How to Make a Bakery Business Plan to Set Up a Profitable Bakery

Setting up a bakery business can be a rewarding venture for any individual who is passionate about baking and entrepreneurship. The market itself is expected to grow from ₹1.2 lakh crore in 2024 to ₹2.75 lakh crore in 2033. Setting up a bakery business may seem like a profitable proposition, but it starts with knowing how to create a bakery business plan in the first place.

Should You Open a Bakery Business in India?

By 2033, the bakery market in India is poised to grow to ₹2.75 lakh crore. These figures show that disposable incomes and cravings for freshly baked delights are likely to increase exponentially over the decade or so. In between understanding this demand and the business itself gives way to the question - should you even open a bakery business in India?

Fortunately, the answer is a resounding yes. If you are looking for a lucrative and profitable business idea, a bakery checks all the boxes. Here are some of the advantages and disadvantages of opening a bakery:

Why Is There a Need to Create a Bakery Business Plan?

As per reports, consumption of bakery and cereals products in India is likely to rise to a total of 8.2 billion kg of baked goods by 2026. Be it bread or biscuits, every product offers you a great opportunity to increase sales and generate revenue. However, as lucrative as the bakery business is, the market is highly competitive, and success is dependent on careful planning and informed decision making.

Here, a robust bakery shop business plan serves as a guide to help you navigate the market. A bakery business plan not only helps you easily set up the bakery but also grow it strategically. Here is why you must create a bakery business plan:

How to Create a Bakery Business Plan?

Creating a bakery business plan requires you to consider every aspect in detail that may affect the immediate work and the venture’s long-term success. Some important considerations you must take into account when creating a thorough bakery business plan are described below:

1. Executive Summary

• Purpose: State clearly what the bakery business plan aims to achieve, i.e., funding, growth planning, or strategic planning.
• Business Concept: Describe what makes the business valuable/unique and its special offerings.
• Ownership Structure: Identify legal ownership structure by choosing from sole proprietorship, LLC, partnership and OPC company type.
• Summarize Financials: Clearly set vision for anticipated sales, profits, initial investment, and minimum financing requirements.

2. Business Overview

• Company Description: Mention details like proprietor name, how the business will operate, the physical location of your business, what inspired you to start the store, and the details of the legal name.
• Business Objectives: You must clearly establish goals that are specific, measurable, achievable, relevant, and time-bound (SMART).

3. Market Analysis

• Industry Overview: You must examine trends, growth, and the nature of the market as a whole.
• Target Market Identification: First, you must identify or define who your ideal customer is based on demographic, geographic, and behavioral attributes.
• Market Size and Growth Forecasts: Provide fact-based predictions on the total size of the target market, its projected growth, and the targeted market share.
• Competitive Landscape: Whether it's a metro or TIER-3 city, find out your direct and indirect competitors. You must also examine their services, rates, advantages, and disadvantages.
• Customer Needs Assessment: In the business plan, use your market research to mention what consumers like and which products are likely to make them spend more in your bakery.

4. Management and Organization

• Organizational Structure: Put an organizational chart (that will show hierarchy, departments, and reporting) in it.
• Roles and Responsibilities: Lay out the functions and responsibilities of all these pivotal roles.
• Recruitment Strategy: Explain the staffing needs, the principles of recruitment, and the necessary qualifications.

5. Products and Services

• Product Portfolio: List all products from the menu, such as signature breads, cakes, pastries, specialty items, and beverages.
• Unique Selling Proposition (USP): Emphasize what is special about your offerings in the market (e.g., organic ingredients, heritage recipes, gluten-free options).
• Product Development: Explain current and future product development programs.
• Intellectual Property: Describe any proprietary recipes, branding, or trademarks.

6. Marketing and Sales Strategy

• Brand Positioning: Determine how you would position your bakery in terms of costing and experience.
• Pricing Strategy: Explain pricing models using cost-based, competitor pricing, and perceived value.
• Promotional Plan: Describe advertising, online marketing, alliances, publicity, loyalty programs, and in-store promotions.
• Sales Channels: List all the sales channels, including in-store, online orders, catering, delivery partnerships, and wholesale.
• Customer Relationship Management (CRM): Determine ways to approach customers, how to collect feedback, and retention strategies.

7. Operational Plan

• Daily Operations: Give a step-by-step process flow, procurement, production, sales, and customer service.
• Location and Facilities: Explain the premises, layout, and seating capacity (if any) of your bakery, and also explain the lease or ownership.
• Supply Chain Management: Identify major suppliers, schedules, inventory control procedures, and backup plans in case of supply interruptions.
• Equipment and Technology: Stock up on important baking equipment, point of sale systems and more.
• Quality Control: Implement product consistency, freshness, food safety, and regulatory compliance processes.
• Health and Safety Procedures: Describe hygiene practices, the training of staff on safety, and government regulations.

8. Financial Planning

• Startup Costs: Determine the cost of startup by category (e.g., equipment, interiors, licenses, marketing).
• Fixed and Variable Costs: Classify all expenses like rent, salaries, utilities, raw materials, and consumables.
• Revenue Projections: Provide monthly and annual sales forecasts, accompanied by assumptions.
• Profit and Loss Statement (P&L): Cash inflows and outflows of the project for at least three years.
• Cash Flow Analysis: Add cash flow projections to make it liquid.
• Break-even Analysis: Find out how much sales are needed to break even and start making a profit.
• Funding Requirements: Specify the amount of capital required, planned sources, terms, and debt/equity ratio.

