How to open a bakery and propel it to success

Baguettes are practically synonymous with French culture – to the extent that French people are the envy of bread-lovers worldwide. 

If you’re passionate about baking (and know your way around a rolling pin) then you might be seriously considering the possibility of opening your very own bakery. 

If you don’t know where to start, you’ve come to the right place. In this guide, we’ve included all the steps involved (from market research to writing your business plan) in knowing how to open a bakery.

What type of bakery should I open?

Bakery cafe

Bakery cafes offer hot drinks and light refreshments in addition to traditional baked snacks.

These are often very popular with customers because such combinations work well, especially during breakfast times.

Bakery food truck

Bakery food trucks are mobile and can be moved around to cater for demand in specific locations.

It’s difficult to bake much within these premises and so any food preperation may have to be carried out elsewhere.

Specialty bakeries

These are quite uncommon because they specalise in a certain type of baking. Artisian baking using traditional techniques is one such example.

Specalising often results in fewer sales because a small number of customers are catered for.

This is a great model to choose if you have skills in a specfic area of baking.

Online/home bakeries

Online bakeries are usually run from a small office or the individuals’ home. 

This benefits entrepreneurs keen to open a bakery because it allows them to trial their business idea without having to invest a substantial amount of funds.

Operating online means that start-up costs are minimal and overheads are low.

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Carrying out market research for a bakery

The first step in knowing how to open a bakery is to conduct market research to verify that there is sufficient demand in the area. To do so, you need to gather data on:

The characteristics of your future clientele:

• Will they be people living in the area or people working nearby?
• What will the peak hours and most popular products be?
• What do you expect in terms of frequency of purchase and average basket value?

The bakeries already located nearby

• What types of bread do they offer?
• Do they also offer pastries or sandwiches?
• Are customers satisfied with the current range of products?

Trends in the bakery sector

• How are buying habits and behaviour changing?
• Is there a trend toward independent bakeries or franchises?
• Are large food stores a danger to artisan bakeries?

Deciding the concept for your bakery

Once your market research has been carried out, you’ll have to define the positioning of your future bakery, including:

What type of bakery should I open?

• Will it be a traditional or industrial bakery?
• Who will be its target customers and what will be its concept?

What type of products will I offer?

Only freshly baked loaves, or will you also offer pastries and sandwiches?

Should I join a franchise or not?

Would you like to open a bakery that’s independent or to join a chain?

The answer to these questions will, of course, depend on your own level of expertise and your personal ambitions.

They’ll have a significant influence on the potential profitability and choice of location for opening your bakery, so it’s important to consider them in the early stages of your bakery’s development.

Opening a bakery by joining a franchise allows you to benefit from a whole host of advantages (including having already dedicated customers and established relationships with suppliers), but will also come at a cost in the loss of autonomy.

So if you’re keen to open a bakery that thrives on creativity then we recommend that you steer clear of the franchising sphere.

This is not the only option you have to open your bakery, and you could also take over an existing bakery.

Which location should I choose to open a bakery?

The location of your bakery will have a massive impact on its level of success – as it will determine how many customers come in and out of your store. To choose the best location possible, it’s important to consider several criteria to open a bakery. 

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Take into account the footfall of the area and how busy it is

• A bakery located in a popular downtown street will ensure you are easily seen by those driving or walking by
• A residential area, an industrial area with offices, a shopping centre, or even near a train station might also be possibilities.

Does the location align with the concept?

If you choose to open a bakery near a train station or office district, for example, you’ll need to offer takeaway lunch items such as sandwiches.

Emphasising the cake and pastry selection might be a good idea if you are located between a butcher and a supermarket in the city centre.

Ensure your bakery premises is an appropriate size

Also bear in mind that a bakery requires a large surface area as the bread needs to be made in-house.

The larger your location, of course, the higher the rent or purchase price will be – so you’ll have to factor in these costs when creating your financial forecast.

What is the legal structure for opening a bakery?

The next step in opening a bakery is choosing the legal structure of your business.

This is a vital step as it will impact:

• How much your business is taxed
• Your taxation at a personal level
• Your responsibility for the company’s debts in the event of bankruptcy

To help you make your choice, you can find more detailed information on the different legal forms available to you on the gov.uk guide for UK business owners and SBA guide for those of you based in the US.

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The rules and regulations of opening a bakery

The next step is checking out the rules and regulations around opening a bakery. Below we take a deep dive into the separate regulations that govern opening a bakery in the UK and US respectively.

