How Much Does it Cost to Start a Baking Business?

Every new business requires an initial investment in order to start and grow and one has to be quite careful with the funding. Different kinds of business require a different amount of funding which is why it is important to research and understand your business area before you start to open it.

Nowadays, a lot of people have started to get into the food business and are opening their own restaurants, bakery outlets, food trucks, etc. to work on something they are passionate about. Are you one of such people too?

If yes, then it is important that you do a thorough research on the investment that you will need to make to open your own food business. Opening a bakery or a restaurant is a serious job and if you don’t have all the figures ready then you could end up in a lot of trouble.

Luckily for you, we have prepared this article on the approximate cost of opening a new bakery business. This will help you understand all the various costs involved with opening a bakery business and prepare for it in a better way.

Things to Keep in Mind when Opening a Bakery

Here is a list of things and operations that will cost you and must be considered when you are opening a bakery.

1. To Open a Home Bakery

Since a home bakery doesn’t require a lot of fancy software and equipment, one is able to start by investing a little amount of money. On an average, a home bakery requires around Rs 1,00,000 – 2,00,000 of startup funding and then the operational costs are barely Rs 30,000 – 50,000 per month. This is why home bakeries are so popular and a lot of bakers often start small first to make a base before starting a bakery outlet.

In this section, we discuss some of the things that will require funding when you are opening a new home bakery.

Online Website and Application for Bakery Business

The first thing that you need is an online website for your bakery business with an online order widget so that customers can conveniently order your stuff. Gone are the days when people called up the home bakeries to place an order for desserts, cakes, etc. Nowadays, most people prefer to search online for a bakery website and then order stuff directly from it.

This allows them to explore the options and pay through the desired mode of payment. Also, an online website helps in creating a web presence for your bakery business and helps in the marketing aspect as well. So, make sure you get a website for your bakery, it is likely to cost approximately Rs 10,000 – 15,000 and would be quite beneficial for your business in the long run.

Baking Equipment and Ingredients Required

You also invest in a good stand mixer, hand mixers, oven, stove, fridge, baking pans, parchment paper, and so on in order to bake efficiently. Although most passionate bakers already have a majority of the kitchen and baking tools so you will not have to invest too much and would require an approximate funding of just Rs 40,000 – 50,000.

Apart from getting the necessary baking tools, you also need to stock up on the raw materials required for baking which includes flour, sugar, salt, baking soda, fruits, eggs, etc. Raw materials are not expensive and can cost approximately Rs 10,000 – 15,000 in a month. However, make sure that you don’t compromise on the baking tools or ingredients as it will affect the quality and taste of your baked goods.

Delivery Service and Transportation Cost

Another thing that would require some funding would be the transportation cost of delivering your goods to the customer’s location. While many home bakers often use the help of their family members there are still many who have to employ external delivery services. So, you can either hire a delivery guy to make the rounds or you can employ a daily taxi service depending on your budget.

This can cost you approximately Rs 6,000 – 10,000 per month but once you have a delivery service in place, it will be easier to get your baked goods around and handle more orders.

Marketing of your Home Bakery

Another important aspect of home bakery business is promoting your bakery business so that more people get to know about. While making an online website is a great way to do that, there are several other methods like distributing menu pamphlets, participating in local events, setting up a bakery stall in popular places, etc. to gather more customers.

Creating menu pamphlets for your home bakery will require some funding but you can reduce the cost if you have a printer at home. Initially, you can start by printing 10,000 copies of your menu will cost approximately Rs 5,000 – 10,000. One of the most effective ways to market your home bakery is through social media platforms like Instagram, Facebook, Twitter, etc.

Other Miscellaneous Expenses

Apart from the mentioned startup costs, there will also be a few additional expenses in the first few months. This will include your phone bills, Internet bill, water bill, electricity bill, and so on. This can cost you somewhere around Rs 3,000 – 5,000 monthly and can increase once your business prospers. There are many unplanned expenses that you would need to take care of in the initial months so keep a sum of Rs 10,000 – 15,000 separate for your miscellaneous expenses.

Total Cost of Opening a Home Bakery

Now, if you add then the final tally of the startup cost for your home bakery will come approximately to Rs 1,50,000 – 2,00,000 which can often vary depending on the cost of your kitchen equipment.

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2. To Open a Bakery Outlet

A bakery outlet will require more investment in comparison to a home bakery which can often come at an approximate cost of Rs 14 lakhs – 15 lakhs. However, this is just a tentative cost which can fluctuate depending on the location of your bakery outlet, cost of the kitchen equipment, etc.

Rented Estate for your Bakery Outlet

One of the first things that a person needs to find when opening a bakery outlet is a suitable location and a rented space that is in their budget. This can be tricky to find and the cost of your rented space can vary from Rs 30,000 – 1,00,000 depending on the neighborhood and the size of the property. If you want your bakery outlet to work well then it would be wise to open the shop in a popular market street, mall, or a high-end residential area. However, remember that outlets in such locations don’t come cheap and your initial investment is likely to increase due to it.

So, carefully choose a rented space for your bakery outlet and explore options which are in your budget. Try to take a place in a famous shopping area but if it is out of your budget then choose a location close to it.

