Do you want to start a cupcake bakery and want to know the cost? If YES, here is a cost breakdown for opening a cupcake bakery and the profit margin/ROI.
Cupcakes are beautifully decorated delicious little confections. It is quite easy for a seasoned baker to whip up some batches and start selling from home. But of course, this wouldn’t make you tremendously rich. If you are targeting the big money, then you have to open a standard bakery, even if it is a small one.
Before opening a physical store to sell your cupcake creations, you may want to start off selling your treats online or at local events to get more acquainted with the business. You can make money on your cupcakes by charging enough to cover the overhead to make the treats.
When it comes to pricing, you can take a look at what your competitors are charging and also take your production costs into consideration.
If you are new to the industry and you are trying to open up your bakery, you should know that you would need a little bit more equipment to start off than you will need when baking from your home kitchen. For the avoidance of doubt, here is is what it would cost you to start up your cupcake bakery.
Estimated Cost Breakdown to Start a Cupcake Bakery
Research has put the average cost of setting up a cupcake bakery at between $10,000 and $50,000. If this figure is on the high side for you, and you just want to start a small cupcake bakery by the street corner, you may get lucky enough to kickoff with $2,000 if you can plan your expenses properly.
To startup, the most pertinent cost for you to consider include: securing a lease for a physical store; purchasing supplies such as mixers, bowls and storage containers; getting personnel; food and ingredients; and furniture and decor.
For smaller bakeries, the expense breakdown should allot 25 percent of funds for ingredients and packaging, 35 percent of the money for labor, 30 percent to pay for overhead (rent, bills, etc.) and 10 percent for profit. Joining a franchise is another way to get into the cupcake bakery business, but you should know that this would cost you a whole lot because you would be buying into a successful business.
Starting a cupcake business requires a Food License (including a Food Safety Certificate), Insurance, Packaging and Ingredients. That is basically all you need to get started. The rest you can pick up as time goes by.
Food License – $400 (approx)
For you to start any food producing shop, you need to get a food license. You should factor this into your startup budget. Food Licensing fees and costs is different from Council to Council, as it depends on their budgeting requirements. There generally is an application fee as well as the yearly license fee.
Insurance – $195 (yearly)
You can’t run any business in the united states without some form of insurance, so this is a given. You can budget $195 annually for your insurance needs.
Food Supervisors Certification – $100 (once off cost)
While this may not be compulsory, but you need to be certified so your customers would be more comfortable buying from you.
Ingredients – $150 (approx)
Ingredients are a major continuous cost when running a cupcake bakery. Ingredients are generally purchased from week to week, just buying what you need. You can keep your budget at between $150 to $200 depending on the size of your sales.
Decorating Tools – $100
Cupcakes are beautiful creations, so you must spend some money on some good decorating tools. Decorating Tools you probably need to purchase are – piping bags, nozzles, simple fondant cutters, fondant smoother, electronic scales, etc. The good thing here is that this is a one-off purchase.
Packaging – $300 (approx)
Your cupcakes need to packed in pretty little packages, so you have to make provisions in your budget for this. The packaging cost will depend on what products you are selling and what quantities to start with.
Equipment – You need some equipment to get the cupcake baking job done. You will need things like cupcake tins, cake tins, beater, trays, oven. This will cost you a pretty penny especially your oven. You can get great deals on high-end ovens by comparison shopping
Register Business Name – $30 or whatever your state demands
Financial Breakdown for Opening a Cupcake Franchise
A cupcake franchise is yet another way to get into the cupcake bakery business. If you want to consider this route, we will give you a breakdown of the cost of startup.
It is essential to budget between $250,000 to $375,000 USD to break into this delicious franchise market. There are numerous requirements in order to be awarded the opportunity to have a franchise of any kind. Your credit has to be top notch if you want your application to be considered.
If you have less than savory credit or are in the midst of a long credit repair process; consider having a business partner to share the requirements with. Most franchises require that you have a high amount of free and clear cash available on top of your approval fees.
This can range up to $200,000; another popular reason many of these locations are designated by a partnership. If you are hoping to secure a loan for this endeavor, be prepared to put a minimum of 20 to 30 percent down if you are applying for a business loan.
Startup Costs for a Cupcake Bakery Franchise
As with any franchise, the building is built to suit and made to look recognizable with the parent franchise. Therefore, a significant amount of your startup costs will revolve around the construction of your new savvy location. Be prepared to spend 25,000 or more on constructing your new digs.
Once your building is up to code, prepare to purchase everything required to furnish your franchise. Tables, bake racks, pots, pans and kitchen preparation equipment will run approximately $8-$10,000. Your amazing oven will be in the range of $8,000.
Permits will run $1,000 or more and your star up inventory of ingredients, packaging etc. will be in the range of $5,000 Many franchises require a security deposit often around $3,000 – $4,000. Your estimated startup will cost a minimum of $50,000.
Staffing expenses will cost approximately $3,000 to $4,000; depending on how many crew members you hire. Utilities and rent can run in the range of $3,000 each month. Prepare to spend $1,000 to $2,000 on your monthly inventory. Insurance is approximately $100 each month.
Expect to pay an initial fee around $25,000 to open a franchise. This money goes toward your initial training, selecting a prime location, planning your layout and learning the secrets to the trade. Royalty fees ranging 6% are common every month along with paying an additional 2 to 3 percent for marketing.
The positive news is that cupcakes are showing a profit even in the gloomiest economy. Perhaps this is due to many people feeding their sugar stress response, opting for cupcakes instead of traditional wedding or birthday cakes and their affordability factor.
There are many startup costs associated with opening a cupcake bakery. If you are starting from scratch, you need to purchase all of the materials you need to start baking. You also need to ensure you have the tools needed to be successful – such as mixers, ovens and other basic necessities.
New York Magazine describes the startup costs of a cupcake bakery as totaling almost $40,000. However, if you are joining a pre-existing franchise, the costs can be greater than $420,000. These costs included facility-related expenses such as construction and rental fees, startup inventory and other materials necessary to start the bakery.