How Much Does a Bakery Startup Cost

The bakery business is one of the most profitable food businesses. Bakery products have gained popularity all over the world. The delicious flavor, sweet taste, and aroma have made it widely famous for all ages. 

Moreover, the bakery business is the most demanding and challenging one. It has become a passion for the food business entrepreneur. Many new and old entrepreneurs are now moving forward to the bakery business. 

However, the bakery business has some challenges also. So, if you are one of those who has a high passion for bakery businesses. And, you want to enter into the bakery business industry. Then, you must know how much does a bakery startup costs. 

In this article you will get a clear idea of how much does it cost to open a bakery. Let's get into the details and know every aspect of the bakery business.

What is Bakery Business

A bakery business is a type of food business where baked products are sold. In a bakery you will find different types of bakery items. The market size of the bakery business is very wide and profitable. A bakery business can be done in different ways. 

You will find many bakeries that make and bake goods. And these items are directly sold from the bakeries to the customers. On the other hand, some bakeries bake goods and sell them in the local market. There are also home bakery businesses. 

So, you can start your bakery business according to your plan. Here, we will discuss some important types and aspects of the bakery business.

• Retail Bakery

A retail bakery is a type of business where bakery items are directly sold to the customers. It is one of the most popular bakery business types. A retail bakery offers a variety of goods. 

It includes everything from cake to pastries, bread to biscuits, dessert to fast food, and others. Basically, a retail bakery needs more space and investment. 

As the retail bakery is involved in direct selling, they need a front of the house and a back of the house for operating. Front houses are needed to interact with the customers. And the back of the house is used for baking, inventory, and storing baked items.

• Wholesale Bakery

Wholesale bakery is another type of famous bakery business. In a wholesale bakery, a higher amount of goods are produced for sale. However, in the wholesale bakery business, the goods are sold to the other business rather than directly to the customers. 

Different types of bakeries and pastry shops, restaurants, grocery stores, and cafes are the customers of wholesale bakeries. One of the major characteristics of a wholesale bakery is high-volume production, quality, and consistency. 

• Speciality Bakery 

A specialty bakery is different from a traditional bakery business. These types of bakeries mainly focus on some specific, unique dietary goods. However, the specialty bakery is popular for selling high-quality baked items. 

They differ from others for their techniques and premium-quality ingredients. You will find different types of specialty bakeries. It includes vegan bakeries, gluten-free bakeries, sourdough bakeries, artisan bread bakeries, etc. 

How Much Does a Bakery Startup Cost

Starting a food business is challenging. It takes a strong business plan and marketing strategy. While you are planning to start a bakery business, bakery startup costs are a major concern. 

You must pay a handsome amount of money for making your dream successful. Before entering into the process, you should know the bakery startup cost checklist. According to the startup cost, you can make a budget and start your business. 

Here is a guideline on how much does a bakery startup costs. Break down all the financial aspects and establish yourself in the food industry. Remember, the startup cost can vary a lot based on several factors. It includes the location of your bakeries, size, bakery types, quality of ingredients, etc.

1. Location and Lease a Space

Location and selecting space is a very essential part of a bakery startup. First, you have to choose a location where you want to start your bakery business. The cost can vary a lot based on the location. 

Remember, you must do complete research on the market before starting. It will be a wiser decision to choose a high-traffic area for the bakery. After selecting the location, you have to choose the space.

You can purchase or lease a commercial space for the bakery. But leasing a space for the bakery is most preferable. It is cost-saving and easy to start. Space lease cost also varies on location and the size of the space. 

The more space you purchase, the more cost will be needed.

Estimated Cost:

The average cost of renting a space for a mid-sized (1500 to 1700 square feet) bakery can range from $900 to $6000 per month. However, if you want to buy a space, then you must spend more money to purchase it. 

Although the average costs can change from state to state. Moreover, bakery types are crucial for renting. If you want to make an upfront area for your customers. Then, you need a larger space. And the price will automatically increase.

2. Technology

Technology is important to run and manage your bakery properly. You need different types of technological support for bakery businesses. Simply, you need restaurant software for managing your bakery. 

However, technology also costs a range of lower to high amounts. It depends on how much technology you have been using. Moreover, the types of technology also play a crucial role in overall costs. 

Here, we will provide some software that may be required for running your food business. 

• POS Software

Restaurant POS software has become mandatory for managing any food business. Effective restaurant POS software effectively manages the entire bakery operation. However, using POS software is easy to use and reduces complexity. So, you must include the cost of POS software in your bakery startup cost. 

• Online Ordering System

An online ordering system is an important technology for food businesses. It can be used for managing online orders, delivery, pickup, menu management, etc. This technological investment is a part of your bakery costs. 

