How to start a Bakery Business in India [Business Plan]
The bakery industry in India has really started taking off. With the pandemic and the increasing usage of social media, people are moving more towards the bakery and sugary food items that they see online.
The bakery business in India as of 2020 had an annual turnover of $ 7.60 billion. The growth is mainly driven by the biscuits, cookies and cakes industry. Especially biscuits and cookies which are ready to eat and affordable.
Bakeries are also a highly lucrative business segment in the restaurant industry. Restaurant businesses are going beyond the basic bakery items and offering a varied bunch of choices originating from around the world.
It is not just about breads and cakes and cookies but the food items in the bakery industry in India has gone inter-continental. Let us understand how to start a bakery business in India?
How to Start Bakery Business in India [Bakery Business Plan]
Types of bakery businesses
There are many different types of bakery business models that you can choose from.
Storefronts: Most commonly found bakery business plan in India is the storefront one. It is similar to the typical grocery store except that it specializes in bakery goods.
Home-based: This is a go-to option when you do not want to invest a large amount of money. This one needs a little investment as you bake from your house and sell your products.
Online bakery: Today’s social media era is actually a pretty good time for having an online bakery business plan in India. You can leverage the power of the internet and social media to get orders and customers while working and selling your products from home. It requires very little finance and is also convenient.
Bakery cafes: This concept is an expensive one but this is also one of the emerging new restaurant themes in the market. It is similar to having a dessert cafe which involves having a commercial space with a wide range of menus and a promise to provide an experience to your customers.
For creating a bakery business plan in India, you have to plan and strategize step by step the process that you will follow.
You must have an understanding and thorough research conducted on your target audience.
You must have an analysis conducted on the current market scenario, current market trends and your competitors.
You must have an overview of the business model, mission and vision of your business, legal structure and ownership.
Conduct an industry analysis and a SWOT analysis to identify the strengths, weaknesses, and opportunities.
Build a plan of operations of how the business would function, menu, service, raw materials, staff management, etc.
Marketing and financial analysis are a must of any business plan.
Profit margin in the bakery business in India
Because of how emerging this industry is, there is a huge profit margin in the bakery business in India. When starting a bakery business in India, you have to keep in mind these financials that you will have to invest in:
If you are renting out a space for your business, you have to check the current market rates as well as make sure that the location you have chosen for your bakery is also affordable for you, rentwise.
Equipments and Machinery
Bakeries require a lot of machinery and equipment. From refrigerators, ovens, processors, grinders, display boxes, utensils, containers, deep freeze, milk pots, weighing scales, pos system, baking trays, working tables, gas cylinders and even mixing bowls.
Procuring a license can also be costly and in India, it can actually cost up to Rs. 30,000 to procure all permits and licenses.
Employees and Staff
When you are running a bakery business, you also require staff for operations and day-to-day activities. You need a chef, a support chef, a manager, a server, a housekeeper, and even a delivery person if that is a service you offer.
For spreading the word about your newfound business, you will also have to incur marketing costs. It can include costs for both offline marketing and also online marketing (more of online marketing as that is more relevant today.)
An ideal place for opening up a bakery would be a mall, a food court, a reputed market that has a high footfall. Ideally, ground floors provide more visibility and accessibility to the customers.
It has to be ensured that the place you choose also has a good supply of water and drainage. Another thing to be kept in mind is that the place be clean and hygienic. It is a must and also a very important requirement for any food related business.
Also, when getting the location, proper legal agreements and paperwork need to be in order. You must also get a No Objection Certificate from the owner of the place you are renting.
Licenses required to start a bakery
The various licenses required for a bakery business, even if it is a small bakery business in India are:
FSSAI license: This is the food license required mandatory to start the bakery business. It certifies that all food prepared is under the guidelines of Food Safety and Standard Authority of India.
Health license: With the help of a local municipal health inspector, you can obtain a health license. It is to ensure that you are following all the health related guidelines set up by the health department.
Fire license: Your business needs to have fire extinguishers throughout the store. You also need to get an NOC from the fire department and follow all the safety protocols.
