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How to Start a Bakery

How to Start a Bakery

Last updated on 8/07/2018

Bakeries are a popular type of foodservice establishment, and they allow you to express your culinary creativity while also serving a unique market. Additionally, people with non-culinary backgrounds can get into the industry easily by opening a home bakery. Opening a bakery presents many unique challenges that are different from other types of businesses. We will take you through the process of opening a bakery from writing a business plan and getting funding to filing for permits and choosing the right equipment for your new bakery.

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Types of Bakeries

Before you can start planning and organizing your new bakery, you need to understand the different types of bakeries and what sort of customers they serve. There are two main types of bakeries: retail and wholesale. Although these two types of bakeries may make similar products, they have different needs and customer bases.

Retail Bakeries

Retail bakeries are the most common type of bakery, and they are the bakeries that sell baked goods and breads directly to customers. Retail bakeries come in many different forms, and many of them specialize in one type of baked good. They also need both front- and back-of-house space. Here are some specific types of retail bakeries:

A Bakery Display Case with Lots of Colorful Pastries
  • Bakery cafe: This type of bakery is a combination of a bakery and cafe, and they typically sell baked goods like breads, pastries, cookies, and more, as well as coffee and tea. Bakery cafes typically have a dining space where customers can sit and eat.
  • Counter service: While counter service bakeries have a front-of-house, typically they do not have a dining space. Instead, they have a counter where guests can order freshly baked goods to take home.
  • Bakery food trucks: Rather than using a brick-and-mortar store, food truck bakeries sell their products from a mobile truck. Due to the small space, many bakery food trucks do not actually bake in their truck, instead opting to bake their products ahead of time in a commissary kitchen or home bakery.
  • Specialty bakeries: A specialty bakery typically focuses on one type of baked good, such as wedding cakes, cupcakes, or gluten-free items. This type of bakery can excel because they offer niche products that customers either cannot find elsewhere or that are better than the products they can get at other, less-specialized bakeries.
  • Home bakeries: This type of bakery is becoming more common, especially because you don't need a lot of startup capital or culinary experience to start a home bakery. Home bakeries typically market their products online and then deliver them through the mail. Many home bakeries are also very specific and offer twists on one type of baked good, such as cupcakes, cookies, or brownies.

Wholesale Bakeries

The other main type of bakery is wholesale bakeries. Rather than selling their products directly to customers, wholesale bakeries market their baked goods to businesses like grocery stores, restaurants, delis, and cafes.

Because wholesale bakeries have to meet the demands of commercial customers, they are typically larger than retail varieties. Additionally, because they don't serve a typical clientele, wholesale bakeries don't need to have a front-of-house or be located in a desirable, high-traffic area. But, they need to produce higher volumes of baked goods, so wholesale bakeries need a large space and lots of baking equipment, resulting in higher startup costs.

How to Start a Bakery

After you've decided what type of bakery you want to open and what sort of products you want to make, you can start getting into the details of starting a bakery. We broke down the process of opening a bakery into 9 simple steps that you can reference along the way as you design and open your new business.

1. Write a Business Plan

The first step in opening your new establishment should be to write a bakery business plan. The business plan is an integral part of starting a new restaurant because it lays out what type of business you want to open, how it's going to be structured, what sort of products you're going to sell, marketing strategies, and financial projections. There are seven main sections to a bakery business plan:

  1. Executive Summary
  2. Company Overview and Description
  3. Market Analysis
  4. Business Offerings
  5. Management Plan and Ownership Structure
  6. Marketing and Advertising Strategy
  7. Financial Projections

Your business plan serves as the foundation for your business, and a strong plan can help you get funding and make the process of opening a new bakery easy.

2. Obtain Loans and Startup Capital

When starting a bakery, there are many costs that you'll need to consider, such as leasing a commercial space, getting insurance, outfitting your space with equipment, hiring and training a staff, stocking your kitchen, and paying for utilities. As a result, you'll need to have a significant amount of money available to cover these costs. Additionally, it may take a few months after opening for your bakery to become profitable, so you'll need cash on hand to cover costs for several months after opening.

It is unlikely that you and your business partners will be able to fund your new bakery on your own, so you'll need to take out loans. There are three common ways business owners get funding: commercial loans, business lines of credit, and small business loans.