• Accounting Software

Accounting software can manage your bakery's finances. If you want secure financial management, you must need accounting software.

• Inventory Management Software 

Bakery inventory management is crucial for bakery businesses. As we know, bakery products and ingredients have lower expiry dates. So, it should be monitored regularly. Otherwise, your bakery business will face a loss. You must ensure you have effective inventory management software. 

Estimated Cost: 

The cost of technology also varies a lot. It depends on the types of software you have been using. Moreover, the average cost depends on the software subscription method. If you purchase and install one-time software for your bakery, then the cost can be between $500 and $2000. 

On the other hand, if you go for the monthly subscription, then the cost can range between $200 and $600 per month. These costs vary on the software features and subscription model.

3. License and Permission

The food business can be quite challenging. You must obtain some important licenses and insurance to operate a bakery business. And these licenses can cost a lot. 

So, you must include the bakery license cost in your bakery startup checklist. You need different types of licenses;  they include trade licenses, food handler licenses, sales tax permits, liability insurance, and others. 

However, the license and permission costs also vary from city to city. If you open your bakery in a famous city, the cost will be higher. Let's get into the details and break down the costs.

• Business License

A business license is a license that every business needs. Without a business license you cannot operate a business. The cost of a business license can vary based on your location. 

Estimated Cost: $100 to $1000

• Food Service Permit

A food service permit allows you to sell food. It ensures you are following food service selling rules and regulations. Without a food service permit, you cannot sell food.

Estimated Cost: $100 to $800

• Health Department Permit

Whenever you are operating a food business, you need a health department certificate. It ensures that the food you are served is healthy and hygienic. However, the cost of health department permits varies by location and the size of the bakery. 

Estimated Cost: $100 to $1000

• Fire Safety Permit

As you are starting a business that requires you to work with fire and baking. So, it required a fire safety permit. A fire safety permit ensures you have enough fire safety systems.

Estimated Cost: $50 to $300

• Zoning Permits

Zoning permits are essential. When you are starting a business in a specific zone, you need a zoning permit. It ensures you are following the zoning laws and regulations. A  zoning permit can change at any time, it depends on the zones. 

Estimated Cost: $300 to $1200 

• Liability Insurance

Liability insurance is a protective method that saves your bakery from potential risks. It covers any damage, injuries, missing items,etc. It also depends on the area and size of your business Moreover, it varies based on the risk and depth of the accident.

Estimated Cost: $500 to $1500

4. Interior, Renovation and Furniture

Interior, renovation, and furniture are the essential parts of the bakery business. If you are planning for a retail bakery, then you need an attractive interior design and good furniture. 

The cost of interior design, renovation, and furniture significantly varies. It depends on you. The more you decorate, the more you will need to spend. Overall cost depends on your design model and preference. 

Let's break down the costs.

• Renovation

Renovation is changing the space's internal structure such as plumbing, electrical lines, disposal lines, etc. It is essential to make your bakery more effective. Moreover, it also ensures health standards and safety. 

Actual renovation costs depend on the space conditions and amount of renovation. If you need a larger amount of renovation, then the cost will be much higher.

Estimated Cost: $25000 to $50000. In some cases it can reach up to $100000

• Interior Design

Bakery interior costs depend on your choice. If you choose a quality and stylish interior, then the cost will automatically be high. You can reduce your bakery startup cost by choosing the right interior design. 

Estimated Cost: $5000 to $30,000

• Furniture 

Basically, a wholesale and other types of bakery don't need many pieces of furniture. But if you choose a retail bakery, then you need nice furniture to decorate. In that case, the cost will be high. 

Estimated Cost: $5,000 to $15,000 

5. Kitchen and Baking Equipment

The production and performance of a bakery depend on the equipment. If you have high-quality equipment, then automatically the production will be very high. Right equipment can also reduce operating costs. 

Moreover, getting started with the right equipment can reduce health and other risks. So, let's get into the details and know about the kitchen and baking equipment cost details.

Estimated Cost: The average estimated cost of kitchen and baking equipment can range between $25,000 and $40,000 or more.

List of the Equipment:

• Commercial Ovens

Used for baking, and the price depends on the size of the oven. If you want to produce more scale goods, then you need a high-quality convection oven. The cost of the commercial oven can range between $2500 and $30,000. 

• Refrigeration and Freezers

Refrigerators and freezers are very essential parts of a bakery. The size of the refrigerator and freezers plays a crucial role. The larger the size, the more expensive it will be. But on average, the price of the refrigerators and freezers can range from $1000 to $15,000.

