Many food enthusiasts and food bloggers have started opening startups where they sell various food products and bakery business is one such sector which is seeing a rise in startups. Are you planning to open a bakery business too?
While it might sound easy to open a new bakery business, in reality, it is quite difficult and requires meticulous planning and management. You have to think about various things like the bakery products that you will sell in your bakery, location of your bakery, equipment and baking tools that you will need, and so on. You will need a lot of financial aid for this and if not planned properly then you could be in deep trouble.
However, nothing to worry about because we have prepared this guide with a rough estimate of how much you will need to open your own bakery business in India.
Financial Planning for Starting a Baking Business
Although the total approximate cost of starting a bakery business depends on your bakery style, you can assume it to be somewhere around Rs 13 lakhs to Rs 15 lakhs if you are going for a bakery store with a seating section. Now, it might sound a lot but you can surely reduce the cost by cutting on a few things but if you want your bakery business to be successful then it is important that you invest properly. If you are planning for a home bakery then the initial investment will get reduced to approximately around Rs. 2-3 lakhs. In this section, we will explain the cost breakup in detail for you to understand better and make the necessary changes.
#1. Rent a Location for your Bakery
Home Bakery: If you are opening a home bakery then you don’t need to rent a separate space unless you don’t have your own house and are staying in P.G with other people. If you are staying in your house or rented flat, then you can simply open your home bakery without having to worry about renting a space in a popular market location.
Bakery Store: Depending on your bakery location, your expenses can go up or down so start by selecting the best location first. If you are opening a bakery, then a good location would be somewhere near a famous market or a well-reputed residential area. You could also open a bakery shop in a mall but try to choose window-shops which are easily visible to the customers and are on the ground floor. If you are looking for a bakery store with seating section then you will need to look out for space with at least 500 sq feet area which can be easily divided into two floors: one floor for the kitchen where you will bake and one where people will dine. However, this is really up to you.
If you are renting a 1000 sq ft space with two floors then you might have to pay somewhere between 30k – 1 lakh depending on the location of your bakery. So, you will need to pay at least 3-month rent to secure the place. This is why it is important to choose the location carefully and select a place which is in your budget.
Once you have finalized the place, check for power supply and drainage facility as these can further increase your expenses. You will also need to get a Rental agreement and NOC from your landlord to operate your bakery.
So, you can expect to spend somewhere around 60k-3 lakhs for securing the location of your bakery space.
#2. Get the Necessary Licenses
The next important thing that you need to do is get all the licenses that would be needed in order to open a bakery outlet. This will include things like FSSAI license, GST registration, Municipal Health license, NOC from Fire department, etc. The NOC from fire department and Eating House license can be procured once your bakery store is open but for rest of the licenses, you need to collect them before opening your bakery store.
The Food license can be obtained at Rs 15,000 for 5 years and one can easily apply online for it via the www.fssai.gov.in website. It is quite easy to apply for FSSAI license and you can also reach out to agencies to do it for you. Make sure that you get a food license for 5 years to avoid renewal fee each year.
Getting your bakery GST registered is quite simple too and can be done by completing the application form and submitting the required documents to the government officials. You can do this by going to www.gst.gov.in and get the registration number for your bakery store.
Health Trade license is also easy to procure from the Local Municipal Corporation and will cost you approximately Rs 3,000.
To get NOC from Fire department, you will need to get fire extinguisher cylinders installed in your bakery story which will cost somewhere around Rs 1,000 – 2,000.
So, the total approximate cost of getting all the licenses will be somewhere around Rs 20,000 – 25,000. However, if you are opening a home bakery then most of these licenses won’t be required and you could reduce your investment to Rs 5,000 – 10,000.
#3. Hire the Staff Members for your Bakery
Now, depending on the size and style of your bakery you will need to hire people to work for your bakery. For a home bakery, you are more likely to do everything alone or take help from your family so you might need to employ someone. However, you still would need a delivery guy and a helper so you can assume paying them Rs 5,000 – 6,000 every month.
If you have a small bakery store with only counter facilities then you would need barely 4-5 employees. 1 for manning the reception/cashier, 1 helping out the chef, 2 delivering the finished products, and 1 for miscellaneous tasks. So, this will cost you somewhere around Rs 45,000 – 50,000 per month.
On the other hand, if you are opening a large bakery store then you would need more number of hands in the kitchen. You will need a head chef, dessert chef, 2 other chefs, 4 helpers, 2 service boys, and 1 cashier. You will need somewhere around 12-15 people working in your bakery which will cost you somewhere around Rs 1,50,000. This is just an approximate figure and will basically depend on the experience of your chefs.
