What Do You Need to Start a Bakery from Scratch: A Comprehensive Guide

Is it your dream to open the best bakery in town where locals queue to get their hands on the delicious baked goods you have created? Do friends and family often compliment your baking and you’re considering taking the big step and going commercial? 

I am sure that it comes as no suprise to you that opening a business can be quite a challenge. What do you need to start a bakery? First, you need access to relevant information about this testing yet rewarding food business. 

Get one step closer to fulfilling your dream by reading this comprehensive guide. 

A bakery is a food business that focuses on selling flour-based baked goods, such as: 

• Bread 

• Cakes 

• Pies 

• Cookies 

• Doughnuts 

• Pastries 

The establishment can be as big as a storefront cafe or as small as a bakery food truck. There are bakeries that sell a bit of everything and bakeries that focus on perfecting a single product like cinnamon rolls or cookies. 

While you may have a passion for baking, nobody has a passion for losing money. Bakeries have the potential to be profitable, but the amount of profit depends on a variety of factors like: 

• Size 

• Location 

• Menu items 

• Business model 

• Cost management 

Here are a few bakery statistics that will help you decide if opening a bakery is a good choice for you: 

• The average profit margin for a bakery is between 5% and 15%; 

• The average revenue for bakeries is between $325,000 and $450,000; 

• Customers typically spend between $10 to $20 per visit when they visit a bakery; 

• The estimated lifetime value of an average bakery customer is from $520 (once a week, 52 weeks, $10 per visit) to $480 (twice a month, 24 times a year, $20 per visit). 

Any business that requires both physical and financial investment will come with advantages and disadvantages. It is up to you to weigh up the pros and cons of owning a bakery and decide if it is worth the effort. 

Here are the main reasons to open a bakery: 

• Being your own boss: you decide on the products you add to the menu, the hours you work, who you hire, and everything else; 

• You follow your passion: if you enjoy creating delicious baked goods, you will be able to do it every single day; 

• Get closer to the local community: by constantly interacting with clients, you can build lasting relationships that lead to loyal customers; 

• A chance to grow: if your place becomes popular, you get the opportunity to expand your business and make more money; 

• Bakeries are always in demand: people will always need bread, and baked goods are a great treat that most people appreciate. Therefore, you will always have interested clients, as long as you know how to attract them. 

Now, these are the potential disadvantages of starting a bakery business 

• Early starting hours: if you are not an early bird, you will find it challenging to wake up very early to have the baked good ready for when customers start to arrive; 

• High employee turnover: any business in the restaurant industry struggles to keep employees. You will have to motivate them with benefits to keep them happy and working hard for you; 

• A lot of competition: it is highly likely that there are many other bakeries in your area that you will have to outshine to attract customers; 

• Short shelf life for products: most baked products are only good within the day. This means that you must only produce what you sell, otherwise you will lose money due to food waste; 

• Expensive ingredients: tasty baked goods require good ingredients that come with a high price tag. You will have to price your menu items quite high to make a substantial profit. 

What do you need to start a bakery? A guide to show you the most common problems encountered in a bakery business and how to prevent them: 

Mistake 1 : Not analyzing the competition 

Solution: If you open a donut shop near an already established one, it will be harder for you to get noticed. Therefore, you must analyze your direct and indirect competitors to find a niche where you can shine; 

Mistake 2: Choosing the wrong menu items 

Solution: Even if your products are delicious, if you don’t have interested customers around, you won’t sell. Do a bit of market research to find out what your target audience’s food preferences are, so you can create a menu to their liking; 

Mistake 3: Pricing your baked items too low 

Solution: You may want to get people in the bakery by offering low prices. But you will soon discover that you can’t make a profit. It is better to choose a bigger price and invest in marketing to attract customers; 

Mistake 4: Forgetting about online presence 

Solution: If you only focus on your physical location, hoping to gain clients from the people that pass by, you are missing out. You need to have a sales and SEO optimized website and an active social media presence to tempt people into giving your bakery a try; 

Mistake 5: Underestimating costs 

Solution: Running a food business comes with a lot of often forgotten costs like packaging, utilities and marketing that will add up and deter you from making a profit. To prevent this, you have to create a comprehensive business plan which includes every dollar that you plan to spend. 