  1. Traditional Commercial Loan: You can apply for a traditional commercial loan at any major or local bank. This type of loan has lower interest rates and access to large amounts of capital, but requires you to have a high credit score and wait potentially for months to access the money.
  2. Business Line of Credit: A line of credit is similar to a credit card. You get approved to use up to a certain amount, but you're only charged for the amount you use. Additionally, as you pay off the balance, you can access more credit. But, a line of credit doesn't allow you to access as much money as other loan types and requires a higher lending standard.
  3. Small Business Loan: Created by the Small Business Association, a small business loan is a type of loan that aims to protect small businesses and provide them with startup capital. Small business loans typically have lower interest rates and are available to people with borderline credit. But, they require collateral and may take longer to be approved than other loan types.

3. Leasing a Commercial Space

An Empty Commercial Kitchen

Once you've secured funding, you can start looking for a commercial space for your bakery. The type of commercial space you'll need will depend on the type of bakery that you're going to open. For example, if you're opening a food truck bakery, you'll need to purchase the truck and you may want to look into renting space in a commissary kitchen. Retail bakeries will want to look for a space in a central location close to their target demographic that also has a front-of-house area.

Because wholesale bakeries sell their products to businesses rather than customers, they can be located farther from the city center or populated areas. But, regardless of the type of bakery you're opening, there are some things you'll want to consider when looking for a commercial space:

  • Demographics
  • Accessibility
  • Proximity to Suppliers
  • Competition
  • Size and Space Requirements
  • Health Regulations and Zoning
  • Safety and Crime Rates

Once you've found a suitable location for your business, you can hire a lawyer to draw up and negotiate a lease with the landlord. To protect yourself from any potential issues when negotiating a lease, be sure to specify the length of the lease, any raises in rent that might be included, who will pay for any potential renovations, and any utilities that are covered.

4. Permits and Licenses

The foodservice industry is heavily regulated on a federal, state, and local level, and there are some permits and licenses that you'll need to obtain before opening your bakery. The types of permits you'll need will vary depending on your location, so be sure to check your local laws and regulations to see if there are any specific laws that apply to your new business.

5. Designing a Layout

After securing a location for your new bakery, you can begin planning what equipment you'll need and how to organize your kitchen. Additionally, if your bakery has a front-of-house area, you will need to design a floor plan.

Creating a Back-of-House Area Layout

There are many different ways that you can organize your kitchen and your equipment. But, there are four sections that every bakery kitchen will have: cleaning, storage, food preparation, and meal cooking, and you'll want to organize your kitchen so these four sections flow together. Plus, bakery cafes and bakeries with a front-of-house area will also have a service station, where they deliver the food to the customer.

You will want to lay out your kitchen based on the logical flow of food through the baking process. This starts with the storage area, and then goes to the food preparation and meal cooking sections. Once your baked goods have been prepared, you can serve them to your customers or package them. Finally, your dirty dishes, pots, and pans will end up at the cleaning station.

Your kitchen's layout will also depend heavily on the space that you lease and the placement of water and gas lines. You will also want to measure your space and ensure you have enough room for all of the necessary equipment before you finalize your kitchen plan.

Designing a Front-of-House Floor Plan

Some bakeries will have a front-of-house area where customers can browse their selection of baked goods. Creating an optimal layout in the front-of-house area can make your customers feel comfortable to browse and help facilitate purchases. There are four main bakery layouts, each with their own unique benefits.

  1. Straight Floor Plan: Your display cases are organized in straight lines to make it easy for customers to browse.
  2. Angular Floor Plan: This floor plan uses curved displays to create an upscale presentation.
  3. Diagonal Floor Plan: A diagonal floor plan allows customers to flow through your bakery easily.
  4. Mixed Floor Plan: You can also use a combination of all the floor types to maximize your space.

6. Ordering Equipment for Your Bakery

Cake Baker Frosting a Cake

The equipment that your bakery will need depends on what type of baked goods you will be preparing. For example, you may need specific pastry supplies to create different types of baked goods in your kitchen. But, if you're focusing on baking fresh bread, you may not need one. While the specific equipment may change depending on the size and type of your bakery, there are several purposes you need to fill:

  • Dough Preparation: This includes equipment like commercial mixers, work tables for kneading, dough dividers, dough sheeters, and dough scales. You may also need holding cabinets, proofing cabinets, retarder/proofer combos, and refrigerators to prepare your dough.
  • Storage: Storage is important for keeping your kitchen organized. Shelving and storage racks are essential for any bakery. If you're working with bulky bags of flour and sugar, you should invest in trucks, dollies, and carts to move large bags around your kitchen.
  • Baking Equipment: Convection ovens are a great all-purpose piece of bakery equipment because they provide a dry heat and bake evenly. If you're preparing a lot of artisan breads, you may want to choose a deck oven to give your products a crispy base. Wholesale bakeries may be looking for high-output ovens, such as roll-in rack ovens or revolving ovens.
  • Display and Sales: Choosing the right display cases for your baked goods can help boost your sales. You can choose self-service or full-service cases, and there are refrigerated and unrefrigerated options, depending on your needs. In addition to your display cases, be sure to also choose stylish boxes and packaging for your baked goods.
  • Cleaning and Warewashing: A 3 compartment sink should be the centerpiece of any cleaning station. But, be sure to order hand washing stations for your employees, disposable gloves, cleaning chemicals, sponges, scrubbers, and other essential cleaning items.

Bakery Smallwares

In addition to your large equipment, your bakery will also need to be stocked with smallwares, such as mixing bowls, storage boxes, whisks, bread knives, aprons, and more. We compiled a list of essential bakery equipment to ensure you don't forget anything.

You can download the PDF checklist below:

Download Checklist PDF

7. Hiring and Training Staff

The size of your staff will depend on your bakery's size and type. For example, a retail bakery will need to hire and train front-of-house staff to take orders and work the cash register. Most of your bakery staff will work in the back-of-house, though, preparing and baking your food.

Your bakery should have at least one or two employees that have formal training or bakery experience to oversee the actual baking process. Additionally, you may also want to hire some unskilled workers for washing dishes, mixing ingredients, packaging products, and doing other tasks that don't require previous experience or expertise.

Some bakeries will also need professional pastry chefs and personnel to complete delicate and specialized tasks. For example, bakeries that bake wedding cakes should look for experienced cake decorators. Bakeries that offer artisan breads should consider hiring someone who specializes in bread baking.

8. Marketing and Advertising Strategies

Before you open your bakery to the public, you need to conduct some marketing and advertising campaigns to get the word out and create buzz. You can break your bakery marketing strategy into five general steps:

A Bakery Storefront with Chalkboard Menu and Assorted Baked Goods
  1. Conduct market research: The first step in a marketing campaign is to conduct market research and determine your target market. This includes information like the demographics in your bakery's area, any competitors, and niche markets you can fill. Once you have an idea about who your target market is, you can begin coming up with strategies.
  2. Write a market analysis: Your market analysis is a summary of your market research, and it should go in your bakery's business plan. It should include information such as the average income level in your area, discretionary spending among your target market, and your competitor's prices.
  3. Set goals for your marketing campaign: Create realistic goals for your bakery and your marketing and advertising campaign. For example, set goals for how many followers you want to gain on your social media accounts and how many sales you want to get in a month.
  4. Determine how you want to advertise your business: There are many ways you can advertise your bakery and each has its own benefits. If you're in an urban area, using signs is a great and affordable option. You can also consider traditional advertising tactics, such as newspaper advertisements and flyers.
  5. Create a social media presence: Social media marketing is a great way to interact with your customers, create buzz, and advertise your grand opening and other events. Additionally, many people will look for your bakery's website and social media accounts before deciding if they want to visit, so make sure that you have an active online presence.

Many of these tactics apply to retail bakeries, but marketing tactics will differ for wholesale bakeries. Wholesale bakeries instead should focus on competitor analysis and researching where local restaurants and grocery stores source their baked goods. Then, they can reach out and try to make a deal.

9. Hosting a Grand Opening

The final step in opening a bakery is to host your grand opening and welcome customers to your business. A successful grand opening can get your new bakery off to a good start and help create some loyal customers. You should advertise your grand opening to create interest and ensure that customers know when your bakery is opening.

One great way to get customers in your bakery on your grand opening is to offer discounts and specials. For example, you can offer discounts for the first 100 people to visit. Another option is to give customers who order a dozen cupcakes one cupcake for free. You can also offer free samples of your breads and other baked goods to help convince customers to make a purchase.

Starting a bakery presents many unique situations, and it is different than starting a traditional restaurant or other foodservice establishment. One of the best ways to ensure that opening your bakery goes smoothly is to stay organized and ensure you're being thorough. Creating a detailed business plan, following it precisely, and keeping your documents organized will help get your business off to a good start.

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