Do you want to start a bakery business and want to know the cost breakdown? If YES, here are 15 factors that determine how much it cost to open a bakery. You should know that there are several factors that can determine the actual cost of launching this type of business.
The truth is that some of the factors may not apply to you, because the business model and of course the kind of business a person wants to build would affect the overall cost of the business. These factors are unique to each individual and this article may not cover such. Having said that, here are some of the factors that will influence the cost of opening a bakery in the United States of America;
Table of Content
- Estimated Cost Breakdown to Start a Bakery Business in 2021
- 1. The Type of Bakery
- 2. The Choice of Location
- 3. The Required Licenses and Permits
- 4. The Type of Facility
- 5. Your Products and Services Offerings
- 6. The Size of the Bakery
- 7. The Cost of Hiring and Paying a Business Consultant and Attorney
- 8. The Cost for Branding, Promotion and Marketing of the Bakery
- 9. The Cost for Furnishing and Equipping the Bakery
- 10. The Cost for Insurance
- 11. The Cost for Registering the Business
- 12. Source of Your Supplies
- 13. Cost of Recruiting and Training Your Staff
- 14. The Cost for the Purchase and Customizing of Uniforms, Shoes and Caps for Your Employees
- 15. The Cost of the Grand Opening of the Bakery
- How Much Does It Cost to Buy a Bakery Franchise?
- Financing Your Bakery
Estimated Cost Breakdown to Start a Bakery Business in 2021
These are the key expenses you are expected to make when starting a medium scale but standard bakery business in the united states of America;
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Commercial Kitchen/Bakery permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
- Marketing promotion expenses for the grand opening of the bakery in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring business consultant (including writing business plan) – $2,500.
- The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
- The cost for leasing a standard facility in good and centralize location – $200,000
- The cost for remodeling the facility and construction of a commercial bakery – $100,000.
- Other start-up expenses including stationery ($500) and phone and utility (gas, sewer, water and electric) deposits ($6,500).
- The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
- The cost for start-up inventory and commercial bakery equipment (Baking ingredients (flour, yeast, dough, sugar, butter, milk et al), Packaging materials supply, Standard commercial oven, Proof boxes, Baking Sheets and Racks, Mixers, Work Tables, Sinks, Slicers, Scales, Cake decorating Tools, Ingredient Bins and baking utensils, Filing Cabinets, Noticeboard and Staff Uniform et al) – $100,000
- The cost for store equipment (cash register, security, ventilation, signage) – $13,750
- The cost of purchase and installation of CCTVs: $5,000
- The cost for the purchase of furniture and gadgets (Telephone, printing machines, flat screen TVs, sound system, computers, tables and chairs et al) – $25,000.
- The cost for building and hosting a website – $600
- The cost for opening party – $8,000
- Miscellaneous – $5,000
You will need an estimate of seven hundred thousand Dollars ($700,000) to successfully set up a medium scale but standard bakery business in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.
Starting a small scale but standard bakery business that can only concentrate in baking cupcakes and other flour snacks and with fairly used baking equipment in the United States of America will cost about fifty thousand dollars to one hundred and fifty thousand Dollars ($50,000 to $150,000). Please note that this amount includes the salaries of all the staff for the first 3 months of operation and with a distribution network that covers just the immediate community.
When it comes to starting a standard and large scale bakery business with several distribution outlets in key cities in the United States of America, a bakery business with the intention of selling franchise and also baking bread and all forms of baked flour like snacks and cakes, then you should look towards budgeting well over two million dollars ($2 million). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.
15 Factors That Determine How Much It Will Cost to Open a Bakery
1. The Type of Bakery
A major factor that will determine the overall cost of opening a bakery in the United States of America is the type of bakery in question. Basically, a bakery is an establishment that produces and sells flour-based food baked in an oven such as bread, cookies, cakes, pastries, and pies.
Some retail bakeries are also categorized as cafés, serving coffee and tea to customers who wish to consume the baked goods on the premises. Some bakeries might be restricted to selling only bread while standard bakeries may sell a wide variety of baked foods and confectionery items such as cakes, muffins and funnel cakes and serve coffee et al. It is fact that these different types of bakeries have different startup costs.