Some aspects of UK regulations around opening a bakery

Some of the common laws/practices regarding food and hygiene have been stated below, in line with the UK government:

• Selling organic baked goods will likely require a license. Yearly charges are likely to occur to upload the license and for checks.
• If you wish to play music in the premises, you’ll need a music licenses (this applies to any business)
• Since your bakery is likely to produce waste (perishable goods), you’ll need to dispose of it using the correct method.

Standard regulations relating to all businesses in the UK will also apply. These include laws on food and safety standards, fire safety, disabilities and much more.

US regulations to be aware of when opening a bakery

In the US, most states will have their own set of rules. Some of these could be as follows:

• You may have to obtain a number of specific permits or licenses to set up a bakery
• Health authorities may conduct checks or inspections at any point, so your bakery needs to be sanitary at all times

We advise you to read more about these laws on the FDA and FSIS websites.

The equipment and staffing requirements to open a bakery

Once you have chosen the concept of your bakery, settled on a location, and figured out its legal structure, it’s time to think about the equipment and people needed to open and run the business efficiently.

The equipment needed to open a bakery

Opening a bakery requires significant investments, including:

• Equipment for kneading and baking
• Equipment for selling products to customers, such as cash registers and card machines 
• Room layout with a display counter, decorative feature such as paintings, and fire safety equipment 
• Initial stock of food raw materials
• Marketing investments such as a storefront sign and website

The staff needed for a bakery

To establish an accurate financial forecast for your bakery, you will also need to assess your staffing needs.

If you’re not a professional baker yourself, you’ll need to hire someone with professional training in baking who can act as a head pastry chef. 

You will also need to hire a few people for the front-of-house, ideally with a background and clear interest in food sales. How many members of staff you need for each role will depend on the size of your bakery and its opening hours.

Ancillary services to be taken into account when opening a bakery

Opening a bakery also implies having recourse to additional services, such as insurance, water, and utility bills.

You may also want to outsource shop maintenance to a cleaning company or delegate part of the administrative work to an accounting firm. To ensure you estimate these expenses as accurately as possible, get in touch with several professionals and ask them for quotes.

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Setting out the marketing plan for a bakery

Now it’s time to develop a strong marketing strategy to help you attract and retain customers. 

Countless marketing options are available, so it’s up to you to choose which actions are best suited to your business.

Street marketing can be an effective marketing tool for local businesses, as passing out flyers in the street will quickly introduce you to the people who work and live in the area.

Also, consider announcing the opening of your bakery in the local newspaper and getting a listing on Google Maps.

Implementing a promotion and loyalty system can also be a great way to (you guessed it) build customer loyalty. You could incentivize customers to keep coming back by offering 1 free croissant for every 10 purchased, for example.

Writing the business plan of a bakery

Once all of the above steps have been completed, it’s time to draft up the business plan for your bakery. 

The business plan is made up of two major components:

• A financial forecast that aims to highlight the expected profitability of the business and the initial financing requirement.
• A written part that presents, in detail, your project, the team, your business strategy, and your medium-term objectives.

The business plan is the document with which you will try to secure financing from your bank or potential investors, so you need to make it impeccable. 

If you are not used to writing business plans, a good solution would be to use our online business plan software.

There are several advantages to using specialized software:

• You are guided through the writing process by detailed instructions and examples for each part of the plan.
• You can be inspired by already written business plan templates
• You can easily make your financial forecast by letting the software take care of the financial aspects for you.
• You get a professional document, formatted and ready to be sent to your bank.

If you are interested in this type of solution, you can try our software for free by signing up to The Business Plan Shop today.

Securing funding to launch your bakery

Opening a bakery requires significant investment, the exact amount will depend on your location and how big you want your bakery to be.

There are many ways to raise the cash needed to launch your dream bakery.

First of all, it’s highly recommended that you make a personal contribution to the company’s equity, by dipping into your savings.

You can then turn to banks and credit institutions to obtain a loan to finance part of the start-up costs. 

Finally, also think about state aid for business creators. This may enable you to benefit from a low-interest or interest-free loan, for example.

Three things you should know before opening a bakery

Firstly, the cost of dairy products fluctuate more than most other goods. This is especially useful to keep in mind if you are operating a cafe bakery that sells hot drinks or dairy-related products along with baked goods.

Secondly, bakeries normally open for business very early in the morning. This means that you’ll need to find staff who are willing to start work at those times. Sometimes, this can be difficult, especially if you are only offering short shifts.

Last but not least, bakeries sell perishable goods. This means that there is likely to be waste on a regular basis – think about how you can maintain a high level of efficiency. 

Now you know all the steps involved in opening up your very own bakery. We hope you found this article useful if you have any questions or queries at all please do not hesitate to contact our team.

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