GST registration: If your annual turnover is above Rs 20 lakhs, you need a GST registration. Goods and services tax applies to all baked goods as well and you can get a GST registration done by your CA.
Apart from this, you also require a business pan card and if you have your own custom logo, you need to get that also trademarked.
Utensils such as spatulas, dough rolling mats, rolling pins, grates
Decor for cakes
Ovens and microwaves
Pans and spoons
Airtight storage for perishable raw materials
Bags for take-home food orders
Display and packaging boxes
Design, display and POS
The display area needs to be designed in a manner where it is noticeable and customers walk in. You need a display fridge for cakes, pastries and items that require to be in the fridge.
There should also be abakery POS software which is integrated with your inventory. Ensure that the POS you buy has features to also manage the shelf life of all of the baked items as well as manage the robust inventory that includes perishables.
Marketing, branding and collaborations
Marketing is a huge investment that is a must for every business even a small bakery business in India. You have to establish a brand identity by getting a logo made by a designer. It will help you create a unique identity and help your branding.
You must have a well-designed menu, boarding and hoarding advertisements, well-updated social media pages and marketing campaigns run through those social media pages.
Another major way of obtaining new customers as well as gaining profits is by partnering with online food delivery services and businesses. When your customers can order food online, it would help by boosting your online presence and generating more business.
What are the trends and challenges of the bakery industry in India?
Here’s a list of trends in the Indian bakery industry:
● Innovation in items
Nowadays, every industry is working with the latest technology to find new ways to improve them. The bakery industry adds new items such as photo cakes, designer cakes, eggless cakes, and more. Many bakers understand that people are becoming more health conscious these days, so they use healthy alternative ingredients to create gluten-free bread, sugar-free bread, and other baked goods.
● E-retailing of bakery product
Online shopping has experienced significant growth in the last few years. Many online gift delivery sites and online florists now sell bakery items. It also gave rise to longer shelf lives and frozen bakery products. It allows people to stock their favorite bread products in their homes.
● Improved packaging
Custom-made products are trendy nowadays. Many companies offer personalized products to their customers to stay in business. Bakers also bring personalization to the next level by offering customized packaging.
● Plant-based diet
More and more people are moving towards plant-based diets. The goal of this diet is to eat mostly plant-based foods, but animal products are allowed in small amounts. Many bakers add plant-based bread products by not using eggs, butter, or cream without compromising their taste. Bakers are trying to create plant-based biscuits, pastries, and cakes, so their consumers can stay on their diets.
Indian bakers face many challenges when trying to keep up with the above trend. Some of the challenges include the following:
● New age demands
The critical challenge for the bakery industry is fulfilling the needs of their consumers’ growing demand because of the nutritious and innovative bread products they offer. Baker needs to provide more good food and branches of their stores to satisfy the needs of their customers.
● Regulatory affairs
It is tough to follow all the rules and regulations of the government. According to the Guidance Document on Food Safety Management System created by FSSAI, a food creation office like a bakery needs to have drying offices, washbowls, dustbins, cleaners, taps, and an appropriate temperature-controlled water supply. They also told offices that make food to have enough workers and separate, clean bathrooms for men and women who work there.
● Poor cash flow
Even after opening a bakery, it is not easy for a business to keep up with the trend if they don’t have good cash flow. You’ll need to build a strong foundation for your business to get a good cash flow going.
Most people are clean, so the bakery industry needs to keep their customers’ trust by ensuring their bread is clean. However, keeping the food preparation area clean and sanitary at all times can be difficult.
● The rising price of bakery ingredient
After the pandemic, the whole world faces a huge economic impact. It increased the price of many bakery items and raw ingredients, including flour, oil, fat, and eggs. Also, creating nutritious bread products like gluten-free bread is more costly.
The bakery business in India is currently a huge opportunity for those in the food business and for those who want to start a new business. For starting a bakery business, all you need to do is find the ace location, build a plan and strategize, purchase the equipment and get the necessary license and you are all set.
Once the finances are managed, the staff is hired, the food menu is fixed, the branding is done, you are ready to start your own Bakery Business in India.