The biggest hurdle in setting up a bakery business in the UAE is the cost incurred. Even though there are many benefits to setting up a business in the UAE, for instance, zero income tax, multilingual workforce, and excellent broadband facilities, the cost of setting up and running a bakery still overshadows them. These attractions have no value if the restaurateur cannot afford to even set-up the business. Bakery setup costs in the UAE are one of the highest in the world. A well-designed budget should be used to set up a bakery in the UAE, which should be adhered to strictly. Cost optimization can help you survive in business for a long time and enable you to scale faster.
Ways To Diminish Bakery Setup Costs In The UAE
High setup costs deter many new restaurateurs from starting their business. Here are a few ways they can reduce their upfront investment.
1. Rent The Space
Buying a new location can be a lot more expensive than renting a space for setting up your bakery. Renting a former bakery or a restaurant is an excellent strategy to cut the setup cost. Such a space will already have all the professional toolkit in place, including the baking equipment like workbenches, ranges, ovens, and storages. Adoption of this strategy will diminish your cost by over 40 percent.
If this space was popular in the past and closed recently, the old customers could still be drawn to your new business, thereby advertising your bakery. However, you will need to build brand awareness and help customers differentiate between your business and the one running prior to you.
2. Run A Home-Based Bakery
If you do not feel renting a space is a good idea and is costly, you can always open a bakery at your home. All you need to do is combine your baking ideas and creativity with your home-based kitchen setup, and you will be good to go. Running a home-based bakery business is very profitable as it eliminates the entire setup cost all at once and provides the experience of baking at your convenience. However, make sure to get the required licenses from the municipality before setting up the bakery.
3. Buy Second-Hand Equipment
It’s a fact that second-hand or used products are always cheaper than brand new ones. The same goes for the baking apparatus. Bakery equipment is durable and likely to last long. Therefore, it is advisable to opt for used apparatus rather than buying everything brand new, especially if you already have a low budget. Getting used equipment can reduce your setup costs to a great extent.
There are numerous suppliers or websites that sell stock used kitchen equipment. Make sure you approach the ones that maintain the quality of the equipment even though they are used ones. The quality, brand, price, and output capacity are some factors that one should not avoid while going for used equipment.
4. Take Baby Steps
When opening up a new business, one needs to have short as well as long term goals. Trying to set up everything all at once can be the biggest mistake a restaurateur can ever make. This is a risky situation to be in because if the bakery setup does not work, all the investment will go in vain.
Thus, it is always advisable to start small, keep a narrow menu, take baby steps and observe what turn the business takes. Start with fewer employees, a small and rented space, and less equipment to fuel your business in the initial stages. Furthermore, one should save capital for future investment in the business. You can invest in heavier equipment and broaden the menu when the bakery setup has passed the seed stage.
5. Focus On Delivery-Only Outlets
Opening a delivery-only outlet instead of a full-fledged bakery can be pretty lucrative. In the initial stages, the budget is not enough to handle the management costs of brick and mortar spaces. Focusing on only delivery will let you rent an even smaller space and use it to your advantage. This will considerably increase your profit margin.
However, there can be nothing better than the option of operating from home. The home kitchen will be just complimentary to your delivery-only business. You can use it for wholesale business, takeaway or delivery services, or receive online orders. Once the returns increase, you can think of opening a dining space for your bakery.
There are many other ways you can cut costs. However, the setup costs constitute a significant part of bakery setup expenses. You need to consider all business tips to make your bakery setup successful. Incorporate these changes in your bakery business, which will positively impact the profit margin.