Guide To Start A Bakery Business: From Bakers To Entrepreneurs

Are you a passionate baker who can make heads turn with the smell of freshly made cookies? Have you ever considered starting your venture? If yes, then this article is for you! Embarking on a bakery business in India holds tremendous potential, especially given the thriving market and the nation’s growing affinity for delectable baked goods.

According to a report published by the IMARC Group, the Indian Bakery Market was valued at $11.3 Billion in 2022. It is expected to grow at 10.8% annually. The bakery business is gaining immense popularity in India. You have many options ranging from a small home based business to a restaurant-style bakery.

A growing number of fast-food chains and quick-service restaurants has increased the demand for bread. Furthermore, the fast-paced lifestyle has increased the need for ready-to-eat bakery food.

Learn about bakery business ideas and action steps to start a bakery business in India.

Let’s Understand the Types of Bakery Businesses

Before venturing into a new bakery business, you must understand its types. First, you have to decide on whom you are going to serve. You can either start a retail bakery or a wholesale bakery.
This is the first and very crucial decision before any other planning. Based on this decision, you must strategize your investment and client engagement.

Here are various types of bakery businesses:

Retail Bakery

• You will serve the retail customers directly in retail bakeries. The bakery layout, employees, equipment, etc., should be ideal for serving your retail customers.

Wholesale Bakery

• If you choose wholesale bakeries, you supply your products to hotels, cafes, and supermarkets. Your focus should be on an innovative menu, packaging, and delivery.

Types of Bakery Services

Once you have decided on the type of bakery business you will start, you have decided on the type of service. You can choose to work from your home or establish a facility. Here is a list of bakery services that you can choose from.

Home Bakery

For people with less investment, you can get your foot in the door by starting a home-based bakery. You only need ample space to set up your equipment and workspace. Usually, beginners start from home and sell to friends and family. Gradually they expand their customer base and then their facility.

Counter-Service Bakery

When you establish a counter-service bakery, you cut down on customer service. Customers walk into your bakery, order the food items and collect them from the counter. You can combine retail and wholesale bakeries in such setups. You can also deliver bakery food to other cafes while serving retail customers.

Bakery Cafe

In a bakery cafe, you combine your delicacies with a pleasant dining experience. You can have an extended menu and offer additional food items like beverages, breakfast, and a takeaway service. You are setting up a bakery with a restaurant atmosphere.

Wholesale Bakery

Unlike a bakery cafe or counter-service bakery, you need not maintain a storefront. You can focus on your menu, packaging and delivery. The challenge here is finding new clientele. Transporting the food items without damaging the product or packaging is also the key to success.

Food Truck Bakery

Food Trucks of all types are gaining popularity in recent times. You can set up your bakery on a food truck and avoid the cost of setting up a shopfront. You also get the advantage of moving around and serving customers based on demand.

Speciality Bakery

A speciality bakery makes and sells only one or a fixed number of bakery products. Here, you can use your expertise to create quality and yummy products. You can also sell for both retail and wholesale customers.

Start A Bakery Business in India in 2024

The bakery business is one of the most significant segments in India’s Food Processing industry. The industry is expected to snowball with massive innovation and growth opportunities.

Here is an extensive step-by-step guide on how to start a bakery business in India in 2023.

1) Choose your Bakery Style

This is the first step in starting a bakery business in India. You have to decide upon the type of bakery and the services you will offer. You have to choose between the following:

• Online / offline service
• Home-based service / counter-service / bakery cafe
• Retail/wholesale setup.

This decision is crucial to proceed forward in strategising. Based on this decision, you can decide on your investment, registration process, etc.

2) Create a Bakery Business Plan

Once you decide on the style, you must formulate a detailed bakery business plan. It includes investment plans, loans you will apply for, location, marketing efforts, roles of team members, etc. Your bakery business plan comprises:

• Bakery business summary
  • Mission statement
  • Legal structure and ownership
• Bakery business overview
  • Type of bakery service
  • The layout of the bakery
  • Sample menu
  • Details of the team
• Industry Research
  • Analyse the target audience
  • Identify competition in your locality
  • The best location for your bakery
• SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats)
• Operations Strategy
  • Decide how your bakery will function
  • Employee plan and management
  • Order-taking
  • Menu
  • Raw-material procurement
• Financial Strategy
  • Cash flow management
  • Operating costs
  • Expenses management
• Marketing Management
  • Customer acquisition strategy
  • Sales and marketing strategy

This is the document that you have to come back to check if you have achieved all your milestones. It would help if you decided on your next step of action based on your business plan.

3) Look for Startup Loans

A bakery business investment plan is very crucial for successfully running a bakery business. Your business plan will give you an approximate initial investment. You have to decide upon the source of investments.

