Do you want to start a bagel shop? If YES, here is a complete guide to starting a bagel shop business with NO money and no experience.
Okay, so we have provided you an in-depth sample bagel shop business plan template. We also took it further by analyzing and drafting a sample bagel shop marketing plan backed up by actionable guerrilla marketing ideas for bagel shops. In this article, we will be considering all the requirements for starting a bagel shop business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- 1 Why Start a Bagel Shop Business?
- 2 Starting a Bagel Shop Business – Market Research and Feasibility Studies
- 3 Starting a Bagel Shop Business – Legal Matters
- 4 Is Professional Certification Needed to Run a Bagel Shop Business?
- 5 Starting a Bagel Shop Business – Technical and Manpower Details
- 6 Starting a Bagel Shop Business – The Marketing Plan
Why Start a Bagel Shop Business?
Bagels can be regarded as a classic breakfast food that started off becoming popular in New York City before being adopted by other states in the country. Bagels are now considered as a filling, tasty and convenient meal that can be taken for breakfast and lunch.
Most bagel shops do not however sell just bagels as they also sell other beverages and food items so that they can cater to a variety of patrons and also ensure that their customers can get a complete meal. Therefore, if you are looking to start a bagel shop business, you should not only think of the revenue that you will generate but you should also be one that is passionate about food and also enjoy serving others.
Running a bagel shop involves a lot of work because you will not only be making or selling bagels to a whole lot of customers on a regular basis but you will also be brewing coffee and selling other beverages as well. It is important for you to note that your bagel shop will be open not just in the morning but also early afternoon because bagels are taken as breakfast and sometimes lunch.
Therefore, you should prepare your mind at opening your bagel shop almost every morning except for certain holidays. Although some bagel shop owners take a day off every week to rest; you should ensure that you study your area well before doing this.
One aspect that you will need to decide on regarding your business idea is if you intend to make the bagels yourself or just sell them. If you are looking to make the bagels yourself, you should not only know what bagel making equipment you will need, you should also have an idea of the several recipes that you are going to use in creating a variety of bagels in order to be able to serve as many different customers as possible.
If you will however just be selling the bagels without making them, then you could partner with someone making them. It is however important to note that most bagel shops make their own bagels.
Even though successful bagel shops are usually regional, this does not mean that you cannot choose to become a national chain if you want. However, regardless of what you are striving towards, you should ensure that you have carried out a thorough research about the business in order to ensure that you have all the facts necessary to help you achieve your goals and objectives.
Your research should enable you know who you might be competing against, where they are located and what direct impact they are likely to have on your business. Your research should also let you know who your intended target are, how to penetrate and get their attention, therefore getting a fair market share.
Having a business plan is very necessary when starting a business regardless of the nature because a business plan is a map that will give you a view of how your business should run and what decisions and actions you should take in certain circumstances.
Writing a business plan and making it comprehensive enough can be overwhelming especially if you are going to use this to source for funds in starting or running your business. You can therefore get a professional business plan writer to help you write out one or you can download a template online to aid you in writing one if you are on a tight budget.
Starting a Bagel Shop Business – A Complete Guide
- Industry Overview
Out of the 61 percent of adults who take bagels, over 50 percent prefer their bagels fresh. A majority of those that take bagels see it as a main dish and so only take it with toppings and beverages as an accompaniment.
The consumption of Bagel is very popular in New York and it is favored over other bread products. There are some that consider bagels to be a meal for the elites, even though bagels can be afforded by almost everyone. Due to portion control and the fact that people are unwilling to give up their favorite food, has led to more people resorting to bagels as an alternative.
The bagel shop business is regarded as a specialty eatery industry where specialty snacks and beverages that are non-alcoholic in nature are being sold. Global revenue that has been generated from specialty eateries is about $3 trillion.
The specialty eatery industry in the United States generates a combined revenue of $31 billion from about 60,000 establishments – which consists of companies that are in a single location and those that are in multiple locations. The industry is one that is highly fragmented with only a few companies accounting for about 45 percent of the whole industry’s revenue.
Even though there are no specific statistics for the bagel industry in terms of revenue, growth, how many businesses exist as well as how many people are being employed in this industry; the revenue for the industry has increased in the past decade as bagels have become quite popular with there being introduction of new markets.
Industry demand has increased not only due to the innovativeness of the industry but due to the fact that more people consider bagels to be healthier. Because of the current demand of healthy, fast, cheap and convenient meal, it is expected that this industry will continue to grow.
