If you want to open a bakery, you need to start by looking at the different types of bakeries to determine which is best for you. Your choice will ultimately affect many of the decisions that you’ll soon be making, including what equipment you’ll need, how many staff members you should hire, and what type of facilities you’ll require. While this may sound daunting, choosing your bakery type is all about honing in on your specific skills, so don’t be afraid to think outside the cake box.
Retail Bakeries vs. Wholesale Bakeries
Before you begin planning the specifics of your bakery, you’ll need to decide whether you want to open a retail bakery or a wholesale bakery. This is an important choice, as it will determine how you’ll interact with your customers, what type of building and equipment you’ll need, and how much of a financial investment you’ll be making up front.
Opening and Operating a Retail Bakery
A retail bakery sells baked goods directly to customers, as opposed to selling through other businesses or distributors. Retail bakeries can assume many forms, but most of them will require at least one staff member who is in charge of running the cash register and helping customers.
Retail bakeries also need both front- and back-of-house space. If you imagine customers coming into your bakery and sitting down with a cup of coffee and a sweet treat, you’ll need a space for them. This can cost money up front, but it allows you to exercise your creativity with an interior design that matches your bakery’s style.
Pros of Opening a Retail Bakery
- More personal interaction with customers
- Opportunity for creativity with front-of-house design
- Usually less expensive to get up and running
Cons of Opening a Retail Bakery
- Reliance on smaller, less steady orders for income
- Need employees to run front-of-house area
Owning and Operating a Wholesale Bakery
If you’d rather do business with large-scale clients instead of individual customers, you might consider opening a wholesale bakery. Wholesale bakers typically sell their products to other businesses, like restaurants, grocery stores, specialty shops, and even cafes. Because wholesale businesses rely on regular clients, your income won’t depend on individuals coming in for a snack. This can be a huge benefit over retail baking.
Wholesale baking offers more flexibility because you can choose if you want to work from home, in a commissary kitchen, or out of a leased commercial kitchen. While you may not be able to customize your storefront or design a dining area, there are still plenty of opportunities for creativity with wholesale baking, like focusing more on your product and packaging.
A potential drawback of wholesale baking is the large overhead cost. If you are moving a large amount of product, you will need to have more employees to help you. Not to mention, you’ll probably require more equipment to make your baked goods on a large scale. If you’re not prepared to invest more capital up front, a large wholesale bakery may not be the way to go. However, just because wholesale bakeries can be as big as the Tastykake factory, it doesn’t mean that they have to be. A home bakery that sells to a few local diners also counts as a wholesale bakery, and it doesn’t require nearly as much capital as a large operation.
Pros of Opening a Wholesale Bakery
- Large orders offer a steadier source of income
- No front-of-house space needed
- More flexibility in terms of location
Cons of Opening a Wholesale Bakery
- More upfront costs than a retail bakery
- High-volume production may require additional staff, which means more overhead costs
Choose Your Bakery Service Style
Once you’ve decided whether you want to run a wholesale or a retail bakery, you can choose which service style you prefer. Your service method defines the way you move products from your kitchen to your customers, and it will be important when you go on to write your bakery business plan.
Bakery Service Styles
Below, we outline the different service styles that you can choose from when opening a bakery.
Bakery Cafe
A bakery cafe, or a sit-down bakery, is a retail bakery that includes a dining area for customers to sit and enjoy their food. Opening a bakery cafe with seating can be more involved than other bakery business models because you need a location with both back-of-house and front-of-house space. Most bakery-cafes also offer food and drink in addition to baked goods. For example, you might specialize in cookies, cupcakes, and muffins, but you’d also want to consider serving items like coffee, tea, and sandwiches.
Counter Service Bakery
A counter service bakery is similar to a sit-down establishment because both models require a space for customers to order your products. However, counter service bakeries can be smaller, and they don’t have a dining area. This business model could potentially save you money on overhead costs, and you could sell coffee and other food items.
Another benefit of a counter service bakery is that you can cater to walk-in customers who want only a few items, as well as customers who call ahead for a bulk order. Without the extra focus on front-of-house space, you can spend more time filling large orders.
Food Truck Bakery
Bakery food trucks, like cupcake trucks, are more popular than ever, and there are several reasons why. They’re relatively inexpensive to procure (especially when compared to a sit-down establishment), and they also give you the freedom to move around to different locations.
If you choose this business model, however, you’ll probably need to find somewhere else to prepare your product. While it is possible to outfit a bakery or cupcake food truck with a fully-equipped kitchen, it can be very expensive. Luckily, many cities have commissary kitchens that you can pay to access for a set amount of hours. Should you decide to prepare your baked goods at a separate location, you’ll only need enough space in your truck to store and serve your product. This will help keep your costs down.
Home Bakery
Baking at home is perfect for entrepreneurs who don’t have as much capital to invest in their new business. All you need to start a home bakery is the proper equipment, adequate space, and the necessary permits. Some states, like Texas, prohibit the sale of homemade baked goods unless the kitchen area is completely separate from the house, so it is important to check the regulations in your area.
If you choose to start a home bakery, you will also need to consider how you’re going to get your products to your customers. Will you sell your baked goods online? If so, how will you keep them fresh if you have orders from all over the country? If you only plan to sell locally, will you have a delivery truck or van with refrigerated storage? Answering these questions will help you start thinking about how your business will run day-to-day.
Specialty Bakery
A specialty bakery focuses on making either one or a small number of baked goods. For example, a wedding cake shop would be considered a specialty bakery because they specialize in making one type of product particularly well. Allergy-friendly and health-conscious bakeries, like establishments that offer vegan or gluten-free baked goods, also fall into the specialty category. Specialty bakeries also offer flexibility, because although you’ll focus on a specific type of product, you can choose to produce it in either a retail or wholesale setting.
Choosing what type of bakery you want to open is an important decision, as it will determine how you’ll set up your bakery business plan. When you decide what type of bakery you’re going to open, you’re also deciding if you’ll need additional employees, what type of baking space you should lease or buy, and how you’re going to market your bakery. It’s a big decision, but it’s also the exciting first step in your new business venture.