In most cases, you must secure external funding to start the bakery business. In India, you have a variety of business loans to avail of funding. The most viable options are discussed here:

• Asset-based loans: You can avail of loans by providing collateral like inventory, real estate, or machinery.
• Term loans: They are viable for acquiring a long-term loan for 1 to 10 years.
• Working Capital Loans: These short-term loans come with a higher interest rate. You will have to pay them back in a year.

You can choose the appropriate type of loan based on your financial needs. You can acquire these loans from banks and other NBFCs. They provide loans after analysing your creditworthiness.

4) Lease a Bakery Location for Your Business

The next step is to choose the right location for your business. Your market analysis and the type of service you plan to offer will be the critical factors in deciding the location.

For establishing a successful home bakery business, adequate space in your home is enough. You need space for equipment and food preparation. But, if you plan to start a bakery cafe or even wholesale service, you must find an apt location.

You can buy, rent, or lease the location to set up your bakery business. Leasing the location is one of the best cost-effective options to start your business. Some of the essential factors to consider while choosing your location:

• Local competition
• Accessibility of your location
• Footfall potential
• Growth potential
• Proximity to your target audience, etc.

5) Bakery Registration and Licenses

Registering your business and acquiring all the appropriate licenses are essential to start any business. To start a bakery business, you need to have the following licenses and registration:

GST Registration

• When the returns from your business exceed a basic limit, you need a GST registration to function. If you have bakery outlets in different states, you need a specific GST registration for each state. You can get the help of a Chartered Accountant to apply for GST registration. Understand GST registration in detail here.

FSSAI License

• It is one of the most important licenses to obtain for a business in the food industry. FSSAI license is provided by the Food Safety and Standards Authority of India. It certifies that the food in your bakery is safe and of high quality. Check this page to learn the guidelines for applying for an FSSAI license FSSAI.

Health License

• You can obtain the Health license from the Municipal Corporation office. The Health license fee is approximately INR 3000.

Fire License

After completing the initial setup of your bakery, you have to obtain the Fire License. It ensures that Fire extinguishers are installed in prominent locations of your bakery.

Also Read: From Home Cook to Entrepreneur: Best Food Business Idea

6) Equipment Required to Start a Bakery Business

Different Bakery services will require different types of equipment. A deep fridge, Mixers, Ovens, storage utensils, working tables, etc., are some appliances needed to run a bakery.

You have to choose the right equipment based on your type of bakery and the products you are offering. You can choose high-quality brand-new or quality second-hand appliances based on your budget.

7) Design a Bakery Layout

The design of your bakery is vital for its success. It depends on the type of bakery business you are planning to start. For a retail bakery business, you need a perfect layout that showcases all the products. You should plan the layout with all the display equipment in mind.

For a bakery cafe, the layout should be attractive and, at the same time, functional. You should also be able to display the items while accommodating the dining tables and chairs.

Whereas for a wholesale bakery business, you must plan the layout to maximise efficiency. It will help if you improve the functionality of the layout. Planning a proper layout for your bakery is significant for efficiently running the business.

8) Hire your Bakery Staff

Qualified staff are the backbone of the success of any business, especially in the food industry. Consistent taste and quality are critical to the success of a bakery business. With that in mind, hire employees who are committed and passionate enough.

Bakeries will open early in the morning and run until late at night. You should also keep this in mind while hiring appropriate staff. Especially bakery cafes would require compassionate servers to interact with your customers. Customer service is vital to the success of a bakery.

9) Advertise your Bakery

The motive of any business is sales and profit. For your bakery to be successful, your customers have to find you. An effective marketing strategy is crucial in improving customer awareness and promoting your brand. With the advent of the internet, you have ample opportunities to promote your bakery.

Some marketing and advertising options are:

• Traditional Advertising: Flyers, billboards, etc.
• Social Media Advertising: Facebook, Instagram, LinkedIn, etc.
• Coupons: Attach coupons to the local newspaper to create awareness.

10) Host a bakery Grand Opening

Hosting a grand opening for your bakery business will inform the local people about the new venture. It is one of the best methods to create awareness about the bakery. You can also use promotional techniques like inaugural offers to captivate customers. The motive is to popularise your bakery and to get them to taste your products.

Your Pathway to a Flourishing Bakery Business

India’s bakery business is set to grow at a tremendous rate. Due to the increasingly fast-paced lifestyle, ready-to-eat food is gaining acceptance. The demand for ready-to-cook food items like bread is constantly rising. 2023 is the right time to start your bakery business or level up your existing small one.

Innovative, low-investment ideas for the hidden entrepreneur in you! Explore our guide on Business Ideas.

Frequently Asked Questions (FAQs)

Other Related Reads

• 30 Profitable Side Business Ideas to Start in 2023
• 40 Trending Startup Business Ideas in India for 2023
• Empowering Women Entrepreneurs: A Comprehensive Guide to Business Loan for Women