Bakery Business Plan

In today’s day and age, if there is one business that is blooming more than ever before, without a doubt, it is the bakery business. It wouldn’t be an overstatement to claim that almost every street in a city has at least one bakery/café. While this can partly be attributed to the growing influence of the western culture in India, we also need to acknowledge the fact that bakeries/cafes offer a comfortable and warm ambience along with affordable delicious food, which is a perfect combination one looks for when spending fun time with loves ones or for some quality work time.

Along with increasing demand, awareness of high quality bakery goods is on the rise more than ever before. So, opening a bakery business can be an attractive and lucrative option in the F&B sector, especially with the advent of modern technology and machinery which make it possible to prepare a wide variety of bakery goods. The current start up wave swiping the country is just the icing on the cake.

Why Do You Need a Bakery Business Plan?

Creating a big or small bakery business plan is essential for laying a solid foundation for your business. A detailed plan allows you to evaluate your business ideas, set clear goals, and outline the steps needed to turn your vision into reality. It acts as a roadmap and helps you stay focused on your objectives and guides your decisions as you grow your bakery. 

A well-crafted business plan helps you identify the resources you need, such as equipment, raw materials, and capital. It also plays a critical role in securing financing from banks, investors, and other financial institutions. This is because it highlights your business’s potential for success. Having a structured plan ensures that you are well-prepared to tackle challenges and seize opportunities in the competitive bakery market in India. 

Types of Bakery Business

Choosing the right type of business is a crucial step in planning for your cake business plan for bakery. You can opt for either a retail or wholesale bakery, each with its own unique customer interactions and investment requirements. This decision will shape how you structure your business, engage with customers, and manage your operations. 

  • Retail Bakeries: Retail bakeries sell directly to customers, often operating in a storefront or cafe setting. These bakeries can range from small neighbourhood shops to large establishments with seating capacity. Retail bakeries rely on customer foot traffic and online orders. They require employees to manage sales, serve customers, and maintain the shop.  
  • Wholesale Bakeries: Wholesale bakeries produce baked goods in bulk and supply them to supermarkets, hotels, cafes, and other retail outlets. This business model focuses on high-volume production and efficient supply chains. This makes it ideal for those looking to scale quickly. Wholesale bakeries need to invest in more substantial production equipment and build strong relationships with their clients. 

Understanding these models and choosing the right one will help you better prepare for the financial and operational aspects of your bakery. 

Types of Bakery Service Organisations

Deciding on the type of service your bakery will offer is essential, as it influences your brand identity, target market, and operational needs. Here are some popular bakery service models that you can apply to your bakery business ideas: 

  • Bakery Cafe: A bakery cafe combines a traditional bakery with a sit-down area where customers can enjoy their purchases. This model provides a cosy dining experience. It often attracts customers who want to relax and enjoy their meals on-site. 
  • Home Bakery: Home bakeries are ideal for entrepreneurs with limited capital who want to start small. Operating from home allows you to test your products and build a customer base with minimal investment. However, you must ensure compliance with local food safety regulations and obtain the necessary licences.
  • Online Bakery: Online bakeries primarily operate through digital platforms. It allows customers to order baked goods from the comfort of their homes. This model offers convenience and a wider range of products, often featuring delivery services. Online bakeries cater to a growing demand for easy access to freshly baked items while providing customization options for special occasions. 
  • Food Truck Bakery: A food truck bakery offers a mobile option for serving fresh baked goods directly to customers in different locations. This model is perfect for reaching customers on the go and requires a lower initial investment compared to brick-and-mortar stores. 
  • Counter Service Bakery: Similar to a bakery cafe but without a seating area, a counter-service bakery allows customers to walk in, browse, and purchase items over the counter. It offers a simple, straightforward service model with a focus on quick transactions. 
  • Specialty Bakery: Specialty bakeries focus on a specific type of product, such as cakes, bread, or pastries. This model allows for niche marketing and can cater to a loyal customer base that seeks high-quality, specialised baked goods. 
  • Catering Bakeries: Catering bakeries supply baked goods for events and special occasions. They offer a variety of customised options to meet client requirements. They excel in serving large gatherings, ensuring that celebrations are complemented with delicious and tailored baked treats.
  • Franchise Bakeries: Franchise bakeries operate by replicating a successful bakery model across various locations. This format provides uniform branding and product offerings. It ensures that customers receive a consistent experience and quality, regardless of which franchise they visit.

