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How Much Does It Cost to Open a Bagel Shop?

Bagel Shop Business

Do you want to start a bagel shop business and want to know the cost? If YES, here is a cost breakdown to open a bagel shop and the profit margin/ROI.

Bagels are a classic breakfast food that became popular in New York City but is now eaten almost everywhere in the United States. Bagel shops are known as places that sell bagels, which are convenient, tasty, and filling meals, to patrons for breakfast and lunch.

Coupled with bagels, most bagel shops also sell beverages and sides, so customers can get a complete meal quickly. The ideal customer for a bagel shop business is an individual who wants breakfast but doesn’t have much time. This is because bagels are a quick, satisfying food.

These shops often appeal to both people with lots of discretionary income and those on tighter budgets, because bagels are relatively cheap.

Estimated Cost Breakdown to Open a Bagel Shop

The cost of starting a bagel shop usually runs into tens of thousands of dollars. Some of your biggest expenses include rent, equipment costs, and employee salaries (if hiring employees). Other expenses include bagel-making supplies, expenses for other foods and beverages, supplies to put bagels in, and cups.

However, if you want to keep your start-up costs low, you can find a small retail location so the fund allocated to rent can be lower.

A small location will also make it easier to grab items for customers, so you can be able to do all the work yourself and might not need to hire an employee. You can also buy used equipment, which costs well lesser than new ones and can also provide significant savings. Nonetheless, below is an estimated cost of starting a bagel shop in the united states.

  1. Cost of registering the shop in the United States of America – $750.
  2. Legal expenses for obtaining licenses and sellers permit as well as the accounting services (software, P.O.S machines, and other software) – $2,800
  3. Marketing promotion expenses for the grand opening of the bagel shop and the printing of promotional flyers – $4,200
  4. Cost of employing a business consultant and writing of a well-detailed business plan – $2,000.
  5. Cost of purchasing the needed insurance and liability protection for bagel shops (general liability, workers’ compensation, and property-casualty) coverage at a total premium – $3,000.
  6. Cost of Leasing or purchasing a suitable shop facility in a good location – $80,000
  7. Cost of shop remodeling (construction of cages, kernels, racks, and shelves) – $30,000.
  8. Other start-up expenses including stationery ($500) and phone and utility deposits – $2,500
  9. Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $40,000
  10. Bagel shop start-up inventory (costs for bagel-making supplies and other foods, costs for beverages, and costs for serving supplies et al) – $60,000
  11. Cost of acquiring shop equipment (cash register, security, ventilation, signage) – $4,200
  12. The cost of purchase and installation of CCTVs: $2,000
  13. The cost for purchasing shop furniture and gadgets (Computers, Printers, Telephone, TVs, Sound systems, tables and chairs et al): $4,000.
  14. Cost of launching a website and order processing software: $1,200
  15. Shop marketing and promotion cost: $5,000

From the estimate above, you would need approximately $242,000 to start a medium–scale but standard bagel shop business in the United States of America. Note that your ongoing expenses will include rent, licensing fees, employees’ salaries, costs for bagel-making supplies and other foods, costs for beverages, and costs for serving supplies.

How Do Bagel Shops Make Money?

A bagel shop business generates revenue by selling bagels, other food items, and beverages to customers. Some of them may also cater for events and contractual agreements. According to reports, a plain bagel is priced from $1.80 to $3.00 and a bagel with cream cheese from $1.65 to $4.50, although prices elsewhere might be slightly lower, as New York City is known both for its bagels and high prices.

The other foods and beverages sold by bagel shops, which include fresh fruit, yogurt, coffee, and tea usually cost about the same as a bagel or a bagel with cream cheese. The profit a bagel shop can make rests on how many customers it can serve in a day, week, month, or year. For this reason, choosing a suitable location is essential to the success of a bagel shop.

Conclusion

Starting a bagel shop can cost way more than expected and you are advised to research your market extensively before investing your funds. A bagel shop business can set itself apart by making authentic bagels. Many places, including coffee shops, grocery stores, and diners, offer bagels.

These are often frozen products that are thawed, though. A fresh-baked bagel will taste much better, and many people will specifically seek out great bagels. For this reason, business owners should take a bagel-making course.

You can also increase your business profitability by up-selling customers. Featuring bagel sandwiches, which sell for more than a bagel with cream cheese, and offering other options like espresso beverages and granola, can increase the average ticket price.