The cost of starting a bakery can vary greatly depending on where you are located, the size of your location and the products you will sell. Check out this estimation based on typical pricing that will help you get a better idea of how much you need to invest: 

• Leased bakery space: $900 – $6,000 per month for a 1,500 square foot bakery 

• Permitting, licensing, and legal fees: $1,500 – $3,500 

• Remodeling and renovations: $10,000 – $70,000 

• Bakery equipment: $25,000+ 

• Cooking tools and supplies: $1,000+ 

• Bakery furniture and supplies: $4,000 – $15,000 

• Opening inventory & training: $10,000+  

• Marketing costs: $100 – $10,000 

What do you need to start a bakery? A unique concept that is different enough from your competitors that it convinces clients to try out your food business. Here are some of the most popular types of bakeries that catch customers’ eyes: 

• Wedding cake bakery 

• Bakery cafe 

• Specialty bakery 

• Cupcake bakery 

• Doughnut shop 

• Cookie bakery 

• Bread shop 

• Pastry shop 

• Vegan bakery 

• Bakery food truck 

If you want to know how to open a bakery, follow this easy guide that will take you through all the main steps and give you important tips for success.  

Without a thorough business plan, you can easily lose sight of your goals, overspend, and end up not reaching your breakeven point. A solid bakery business plan will help you define your audience, plan your menu items and create an efficient marketing scheme. 

This is what it must include: 

• Bakery mission statement and goals: what is your Unique Selling Proposition? What are you going to offer clients that is better than the competition? What is your story, why should customers buy from you? 

• Target audience: what are your bakeries demographics? Where are they located? What are their food preferences? 

• Market analysis: how many competitors are there in your area? What do they sell and what are their price points? What are the latest bakery trends? 

• Operations plan: how will a workday look at your bakery? Where will you get your stock from? Detail everything from inventory management to staff management and food preparation; 

• Financial plan: profit and loss statement, balance sheet, cash flow statement and any other expenses and sales you can forecast; 

• Marketing plan: what is your strategy and how will you position the bakery on the market? What channels will you use and how much will you invest in it? 

Your potential customers lead busy lives and won’t make the effort of traveling far to reach your bakery. That’s why positioning your bakery in a convenient place for your target audience is a must. Here are a few more tips for choosing the best location to open a bakery: 

• Choose a high-traffic area: for example, you can target office workers by choosing a location near office buildings. Or you can attract families by placing your bakery near a park; 

• Landmarks can add a premium: if you plan on opening a bakery cafe with seating, you can charge more if you offer a view; 

• Make it accessible: people should be able to easily reach you using public transportation; 

• Avoid a location near many competitors: a few bakeries around you are a good sign that there is demand. But if there are too many competitors, you will have a hard time standing out from them; 

• Don’t go over budget: choose a location big enough to fit your equipment, cooking and serving space, but don’t overspend at the start because you will have a hard time making a profit. You can always expand if you start selling more.  

What do you need to start a bakery? An important step is to get all the necessary licenses & permits to ensure your business operates legally. This will not only give you peace of mind and build trust with clients, but it will also protect you from being fined and even closed by the authorities. 

The legal requirements for a bakery business can vary from city to city, but we’ve compiled a general list so you can get a better idea of what you should add to your business plan: 

• Food business registration 

• Food service license 

• Food handler’s permit 

• Health department permit 

• Employer identification number 

• Dumpster license 

• Sign permit 

What makes a bakery successful? An irresistible menu that makes people instantly crave it just by looking at pictures. Your goal should be to create a bakery menu that is so good that it makes people want to return. 

But as you are running a business, you should also consider ways to cut costs so you can make a bigger profit, such as: 

• Use seasonal ingredients: if you use fresh produce, like fruits, in your baked goods, try to change up your offerings with seasonal ingredients as they tend to be cheaper; 

• Buy in bulk: shop around for suppliers until you find ones that can offer a smaller price. Buying in bulk usually always comes with a discount; 

• Make portions smaller: most bakery products are very filling. This gives you the opportunity to make your baked goods smaller while still satisfying your clients; 

• Include some of the most profitable bakery items: fill your menu with baked goods that cost little to produce such as cookies, cupcakes, cakes, brownies, or donuts. 

Moreover, think about making the ordering process as simple as possible to avoid long queues that may discourage clients from returning. An easy way to do it is to allow clients to order using a QR code menu. 

As soon as they enter your bakery, clients can scan the menu, browse the offerings, order, and pay. Then, all they have to do is pick up their order. Simple and fast. Here’s how it looks like for them: 

The great news is that it is also very easy for you to set up an on premise QR code ordering with GloriaFood. It will only take you a few minutes: 

The equipment needed to start a bakery will be different from one establishment to another according to size, needs, concept, and menu items. Look over this list and add all the equipment you will need to your business plan so you can budget for them: 

• Cooking equipment: commercial ovens, doughnut fryer; 

• Food storage: fridge, freezer, ingredient bins; 

• Food preparation: mixer, dough sheeter, proofing cabinet, baking pans and sheets, cooling racks, measuring tools, weighing scale, cake decorating tools, piping bags and tips, pastry brush, rolling pins, cake pans, bakery utensils, digital thermometers; 

• Serving: bakery display case, utensils, serving platters, packaging; 

• Cleaning equipment: sinks, cleaning supplies, rubbish bins. 