Here is a breakdown of the salary for each of these bakery staff members to give you more idea:
- Cashier – Rs 12,000
- Service Boys – Rs 6,000
- Helpers – Rs 5,500 – 6,000
- Chefs – Rs 12,000
- Dessert Chef – Rs 25,000
- Head Chef – Rs 35,000
Note: This is just an approximate salary value and is subjected to change depending on the location of your bakery and experience of the chefs.
#4. Purchase the Kitchen Equipment and Baking Ingredients
Let’s face it, a baking business without the necessary kitchen equipment and baking raw materials is not much of a bakery store.
Again, the cost of setting up your home bakery will differ from setting up a bakery store as you have to think about storage and display facilities. The basic kitchen equipment that you would need at home is a stove, refrigerator, mixer, oven, baking utensils, etc. Most people already have a stove, refrigerator, oven, etc. at home so you would only need to invest in the mixer and other baking tools which shouldn’t cost you more than Rs 50,000 – 1,50,000. Make sure that you take high-quality equipment which is made out of stainless steel as they will be durable and stable and will be easier to work with.
On the other hand, if you are starting a baking store then you will need to invest extensively in your bakery kitchen. A few items that you will need to purchase are stove, oven, mixers, deep fridge, working countertop, gas cylinder, cooling fridge, measuring tools, and so on. This will easily cost you somewhere around Rs 6,00,000 – 8,00,000 depending on the brand and the quality. As mentioned earlier, don’t compromise on the quality as it will provide you with toughness and better efficiency.
#5. Set up a Display Area
The next thing that you need to consider is the display area of your bakery store. Every bakery outlet needs a well-organized and large display area to lure in more customers and to present their products in an appealing manner. This will easily cost you approximately around Rs 1,00,000 where the display fridge is estimated to be around Rs 60,000 and the storage and display racks are likely to be around Rs 40,000.
Make sure that you place your cakes and pastries in a neat and noticeable manner in order to attract walk-in customers.
For home bakeries, a display area isn’t needed so it can be skipped and you can save some money for yourself.
#5. Setting up Billing Software
Again, depending on your bakery size, you will need to determine a payment method for purchasing the baked goods at your place. If you are opening a home bakery, then you can ask customers for cash, NEFT transfer, Paytm, etc. so you won’t really need a billing software and you can easily keep a track of your selling and inventory in excel spreadsheet.
However, if you have opened a bakery story then you will need to set up a POS and a billing software so that the customers can make purchases using their credit/debit cards. With a POS, you will get many features including Inventory management which will help you in managing the shelf life of bakery items. The cost of a POS is dependent on the features and will cost you approximately Rs 30,000 every year.
#6. Marketing your Bakery
You also have to think about promoting and branding of your bakery for which you will need to shell out some money.
You will need to get a professionally designed logo and display board for your bakery story. This will help in adding a uniqueness to your bakery store and will also help in spreading out your bakery name. Apart from that, you will also need to get a well-designed menu and several copies of it. Initially, you can use pamphlets as the menu but you will need a considerable amount which can be distributed among the customers. Around 30,000 of pamphlets made out of good quality paper will cost you approximately Rs 30,000 and a well-designed display board will come somewhere around to be Rs 25,000. You will also need to include the website cost if you are planning to get one created which will again come up to be somewhere around Rs 10,000 – 15,000.
For home bakery, you don’t have to worry about display board but you have to distribute pamphlets or create a website to reach out to potential customers.
#7. Uniform for your Bakery Employees
In order to give a more professional feel to your bakery, you need to get a uniform designed for your staff members which they have to wear all the time during their shift. This can be a simple t-shirt and cap which they can wear with any jeans they like. Depending on the number of staff members in your bakery, the cost of purchasing these uniforms can increase or decrease.
If you have just 4 staff members then uniforms shouldn’t cost you more than Rs 2,000 – 3,000. However, if you have somewhere around 15 staff members then the approximate cost can increase to somewhere around Rs 8,000 – 10,000. The cost will further increase with more staff members but overall, the cost of purchasing uniforms is almost negligible.
Again, uniforms can be skipped if you are opening a home bakery but you might need to purchase an apron for working which will barely cost you Rs 500 – 600.
#8. Miscellaneous Things for Bakery
Apart from the above-mentioned things, you will also need to keep aside some money for miscellaneous things like phones for contacting bakery, water and electricity bill, regular maintenance and repairs, etc. You never know what extra expenditure you might face so it is better to keep a buffer amount of Rs 20,000 – 30,000 when opening a bakery.
Total Initial Investment for Opening a Bakery Business
After checking out all the expenditure in opening a bakery, we can tally the total amount to be somewhere around Rs 2,30,000 for home bakery and Rs 13 – 15 lakhs for a bakery outlet.
However, remember that this is a tentative cost and is most likely to exchange but opening up a bakery business is no joke and requires a serious investment. So, make sure you prepared for it and have sufficient funding before you start.