How Much Does it Cost to Start a Baking Business?

Have you thought about starting your own food business? Wondering how much funding you will need to open your own bakery business?

Opening your own bakery business is no piece of cake and one should think and plan carefully before making any decisions. You will need a considerable amount of funding to open a bakery business which is why budget-planning is crucial. A lot of people don’t realize this and often jump into the bakery business blind and then suffer later on.

This is why we have prepared this step-to-step guide to help you realize the amount of funding you will need at each step so that you can prepare better. A lot of times the cost actually depends on the locality, quality, etc. so you will see huge fluctuations in the approximate cost at different corners of the city. However, there are a lot of things which remain constantly priced everywhere so you can get a rough idea of your total approximate investment estimate.

How to Open a Bakery Business

To open any new startup business, you need proper financial funds which you can invest in the business. A bakery startup is similar which will require an initial funding cost that will depend on the location, size, and style of your bakery. A home bakery will require an initial funding of Rs 2,00,000 – 3,00,000 whereas a bakery store will need an initial investment of Rs 13 lakhs – 15 lakhs.

However, as mentioned earlier, this approximate cost can vary on the location and cost of equipment for your bakery business.

1. Renting Space for Bakery Store

The first step towards opening a bakery is renting a space for your bakery store. Usually, the cost of renting a bakery store space will depend on the size and the location so it can vary slightly.

If you are opening a home bakery then you don’t have to worry about renting out a separate space as you can use your house kitchen to bake desserts and other items. So, you end up saving on the rent by opening a home bakery. However, if you want a separate space for your home bakery then you might need to rent a 1bhk or a studio room for yourself. These won’t cost a lot and can be easily rented in Rs 10,000 – 20,000 depending on the size and the location.

On the other hand, if you are opening a bakery store then you will need to rent a proper 500 – 1000 sq ft space which has two floors so that you can have your kitchen on one floor and the seating arrangement and display area on the second floor. Such a place can often cost you approximate around Rs 30,000 – 1,00,000 depending on the location. If it is in a famous market or mall then the cost of rent will increase.

Make sure that you find a location which will be prominent to customers and is near to high-end shopping areas so that you can get more crowd. Such places will be costly but will be totally worth the high rent. Mostly, prepare a budget and assess your financial status before you rent out a place. Also, check that there is no power issue and there is a proper drainage facility else you will end up spending money on these small fixes too.

2. Procuring License for Operating your Bakery

Once you have rented out a space for your bakery store, you need to get a few licenses to operate the bakery store outlet. This is usually not the case when you are opening a home bakery so you won’t have to spend as much on the licenses in a home bakery. A few licenses which you might need to get beforehand when opening a new bakery store is the Food license, Health Trade license, GST Registration, NOC from Fire department, Eating House license, etc.

You will need to get the GST registration, Food license, and Health Trade license for your baking business before opening the store. Getting these permits and registration is quite simple and easy and can be done online via the official portal.

To get the Food license, aka FSSAI license, you will need to register at www.fssai.gov.in and then fill the required application form. You will also need to submit a few documents and pay a fee of Rs 3000 per year. If you are getting a food license then better get a 5-year license which will cost you no more than Rs 15,000 and you get to save on the renewal fees every year too.

To register your bakery business for GST, you will need to sign up at www.gst.gov.in and then fill out the necessary details about your bakery and upload a few supporting documents. That’s it and you will have successfully registered your business for GST calculations.

Then, you need to get the Health Trade license from the Municipal Corporation of your locality. You will need to fill out the application form, submit a few documents, and pay a fee of Rs 3,000 for 3 years.

Once these three are done, you can go ahead and open your store and then take care of other licenses and registrations. Getting a NOC from Fire Department is quite easy and can be done once you install a few fire extinguishers at your bakery shop which will cost approximately around Rs 1,000 – 2,000.

Overall, you will be spending somewhere around Rs 20,000 – 30,000 on getting your licenses for the bakery outlet and approximately around Rs 5,000 – 15,000 for your home bakery.

3. Getting Staff Members and their Uniforms

Then, you need to hire some employees for your bakery and purchase uniforms for them so that it gives a little professional feel to your bakery. Again, the amount of funds required for hiring a staff for your bakery depends on the number of staff members you are planning to hire and the experience level of these staff members.

If you are planning for a home bakery then you probably just need a helper and a delivery person to operate your bakery business for home. This will not cost you more than Rs 10,000 – 15,000 per month. You can also choose to get a uniform for them or not. Anyway, the uniform shouldn’t cost more than Rs 1,000 – 2,000 including aprons and t-shirts for your employees.

In case of a bakery store, you will need to spend more funds on your staffing. Depending on the size of your bakery, you might end up hiring anywhere between 5 – 20 staff members for different roles in the bakery. You will need a cashier, helpers, chefs, head chef, delivery guys, etc. If it is a counter-only service then you can manage by hiring only 5 members: 1 cashier, 1 helper, 1 delivery guy and 2 chefs. This will cost you approximately something like this:

  • Cashier– Rs 12,000
  • Helper– Rs 6,000
  • Delivery Person– Rs 6,000
  • Chef– Rs. 20,000 – 25,000

On the other hand, if you have a big bakery shop then you would need a few more employees like the following:

  • Head Chef– Rs 35,000 – 45,000
  • Chef De Parties– Rs 25,000 – 30,000
  • Service Person– Rs 5,000

Overall, it can cost you anywhere between Rs 75,000 – 2,00,000 for hiring the staff members for your bakery. Also, don’t forget that with increased staff members, the approximate cost of purchasing the staff uniforms will increase too and will come somewhere around Rs 5,000 – 18,000 depending on the number of employees and quality of the uniforms.