• Mixer

A mixer is used for mixing the ingredients. So, every bakery needs a well-working mixer to be more effective. It helps to increase the production capacity. The cost of a mixer depends on its size. The average commercial mixer price can range from $2000 to $20,000 or more.

• Prep Tables

Prep tables are known as a preparation table. It is a stainless steel working table. The cost of a prep table is between $500 to $7000. 

• Dough Sheeter

A dough sheeter is very important equipment for a bakery. It helps to make a large amount of dough. It reduces time and human workload. The average cost of a dough sheeter is $2000 to $10,000. 

• Bread Slicer

Most of the bakeries use bread slicers. It helps to slice faster and well. The cost of a bread slicer is $1500 to $9000.

• Display Cases

Display cases are equipment that every bakery needs. The cost of a display case depends on its size and design. And the price range is between $1000 and $5000. 

6. Utilities

Utility is an essential part of any business. No matter what your business type is, you must spend money on utility. It helps to smoothly run and operate your bakery operation. Here is a list of utilities and their costs. Most of the utility bills are paid on a monthly basis. And the cost can vary month to month. 

• Electricity

Electricity cost varies widely. It depends on your production, size of the bakery, and types of equipment used. But, on average, you can expect to invest $200 to $1500 in electricity costs. 

• Water

In general, water bills are not so expensive. And the cost also varies on production quantity. So, the estimated cost of production ranges between $100 and $300 monthly.

• Gas

Some bakeries use ovens and stoves that require gas. If you own this type of bakery, then you must need a gas connection. However, the cost of gases varies on the pipe layer, and it costs between $500 and $2000. 

• Waste Disposal 

Every food business makes different types of waste. These wastes need to be disposed of. And the waste disposal depends on the production and waste volume,etc. You have to spend on average $200 to $500 for waste disposal. 

7. Inventory and Ingredients

Inventory and ingredients are vital for the bakery business. If you want to sustain yourself in the bakery industry, then you need an effective inventory system. It ensures your bakery's production and effectiveness. 

Moreover, good food comes from good ingredients. So, you must need good-quality raw materials and ingredients for making the best output. In baking, there are some essential ingredients that are needed. 

It includes flour, eggs, sugar, butter, milk, yeast, dry foods, cream,etc. So, these ingredients are generally very costly. As you are starting a bakery business, you must focus on those terms. 

Moreover, after baking goods, they need to be well packaged. It also needs to add to the overall costs. Custom branding and packaging costs can add some extra cost to the bakery startup costs.

Estimated Cost: The inventory and ingredients' estimated cost is $10,000 to $20,000 or more.

8. Staff Training

You can not run your bakery without staffing. So, you need to hire the staff for your bakery. It will be a wise decision to hire effective and skilled staff. But you need to arrange a training session to train your staff. This training can increase your bakery operation. 

However, this training can cost a certain amount of money. The average cost of staff training can range between $500 to $2000. However, this cost can vary a lot. It depends on the amount of your staff and training programs. 

9. Labour Cost

Labor is an important part of the bakery business. How much labor you need depends on the size and types of your bakery. If you own a large bakery, then you need more staff. 

There are many different types of labor a bakery needs. It includes bakers, pastry chefs, counter chefs, cashiers, cleaners, etc. The salary of the labor also depends on experience and workload. 

But, remember, a well-trained labor force can be very effective for your food business. Moreover, the costs of the labor also vary from location to location. Generally, in developed countries, labor costs are very high.

Estimated Cost:  $16,500 to $30,000.

10. Marketing and Branding

Every business needs marketing. So, in your bakery business plan, you must include a well-defined marketing plan. However, good marketing can make your bakery very successful within a short time. 

A marketing technique can be very unique or simple. There are many marketing strategies on the trends. You can follow them and implement them into your business. You can use random marketing or a social media marketing strategy. 

You can promote your bakery business on different social sites and offer promotional deals. Remember, the cost of marketing and branding depends on your marketing strategy. It can cost a mid to high amount of money. It totally depends on the bakery owners. 

Estimated Cost: $100 to $10,000

Final Thought

Is owning a bakery profitable? Yes, if you can successfully implement all the strategies you can be very successful in the bakery business. Bakery items are widely popular, so if you can maintain quality,it is easy to convert them into a profitable business. 

However, there are several terms to consider while starting a bakery business. You must choose the right types of bakery and the goods. You have to choose the right bakery items according to your area. It helps to make your business successful. 

Now, it is time to make your dream come true. This article is a complete package of bakery startup costs. You can get a clear concept of how much does a bakery startup costs. You should know every single detail of the bakery business costs. It will help you to start and easily maintain your bakery business