This industry is one that is labor intensive because not only do the bagels have to be made every day in order to give customers something fresh, it also requires having a personal interaction with the customers due to activities like taking orders, brewing coffee and making other beverages, as well as other day-to-day operations that continually take place.
Starting a Bagel Shop Business – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who buy bagels are everyone from those with discretionary income and those on a tight budget. So, this means that you should be looking at schools, households, business people, hospitals, corporate executives and generally every other person.
If you are therefore looking to define the demography of your bagel shop, you should try and make it as all-encompassing as possible.
List of Niche ideas Within the Bagel Shop Business That You Can Specialize in
Even though having a bagel shop can generate a lot of revenue for your business because they are generally considered healthier and that people are growing more conscious of what they consume, there are still niche ideas that you might want to consider in order to either specialize in or add to your general business.
It is important that you conduct a thorough study on any niche you intend to go into so that you do not end up wasting money and your time. If you are running a large shop, you can afford to offer more niches than one who is starting off on a small scale.
Below are some of the niche ideas that are within your particular business and that you can specialize in;
- Traditional bagels
- Gourmet bagels
- Other food items and beverages
The Level of Competition in the Bagel Shop Industry
The level of competition to be expected in this kind of industry depends on where your bagel shop is located because if you start your bagel shop in a city like New York where bagels are popular, you will be facing a lot of competition from those who have long been in existence and have achieved a level of success.
What customers expect from your bagel shop is that your bagels should taste like the traditional bagel and should be of the right size. Customers also expect the bagels to be fresh and satisfying. Therefore, you should ensure that you meet the expectations of your customers always.
If you are therefore looking to start your bagel shop in the United States, you should know that you will be facing a lot of competition and so you should have strategies in place that will enable you have an upper hand over your competitors.
List of Well – Known Brands in the Industry
In every industry, there are brands that stand out and are well known and the bagel store industry is no different. Even though the business has few national chains with most being just well known in their regions, there are still brands that stand out due to the quality of their bagels, how long they have been in business, their marketing and promotional strategies.
Below is a list of well-known brands in the industry;
- A & S Bagels, Inc
- Einstein Noah Restaurant Group
- Western Bagel
- Best Bagel & Coffee
- Absolute Bagels
Bagels were once popular only in urban towns before spreading all over the country and becoming one of the hottest food items. Even though early bagel shops were small and independent, large chain outlets and supermarkets have joined the industry and has resulted in bagels being popular all over the country.
In 1996 at the retail level, the dollar sales of bagels went up by 26 percent. Bagel shops and bakeries had the strongest performance as sales increased to over $1.1 billion. Sales in supermarket in-store bakeries closely followed. Another segment of the industry that was small but growing rapidly was the sale of refrigerated bagels that were packaged.
The marketplace is being reshaped by competitive forces especially as there is now a dramatic growth in franchised bagel outlets as well as non-bagel foodservice companies trying to get a share of the market from independent bagel shops. Operators in this industry have to try and catch the attention of the customers by coming up with several new niches.
Even though bagels are competing with other breakfast and even lunch meals, it is still looking at flat sales as they are trapped in the middle of being a healthy meal or being a treat. The challenge that bagels are facing is the fact that it is packed with carbs and calories, thereby leading to a lot of consumers avoiding it especially as people are now more conscious of what they consume, and in order to counter this, bagel shops have taken to shrinking their bagels.
Starting Your Bagel Shop Business from Scratch vs Buying a Franchise
Deciding whether to start your bagel business from scratch or whether to buy a franchise will be something that you will have to take seriously because even though each option has its pros and cons, there is no guarantee that your business will succeed if you choose one over the other.
In starting your business from scratch, there are a lot of challenges that you will likely face such as where to locate the business and how to attract customers to your bagel shop. However, you are most likely going to be in control over all the aspects of your business and can change whatever policies aren’t working for your business.
Buying a franchise is usually regarded as having a head start over those that are starting their business from the scratch. This is because with a franchise, you are not only buying mentorship, you are also getting several aspects – such as advertising, recipes, equipment and staff training – of the business handled by those who have already garnered experience in the industry.
However, not all those who have bought franchises have succeeded and this is because they didn’t take time to research on the company offering the franchise opportunity. It is therefore important to carry out your own research on whether the franchise being offered will enable you achieve your goals.