Increase client satisfaction by taking advantage of efficient technology. The best bakeries make ordering fast and convenient using a bakery POS system. 

Here are the benefits you will enjoy if you choose the GloriaFood bakery POS: 

The GloriaFood bakery POS system is equipped with a checkout-focused layout and color-coded menu categories that will enable you to speed up order and payment processing. 

Don’t let customers wait in line for too long! Serve them as soon as possible with simple gestures on a responsive screen. 

• Swipe to the left or to the right to delete an item from the check; 

• Click the quantity of a menu item in the check detail to increase the number by 1; 

• Perform a long click (long hold) to reset the quantity to the original value. 

GloriaFood allows you to accept a wide range of payment methods, so you can serve every client: 

• Cash 

• Debit or credit cards 

• Smartwatch or mobile payments 

Even if you go offline, your clients don’t have to be disappointed. You can keep serving them as GloriaFood works to process orders and payments even without internet. 

There is nothing more disappointing than dreaming of a cinnamon bun only to arrive at the bakery and find them all gone. This can easily be prevented if you allow people to pre-order and pick up their order at a selected time. 

Pre-order also helps better forecast your inventory needs, so you can cook enough products to serve every customer. 

You bake all the menu items fresh at your bakery, and you will naturally run out of them during the day. Set your customers’ expectations right by marking the item as “Sold Out” when it is no longer available. 

The GloriaFood bakery POS system gives you access to valuable restaurant analytics, such as most popular items, promotions stats, opened checks and sales by day, week, and month. 

Checking this data regularly will help you identify any problems and come up with ways to improve your business. 

What do you need to start a bakery? Employees that you can rely on to do their jobs to the best of their abilities and represent your business. 

To get the best staff members, start by creating a list of job responsibilities and expectations, so you can rely on it during interviews. 

Once you pick the best people for the job, you will have to provide training to help them work efficiently. 

Luckily for you, the GloriaFood bakery POS system is equipped with a training mode which allows you to teach employees about all the stages of order and payment processing, without giving them access to financial information. 

Moreover, you can give different responsibilities to your employees in the POS system. For example, you can only allow the manager to access the cash drawer. 

The speed of service will also increase as employees can log in using an RFID key card. 

Furthermore, you can add and remove employees in a couple of clicks to help you manage the increased employee turnover the restaurant industry faces. 

If you want to increase your sales, you need to know how to open a bakery online. You will need two main things: 

• A sales and SEO optimized website: that will help you rank on the first page of Google where customers interested in your bakery items will easily find you. You can generate your own in just 10 minutes with GloriaFood: 

• An online ordering system: to enable you to sell your baked goods directly on your website. Good news, the sales optimized website from GloriaFood comes with free built-in online ordering that makes the ordering process simple and intuitive, persuading customers to come back again and again. 

Enabling online ordering is very simple, you just: 

• Fill in your bakery’s profile; 

• Create your menu; 

• Generate a website with embedded online ordering. 

Just opening up your doors will not be enough to make your bakery popular and attract clients. You need to focus on marketing by: 

• Promoting your bakery on social media: post many pictures of your products, user generated content, contests, and consider also investing in paid ads; 

• Encouraging positive reviews: you can even offer a freebie for the first 50 positive reviews; 

• Promoting your online ordering service: distribute flyers in your neighborhood to let people know they can order your baked goods online. You can use GloriaFood to create attractive flyers that contain a first-order discount in seconds. 

• Tempt people with promotions: for example, 2 cinnamon buns for the price of one, free delivery, or 10% discount for the first order. Take advantage of the Promotions module from GloriaFood to set up a variety of tried and tested promotions: 

• Send out e-mail marketing campaigns: enable automated campaigns with predefined audiences that get sent at the right time to get people to come back to your bakery. The campaigns encourage second orders, prevent card abandonment and reengage clients. 

Even if you have done everything you could to prepare, launching a bakery can be nerve-racking. What if nobody shows up? What if you are left with a lot of prepared food? What if people don’t like the menu items? 

If you want to build your confidence, how about organizing a soft opening? Before your official opening date, invite all family members, friends and acquaintances to test out your menu items. 

Encourage them to help your business thrive by: 

• Taking lots of pictures of your menu items, of your interior, decor and them enjoying the atmosphere; 

• Post about the event on their social media, and tag your bakery so you can increase your online exposure; 

• Leave positive reviews so you can get your first good reviews that will build your reputation and encourage others to visit you. 

Now that you have a complete answer to “What do you need to start a bakery?”, it is time to work on turning your dream into reality. Your baked goods deserve to be enjoyed by as many customers as possible, so take advantage of technology to increase client satisfaction and profits.