2. The Choice of Location
Another major factor that will determine the cost of opening a bakery business in the United States of America is location. In business, location is key part of what determine the success of the business.
There are business consultants cum realtors who are specialized in helping people choose an ideal location for their business; a location that will guarantee them to profitability. Location can also influence the cost of starting a business not just in the United States of America but anywhere in the world.
For example, renting or leasing a bakery facility in a location that is off the city center or off a major road will be less expensive when compared to renting or leasing a bakery facility within a residential estate; a location along a major road with high vehicular and human traffic.
3. The Required Licenses and Permits
In the United States of America, you cannot open a business without first applying for the mandatory licenses and permits. You would need operational license, food and drink handling permits, kitchen/bakery permits, building license, signage permits and zonal permits amongst others.
These licenses and permits cost money and it will influence the overall cost of opening your bakery business. Please note that you may have to go through several inspections before you can be issued your licenses and permits.
In order to get the overall cost of licensing and permits associated with opening a new bakery, we will advise that you reach out to your city government. You also need to consider state and federal requirements, so do your homework long before you set a date for the opening of your bakery.
4. The Type of Facility
The type of facility you want to operate your bakery business in is also a major factor that will determine the overall cost of opening a bakery business in the United States of America. As regards the facility, you have the options of renting a store facility, leasing a bakery facility or designing and constructing your own facility from the scratch.
With renting and leasing, you may have to spend extra cost to modify the bakery facility to fit into what you have in mind, but there is a limit to how far you can go and it will be dependent on what the landlord of the facility wants. Let us assume that you want to construct your bakery facility from the scratch.
It means that you will buy the land or a property, construct and equip the bakery facility to fit into the ideal picture you have in mind. You will agree that you are going to spend way more when compared to people that rent or lease a store facility in a shopping mall.
5. Your Products and Services Offerings
Another key factor that will determine the cost of opening and operating a bakery business in the United States of America is of course, the products and service offerings of the bakery. The fact that there are different types of bakeries means that these bakeries are designed to retail different types of products and offer different types of services.
As a matter of fact, the cost of opening a bakery that will only sell bread will be different from the cost of opening a standard bakery that will sell a variety of baked foods, confectioneries and serve coffee. The cost for opening these different types of bakeries is going to be different and it will indeed influence the overall cost of opening a bakery business.
6. The Size of the Bakery
Another very important factor that determines the cost of opening a bakery business in the United States of America is the size of the bakery. Of course, the larger the bakery, the larger the budget to get it up and running especially as it relates to creating space for customers most especially if it has the option of serving people within the premises.
Aside from the cost of stocking the bakery with ingredients, it will also cost you more to position employees to man different job positions in the bakery and this will translate to spending money to open the bakery. For example, less than a handful of employees can man a bakery that is in a 12 by 12 facility while it will take about a dozen employees to man a bakery that is in a 24 by 24 facility.
7. The Cost of Hiring and Paying a Business Consultant and Attorney
As expected, if you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney. A business consultant will help with drafting a workable business plan document for the bakery, a marketing plan and strategy, comprehensive SWOT analysis, and other advisory services.
An attorney will also help you with registering the business, drafting contract documents (especially for your suppliers and creditors) and offering you all the legal expertise that will help you start the business on the right foundation. Of course, you will agree that these services will cost you money and it will indeed influence the overall cost of opening a bakery in the United States of America.
8. The Cost for Branding, Promotion and Marketing of the Bakery
The cost for branding, promoting and marketing the bakery is yet another key factor that will determine the overall cost of opening a bakery in the United States of America. Trust me, if you need massive results as it relates to competing and winning a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion and marketing.
It is not cheap to come by an expert that will help you compete with brands that are already determining the market direction of the bakery industry in your city. So, if you add the cost of paying a branding and marketing expert, it will sure increase the cost of opening your bakery.
