Start Bakery Business in India

Bakery business is a huge, booming industry in India projected to exceed 12 billion in another 3 years. 

There are so many different kinds of bakeries in India, not to mention the immense variety of bakery products which also vary from State to State.

In Chennai or Bangalore, you will find spanking new doughnut shops, cake shops, and patisseries alongside traditional bakeries like Iyengar bakery which also do good business.

So there is an immense opportunity here and also the opportunity to specialize in certain selected products or innovate.

For example – millet-based cakes and cookies are emerging as healthy choices.

If you are looking to start a bakery business you are in the right place and possibly the time is right as well. This article will help you understand the basics of starting a bakery business in India. While some of this is from experience you will need to learn more and do a thorough study in your area before you start one.

Is it easy to set up a Bakery Business in India?

This depends on the type of business you are willing to start. Are you making going to be baking from home and selling or are you going to set up a bakery products manufacturing unit? The range and scope are very vast in this business.

Let’s take a Home baking business

For this kind of business, you just need a word of mouth reference and good quality food and the business will take off. There are many home bakers who make a tidy sum without a lot of investment. In terms of investment, you can start on a shoestring. You can use existing ovens, mixers, and microwaves for or for this business. So in that way it is easy as long as you have the skill and talent to to produce creative and tasty appealing food products from home. With Facebook and WhatsApp as well Instagram, getting found and building a customer base is not very difficult. Registration with Fssai will make your business l credible as well.

How about a small bakery?

This is slightly more difficult as when you have to set up a bakery and hire people, do the interiors get the equipment, but display rack and build shelves. So the investment becomes very high. You also need to get licences registration success in place to start your business at this level. You also will have to pay a lump sum to the landlord as a deposit and then monthly rent too.

But whether you have a home baking business or a small bakery both have their benefits and challenges. You do have to get FSSAI registration if you are commercially selling food products, whether from home or otherwise.

Benefits of a Home Baking Business

One of the major benefits is that you can start with minimal investment, build word of mouth with neighbors, friends, and families along with some clever online and Facebook marketing to be successful.

The disadvantages are that it is not set up to accept a bigger amount of customers and there are many restrictions to doing business from your place of residence.

If you are in an apartment or in a residential colony it may be difficult to run a full-fledged bakery business. You also may have issues with the apartment association and the panchayat or municipality in accepting and allowing your business to credibly run.

But once you identify the demand you could always move your business to a shop in a good location.

How to set up a home bakery business

To set up a home bakery business there are a  few steps which we will discuss below

The central part of your home bakery business is the product that you are going to sell. Everyone cooks at home.

Do you have a product that is exceptionally good and appealing?

The next question is if you get bulk orders will you be able to fulfill those and get help in cooking and delivering when needed? 

Imagine the scenario – You make very delicious cakes or doughnuts. If you are confident enough that you are doughnuts or cakes will be liked by your customers or anybody who tries them, then it is easy to just start a business by letting your friends and family know that you are going to supply this.

You can also print a few fliers and post them on the notice boards. Having a Facebook page and WhatsApp to promote your business will also help to get the initial orders pouring in.

Getting customers would not be a major problem.

But sustaining the effort and growing the business can be challenging. Making good food is one thing but running a good business is an entirely different matter. You need to be able to maintain the quality of your products, establish good customer relations ensure that payments are collected focus on your pricing and marketing strategies, and overall be able to keep up with the demands of your customers while juggling your family and other work if you have that also.

So doing everything from home sometimes can be quite challenging and stressful as it becomes difficult to prioritise. This is a good way to start of initially and get a pulse of the market so that you can, later on, do it on a bigger scale.

Now let’s look at how to start a small bakery shop in India

How to start a Small Bakery Shop in India

To start a small bakery in India you have to ask the question

 Am I going to make the product myself or am I going to sell other day other people’s bakery products?

To stock and sell other people’s bakery products you need a shop front and you need tie-ups with suppliers who will supply you with the necessary items you can sell.

You will be getting these products at a wholesale rate and then selling them at a retail rate.

You may be making anywhere between 2 rupees to 20 rupees on an average/ per item depending on the item that you are selling.

For example, if you are selling bread – a  normal loaf of bread can cost around 35 rupees and you may get it for Rs. 25.

Similarly, samosa’s, puffs, and cutlets may get you a margin of Rs. 3- Rs. 12 based on the quality, location, and clientele.

Based on the location that you are in the sales will greatly vary. If you set up your bakery near a railway station, bus stop, colleges, schools, and other trafficked areas your revenues tend to be much higher as compared to setting it up in residential colonies and away from trafficked areas. 

The good part of starting small and selling externally made food products is that you don’t have a lot of capital to invest. The problem is that your margin would be much lower compared to selling items manufactured in your own unit. You would also have greater control over the quality and taste of the end product while manufacturing yourself.

The initial locations that you may have access to might not be highly trafficked. If you are willing to invest from  10 to 20 lacs then you will be able to get a better location although your running cause and initial investment become higher.

If you have a unique product then it is possible that location is not of that importance because to get your product they will be able to come from anywhere.

You also have modern apps such as Zomato and SWIGGY you will get your products to your customers even if you are far away from them.