9. SWOT Analysis

• Strengths: Internal advantages like well-trained employees, proprietary recipes, or prime location.
• Weaknesses: Identify potential weakness, such as low brand awareness or excessive overhead.
• Opportunities: Describe external opportunities like increasing health-consciousness, local events, or expansion opportunities.
• Threats: Determine the external risks such as market competition, economic conditions, supply chain vulnerability, and regulatory changes.

10. Risk Management

• Regulatory Compliance: List licenses, permits, and food safety standards required.
  • FSSAI Registration/License: Food Safety and Standards Authority of India- required in all food businesses.
    • Basic Registration (turnover <₹12 lakh)
    • State License (₹12 lakh–₹20 crore)
    • Central License (>₹20 crore)
  • GST Registration: For tax compliance
  • Shop & Establishment Act License: For physical shops.
  • Municipal Health/Trade License: Confirms that premises are safe and hygienic.
  • Fire Safety Certificate: For commercial kitchens.
  • Trademark Registration: Protects your brand name/logo.
  • Other possible registrations: Udyam MSME for small businesses.
• Insurance Coverage: Specify what policies are required (liability, property, workers' compensation).
• Contingency Planning: Be ready to face operational hiccups, recalls, shortage of supplies, or economic fluctuations.

Types of Bakery Businesses in India

The biggest advantage of setting up a bakery business is that it requires little capital. Based on the capital you have, you can start different types of bakery shops in India. Here are the different types of bakery businesses you can open in India:

1. Retail Bakery: It is a conventional storefront bakery that sells fresh bakery goods to customers. As a retail bakery owner, you can sell breads, cakes, cookies, pastries, and more. You can also cater to both custom and event orders.
2. Wholesale Bakery: Your bakery sells baked goods wholesale to other retailers, cafes, supermarkets or restaurants. It requires you to have a network and capability for high-volume production.
3. Home Bakery: Home bakery is based out of a kitchen in a house and usually specialises in small-batch or pre-order sales. The main benefit is that this type reduces start-up expenses, suitable for hobbyists or those with small capital.
4. Online Bakery/e-Commerce Model: You sell bakery products through your e-Commerce site, app or social media. Your bakery products are delivered to the customer's door, widening your reach significantly.
5. Counter Service Bakery: In this business type, customers place orders for the bakery products and pick them up at a counter. This model of bakery specialises only in fast sales and tends to use smaller premises.
6. Cafe and Bakery: It combines a bakery and a cafe in one, with hot/cold beverages and baked goods. Unlike counter service, you offer self-service or table service in a space where people can sit, work and socialise.
7. Food Truck or Mobile Bakery: You bake and sell your products through a mobile facility, such as a food truck or pushcart. It eliminates the need to lease a shop and pay a hefty rent.
8. Speciality Bakery: This bakery specialises in niche bakery products, like wedding cakes, vegan/gluten-free products, cupcakes or breads. The key benefit is that it attracts customers looking for unique products or dietary options.
9. Custom Order Bakery: It specialises in customised orders like birthday cakes, wedding/celebration cakes, dessert tables, and so on. It typically works by pre-order or appointment.
10. Subscription Service Bakery: You take subscriptions and deliver a package of baked goods (e.g. cookies, breads, or cakes) to subscribers weekly or monthly.
11. Franchise Bakery: It works under a known brand name and has a tried and tested system. It reduces risk and leverages brand recognition.
12. Baking Classes & Workshops: As an expert, you provide baking classes and earn an income through workshops, classes, and the sale of related products.

What is the Budget for a Bakery Shop in India?

Based on various market research, here is the approximate amount you will require to open different types of bakeries in India:

To Conclude

The bakery business has enjoyed steadily rising demand through decades and is highly unlikely to witness any dip in popularity in the near future. A well-drawn bakery business plan provides a clear roadmap to successfully launch, operate, and grow a profitable bakery.

At Poonawalla Fincorp, we empower financial freedom that comes with starting your own bakery in India by offering the necessary capital to those who need it. For instant financing, you can get up to ₹5 Lakhs with an Instant Personal Loan. Apply now on the official website.

Frequently Asked Questions

How much money is needed to start a bakery in India?

The cost of opening a bakery depends on the type of bakery you want to open. A home-based bakery costs less to start than wholesale, as it focuses on high-volume production. A home-based bakery costs ₹2 lakh - ₹3 lakh, a retail bakery costs ₹25 lakh - ₹30 lakh, and wholesale bakeries    cost ₹40 lakh - ₹50 lakh.

What is the profit margin of a bakery?

While the profit margin varies from bakery to bakery, you can expect to draw anywhere between 20-75% for the products you sell.

Is it hard to start a bakery?

No. It is not hard to start or run a bakery in India. If you already have a passion for baking, you can turn it into a profitable venture. If you don't have any prior experience, you can enrol for a baking course and start at a smaller scale.

How to draw a bakery business plan?

In order to draw a bakery business plan, you must first study the market, know the demand, the gap in the supply, list the products, sales strategy and plan finances.

How to start a bakery from home in India?

In order to start a bakery from home, you must first select the product line, get the necessary licenses, purchase the equipment, prepare the kitchen, buy the raw materials, bake products, and market your business.