the market and collect your findings.
As Joanne Chang – Owner of Flour Bakery + Cafe says:
“If you want to open a bakery, go work in a bakery. Baking is still the easy part. There are a lot more organisational skills that you’ll need to run a business.”
Your market analysis should include:
- Who your potential customers are? Are any subcategories you can divide them in? What are their habits and paying capacities?
- Who are your direct and indirect competitors? What are their key offerings? What are their challenges and successes?
- What is the industry like? What projections are there in the market already? Which areas are yet to be explored, etc.
Next, in the bakery business plan, focus on deciding your range of products and curating a menu.
“Find your USP. Whether it’s a particular dessert or a line-up – something that will make your customers come back to you.”
– Allison Whitmarsh, Owner, ProperMade
Another great advice on making your menu is by Michelle Green of Three Sweeties:
“Be the best, the first, or the only one baking the kind of treats you make. If you can be all three of those things, that’s even better.”
Here are a few tips to get you started:
- Get the basics like cakes and pastries covered.
- Draw on your speciality, any dish that impacted your baking journey.
- Think about seasonal dishes. Curate a special mango or watermelon menu for instance.
- Look at local or international trends, depending on your focus. Get the selected items on your menu.
- Check your menu with a few early testers. Take their feedback for improvement before the main launch.
Deciding on a location:
Kevin Gardner of Five Points Bakery suggests:
“To start, rent space hourly in a commercial commissary until you get a handle on ingredient costs and market demand.”
Depending on your bakery model (cloud-kitchen or bakery-cafe), these are few considerations to go over when deciding on a location:
- Kitchen space is enough for your staff to work in.
- The outlet is well ventilated as a lot of cooking and baking will be going on.
- For cafes – the area is near to your target audience and easily visible. There’s parking space available and good seating arrangement can be done.
- The price point of the location compared to its benefits and the market standards,
What equipment is needed to start a bakery?
- Ovens, mixers, whiskers and other electrical equipment depending on what you intend to bake.
- Packaging material like bags, boxes, etc. for customers take goods home
- Display cases for your dishes
- Cooling racks and refrigerators for the food
- Baking dishes, tins and pans of different shapes and sizes
- Cutlery and utensils
#Tip: Lower your overhead by finding used/2nd hand stuff at auctions or in resale markets for example – Sikandarpur in Gurgaon or Daryaganj in Delhi.
Listen to what Pooja Dhingra of Le-15 says:
“Baking is a science – it requires precision. You cannot just wing it – it is important to measure your ingredients correctly, try to stick to the recipe and follow it. And please, invest in a good oven.”
Building a team that will support your growth is an important step while opening a bakery.
To initially start-up, you’ll require:
- A head chef
- A support chef
While you grow, you might want to add: chefs specialising in a particular theme, an operations manager, a marketing person, and a finance manager.
#Tip: Hire fresh-graduates or culinary school students for internships or the support chef role. They’re quick to learn and cost-friendly.
Once you have all the basics in place, it’s time to focus on a great marketing and launch plan. Use these tips to gather your customers’ attention:
- Decide on a theme for the launch.
- Develop a story and brand collaterals to be shared with everyone.
- Involve influencers and invite them for a launch dessert party.
- Run a few giveaways on your social media profile.
- Partner with local musicians and pop-up shop owners to plan a great week of activities.
- Even if you run a cloud kitchen, host a baking workshop to give people a behind-the-scenes view. Do an Instagram/Facebook live during it.
Here’s a quick marketing tip from Shivesh Bhatia of Bake With Shivesh:
“It’s about practising and reading a lot to keep learning and growing. Also, photographing your dishes well, if my food doesn’t look beautiful, then no one will want to eat it.”
Now that you have a business plan in place, get the right technology to support it end-to-end.
Technology for a bakery business:
Technology goes a long way in streamlining processes for a food business.
First, you need, POS and Order Management systems:
Having a restaurant POS that integrates with different tools and runs on cloud-tech will make your life much easier. Another must-have is an order management system that can bring orders from different third-parties into one place for faster processing.
Here are the latest POS trends that you should take note of.
Then you should definitely consider taking your bakery business online with an Online Ordering System:
Your online food ordering system is like your silent server. It helps in maximising your sales opportunities and increasing your customer base. When you invest in your restaurant’s website, it’s like investing in a long-term promotional and business tool.
Finally, you should close the loop and retain your customers with Engagement and Feedback Tools:
A dedicated CRM and loyalty system will ensure that you’re capturing the right customer data and nurturing it well. While a feedback tool will ensure you’ve a correct picture of what your customers like and what you can improve on. All these tools are important for your bakery business to have a complete picture of your customers and to retain them.
Now let’s go over the licenses and permits you need before officially starting up your shop.
What permits do you need to open a bakery?
- FSSAI license: It is a unique 14 digit registration number that is given to manufacturers, traders, and restaurants. FSSAI license is also known as the Food license, You can apply for it on the FSSAI website
- GST Registration: It is one tax that you need to pay unlike different taxes (VAT, Service Tax) earlier. You can easily register your restaurant for GST online and get it sanctioned with minimal hassle.
- Health License: This license ensures that your restaurant stands corrected under the health concerns of the Health Department. It will need around 60 days to be issued to you after your submission. Apply for it on your State Municipal Corporation website.
- Police Eating House license: The Eating House License is provided by the Licensing Police Commissioner of that city where you would want to open the outlet. The approximate cost required to issue this license is Rs. 300 for three years.
- Fire License: A No-Objection-Certificate (NOC) from the fire department is required to run a restaurant. There is no fee required for NOC as of now.
For a full list of licenses and taxes for a food business in India go here.
With that, it’s time for action!
If you’re planning to open a bakery, and have read through this guide, congratulations! That’s the first step taken already. Now it’s time to take this information into action and start working on your plans.
As Sharmeen, Founder of The Parfait Company says:
“No business at an early stage can be run successfully on autopilot. It’s going to be backbreaking, but it’ll be fun too!”
Have any more questions you would like us to answer? Just let us know in the comments.
Happy baking and business planning! 😉