written by Keshav Sharma | September 26, 2020

How To Open A Bakery Business In India? - Tips To Generate Extra Revenue!

Bakeries are a popular foodservice business in the country with multiple units on almost every city's main roads. While many bakeries prepare their own products such as cakes, bread, pastries, savouries and other snacks, many outsource it to vendors, who may be wholesalers. With steady growth in demand for bakery products, many others with different business models have entered the baking scene offering everything from home delivery to customized items for parties and events. 

If you are one of those with a talent for baking and interested in running your own business, then the baking industry holds much promise. The forecast is that the Indian bakery business will become a USD 12 Billion industry by 2024 with a steady CARG (Compound Annual Growth Rate) of 9.3% from 2019 to 2024. There is much scope for innovation in baking where you can impress your customers with something new and take advantage of the sugar rush! This article goes deeper into what it takes to start a bakery and everything that goes into running it successfully. 

What Kind of a Bakery Business Would You Want to Start? 

There are several avenues for the size and type of bakery you wish to run, and your experience will determine where you can perform well. Here are 5 types of bakeries you can own: 

  1. Storefront Bakeries: This is the most commonly found bakery shop in all Indian cities. It takes a little more room than a typical grocery store where your customers come to pick up the baked goods. Anyone can start these with minimal staff and some experience in baking. 
  2. Home Bakeries: For those looking for how to start a bakery business with no money, this is the go-to option. These bakeries need very little investment, and the limited items for sale are baked at home. Over time with enough profits, the menu can be expanded, and the baking can be moved to a shop from the house. 
  3. Speciality Bakeries: Speciality bakeries are often run by those who have experience in baking and dominate specific product areas. They do not offer a wide range of products, but they accept orders in advance for private events or regular clients. Their products are of higher quality and taste better while being priced slightly high. 
  4. Online Bakeries: Leveraging internet and delivery services, many start online bakeries where the orders are placed on apps, and the bakery delivers it directly to the home. These work economically as you won’t have to spend much money renting commercial spaces or employ a lot of staff.  
  5. Bakery Café: Bakery Cafes are much more expensive to set up as it involves renting a commercial space in busy areas and hiring staff for baking and maintenance. These bakeries have a wide range of menu, and more experience is needed for commercial success. 

How Much Does it Cost to Start a Bakery in India? 

If you plan on setting up a bakery in a commercial area, the cost estimates look like this: 

  • Rent: Depending on your bakery's size, the rent in a decent area can vary from INR 25,000 to INR 40,000 per month. The rent for a bakery café space can range from INR 70,000 to INR 1,50,000 per month. 
  • Equipment: Bakeries need a range of equipment from grinders, processors to oven and display boxes. These can cost from INR 5,00,000 to INR 10,00,000. 
  • Licensing: The total costs for permits and licenses can come up to about 30,000. 
  • Staff: For a decent-sized bakery, you might need a staff of four members: a head chef, support chef, manager and housekeeping. Their salaries and uniforms (if any) can add up to INR 1,20,000 a month. 
  • Billing and POS System: A POS (Point of Sale) billing system is essential for running any bakery. A good unit can range from INR 24,000 to INR 50,000. 
  • Marketing Costs: Marketing is essential initially to spread the word about your business. The cost can range from INR 40,000 to INR 60,000 per month for both online and offline marketing, depending on the methods. 

Also Read: How to open a Kirana store?

Licenses Required to Open a Bakery in India 

You need to have these licenses to start a bakery in India: 

  1. FSSAI License: This is also called the Food License that you will need to start your bakery. It is proof that all your products are prepared under the standard guidelines of the FSSAI (Food Safety and Standard Authority of India). 
  2. Eating House License: This one deals with the food business and needs to be obtained from the Commissioner of Police or the City or State Police. 
  3. Health License: The Health License has to be obtained from the Municipal Health Inspector and comes with a fee. It is proof that your business conforms to all the health-related guidelines set by the Health Department.  
  4. Fire License: You will have to install fire extinguishers throughout the building and have the safety protocols before getting this one. Once set, you will be given a Fire NOC from the Fire department. This comes with a fee as well. 
  5. Trademark Registration:  The Logo or Brand of your bakery has to be registered to give it a unique identity. 
  6. GST Registration: If your bakery's annual turnover exceeds 20 lakhs, you need a GST registration. This is because the Goods and Service tax applies to all baked products.

