Bakery business is a rather lucrative business in today’s times as everyone wants tasty and well-presented food. With mushrooming of bakery shops in all neighbourhoods thanks to the boom of self-trained and artisan bakers, it’s a business that can be set up to rake in profits in present times. Astro strategist Hirav Shah feels with a good bakery business plan in place, one can stay on top of the game
Not long ago, a bakery meant a quaint, little place where people went to eat their favourite treats. The bakeries were easy on the pocket and attracted large numbers which kept them in business for decades. However, with the influx of fast food chains, the bakeries lost their old world charm and many of them ran out of business. However, the story does not end on a gloomy note.
Voila, cut to 2000 and the decade after. The bakery business has become an upmarket affair in most parts of India. With potential bakers getting trained abroad and home bakers popping up in almost every neighbourhood, baking and all things associated with it became ultra chic. With customers drooling over the amazing variety offered by these artisan and self-trained bakers, the bakery business in India has boomed and has been flourishing ever since. And it is these bakeries that have disrupted the food scene in the country.
Most recently, when pandemic hit the country, it was as if a whole new world was thrown open to those who were locked down at home. Aspiring bakers and trained bakers took to instagram and other social media channels to post their stuff and this once again set a trend for home bakeries or neighbourhood bakeries. In short, it was a food renaissance of sorts for bakery business in India.
So, how does one go about setting up a profitable bakery business in India? Let’s figure out the bakery business plan…
According to a report by IMARC Group, the Indian bakery market had reached a value of around $8 billion in 2019, making it a highly lucrative business.
For starters, setting up a bakery can cost around Rs 15 lakh on an average. This however varies based on cost of equipment, location, advertising revenues, etc. To begin with:
Create a bakery business plan
Even before you figure out how to start a bakery business in India, you must begin by creating a bakery business plan. This will help you to streamline operations, decide budget allocations, setting future goals for your bakery business. This should ideally include:
a) Summary of the bakery business plan: The summary of your bakery business plan acts as an overview of your bakery business that you are planning to set up or revive. The plan must contain a mission statement, review of the bakery’s legal structure and ownership, brief history or story of how and why you set up or want to start a bakery business and plans for your business.
b) Business overview: The business overview must talk about the concept you have in mind for your bakery, the type of service you would be providing, like self-help, dine-in, etc. It must also include the layout of the bakery, a sample menu and details of the management team.
c) Industry analysis: Spending time and resources on industry analysis will give far-fetching results for your business. This is an extremely important step before you ponder about opening your bakery business. This will help you identify the competition in the area or location you are eyeing, the target audience for your bakery and helps you in picking the appropriate location for your business.
d) SWOT analysis: SWOT analysis will help you identify the strengths, weaknesses, opportunities and threats associated with your bakery business. First, begin by listing out your strengths, say items on your menu or your location, etc. These are factors that will help you bring in more revenue. Then come the weaknesses. These are areas where you are at a disadvantage and which could result in losses. The O of SWOT is opportunities that you can spot early on and turn them into profits.
For example, you could predict a trend or catch up with a new trend early on that could in turn attract more customers. For example, if you pick a location that is nearer to a shopping mall, then you can expect a higher footfall. T stands for threats or external factors that could affect your bakery business. They could include high competition or increase in prices of raw materials, advertising costs or even increase in rentals if you are leasing a property.
e) Operations plan: This should include details about how your bakery will function. Order taking, menu, service, staff management, raw material procurement, etc.
f) Financial analysis: This must include cash flow statements, operating costs, fixed and recurring expenses, etc. This exercise will help you gain financial viability for your bakery business.
g) Marketing plan: It is essential to include the marketing plan that will talk about how you will attract customers and promote your bakery.
Here are a couple of tips that will help you write down a bakery business plan better. One tip is to do your SWOT analysis prior to industry analysis, as knowing about your strengths and weaknesses will help you figure out where you stand amidst competitors. Similarly, another tip is to write the summary at the very end. This way, you will have a more structured and well-informed summary.
Choose a location for your bakery business
Once you have a business plan and strategy in hand, then get on to the most important step. This is to find an appropriate location for your bakery, be it small, medium or big. An ideal location would be in a reputed market or high-end shopping streets, where the footfall would be high. Another point to note is to have a front area shop on the ground floor that is easily accessible and visible.
However, if finances and space permit, it is best to have a two-level store or shop where the kitchen can be set up on one floor and the display cum serving area can be located on the other. Keep a tab on the amount you are spending on rental, if you are leasing a space or buying one. It’s also important to check for proper water supply and drainage facilities. An appropriate legal agreement for the property is also a must as it is required for paperwork and other licenses. Also, remember to get a NOC or No Objection Certificate from the property owner saying he has no issues with using his space for commercial purposes.
Procure all licenses required to open a bakery
These would include FSSAI license, GST registration, local municipal corporation health license, police eating house license and fire license.
• Food license: You can apply for it online on the website www.fssai.gov.in.
• GST registration: This can be done through a chartered accountant.
• Health license: This can be got from a local municipal health inspector and could cost around Rs 3000.
• Fire license: You can get a fire license by paying a fee of Rs 1000 to Rs 2000 after the installation of fire extinguisher cylinders.
Hire the required manpower
If you are not a home baker or a food truck, a bakery business requires expert and well-trained staff as a good bakery thrives on both taste and presentation. If you are a high-end bakery, then you will need a sous or head chef, chef de parties, commi level chef, helpers, service boys and a cashier at the display and serving area. About 15 people are required on an average for a bakery shop.
Buy the right and latest equipment to kick-start operations
The kitchen equipment comes at a price as it is made of stainless steel that is sturdy and long-lasting. Equipment includes an oven, deep fridge, cooling fridge, working tables, gas stoves, cylinders, storage utensils, utensils and other equipment.
n Install the right billing software: Install the latest software that can integrate inventory management and billing. It should be able to manage the shelf life of the items on the menu with a robust inventory management system, as the bakery business is all about handling perishable items.
Right marketing and branding
As is the case with any business, it is important to have an attractive logo and display board for your bakery shop. This will create a unique identity of your brand in the market and among customers. It will also help you while developing packing materials and promotional material. It is also important to have money set aside for running marketing campaigns both online and offline.
Design the display area of your business
What the eye sees catches the fancy of a potential customer. Presentation is of vital importance in this business. The display area or the front end of the bakery business should be attractive, eye-catching, so that each item catches the attention of the customer. If you are a fancy outlet, then doing up the window space is utterly important as your clientele will have high expectations.
While this might sound trivial, it is essential to give a professional look to your business. This also helps in branding if you are a big brand or a chain of bakery shops. It is necessary that your staff looks hygienic and well-dressed according to their area of work.
Partnering with online food aggregators
Though mentioned towards the end, this is a primary requirement in today’s times. The demand for online food delivery is huge these days and it is best that you register your business with online food aggregators to generate online sales.
It will also help to have an online-ordering enabled website. This will boost your online presence and generate online orders for the bakery. Naturally, these steps will up your revenues.
This, in essence, is the guide for anyone wishing to set up their own bakery business.