How Much Does It Cost To Start A Bakery Business In India?
There is a stark difference in what a bakery means in India to what it means in the other parts of the world. Generally, a bakery is where bread and cakes are made and sold, however in India, it is where western (European) food, in general, is available. Apart from bread and cakes, foods like burgers, pizzas, Puffs (baked puff pastry), veg and non-veg snacks, many kinds of beverages, kids’ food like chocolates, candy, lollipops, etc are sold.
A bakery in India is one stop for all birthday party needs. Many bakeries in India have adopted restaurant-style seating with a casual theme, generally attracting young people. It is decently profitable when done right and if location and quality are prioritized then huge profits can be expected.
Here are some factors to be considered before starting a bakery and also while maintaining a bakery in India:
- Capital and stock
- Menu and pricing
Capital and Stock for Bakery in India
Roughly speaking, a fixed capital of Rs.3-7 lakhs and operational capital of Rs.50,000-1.5 lakh per month would be required to start a medium-sized bakery with enough products on the menu.
Fixed capital include expenses like; kitchen and product display equipment, interior designing of the bakery, furniture for customers (can be from 2 stools to about 15 or more table and 4 chair set), billing equipment (using Toolny can drastically reduce this cost), company registration and purchases of licenses, and other miscellaneous expenses.
Operational capital includes every month expenses like; rent of the bakery, salaries of employees, purchase of regular stock, marketing expenses, GST and annual filing, and other miscellaneous expenses.
There are many exceptions in the above-mentioned expenses, people who own the store need not pay the rent, if an experienced baker wants to start a small bakery, he might not hire employees, etc.
Company registration and purchases of licenses like food license, trade license, and labor license is a must. You can register your company with GST by clicking on this link https://reg.gst.gov.in/registration/. You can apply for the food license https://foodlicensing.fssai.gov.in/index.aspx.
You can read our Ultimate FSSAI License Guide to know more about its licenses, prices, and complete details.
Labor and trade licenses can be applied through respectable state portals. Initially, not buying an extreme amount of stock is suggested as buying limited stock helps you identify what product sells more and what product sells less and thus helps in deciding what stock to buy and what not to buy. Rs.30,000-50,000 should be spent on purchasing of stock initially.
To know more about labour and trade licenses and how to apply for them check out guide on licenses.
Using apps/softwares like Zoho, Toolny, etc helps you maintain inventory and billing. These apps save a lot of time and are quite efficient.
Location of a Bakery
Location is one of the major factors when setting up a bakery. Choosing a location where there is a heavy footfall of customers is always preferable. Unlike coffee shops, the bakery should serve not only as a quick food grab place but also a place where people can sit and chill for a while.
Locations like; near school/college area, area center, near bus stops and railway stations, on highways, etc are preferable. One can also start a bakery if there is no bakery within a 3km radius in a decently populated area.
To know more, read our guide to pick the best location for an business.
Deciding Menu and pricing in a Bakery
As mentioned in the first paragraph, the bakery not only sells bread and cake but also many other continental foods. Generally, a typical menu of a bakery in India consists of cakes, Birthday cakes, Bread, various types of Pizzas, Burgers, Puffs, Biscuits, Cookies, Candy, Chocolates, Beverages, Indian snacks like Chicken/veg 65, Veg/chicken. Manchurian, Veg/chicken cutlet, etc. There are bakeries that have started selling Chinese food as well.
The menu should never be huge as it would lead to a lot of wastage of stock and decline in quality. The bakery would be sure-shot profitable if there are any products in the menu that are unique to the bakery and are of very high taste and quality.
If one decides to start a bakery, quality and pricing definitely matter. Never sell low quality food! Get decent quality stock and set decent pricing for your menu. Pricing depends on the standard of living of the people where your bakery is located.
There are two categories of pricing one can try anywhere: make high-quality food and sell it at premium rates – this generally leads to the low footfall of customers but a small quantity of sale would give enough profits, this generates goodwill for your bakery however one might have to face a lot of wastage of stock, make decent quality food and sell it at easily affordable rates – this leads to the heavy footfall of customers and generates a steady profit every month.
If one desires to scale up the business and eventually convert it to a franchise model, it is preferable to go with a premium menu.
How to Hire Employees for a Bakery
Hiring employees is not mandatory for a small bakery where the owner manages everything. However, a bakery in India definitely needs employees (at least 2) to run a bakery along with the owner. The employees should be taught in baking and cooking. It is always suggestible for the owner to learn the art of baking. There are several ways of employee maintenance the common one being providing food and shelter along with salary to the employees.
Typically, a bakery employee’s salary ranges from Rs.15,000-Rs.50,000. One can also hire trainees for lesser amount of time, but they have to be taught.
Managing your Bakery successfully
Managing a bakery every day is sure a tough task. A bakery should be clean! It is quite important as any person in India would experience the untidiness of a bakery. Since there is a lot of food being displayed, mosquitoes and houseflies would cause a huge problem and such problems have to be dealt with. Every inch in the bakery should be regularly cleaned.
GST filing every month is a must, if one has extra money to spend then hiring a Chattered Accountant would save time however, using apps like Quickbooks, Toolny, etc. helps one to file GST every month quite easily.
Inventory management, billing, employee management, etc. can also be managed using several apps present in the market. As mentioned before, apps like Zoho, Toolny, etc. always save time and money while managing the bakery.
Marketing your Bakery Perfectly
Marketing is an important branch of business and plays a significant role in the bakery’s success. In the initial stages, it is suggestible to distribute pamphlets in the local area either handing to the public or through newspapers. A better way to market is by using digital marketing techniques like Facebook promotions, Instagram promotions, etc.
Having a website and accounts in various social media displaying the bakery, food and other products would be a huge marketing strategy with a very limited amount of money spent. Toolny is such an app that helps you manage all social media accounts and also create and maintain a website for the bakery.
Registering for food delivery services like Swiggy, Zomato, etc. and marketing the bakery using those services is also a good idea given the commitment to spend a decent amount of money for it. Listing and receiving food orders is quite easy using these services however, these services take more than 20% in commission for doing so.
If one can deliver the products of the bakery to nearby customers, then having an app like Toolny definitely helps as it provides online delivery apparatus where the customer can order food through the bakery’s website and bakery can keep track and deliver the food to the customer using the app.