Draft a Bakery Shop Business Plan 

Now that you know the essentials that go into starting a bakery, you have to make a business plan to organise and make decisions. This plan to open a bakery business will give you an idea of how to get started: 

  • A summary of your business plan: The business plan summary is a rough model of what goes into setting up a bakery. It has your mission statement, the plans for your business and other legal items such as ownership, structure and history.  
  • Overview of the business: Your bakery’s business overview will consist of what type of business it is and its idea. It can also involve the type of service, the layout of your bakery, the menu and details of how it will all be managed. 
  • Market analysis: This is quite an important step as it tells you about the potential customers of the area that you are planning to set up in and who your customers will be. You can also size up your competition and decide what area to focus on to capture the most business. 
  • The SWOT Analysis: The Strengths, Weaknesses, Opportunity and Threats analysis can give you a useful insight. 
  • Financial Analysis: Your bakery’s financial analysis includes things like operating costs, cash flow and expenses along with profits. 
  • Operations Planning: Your bakery’s operations planning involves the details of how it will be run daily. This entails managing the staff, handling raw materials, taking orders, sending orders, maintenance and more.
  • Marketing Plan: Your marketing plan will talk about how you will advertise your bakery and attract customers.   

Choosing a location 

Unless your offering of baked items is unique to your area or city, the place you choose to set up your bakery can make or break your business. It is common wisdom to set it up where the people passing through are high, such as the corners of shopping streets or important roads. Depending on the floor space available to you, you can divide the bakery into a kitchen and a display area where the customers can walk through.

When setting up closer to residential areas, make sure you have adequate water and drainage facility to run your kitchen. To keep any issues with the property owner at bay, get a No Objection Certification (NOC) for your day-to-day activities. 

Also Read: Top 10 Cities To Do Business in India

Equipment Needed for a Bakery Business in India 

Your bakery can’t do without some of the essential equipment needed to process raw materials, bake and storing the baked items. 

Here’s a list of equipments you will need: 

  1. Baking Equipment
  2. You will need commercial mixers, food processors or choppers of different capacities to handle the raw materials for tasks such as mixing, blending and grinding. 
  3. A turn over machine to handle the dough.
  4. Slicers to prepare bagels and loaves. 
  5. Necessary utensils such as spatulas, dough rolling mats, rolling pins, icing grates etc.
  6. Cake décor accessories and supplies for custom cakes. 
  7. Ovens for baking, storing and warming up. 
  8. Different types of pans.
  9. Fryer 
  10. Storage Equipment
  11. Shelves, both in the kitchen and display area.
  12. Refrigerator and freezer to store perishable items and save prepared items overnight. 
  13. Air-tight storage boxes to store raw materials.
  14. Food bags for customers who make large purchases. 
  15. Display and Packaging
  16. Display boxes at the front of the store with refrigeration and heating function to display the items and keep them fresh. 
  17. Good quality packaging which is also environment-friendly.
  18. Other Equipment:
    • Business accounting software for better management of systems. 
    • A filing system to keep your documents organized. 
    • Card readers for electronic payment.
    • Aprons, Hairnets and gloves for you and your staff to maintain hygiene. 
    • Delivery vehicles such as a van and a motorcycle.

Final Words

To wrap it up, starting a bakery is a great idea if you are passionate about baking and want to build a brand around it. If you can get your licensing and budgeting right initially and prepare a range of delicious baked products, your business can take off pretty well. From there, it’s all about how well you manage your bakery and your marketing. This should give you enough to get started on your idea, and we wish you the best! 

Bakery Business in India FAQs 

How important is the bakery display area?

A well-designed display complements all the items you bake and gives them an irresistible appeal to anyone who walks into your store. The idea is to make it look full and fresh all the time so people can know they can count on your quality. Get a custom-built display rack that goes with the layout of your store. Add attractive lighting that lights up the baked items and add a scrumptious glistening that makes anyone want to take a bit out of it. 

How do I market my new bakery? 

Your marketing strategy will go a long way in establishing your brand, even if you are a complete beginner in the baking industry. Here are a few tips: 

  • Social media Presence: You can start with opening pages on various social media platforms and post every day about all that you offer and the pictures and reviews of your happy customers. 
  • Open a Website: While social media is where you’ll catch most of your online following, a website is essential to keep things official. You can share much more detail about your business and have subscription sign up forms. You could also start a blog to share your expertise in baking and post regularly about helpful tips for your visitors. 
  • Join Groups: Network with your local business or corporate groups to meet new people who can help you with the promotion or other things.  Establish good relationships with them to make new contacts. 
  • Partner with online food aggregators: With most people preferring to order from their home's comfort, it is a must for you to partner with an online food aggregator to grow your sales and establish your brand. If it clicks, you will potentially have your highest sales online! Your website should also be online-ordering enabled so people can place orders as soon as they like something they see. 

Does my bakery need POS and Order management systems? 

Absolutely. If you are opening a bakery that will be handling large volumes of goods, the POS software is a critical component of it. They are no longer only billing software. They can handle inventory, take orders online, manage requests and improve operating efficiency. As your business grows, you can invest in Feedback Tools to capture customer data and improve your services. 

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