4. Buying Kitchen and Baking Equipment and Materials

You will also need to stock your bakery kitchen and purchase the necessary raw materials and kitchen equipment to get the baking done. The approximate cost for this will vary depending on the quality of your ingredients and tools and the bakery-style of for your business.

For home bakers, the investment is likely to be less in comparison to bakery store owners as you would already have most essentials like a Stove, Oven, Fridge, Storage Cupboard, and a few baking tools. However, you will need to take into account the money that you will spend daily on getting fresh ingredients for baking like eggs, fruits, flour, sugar, etc. which will cost approximately Rs 5,000 – 20,000 for a month. You will also need to invest in more kitchen and baking equipment which can further increase your investment to Rs 1,00,000 – 2,00,000 depending on the quality and the quantity of the purchased utensils.

For bakery store owners, the investment will be greater as you will need to purchase good quality Ovens, Stove, Cylinders, Cooling Fridge, Deep Fridge, Storage Cupboards, Mixers and several baking tools. You cannot compromise on the quality of the kitchen equipment and will need to get stainless steel material tools which will last for a longer period of time and will be efficient in baking activities.

You will also need to get bulk raw materials which will easily come around to Rs 15,000 – 25,000 in a month and can often fluctuate depending on the items that you sell each month.

Overall, it can cost you approximately Rs 2,00,000 – 8,00,000 to start your bakery business regarding the necessary baking equipment and raw materials.

5. Setting up a Well-Designed Display Area

Another thing that most bakery store owners will need to consider for a successful operation is the display fridge where you can neatly stack your produced goods like cakes, pastries, etc. for the customers to check. A display area is not cheap and combined with cooling and display rack can often you approximately around  Rs 1,00,000 as the display fridge only costs somewhere around Rs 60,000 and the rest will be spent on the racks.

A display area is important to make sells to the walk-in customers and is a great way to get more traffic to your bakery store. So, make sure you don’t skimp out on this and purchase a good quality display fridge for storing your baked goods.

However, this is not a concern for a home bakery and can be skipped right out.

6. Getting POS and Billing Software

Another thing that you will need to invest in is the POS and billing software for your bakery store. A lot of people pay with their credit card and debit card these days and a POS system can help you in the billing process. However, that is not all. The POS software will also manage your inventory and will allow you to keep a track of all the materials that have been finished and need to be bought or made again.

This is a great and easy way to keep track of your inventory and will reduce the manual effort on your part considerably. So, all you need to do is purchase a POS or another billing software, set it up and then enjoy its services. However, it can cost you somewhere around Rs 30,000 for purchasing a POS for a year so be prepared.

7. Promotion and Branding of Bakery

While setting up your bakery is important, it is equally important to promote and market it properly. You will need to start by getting a well-designed logo for your bakery business and a display board to put outside your bakery to attract customers. Then, you will need to print out menus for your bakery store and distribute this menu among the customers and people walking past your bakery shop. You will need at least 30,000 menu pamphlets in the starting which will approximately cost you Rs 30,000 if you use a high-quality paper.

Then, you will also need to build an online website to post content about your bakery and an online portal where customers can conveniently buy your baked goods. A well-designed website will cost approximately Rs 10,000 and can greatly help in boosting your bakery business. The display board will approximately cost Rs 25,000 so that brings you total tally for marketing around Rs 50,000 – 70,000.

For home bakers, the only cost that you have to worry about is the pamphlet cost and the website cost so your total expenditure on promotion will approximately be around Rs 30,000 – 40,000.

8. Other Operational Expenses for Bakery

That’s not all though. You will also need set aside some funds for operating your bakery which includes telephone bills, occasional repairs, packaging, transportation cost, etc. The telephone bill will cost you somewhere around Rs 1,000 – 2,000 per month while the transportation and packaging will easily come around to be Rs 20,000 – 30,000. You will also need to take care of other bills like the water bill, electricity bill, etc. which will vary depending on your consumption and location cost.

Overall, you can expect to spend somewhere around Rs 35,000 – 40,000 per month on operational expenses for your bakery.

Total Approximate Cost of Opening a Bakery

Once you add up all the above expenses, you will see that your total approximate cost of opening a bakery will come to be Rs 14 lakhs – 15 lakhs depending on several factors like location of your bakery store, the number of staff members hired, quality of kitchen equipment, etc.

On the other hand, you can expect an initial expenditure of Rs 2,00,000 – 3,00,000 if you are planning to open a home bakery. Although this is a tentative cost break-down, you will need to be prepared for it and get your funding before you start opening the bakery. So, be careful while planning your bakery business and suit the best and most-suitable options for yourself.