Possible Threats and Challenges you will face when starting a Bagel Shop Business
In every business, threats and challenges are always faced and so as an entrepreneur, it is necessary that you understand the different threats and challenges that are bound to plague your business and how you can easily combat or control them. You should know that not all the threats and challenges that will crop up will have been foreseen or can be easily handled and so when they occur, all you can do is hope for the best.
Therefore, some of the threats and challenges that you will likely face when starting your bagel shop business are; having to deal with already existing competitors, natural disasters, industry and government regulations, being an unknown brand and also customers finding alternatives.
Starting a Bagel Shop Business – Legal Matters
- Best legal entity to use for this type of business
One of the toughest decisions that you will ever make is what legal entity to choose for your business. The wrong choice of a legal entity could greatly limit the way your business can achieve its goals and objectives, therefore it is necessary that you take this issue seriously by asking others in the same business what is being used.
The several legal entities that are available for entrepreneurs in the United States all have their pros and cons and so it is necessary that you study them well in order to determine which would best suit your business or alternatively, you get in touch with an attorney to help you out with what legal entity is right for your business.
There are certain attributes that must be taken into consideration when looking to choose a legal entity and some of the attributes are; ease of set-up, ownership and control, flexibility of the legal entity, liability status, and taxation structure.
Even though starting off as a sole proprietor is achievable, it exposes you and your business to so many risks. The food industry regardless of the sector is a risky business with strict regulations from the authorities and so should any unforeseen incident happen – such as one of your customers accusing you of food poisoning – then you might find that you and your business are vulnerable since you are both regarded as one entity.
The best that you can do under these circumstances is to run your business as a separate entity from yourself and this attribute exists in a corporation or limited liability company (LLC). While a corporation is regarded as more formal and rigid in its procedures, an LLC is regarded as less stringent.
Catchy Business Name ideas Suitable for a Bagel Shop Business
Having a catchy business name is important because this is how you can not only get your business to stand out but you can also get the attention of your target market. Choosing a name might look very easy but when you find out that there are certain criteria that your business name should meet, you will know how difficult it is to come up with a name.
When choosing a business name, it is important that the name is memorable, can be easily pronounced, isn’t being used by another and indicative of the industry that you are in. Below are some of the catchy business names that you can use for your bagel shop;
- Sumptuous Bagel Shop
- Diane’s Bagels
- Bagels and More
- Mama Rose Fresh Bagels
- Filling Delight Bagel Shop
There are always risks in every endeavor and as an entrepreneur you must ensure that you are not the one bearing these risks. Insuring your business might look tedious but it is to your own benefit if you do especially when calamity strikes.
Many businesses have had to shut down because the owners did not insure the business or get the right insurance that will cover the business regardless of the calamity that is likely to occur, which is why it is often advised that you seek the advice of an insurance agent or broker when looking to purchase your insurance policies. Some of the insurance policies that you will therefore need to purchase for your bagel shop include;
- Property Insurance
- Casualty Insurance
- Workers’ Compensation Insurance
- General Liability Insurance
- Commercial Property Insurance
- Product Liability Insurance
- Business Auto Insurance
- Umbrella Policies
- Contents Coverage
- Food Contamination Endorsement
- Mechanical Breakdown
Intellectual Property Protection/Trademark
Bagels are regarded as traditional meals that are suitable for breakfast and lunch and even though several bagel recipes have cropped up, the owners cannot sue if another store makes up something similar. Therefore buying an intellectual property protection for your recipes will be a waste of your time and money.
Some successful bagel shops that buy IPP for their businesses usually do so in order to protect their company name, logo, jingle and any other material that they feel is worthy enough to be protected. It is however not considered a priority by those in this industry.
Is Professional Certification Needed to Run a Bagel Shop Business?
In running a traditional bagel shop, there is no need for you to acquire any sort of professional certification as your customers are not concerned about what sort of certification you have as all they want is to be able to purchase fresh and quality bagels.
This does not however mean that you cannot acquire any sort of professional certification especially if you are looking to offer other services such as catering of events where your certification will enable you stand out from others.
List of Legal Documents You Need to Run a Bagel Shop Business
In any business that you intend to start, it is important that you have all your legal documents in place. Not having a list of legal documents in place might make you run into trouble with the law, which might lead to you be fined or banned from running that sort of business anywhere in the country.