How to Open a Bakery Shop in India: A systematic Plan

1. Make a detailed bakery business plan – creating a business plan will help you streamline the operations, plan the budget distribution as well as plan the future development of the bakery business. Your business plan should include the below:

  1. Summary of the bakery business : This section provides an overview of your bakery, including your mission, the business structure, ownership details, and future plans. It sets the tone for your business journey and gives potential stakeholders a clear picture of what your bakery aims to achieve.
  2. Business overview : Describe the concept of your bakery and the type of service you will offer. This includes the layout, sample menu, and details about the management team. Clearly outline what makes your bakery unique and how it stands out from competitors.
  3. Analysis of the bakery industry : Conducting an industry analysis helps you understand the bakery market in your area. Analyse your competitors, identify your target audience, and determine the best location for your bakery to thrive. 
  4. SWOT analysis : Perform a SWOT analysis to identify your bakery’s strengths, weaknesses, opportunities, and threats. This will help you strategize on how to leverage your strengths, improve on weaknesses, capitalise on opportunities, and mitigate potential risks.
  5. Planning operations : Detail the day-to-day operations of your bakery. It should include how orders will be managed, staffing requirements, sourcing of ingredients, and overall service flow. This section helps streamline processes and ensure smooth business operations.
  6. Financial evaluation : Outline your expected expenses, including initial setup costs, fixed and variable expenses, and projected cash flow. This analysis is crucial for understanding the financial viability of your business and planning for sustainable growth. 
  7. Marketing plan : Develop a marketing strategy that outlines how you will attract and retain customers. Include details on both online and offline marketing tactics, such as social media promotions, collaborations, and local advertising.

2. Choose the location – Selecting an ideal location is a critical step in the process as it can potentially make or break your business. High-footfall areas are ideal spots. Aim for a ground-floor shop that is accessible and visible to attract walk-in customers. Ideally, a space of around 500 sq ft. is recommended. This space can be divided into a kitchen and a display or serving area. 

If you are planning a larger setup, a 1,000 sq ft. area split across two floors can be ideal. This space should have a kitchen on one floor and a customer service area on the other. The small bakery setup cost in India can vary, but, ideally, for a 1,000 sq ft. space, the rent should be within the range of ₹60,000 to ₹70,000 per month. By including the other initial costs, your bakery business investment budget should be approximately ₹1,80,000 for securing your business location.

Some ideal location spots could be one of the below:

  1. A well-known and reputed market area.
  2. High end shopping streets that experience a surge of youngsters or students flocking the area.
  3. Front area shops, ideally on the ground floor for easy accessibility.
  4. Area that has a proper drainage facility and 24*7 water supply to main good hygiene standards.

3. Acquiring all the licenses required for opening a bakery business – once you have finalised the location for your business, the next step would be to get all the below licenses:

  1. FSSAI license – you can get online on the official FSSAI website or through an agency that will charge you processing fees.
  2. GST Registration – this can be processed with the assistance of your Chartered Accountant.
  3. Local Municipal Corporation’s Health License – this can be acquired with the help of a local Municipal Health inspector.
  4. Fire License – you will acquire this license after the installation of fire extinguisher cylinders.

4. Hire Manpower – to run a successful bakery business, employing a skilled workforce is vital because the taste of food and the look and feel of the place are the only factors that will draw people in. You will need to hire:

  1. Head chef
  2. Chef De Partie
  3. Commi level Chefs
  4. Waiters/helpers
  5. Cashier
  6. Cleaners

5. Purchase equipment – you will need to buy sturdy and long lasting kitchen equipment to ensure good quality products and maximum efficiency. Some of these would be:

  1. Oven
  2. Deep fridge
  3. Cooling fridge
  4. Gas stove
  5. Planetary mixers
  6. Crockery and storage utensils
  7. Cylinders
  8. Working table

6. Install billing software – you will need a POS billing software, which is equipped with inventory management and features that help manage the shelf life of perishables.

7. Marketing and branding of the bakery – as is the case with all business, effective advertising and branding is vital to the success of a bakery business as well.

  1. Design your logo, pamphlet and display board
  2. Well-designed menu.

8. Financing the business – the most vital step of the business plan will include getting the required business loan:

Types of Loans –

  1. Asset bases loans, wherein you can use assets like inventory, real estate or machinery as collateral.
  2. Term loans, which are useful for long term big investments for a tenure of 1 – 10 years.
  3. Working Capital Loans, which have a high interest rate, are useful for short term requirements and that are payable within a year.

Loan providers – you can get an easy bakery business loan from banks or a non-deposit taking NBFC like Lendingkart, since it offers easy SME loans in India after an accurate and rapid analysis of the credit worthiness of a business with the help of latest technology and analytical tools.

9.Partnering with online food aggregators: With the growing trend of online food delivery, partnering with popular food aggregators like Swiggy, Zomato, and Uber Eats can significantly boost your sales. Registering your bakery on these platforms allows you to tap into a larger audience and generate online orders. Plus, having your online-ordering enabled website enhances your digital presence. It also gives customers a chance to directly order from you. The online bakery setup cost includes website creation and registration with food aggregators. It will vary but it is a worthwhile investment that pays off through increased visibility and sales. 