9. The Cost for Furnishing and Equipping the Bakery
Another factor that will determine the cost of opening a bakery is the cost of furnishing and equipping the bakery. You will quite agree that aside from the basic facilities that are expected to be found in a bakery, an investor may decide to equip the bakery to look unique.
Before you can open a bakery, you should budget and buy stuffs that should be found in the bakery – items such as ovens, bread slicing machines, storage hardware (bins, rack, shelves), counter area equipment (Flat Screen TVs, sound system, Satellite dish and decoder, furniture (table, sofas and stools), telephones, filing cabinets), store equipment (cash register, POS machines, security, CCTV, ventilation, signage), and security and fire alarms and prevention gadgets amongst others. All these will cost money and it will influence the overall cost of opening your bakery.
10. The Cost for Insurance
The cost for paying for insurance policy cover is yet another important factor that will determine the overall cost of opening a bakery in the United States of America. Interestingly, in the United States you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your own bakery business.
11. The Cost for Registering the Business
The cost of registering the bakery business is yet another cost that will influence the overall cost of opening a bakery in the United States of America. Although, the cost of registering a business an obtaining all the needed documents is affordable, it will no doubt add to the overall cost of opening a bakery in the United States of America.
12. Source of Your Supplies
Another major factor that will determine the cost of opening a bakery in the United States of America is the source of your supplies. For example, if you have access to manufacturers of the type of baking ingredients that you need, it will sure cut down the cost of running the bakery.
13. Cost of Recruiting and Training Your Staff
The fact that you are opening your bakery as a new business means that you are expected to recruit and train your staff to conform to the kind of bakery you want to operate. The training will help you sell the corporate culture of your organization to the new employees. As expected, it will cost you money to hire expect trainers that will help you train and bring your new hires up to speed, and that will add to the overall cost of opening the bakery business.
When it comes to starting a standard bakery business on a large scale, you would need the services of the following professionals;
- Chief Executive Officer
- Chief Baker
- Assistant Bakers
- Human Resources and Admin Manager
- Merchandise Manager
- Marketing and Sales Executive
- Security Guard
14. The Cost for the Purchase and Customizing of Uniforms, Shoes and Caps for Your Employees
Another factor that will determine the overall cost of opening a bakery business in the United States is the cost of the purchase and customizing of uniforms, shoes, and caps amongst others. Sales boys and girls, front desk/payment attendants, other workers and security personnel all have different uniforms and they are expected to put on these uniforms when they are on duty. All these uniforms will cost you money which is why it must be part of your budget if you are looking towards opening a bakery in the United States.
15. The Cost of the Grand Opening of the Bakery
You will agree that in recent times, no bakery opens its door for business without first organizing an opening party to officially launch the business. This means that the cost of the opening is part of the factors that will determine the overall cost of opening your bakery business in the United States of America.
You can choose to do a soft opening if you are operating on a low budget or you can choose to go for a grand opening party. The bottom line is that it is a cost that must be part of your budget and this cost will influence the overall cost of opening the bakery business.
How Much Does It Cost to Buy a Bakery Franchise?
In the United States of America, the Average Cost of Purchasing a Bakery Franchise is $50,000. Examples of 3 Well – Known Franchising Companies in the United States of America are;
- Corner Bakery Cafe®- Franchise
- Great Harvest Bread
- Bread smith
Financing Your Bakery
There is always need to financing any kind of business, therefore when it comes to financing a business, one of the first thing and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start – up capital;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Applying for Loan from your Bank / banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
Can a Bakery Business Be Bootstrapped on a Lean Budget from Home?
If you a looking for a small scale business that you can successfully bootstrap on a lean budget right from your home, then you should consider starting a bakery business. One good thing about bakery business is that you can successfully run the business from your home especially if you choose to operate on a small scale and to concentrate in baking cakes, cupcakes and other flour baked snacks for sale in your immediate community.
As a matter of fact, you can start a bakery business with as low as five thousand dollars or even less depending on how small you want the business to be. All you need to do is to register the business, purchase the basic needed baking oven, baking equipment and bakery ingredients and supplies, print your business card and market your products. The challenge here is that you must be ready to take on more than half of the available roles in the business.
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