Bakery Business

The demand for baked items has witnessed a steady increase in the last couple of years. Baked goods offer customers convenience and affordability, and the growing demand has led to a lot of home-bakers and chefs venturing into the bakery business. As per a report, the Indian bakery market is estimated to grow at a CAGR of 8.5% between 2021 and 2026 and is set to reach a value of USD 12.39 billion by 2026, thus making bakeries a highly lucrative restaurant format. In this article, we will talk in detail about how to open a bakery business in India, but before that, let us understand the types of bakery businesses.

Types of Bakery Business

You must first select whether you want to create a retail bakery or a wholesale bakery before you can begin arranging the specifications of your bakery. Deciding this is crucial because it will influence how you engage with your clients and how much money you need to invest.

• Retail Bakeries: Customers can buy baked goods directly from a retail bakery. You can establish them in various shapes and sizes, but they all need at least one employee to manage the cash register and assist customers.
• Wholesale Bakeries: A wholesale bakery offers baked goods for sale or supplies them to retail establishments like cafes, hotels, and supermarkets. With wholesale baking, there are many creative options, such as concentrating more on your menu and its packaging.

Types of Bakery Service

Now that you know what kind of bakery you’re planning to open, you need to decide what kind of services you’ll offer.

• Bakery Cafe:A bakery cafe, often a sit-down bakery, contains a dining space where your clients can relax and enjoy their meals.
• Food Truck Bakery:If you want to cater to customers constantly on the go, mobile eateries or bakery food trucks are a fantastic alternative.
• Home Bakery: For business owners who don’t have many funds to invest in their new endeavor, baking from home is ideal. All you need to launch a home bakery is the right tools, enough room, and the required licenses.
• Counter-Service Bakery: Except for the dining space, a counter-service bakery is similar to a bakery cafe. Customers can typically go in and collect their items from a small store.
• Specialty Bakery: A specialized bakery specializes in producing just one or a few types of baked goods. They also provide flexibility since, despite concentrating on a single product type, you can decide whether to make it for retail or wholesale.

10 Steps To Open A Successful Bakery Business In India

1. Create A Bakery Business Plan

Before learning about how to start a bakery business in India, you should create a bakery business plan as it would help you in streamlining the operations, deciding the budget distribution, and planning the future development of your bakery business. It ideally should include:

1. Summary of the Bakery Business Plan –The Summary of your bakery business plan acts as an overview of your bakery. This should consist of your mission statement, a review of your restaurant’s legal structure and ownership, a brief history of the restaurant if it’s an existing restaurant, and plans of your restaurant business.
2. Business Overview –The Business Overview of a bakery business plan must include the concept of your bakery business, and the type of service you’re going to provide. It should include the layout of your bakery and the service type, a sample menu, and the details of the management team.
3. Industry Analysis – Doing the Industry Analysis is extremely important before you open a bakery business. It would help you identify the competition in your area, analyze the target audience for your bakery, and help you choose the right location for your bakery business.
4. SWOT Analysis – The SWOT Analysis of your bakery business would help you identify the Strengths, Weaknesses, Opportunities, and Threats associated with your bakery business. Learn how you can do the SWOT analysis for your bakery business here.
5. Operations Plan – The Operations Plan of your bakery business should include the details about how your bakery would function, such as order-taking, menu, service, staff management, raw material procurement, etc.
6. Financial Analysis – The Financial Analysis of your bakery business plan should include the cash flow statement, the operating costs, the fixed and the recurring expenses, etc. This would help you gain the financial viability of your bakery business.
7. Marketing Plan – You should include a marketing plan in your bakery business plan as well. The marketing plan should talk about how you’ll attract customers and promote your bakery.

2. Choose A Location For Your Bakery Business

One of the first steps to how to start a bakery business in India is to decide on a good location. For a bakery, the ideal location is a reputed market or high-end shopping streets where footfall is high. Ideally, front area shops on the ground floor, which are easily accessible and visible, are apt for the bakery business. It is advisable to have a 500 sq ft shop, divided into two floors, to build a functional kitchen on one level, and have a display cum serving area at another. However, this is subjective to the space available and your own choice.

