The Costs for Starting a Bakery
So how much does it cost to open a bakery? A small bakery has a generally less expensive startup cost of approximately $10,000 to $70,000 compared to joining an established bakery franchise, which averages at $400,000. The first thing you should know is that you should have enough funding to cover the expenses you will incur during the first six months of the business or until you turn a profit.
To find out how much it will cost you to open a bakery, first determine how much money you plan to make with your baked good, then distribute all the estimated costs on your offerings. Here are a few tips for pricing accordingly:
- Develop a list of ingredients for all menu items and calculate the cost of each one
- Consider items with set prices
- Keep the price competitive while still taking everything into account
- Consider all the bakery equipment you will need for food production
- Don’t forget to figure overhead costs into the equation such as baking supplies, packaging, and delivery, rent, utilities (water, electricity, and heat)
Bakery Equipment Needed to Get Started
The right commercial kitchen equipment will be the lifeblood of your bakery! You should have everything you need to maintain a steady production of your baked goods. For a startup bakery, the average cost for a complete equipment setup is around $35,000.
Generally, brand new equipment is recommended as opposed to used ones because you can get the warranty, gain complete knowledge of the service life, and have lower risks of equipment failure. Depending on the type of bakery and the size of your operation, you will have to purchase the following:
- Ovens (deck, conveyor, convection, standard)
- Freezer and blast chiller
- Refrigerator
- Commercial mixer
- Dough mixer
- Dough sheeter
- Dough rounder
- Proofing cabinet
- Bread slicer and food processor
- Dry storage case
- Display case
- Ice machine
- Dishwasher
- Bakeware
- Point-of-sale system
- Utility and delivery carts
Understanding the importance of maintaining the equipment is also crucial so that high-quality items like Hobart commercial dishwasher, Manitowoc ice machine, and everything else you equip your kitchen with will be useful for the long haul.
Unless you are building the bakery from scratch, you’ll only have to worry about rent/lease expenses plus the decor and furniture for your front-of-house. For a bakery in a large city, the cost for this will be around $10,000.
Licensing and updating
Licenses and permits will also set you back at least $1,000, just like when opening any type of restaurant. Set aside some cash for potential updating and modifications to get your kitchen up to the standards of your local health department.
Operations
This covers your daily expenses incurred in six months. The large chunk of it will be ingredients and the cost of labor, as well as the regular baking supplies and packaging. Think ahead and make sure to establish good relationships with vendors/suppliers so you can negotiate for the best price. You’ll also have to think about advertising and social media marketing expenses, which should be approximately $1,000 or less, plus any accounting and administrative services you get.
Staff
It is common for startup bakeries to keep the staff small initially, with only two bakers, two maintenance staff, and one for two cashiers. It is recommended that you hire an accountant to manage and get a better understanding of your bakery’s cash flow. You can also opt to offload essential tasks like tracking inventory. For the workforce required to run a small to medium bakery in the city, add $10,000 to $15,000 to the expenses.
Contingencies
You should be ready for unpleasant surprises or emergencies by estimating higher and keeping a contingency budget.
Summary
So when it comes to figuring out how much it costs to open your bakery, leave no stone unturned–from the commercial kitchen equipment to the licenses to the smallest of baking supplies. This way, you can stay on top of your expenses and maximize the profitability of your business.
