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.
1. 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.
2. 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 much funds to invest in their new endeavour, 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.
- Speciality 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.
It’s crucial to decide what kind of bakery you would like to start because this will affect how your bakery business model is structured. It’s a big choice but also the most exciting part of your brand-new company.
3. Steps To Open A Successful Bakery Business In India
Follow the below-mentioned steps to open a successful bakery business in India in 2023:
i) 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 streamline the operations, decide the budget distribution, and plan the future development of your bakery business. It ideally should include:
- 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 for your restaurant business.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
📚 Suggested Read: How To Write A Restaurant Business Plan in 2023
ii) Choose A Location For Your Bakery Business
One of the first steps 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.
For a 1000 sqft area divided between two floors, the rent should not exceed more than Rs 60-70k. Your expenditure would be around Rs 1,80,000 to acquire the place where the bakery will operate.
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.
📚 Suggested Read: 7 Things to Consider While Deciding Your Restaurant’s Location
iii) 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 start of the outlet. Police eating house and fire licenses 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 license is Rs 15,000. Find out how to get the FSSAI License for your restaurant here.
- GST Registration: This can be done with the help of a Chartered 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.
Here is a complete list of all the licenses required for opening a food business in India and the steps to procuring them.
iv) 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 are 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 depends on their experience.
📚 Suggested Read: How to Create a Human Resource Structure for Restaurants
v) 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 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.
vi) 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.
vii) 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, and 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.
Learn how you can choose the best POS Software for your bakery here.
viii) Do the Right Marketing and 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.
For the first few months, around 30,000 pamphlets are good enough to market your bakery. These 30,000 pamphlets will cost you somewhere around Rs 30,000, with good paper quality. Apart from flyers, invest some money in a great display board to attract customers. Well-designed display board costs around Rs 25,000.
Apart from these, you must have a separate budget for restaurant management software, since it could also help you in running several marketing campaigns by utilizing customer data.
ix) 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.
x) 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.
Here we have mentioned the set-up cost of opening a bakery that will tell you how much it costs to start a bakery business in India. The total approximate cost of opening a bakery in India is around Rs 15 lakhs. However, the cost of equipment and location can lead to considerable variance in the estimated cost.
With this article, we hope you were able to gain an understanding of how to open a bakery business in India. Learn how you can make your bakery business successful here!