Also, while finalizing the location of the bakery, it is essential to ensure that the place has a proper water supply and drainage facility. Get an appropriate legal agreement for the property as it is also required in paperwork and other licenses. You should even get a No Objection Certificate (NOC) from the property owner that he has no problem that his place would be used for food outlet purposes.

3. Get All Licenses Required To Open A Bakery Business In India

Similar to the QSR format, the bakery business also needs five licenses: FSSAI license, GST Registration, Local Municipal Corporation Health License, Police Eating House license, and the Fire License. Out of all the permits, FSSAI, GST, and Local Municipal Corporation Health License are the most important ones to have at the starting of the outlet. Police eating house and fire license can be acquired once you commence your operations. However, it is recommended to have all the licenses in place before starting a bakery.

• Food License: You can apply online, through its website (www.fssai.gov.in). You can also get this done through various agencies that charge around Rs 5,000 for the complete paperwork and license fee. It is advised to get a five-year food license to avoid renewal fees every year. The cost for the five years FSSAI licenses is Rs 15,000.  Find out how to get the FSSAI License for your restaurant here.
• GST Registration: It can be done with the help of a Charted Accountant. Find out how you can do GST Registration for your Restaurant here.
• Health License:You can get the Municipal Corporation’s health license fee with the help of a local Municipal Health inspector. This would cost you around Rs 3,000.
• Fire License:You can get the fire license with a mere fee of Rs 1,000-2,000, after the installation of fire extinguisher cylinders.

4. Get Manpower Required To Open A Bakery

Unlike the QSR and Food Truck, Bakery shops need an expert workforce because both the taste as well as the presentation is essential in the case of baked goods. For a high-end bakery, you need a Head Chef, Chef De Parties, Commi level Chef, and Helpers, plus Service Boys and a Cashier at the display and the serving area. The approximate total count of manpower required in the bakery is 15. The salary of the chefs, Commi, and helpers depend on their experience.

5. Buy Equipment Needed To Start A Bakery Business

The kitchen equipment is costly for a bakery business since each piece of equipment is made up of stainless steel, which is sturdy and long-lasting. The major equipment required in the bakery is Ultrasonic Food Cuting Machine, Planetary Mixers, Oven, Deep Fridge, Cooling Fridge, Working table, Gas stove, Cylinders, storage utensils, and other equipment. Unlike QSR or Food trucks, the bakery requires new equipment for better efficiency. But to lower the cost, you can get the working table second-hand.

6. Design The Display Area Of Your Bakery Business

The display area or the front end of the bakery business should be well designed and created in a manner that every item is noticeable to attract walk-in customers. You mainly require a Display fridge for cakes and pastries. Other than the refrigerator, the display area should have proper storage and a display rack for the items.

7. Install A POS & Billing Software In Your Bakery

The POS software is not just billing software anymore. Equipped with powerful integrations such as Inventory management, the POS software is now the only software you need in your restaurant. While purchasing one for your bakery business, ensure that the POS software has features to manage the shelf life of the baked items, robust inventory management as you would be dealing with perishables. The price of POS software is likely to differ based on the features you wish to include.

8. Do Right Marketing & Branding Of Your Bakery Business

Market and branding are essential for any business to flourish, and a bakery is no stranger to this. Get a properly designed logo and display board from a professional designer. This will not only help you to create your own unique identity but will also help in your branding while packaging.  Also, do remember to get a well-designed menu.

9. Decide On The Staff Uniform Of  Your Employees

Staff uniforms are often ignored while opening a food business. However, they are essential as they help deliver a professional look and also in the branding of the bakery. All the staff members must look good, hygienic, and well dressed. You can choose from different types of dresses such as chef coats, smart shirts and t-shirts, and an apron.

10. Partnering With Online Food Aggregators

The demand for online food delivery is steadily increasing these days. For a new bakery business, it is highly recommended that you register your business on the online food aggregators to generate online orders.