Also, keep in mind the area of the rented space. Get a place which will offer you at least 500 – 1000 sq ft. A 1000 sq ft will offer you with a seating arrangement but if you want to open a bakery outlet with just counter service then a 500 sq ft space will do. Make sure that you check the wiring connection and drainage facility of your place before renting it out and don’t choose a place which offers you with hard water or irregular electricity supply.

Necessary Licenses for Opening the Bakery

You will also need to get the necessary licenses for your bakery before you open it. This includes Food license (FSSAI license), Health Trade license, Eating house license, GST Registration, and so on. In order to open a bakery outlet, you will first need to get GST Registration for your bakery business, Food license and Health Trade license beforehand. Once you have them, you can open up your bakery outlet and get other licenses and permits for your bakery.

The Food license, aka FSSAI license, can be obtained by submitting an application form along with some supporting documents and an application fee of Rs 3,000 per year. You can apply online via www.fssai.gov.in and can also get a 5-year food license for your bakery to avoid renewal fees.

To get Health Trade license, you will need to visit a local Municipal Corporation office and get your property inspected by a Municipal corporation officer. You will also need to pay somewhere around Rs 3,000 to get the license and will need to provide documents for your bakery which will include the blueprint and the plan.

You can get the GST registration for your bakery by going online at www.gst.gov.in or you can take the help of a CA. You will also need a Fire NOC from the Fire Department after installing fire extinguisher cylinders which will cost approximately Rs 1,000 – 2,000.

Hiring Employees for Bakery

Next thing you need to do is hire employees for your bakery. This will majorly depend on the size of your bakery and range anywhere from 5 – 20 staff members. Here is a list of employees you are likely to need for your bakery and the corresponding salary that you will need to pay them:

  • Head Chef– Rs 35,000 to 45,000
  • Chef de Parties– Rs 25,000 to 30,000
  • Other Chefs– Rs 15,000 to 20,000
  • Cashier/Receptionist– Rs 12,000
  • Helpers/Service Person– Rs 5,500 to 6,000

So, depending on the number of staff members you hire, the total hiring cost will fluctuate and can be somewhere in the range of Rs 1,00,000 – 2,00,000 per month.

Buying Kitchen Equipment and Necessary Ingredients

Since you will be setting up a new kitchen for your bakery from the scratch, you will need to heavily invest in the kitchen and baking equipment. This will mainly include things like Ovens, Gas Stove, Cylinders, Cooling Fridge, Deep Fridge, Storage equipment, and so on. Since all the equipment needs to be made out of stainless steel and be of high-quality, you can easily expect your investment to be approximately around rs 7,00,000 – 8,00,000.

Apart from the equipment and baking tools, you will also need to buy raw materials in bulk which will include flour, baking soda, whole wheat, cocoa powder, and so on. This will cost you approximately Rs 20,000 – 30,000 per month and can vary depending on the number of desserts and goods that you prepare in a month.

Getting Matching Staff Uniforms

You will also need to buy a well-designed uniform for your staff to give a more professional look to your bakery. The uniforms can be simple and you can bulk order them at a cheaper rate. A t-shirt and a cap as a uniform for 20 people will cost you something around Rs 15,000 or less and coats for the chefs will add up to be around Rs 5,000 – 6,000.

Display Area and Billing Software

You will also need to set up a display area to showcase your baked goods and have a POS software in place to get the payment for the bakery orders.

A display area is a great way to lure in more customers which can easily cost you somewhere around Rs 1 lakh. The display fridge comes to be Rs 60,000 while the cooling and display rack cost approximately Rs 30,000. Make sure that all your desserts and cakes are neatly placed inside the display fridge so that customers can look easily and choose the product which they like.

The POS and billing software will cost approximately Rs 30,000 and will not only help in the billing process but will also manage your inventory efficiently and smartly. This is why it is important to get a POS system in place for an efficient billing and inventory management system.

Promotion of Bakery Business

Then, you will also need to promote and brand your baker business so that more people get to know about it. You will need to get logo and display board for your bakery outlet and get several menu pamphlets which can be distributed to customers.

A well-designed display board will cost you approximately Rs 25,000 and will help in attracting the attention of the customers from far away. You will also need to print posters, pamphlets, etc. to distribute and the initial count can be somewhere around 20,000 – 30,000 whose cost will vary depending on the quality of paper used. You will also need to build a website for your bakery outlet which will not cost you more than Rs 10,000 and make sure that it has an Online Order widget to allow online ordering for customers.

This will help in spreading the news about your newly opened bakery and due to the convenience of online ordering, more people will purchase your goods.

Other Miscellaneous Expenses

You will also need to get a landline and mobile phone for your bakery which will cost you approximately Rs 2,000. Apart from that, you will need to take into account several other operational expenses like the water bill, electricity bill, and so on.

Total Cost of Opening a Bakery Outlet

Once you add up all the mentioned startup costs, you will see that the total tally comes somewhere around Rs 13 lakhs to 15 lakhs but this figure can often vary depending on various factors.

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Conclusion

Although it is not surprising that a home bakery costs a lot less in comparison to a bakery outlet, you cannot choose to open a home bakery just because it would require less investment. While bakery outlets can be slightly risky and need more investment, if they work well then they can be highly rewarding too.

So, your aim should be to open the kind of bakery that you want and prepare to get the necessary funding for it beforehand along with little extra funds to help you get by a few months. This planning will help you in the successful starting of your bakery and will help your business grow gradually and consistently.