Startup Costs for a Bakery. (Is it Expensive to Start a Bakery)

Startup Cost for a Bakery. (Is it Expensive to Start a Bakery)

by

A lot of people dream of starting their bakery. Who doesn’t like the smell of fresh-baked bread and pastries? However, dreams take work and money to achieve. Before you can start selling your baked goods, you need capital. 

The average costs to start a bakery can be between $15,000 and 70,000. Your startup costs can depend on several things. You will need money for a location, construction or remodeling, startup expenses, equipment, ingredients, and advertising.

Location

Startup Costs for a Bakery. (Is it Expensive to Start a Bakery)

Your location can make or break your bakery. If your bakery is not in a place that is convenient for customers to access, it will likely fail. Unfortunately, places that are easy for customers to access can often be expensive for startups. Rent for a commercial bakery can cost $2,500 or more a month. If you’re trying to start an industrial bakery, that can jump to $7,500. However, there are ways to get better locations or decrease your expenses.

One way is to get a location that is strictly a bakery. Some bakeries have sit-down seating where people can eat (often a place that has been converted into a bakery from a cafe or other restaurant). While this may seem like a good idea, a lot of bakery customers want a pastry or loaf of bread they can grab and leave with. Or they may want a cake they can take to a party with them. It may not be worth the money to have a sit-down area. Especially if you’re planning on starting a bakery in a high-traffic area since these areas are often the most expensive If you stick to a grab-and-go bakery, you’ll save a lot of money as rental costs are often affected by square footage. The fact that the cost of the building is affected by square footage means that an industrial-scale operation will have a higher cost.

Another way you can save money, in the long run, is to run your bakery from home. Some people get industrial kitchen equipment and bake things and ship them from home or bring them to events as a catering service. Of course, this requires some remodeling since residential ovens won’t be able to handle the job and will likely preclude owning pets. The remodeling would be expensive but you’d save a lot compared to a store-front.

Construction and Remodeling

If you’re constructing a space or remodeling an existing one, expect to write a hefty check. A commercial space remodel or construction will cost around $5,000-$25,000 depending on the size. The construction of an industrial bakery will cost less at $3,000-$12,000. The real cost will come from the warehouse space, at around $35,000. Since your bakery won’t be making any money during the construction, you’ll probably need to get some investors involved.

How Much Ingredients Should Cost For A Bakery

Startup Expenses

Starting a business of any kind has considerable expenses. You will need to hire a lawyer to handle the legal paperwork that goes into forming a business as well as any other assorted contracts. This expense can vary wildly. You’ll also need to deal with things like regulatory permits and insurance which can run anywhere from $500-$2,500 depending on your type of space. You’ll also need to have utilities set up as you remodel your space. This can cost $1,000-$2,000 and you won’t be making money while you’re constructing the bakery. This cost can be considerably more if you’re starting a wholesale or industrial bakery. If you’re running a traditional storefront bakery, you’ll also have to deal with decoration costs since the atmosphere does have a degree of importance. If you choose to have a seating area, you’ll be looking at another $$5,000. If you’re running an online or home bakery, your costs will still exist and might be lower but they’ll be different. If you’re going into catering, you’ll need a vehicle that can safely transport the food and the catering equipment. These large vehicles can be on the expensive side, usually around several thousand dollars, and you’ll have to factor in fuel costs too since they tend to eat gas.

If you’re running a bakery from home, you’ll have to deal with shipping companies and converting your kitchen. While this can be cheaper, it isn’t free.

If you’re running a normal storefront or industrial bakery, you will have employees. These have costs. Paying the employees and offering benefits to attract employees is important but there are other things to consider. You’ll have to get uniforms (and a company to design the uniforms) safety gear like first aid kits, and safety gear related to food handling. Safety gear will be especially important if you’re planning on starting an industrial bakery. On average, you’ll be looking at spending $8,000-$13,000 on employees. If you’re going the industrial route, you will need $6,00-$25,000.

Top 6 Biggest Mistakes When Opening a Bakery

Equipment

Startup Costs for a Bakery. (Is it Expensive to Start a Bakery)

Equipment is especially expensive for startup bakeries. There are ways to cut down on expenses. You will need a commercial or industrial oven of course. Sometimes, you can find used equipment on sites like Craigslist but you should be prepared to buy a new oven. If possible, try to test the used equipment before you pay for it. 

If you’re looking for industrial-scale equipment, not only are you looking at bigger versions of traditional equipment, you’ll be looking at more equipment. Things like conveyor belts and industrial rollers are common in industrial bakeries. If you’re starting an industrial/wholesale bakery, vehicles are also important.

Things like utensils are also important. What utensils you’ll need depends on what you intend to bake. Some bakeries may focus on breakfast food like muffins, croissants, and donuts so they might need friers and pastry bags. Other bakeries may focus on elaborate cakes so you might need specialized equipment more conducive to that.

For those that intend to run a commercial bakery, your display case will be extremely important. To get customers in your store, you need to show off your wares. People will be enticed to come into your store when they see your goods in the front window and might be enticed to do some extra shopping when they see things prominently displayed at the register.

Your equipment costs will vary. A home bakery can save some money by using utensils they already own. They’ll need things like an upgraded oven. Home bakery equipment can cost around $5,000. Commercial equipment will run around $20,00. If you’re going full industrial baking, you’re looking at a $35,000 expense.

Why It Is Not Difficult to Open a Bakery

Ingredients

You can’t have a bakery without ingredients and you’ll want to have them ready before your grand opening. Costs will vary depending on your operation. If you’re running an in-home or online operation, you’ll need fewer ingredients because you’re probably going to specialize in a few items compared to commercial bakeries that have to make a wider variety of items, especially if they’re trying to have a restaurant-style bakery like Panera Bread. Though industrial bakeries make fewer items, they need larger amounts of items. 

Depending on the type of operation, you’ll be dealing with a $1,500-$7,500 expense.

Marketing
Startup Costs for a Bakery. (Is it Expensive to Start a Bakery)

Marketing is an essential step for getting your business off the ground. You can’t get customers if they don’t know you exist. You might think this will be expensive but it doesn’t have to be. Your cheapest marketing tool is reviews. Get customers to leave reviews on your social media pages and your Google search page. Getting a social media page and running it well is also cheap (though you may want to add it to the duties of one of your employees/  Designing a website to be appealing and functional is important, especially if you’re running a home operation. Assuming you want a professionally done website, you’ll be spending around $200. If you’re looking at traditional commercials, you’ll be spending several thousand dollars depending on the market.

Logo design is important because you want something distinct that can get people’s attention. You’ll need a professional logo designer. You can find these on many freelancing websites.

Physical marketing will be a higher expense at around $4,000. This is because you’ll need a sign designed and put up. Chances are that you won’t be able to do this from a home bakery. due to zoning regulations. In all, you’ll be looking at $1,500-$4,000 to start. You may need to spend more on marketing in the future.

Six Must-Have Items To Sell In Your Bakery

Frequently Asked Questions

1, What kinds of customers do industrial bakers serve?

Grocery stores, schools, restaurants, and other places that serve a large number of baked goods at once usually get them from an industrial baker.

2, Why would a home baker sell a smaller variety of items?

Simply put, there’s not a lot of space in a home bakery operation. Many of their items are made to order and there’s demand to consider. There are a lot of places that sell bread and muffins already. Many home bakers focus on things like decorative cakes since that’s something unique they can offer.

To learn more on how to start your own bakery business check out my startup documents here

This blog post is provided for informational purposes only. The information contained is not intended to constitute legal advice or to substitute for obtaining legal advice from a qualified attorney.