The overall bakery investment cost in India is approximately around ₹15 lakhs, but this can fluctuate based on factors like location, size, and the scale of equipment needed. Careful budgeting and planning will help you keep expenses under control and set our bakery on the path to success.


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Some of the other key features of borrowing a loan from us are:

  1. Straightforward application process, free from the bureaucratic red tape.
  2. Low one time processing fee of 2% to 5%
  3. Quick disbursals and turnaround time
  4. Wider loan window which provide loans up to Rs 2 Crore
  5. Express same day loan approvals and processing with online application process
  6. Best rates of interest
  7. learning to determine the lowest interest rates
  8. Zero hidden costs and charges.

Documents required

  1. VAT Registration
  2. GST Filing
  3. Business Registration Certificate
  4. Trade License
  5. Taxpayer Identification Number
  6. Gumasta License

Bakery business Loan procedure with Lendingkart

  1. Submit your application online by entering the required personal, business and financial information.
  2. Upload your documents for verification.
  3. Get your loan sanctioned and disbursed within 3 business days!

Business loan interest rates and charges

Customized Rate of Interest

Starting from 1.25% per month

Charges for Pre-Closure

Pre-closure charges are applicable as per the lender’s policy

Instalment period

Monthly or Bi-Weekly

Loan Tenure

Up to 3 years

Conclusion 

Creating a bakery business in India involves thorough research and planning to ensure success in a competitive market. By outlining your business concept, analysing the industry and determining your target audience, you can build a solid base for your bakery. Moreover, understanding your operational and financial needs will help you manage resources effectively and attract potential investors. Embracing modern trends, such as online sales and partnerships with food aggregators, can further enhance your reach. With a well-structured plan in place, you are poised for success. Platforms like Lendingkart can provide valuable financial support to turn your bakery dreams into reality. Get quick and hassle-free MSME or working capital loans to kick-start your business today!

Bakery Business Plan FAQs:

1. Is it possible to expedite the loan sanction process?

The only way to ensure quick loan approval is to provide accurate details to your lender at the right time.

2. What is the EMI one needs to pay for the bakery business loan?

EMI will depend on the loan amount and the repayment tenure.

3. Can we cancel the loan application after approval?

Yes, you can cancel your loan application before the loan amount has been disbursed.

4. How can we ensure success of our bakery business?

The success of your bakery business will depend on the quality of your products, pricing, expenses and marketing.

5. Does a bakery business have good long term potential?

The potential of a bakery business can be improved if it focuses on retail as well as wholesale of bakery items.

6. What is a good profit margin in a bakery business?

Profit margins vary depending on multiple factors, though a 10% to 20% net profit margin is generally considered decent.

7. What are the different types of Bakeries that one can open?

Before, one thinks of starting up a business in Bakery, he needs to be
particular about the kind of bakery he would want to open from the following
types:
• Bakery Café – It provides a seating arrangement for its customers to
relax and relish the sumptuous bakery items along with a few health
drinks which also encourages high volume of sales. In this case, an apt
location and design of the café needs to be considered before opening
a bakery café.
• Home Bakery – Before opening a full-fledged bakery, if an individual is
sceptical about the taste of the customers and how they respond
towards the menu provided by the bakers, they gradually start the
business at home, test the market before going mainstream.
• Delivery or Cloud Kitchen – The advantages of this kind of a bakery
is a low client interaction and a low investment, as this kind of a
business accommodates itself in the available space of one’s own
kitchen or back-house to bake goodies and sell it out to the main
vendors.

8. What is the bifurcation of major costs involved in opening a bakery?

Before opening a bakery, one must consider the following costs –
• Location charges
• Purchase of Bakery Equipment
• Licensing and other legal formalities
• Staffing
• Billing and POS
• Cost of Raw Material
• Cost of Marketing

9. How much will it cost to start a bakery in India?

The cost of starting a bakery depends on your goals. A small bakery investment cost in India can be ₹50,000 to ₹5 lakhs. Whereas starting a bakery business on a larger scale can cost several lakhs or more.

10. How can I start a bakery business from home in India?

To start a bakery business from home in India, first, come up with unique baking business ideas, plan your finances, and make sure to get all the needed licences. This will guide you on how to start a bakery business from home effectively.

11. Bakery is what type of business?

A bakery business is categorised as a food service business specialising in baked goods, such as bread, pastries, and cakes. It offers a wide range of products, making it a lucrative venture when managed efficiently.

12. How to promote your bakery business?

First, formulate a bakery business plan incorporating social media marketing and other promotional strategies. Creating a strong online presence, engaging with customers, and offering unique baked goods to stand out can help maximise bakery business profits.

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