Some of the essential investments that you have to think of when starting a bakery shop  will be as follows 

• You need to invest in good design and get flex boards, flyers price list printed
• You need to pay the deposit for the shop that you choose. Usually, this deposit can be anywhere from 5 months to 10 months rent. In most cases, the shop owners will take approximately 10 months rent or more before giving out on rent.
• You also need to stock your bakery initially. Stocking the bakery is tricky because if you have too many items it will go bad and if you have too little, people will not come. Everyone likes to see a loaded bakery where everything looks fresh and clean.
• You need to invest in display racks and shelves. This costs quite a bit based on the type and quality you intend.
• If you are selling other people’s products you don’t have to have a special kitchen maybe a microwave would help so that you can heat up cutlets and brownies before giving them to the customer.
• If you are going to also do baking you need to invest in some equipment such as kneaders, dough mixers, and grinders also.
• Initially, you do need to break the bank and invest in the opening ceremony much. Just put up an ad in the newspaper announcing the opening of your bakery

My Bakery Experience

I have started a small bakery on a shoestring budget. In an effort to understand how this business runs, I negotiated and paid a 3-month deposit and my monthly rent was below 5000 rupees.

The reason for the rent being low was because it was not near any major traffic area.

I invested in a small board and got it done by a designer for about Rs. 2000 to put outside the shop.

I invested in 3 shelves which cost me INR 8000. I also purchased a shelf with glass display which was approximately 7000 to 8000 rupees.

Shelves being delivered

Because it is a small shop I didn’t have to invest initially a lot, nor stock it up so much. But it could have been stocked up better.

Now I realize I could have done better on the stocking of the shelves.

I started selling bread, chips, biscuits, and packaged juices.

I also found a supplier to get egg puffs and cake manufacturers from whom I got various types of brownies and cakes.

I did find that the supplier products did sell well enough and there was daily income. Sales varied as I was working in the job and some days I could not sit in the shop the full day.

I was looking at having a side income of 10,000 to 15000 from the bakery I learned that you need consistency and that keeping the shop open with fixed timings is crucial. Once you start the bakery your presence is required constantly in making decisions such as reordering supplies, handling payment,managing customers etc.

I had to find one person to sit in the shop and paid around Rs 4000 for being in the shop part-time (5 hrs).

Again this was not in a city and some of the inside roads so the overall cost of hiring somebody to help was not high.

Also, the rent amount was low. This was helpful while I was learning the nuances of running a bakery business. I also joined a bakery certification course which was very helpful in understanding how the business actually works and how to create products.

Overall it was an enriching experience and I learned valuable lessons.

Here are the lessons I learned from running a small Bakery

1. When you start out invest well in the design, in procuring sufficient stock, and in finding a good location
2. You need to be in the shop full time as the customer expects the shop to be open when they have a need
3. Fixed timings are a must and must be posted outside the shop. Whether it is from 8 a.m. to 8 p.m. or 10 a.m. to 10 p.m consistency with timing is key.
4. Your stock can be categorized into three types of stock-based on expiry dates
   • A – Ones that last only a day or 2 
   • B – Ones that last 10 -15 days  
   • C – Ones that last for a month 
   • D – Ones that last for 6 months and more 
5. You need to stock your shop with D and C and then carefully plan your A, B, and C based on demand.
6. Puffs and pastries last only a day so you need to be careful about the amount you stock as it will not be saleable the next day
7. Bread and cakes and highly perishable items last only 2-3 days half beyond which if you sell and the taste changes and customers will stop coming. So you need to order only as much as your estimate of how much the customers will buy and be ready to throw the rest or donate before it goes bad.
8. The next type is biscuits in canned and packaged beverages snacks and biscuits which can last anywhere from 5 months to 8 months and because of the advertising and the brand value people will come and buy it without question. So you need to stock up on this as much as possible maybe 60% of the stock should comprise of this as it lasts longer and there is a demand for it.
9. Cakes and other items which contain margarine should also not be kept in direct sunlight as they tend to go bad faster and the taste changes quickly. In the initial days till you get a feel for the demand you might need to throw away some items first few days and plan better as you learn the demand in that location.
10. Some days such as Fridays Saturdays Sundays the sale is much more than on a weekday but again this depends on your location if you are near a school or college the weekdays have more sales and it will possibly be lesser on the weekends.

When you sell other people’s products the margins are not as much in mike makes 20% 30% on the retail price which might be enough initially but if you want higher margins you might need to to manufacture the food product yourself. This means getting ovens daw mixes proofing stations shelves and also people to help you out there were a lot of cleaning and arranging carrying exception to be done. It is necessary to have somebody in the bakery as well as help in the kitchen baking area.

Loans are available with those with the certifications that are recognised nationally . PMYK program offers certifications courses for bakers and these certifications are also sufficient  for star up loans based on Government schemes.

How to Market your Home Baking Business

Congratulations on starting your home baking business. Now let get started with sharing this with the world.

Google My Business

To get started, create a Google My Business Listing, and wait for Google to send you a postcard with a pin. This postcard should reach you within 7 days.

Enter this pin on Google My Business to get your listing verified.

You can create a free website if you do not have one, else link your existing website to this Google My Business Listing

GMB lets you add posts, share pictures of your baking goods, coupons and deals.

You can get insights on how many people visited your business, saw your posts, place a call or visited your shop.

This is valuable information for a bakery. It will help you understand what people are looking for.

This was one of the ways on how to market your Bakery or Cafe in India. The next step would be to take your bakery business to the next level and learn how to brand and market your retail food products