Also, the authorities in the United States really scrutinize those that run the food business as constant checks and regulations are continually carried out to ensure that proper documentation is in place. If you aren’t sure of what documentations you might need, you can engage the services of an attorney or ask others in the same business.
Below is a list of the legal documents that you will need in order to run your bagel shop;
- Certificate of Incorporation
- Operating Agreement for LLCs
- Business Plan
- Insurance Policy
- Business License
- Food Preparation License
- Food Handler Permit
- Employment Agreement
- Federal Tax Identification Number (TIN)
- Employee Identification Number (EIN)
Financing Your Bagel Shop Business
When looking to start any business, it is important that you have funds that will not only enable you to start the business but also to grow it as well. However, not all entrepreneurs have all the necessary funds to start their business and so have to source for funds from other places.
Sourcing for funds from external sources is easy for any entrepreneur which is why it is advised that there be a business plan as this will convince intending investors of your seriousness regarding the business that you are looking to start up.
Below are some of the financing options available when looking to start your bagel shop;
- Raising part of start-up capital from personal savings as well as sale of personal stocks
- Sourcing for soft loans from family members and friends
- Sourcing for start-up capital from investors and business partners
- Applying for loan from the bank or financial institution
Choosing a Suitable Location for your Bagel Shop
A bagel shop is not a business that can be run from home and so you will need to ensure that you have picked the most suitable location for your business, if you intend to be successful.
It is essential that you pick a location that has been zoned for food service, this therefore limits you to certain areas and will mean that you cannot just open up your bagel shop anywhere. Once you have gotten the appropriate location, ensure that it is close to other stores so that you won’t need to worry about foot traffic. However ensure that you aren’t too close to other bagel stores.
Once you have gotten the right location for your bagel shop, ensure that you approach the town’s licensing committee in order to obtain the various permits that you might need. You should know that the permits you will require vary depending on the location and so it is necessary to make proper findings to know what you will require.
Even though you might be tempted to lease a huge facility, it is better that you start with a small facility so that it will be easier for your employees to grab items your customers. Also, a smaller shop means your rent will not be so high. If you aren’t sure of where to locate your business in order to run it successfully, you can engage the services of a real estate agent who has a thorough knowledge about the area and your kind of business to help you out.
Starting a Bagel Shop Business – Technical and Manpower Details
The first thing you will need to achieve when looking to start your bagel shop is to ensure that your bagels are worthy enough because this will not only enable you attract customers but it will also enable them to refer others to your business.
You must first decide on what flavors you intend to offer your customers as you must have first tried out several recipes amongst your close friends and family members and getting their views. While you can make the bagels from scratch, you can also buy frozen bagel dough and bake the bagels instead.
Getting a good location to sell your bagels is very important because this is not a business that you can run from home. Because permits for location will likely vary, it is important that you survey the area well, not only to know if you will be permitted to run your bagel shop there but also to know if you will have competitors close to you.
You will require equipment in order to effectively make the bagels. Before buying equipment, ensure that you make a list of the equipment that you will require and how much they are likely to cost before prioritizing the items that you should pick first based on necessity and cost.
You should know that there are some items that you can get as fairly used especially if you are starting up on a tight budget but ensure that you have checked them out thoroughly so that you do not end up buying something that will cost you so much to repair. Some of the equipment that you will need for your bagel shop business include; display counters, steam ovens, walk-in refrigerator, drink cooler for beverages, industrial mixers, boiling kettles, plastic utensils and containers.
Even though you might be starting your business on a low scale, it is not something that you can handle alone and so it will be vital for you to build a solid business structure that will allow you run your shop efficiently. Therefore, those you will need to hire include; bagel bakers, cleaners, customer service, marketing and sales rep, office manager, supervisor and accountant.
From the above analysis, you will require at least 7 key people in order to run your bagel shop effectively.
The Service Delivery Process of a Bagel Shop Business
The process in a bagel shop business requires you to first get the requisite experience before opening your shop to potential customers. Not having the necessary skills is not an excuse as there are classes that you can take to help you develop or enhance your skills.
You have to decide whether you want to start your shop from scratch or buy an existing franchise because this will determine if you are going to be creating your own recipes or if you will be given the recipes to use in making the bagels you intend to see.
Another decision that you will have to make is what means of production you intend to use – make your bagels or bake them. If making your bagels, you will need to start from the scratch and make bagels that will be unique to your shop as you can control your recipe. If you are going to bake the bagels, then you will need to order ready-made bagel dough which will enable you cut down on costs.