This article talks in detail about how you can partner with online food aggregators. It is also essential to have an online-ordering enabled website for your bakery business. This would help you boost your online presence and also generate online orders for your bakery.

Financial Planning Tips for Bakeries

Are you a bakery owner struggling with managing your finances? Creating a budget and financial plan can help you take control of your business finances and make informed decisions. Discover this four step guide developing a financial plan for your bakery.

Managing the finances of a bakery can be challenging, especially when you’re dealing with fluctuating sales and unpredictable costs. However, creating a budget and financial plan can help you to gain control over your business finances and make better, more well-informed decisions. In this article, we will discuss the key steps to creating a budget and financial plan for your bakery.

By assessing your current financial situation, creating a budget, and developing a financial plan, you can make sure that you’re prepared for any financial challenges that come your way. With the right strategies in place, you can improve your profitability, minimize your expenses, and achieve long-term success for your baking business.

Four Steps for Creating a Budget/Financial Plan

1.Assess Your Current Financial Situation
2.Create a Budget
3.Create a Financial Plan or Forecast using the Budget
4.Implement Your Plan

1. Assess Your Current Financial Situation

Before you can create a budget or financial plan for your bakery, you need to understand your business’ current financial position. This includes analyzing your income and expenses, reviewing your profit and loss statements, and identifying any areas where you may be overspending or underspending.

Take the time to gather and review all of your financial records, such as bank statements, receipts, and invoices. This will give you a clear picture of your bakery’s financial health and help you to identify any financial challenges that might come your way in the future.

If you’re new to tracking business finances, there are several software options available that can help you better understand your financial situation. Both QuickBooks and Xero allow you to track your income and expenses, create invoices, and manage your accounts payable and receivable. To get started with either software, you’ll need to input your and set up a chart of accounts to track your income and expenses. Once set up, the software can generate reports that provide insights into your bakery’s financial health such as a profit and loss statement, cash flow statement, and balance sheet. These reports can help you make informed decisions about the business, such as where to cut costs or where to invest more resources.

2. Create a Budget

Once you have a clear understanding of your current financial situation, you can start creating a budget for your bakery. A budget is a financial plan that outlines your expected income and expenses over a specific period of time.

To create a budget, start by listing all of your bakery’s income sources, such as direct sales, wholesale orders, revenue from classes, etc. Next, list all of your expenses, including fixed expenses such as rent and utilities, and variable expenses such as ingredients and packaging. Also make sure to include any one-time or annual expenses, such as taxes or insurance premiums. After you have a list of all your income and expenses, allocate funds accordingly to ensure you can cover your expenses while still being able to turn a profit.

3. Create a Financial Plan or Forecast using the Budget

Once you have created a budget, use it as the basis for creating a financial plan or forecast for your bakery. A financial plan or forecast helps you predict your future income and expenses based on your current financial situation and expected changes in the market or industry.

4. Implement Your Plan

Now that you’ve created a budget and a financial plan, it’s time to put it into action. The following steps will help you effectively implement your plan and ensure that your bakery is on a path towards financial success:

1. Communicate your plan with employees: Your employees play an important role in helping you achieve your financial goals. Make sure they understand the plan and their role in making it a success. Keep them informed of any changes or updates to the plan and encourage them to share their ideas or concerns.
2. Allocate resources effectively: Ensure that you allocate resources in a way that aligns with your plan. This includes allocating funds for marketing, advertising, staff training, equipment upgrades, and other areas that can help you achieve your goals.
3. Track and manage expenses: Keep track of all your expenses and regularly review them to ensure that you are staying within your budget. Consider using software tools to make this process easier and more efficient. You can also work with a financial advisor or accountant to ensure your finances are in order and to get expert advice on how to optimize your financial plan.
4. Assess progress towards goals: Regularly assess your progress towards your financial goals and make any necessary adjustments. Use financial statements and reports to monitor your cash flow, revenue, and expenses. Make sure you are on track to achieve your goals and if not, identify what adjustments you need to make.