An online report suggests that the bakery market of India is estimated to grow at a Cumulative Annual Growth Rate (CAGR) of 8.5% between the years 2021 and 2026. Additionally, the report implies that it is set to reach a valuation of US$12.39 billion by the end of the year 2026, making bakeries a fairly lucrative restaurant format. This can be evidenced by the demand for baked goods that has witnessed a gradual but noticeable increase in the past couple of years. The same can be true as baked goods tend to offer customers convenient food options at an affordable price, hence the growing demand. This has also led to an increase in the number of bakers operating from their homes and chefs venturing into the bakery business from the comfort of their homes. In this article, we will talk in detail about how to open a bakery business in India and how one can secure a business loan for it.
Before going ahead and learning about the method of starting a bakery business in India, one must create a solid bakery business plan. This should help one streamline the operations, decide the distribution of budget, and plan the future development of the venture, among others. The first step should be the creation of:
Bakery Business Plan Summary– The business plan summary of one's bakery business should be an overview of the bakery. It should consist of the entrepreneur's mission statement, a review of their restaurant's legal structure, and ownership pattern. Additionally, it should contain a brief history of the restaurant if it is an existing establishment.
Overview of the Business– The overview of a bakery business plan must be made up of the concept and the type of service it intends on providing. On top of that, it should include the bakery layout. To give a clearer picture of the kind of eateries that will be offered, a future bakery business owner should furnish a sample menu and the details of the management team.
Analysis of the Industry– Conducting an Industry Analysis is extremely important to open a bakery. It helps identify the competition in one's area, analyse the target audience for the bakery, and help them select the right location for the eatery.
SWOT Analysis– The Strength, Weaknesses, Opportunities, and Threat (SWOT) analysis of one's bakery would help them identify their plus points, their minus ones, opportunities for growth, and barriers to trade and competition.
Plan of Operations– The plan of operations of one's bakery business should be home to information such as the functioning of the bakery, order-taking process, menu setting/printing, value-added services, management of staff, and procurement of raw materials, among others.
Analysis of the Finances– A bakery's finances should include the statement of cash flows, costs associated with day-to-day operations, and fixed/recurring expenses. This should help one in ascertaining the financial viability of the venture.
Marketing Plan– The marketing plan should discuss how the owner will attract customers and simultaneously promote their bakery.
The first step of starting a bakery business in India is to decide on a location. In the case of a bakery, the ideal location is a market of repute or a high-end centre complete with sports bars and other kinds of eateries that already draw attention to the place. Ideally, the front area shops on the ground floor that are easily visible and accessible are appropriate for bakery businesses. It is advisable to have a shop with a carpet area of 500 square feet at the very least, preferably divided into two floors to build a functional kitchen on one level and house the patrons in another. However, this is subjective to the available space.
For a commercial space spread over 1000 square feet, the rent should not go beyond ₹60-70k, and expenditure should be capped at ₹1,80,000 to acquire the place for the bakery’s operations.
Additionally, while finalising the location, it is essential to ensure that the place comes with proper drainage and water supply facilities. The owner should also procure a No Objection Certificate (NOC) from the property owner, stating that they have no problem using their place as a bakery.
Similar to the Quality System Regulation (QSR) format, a bakery business also needs a total of five licences, namely:
Health Licence by the Local Municipal Corporation
Police Eating House licence, and
Out of all of the above, the first three are the most important ones to have. Police eating house and the requisite fire licence can be acquired once the owner commences their operations. However, it is recommended that one has all of the licences in place before opening a shop.
Food Licence: The FSSAI website (www.fssai.gov.in) is one place where one can apply for the relevant food licences. Additionally, you can also get the same done through a myriad of agencies that charge around or up to ₹5,000 for the paperwork in its entirety along with the licence fee. The licence must have a validity of 5 years at least to avoid annual renewal fees. The licences that have a validity of 5 years cost around ₹15,000.
GST Registration: It can be done with a Chartered Accountant’s assistance. They will guide the entrepreneur every step of the way.
Health Licence(s): One must also obtain the requisite health licence, courtesy of the Municipal Corporation with the help of a local health inspector. This should cost the individual somewhere around ₹3,000.
Fire Licences: The requisite fire licence can be acquired by simply shelling out ₹1,000-2,000, after the fire extinguisher cylinders are installed.
Unlike the QSR and Food Truck methods, bakery shops need a relatively skilled workforce since both the taste and presentation aspects of a baked good are fairly crucial to its ultimate fate. In the case of a high-end bakery, one will need a chef de partie, a head chef, helpers and a commis chef, in addition to a cashier and service boys at the serving area’s display. The salary of the personnel will depend on their experience.
The bakery kitchen equipment is costly as each equipment piece is made up of stainless steel because they are supposed to be sturdy and long-lasting. The essential pieces of equipment required at a bakery are ovens, planetary mixers, cooling fridge, deep fridge, gas stove, working table, storage utensils, and cylinders. Unlike QSR or Food Trucks, a bakery requires new efficiency equipment. But, to lower the cost, one can get a second-hand working table.
The display area or the front end of the bakery business should be well designed and created so that every item is noticeable to attract walk-in customers. You mainly require a display fridge for cakes and pastries. Other than the refrigerator, the display area should have proper storage and a display rack.
The point of sale (POS) software is no longer just billing software. These things are equipped with powerful integrations like inventory management, making the POS software the only software one will need in their bakery. While purchasing one, the owner must ensure that the device's software has features that will help them manage the baked items' shelf life and have robust inventory management capabilities as one would be dealing with perishables all the time.
Marketing and branding are essential for any entrepreneur who wants their business to flourish, and the list of such entrepreneurs includes bakers too. One must acquire a properly designed logo and display board from an experienced designer, and it is also important to get a well-designed menu.
Apart from the items mentioned above, one must also have set aside some money for the restaurant management software. It could also help them run multiple marketing campaigns by utilising data pertaining to customers.
Uniforms are usually ignored while opening a bakery. However, it must be noted that they are essential as they give out a professional feel and look, which usually works well for the branding of the bakery. All staff members must look hygienic, cleaned, and well dressed. One can choose from chef coats, smart shirts and t-shirts, and aprons, among others.
The demand for online food delivery is steadily increasing these days, with most of it coming from online food aggregators. For a new bakery on the block, it is highly recommended to get registered with online food aggregators to generate orders through such portals.
It is also advisable to have an online-ordering enabled website for the bakery. This would help one boost their online presence and generate online orders for their bakery. One can safely say that the approximate cost of getting a quality bakery started in India is around ₹15 Lakhs. However, the cost of equipment and location can lead to a significant amount of variance in the estimated cost.
Do not let the costs mentioned above deter you from bringing your culinary dreams to life, as almost all of the above expenses can be taken care of with the help of a single business loan. As a user of Bajaj Markets, one can be assured that the application process will take a negligible amount of time. If the applicant meets the eligibility criteria, the amount which they have decided on with the lender will find its way to the bank account of the future business owner in a matter of days. Apply now!