Starting a Bagel Shop Business – The Marketing Plan
- Marketing ideas and Strategies
The main purpose of starting any business is to make profit and profit can only be made when revenue is generated. The only way revenue can be generated is by ensuring that as many customers as possible are aware of your bagel shop and a certain amount of these customers are willing to patronize your shop. The process of making your customers aware of your business is coming up with different ideas and strategies that are supposed to be effective in conveying your intentions and actualizing your goals.
One major aspect that can have a positive or negative impact on your business is where you are located. If you are located in a bad place then no matter how much marketing campaigns you carry out, you are likely not going to achieve all your goals because instead of customers getting inconvenienced because they want to buy bagels, they’d rather go for an alternative that is closer to them; and so one of your first marketing strategies should be to be located in a strategic and conspicuous area.
Due to how serious creating effective marketing strategies are, it is important that you carry out a thorough research regarding the business, your target market, what to expect from them and what they should expect from you. You will also through the research know about your competitors and how you can best them and get a fair share of the market for your business, thereby achieving your intended aim and objectives.
Once you have drafted your marketing strategies, ensure that you continually monitor them in order to remove those that aren’t achieving the purpose you intend for them. This is because no matter how great your strategies might have been at one point, the changing market trends might change the dynamics, making some of the strategies not to achieve their aims.
Below are some of the marketing ideas and strategies that will be effective in helping you achieve your corporate goals and objectives;
- Ensure that your bagel shop is listed in yellow pages and in reputable online directories
- Advertise your new business in local newspapers and food related magazines as well as on radio and television stations
- Distribute attractive handbills and paste fliers in strategic locations in order to increase awareness for your bagel shop
- Encourage your loyal customers to help refer your bagel shop to others and reward them for it
- Use your social media platforms by creating an official Facebook page, an Instagram and Twitter account and use them to promote your bagel shop
- Empower your marketing and sales executives to to physically market your bagel shop to potential customers
Possible Competitive Strategies for Winning your Competitors
There are enough bagel shops in existence especially in busy cities as people are on the look-out for healthy meals that can be consumed while on the move; and so there is bound to be some level of competition that you should expect. If you intend to get a fair share of the market, then it is necessary that you know who your competitors are, what their weaknesses are and how to use this as an advantage for your business.
Some of the competitive strategies that you should therefore have in place when you are looking to win over your competitors are; having unique recipes that will enable you to have a variety of customers, offering your customers discounts and incentives, ensuring that you have great customer care and that your bagels are always fresh and of high quality.
Strategies to Boost Your Bagel Shop Brand Awareness and Create Your Corporate Identity
Constantly promoting your business is very important because every effort that is made in boosting your brand is for the benefit of your business. If you are hoping to compete against other bagel shops that have already had a share of the market, then your only hope is to ensure that you create the right strategies that will enable you boost your brand awareness effectively whilst also ensuring that you have created a corporate identity that your potential customers are able to identify with.
The positive effects that publicity brings – awareness and revenue generation – is the reason why even companies that have long been in existence still deploy or create new strategies that will allow them continually be seen by their customers which in turn leads to more revenue generation.
However, like all strategies that you will be developing for your business, it is important that you conduct a thorough research regarding your potential target market and what publicity strategies will be effective for them. If your potential market is not likely going to be reading the local newspapers, then promoting your bagel shop via the newspapers might not have the intended effect you seek as the odds of a number of them picking the local newspapers won’t be so great.
This doesn’t mean that you cannot still promote your business offline effectively; however, knowing which offline methods will work will ensure that you do not end up wasting your time and money on something that is not likely to work. Constantly reviewing your strategies is also very important as it will enable you know which are working and which should be modified or removed.
Below are some of the strategies that you can use to boost your brand as well as create a corporate identity for your company;
- Develop a website and then ensure that you promote it well by deploying keywords and links when making posts on them so as to boost their ranking on search engines
- Ensure that you encourage you loyal customers to help refer your business to others
- Make use of social media platforms such as Facebook, Twitter, Instagram and Snapchat in order to increase awareness for your bagel shop
- Distribute handbills and fliers in strategic locations around the area where you intend to run your bagel shop from
- Promote your bagel shop by writing a piece in your local newspapers on specialty eatries or healthy and quick meals
- Participate in a local community event in order to promote your bagel shop effectively