Opening a bakery can be a delicious and profitable endeavor, but it’s essential to understand the costs involved in starting a baked goods business.
Here we will outline the typical expenses you can expect when launching your bakery. Remember that these costs will vary depending on your location, the size of your bakery, the business model you choose and other factors. So, how much does it cost to open a bakery?
Bakery Business Startup Costs
Average costs to open a bakery are between $10,000 and $500,000, while home bakeries tend to be on the lower end, commercial bakeries can costs tens of thousands of dollars to get started. But, of course, various factors affect your specific starting costs. So, let’s take a look at some of the key components you need to factor into your budget when starting a bakery business.
One of the most important investments for your bakery will be the equipment. The cost of commercial baking equipment can range from a few thousand dollars to tens of thousands of dollars.
When building a budget, consider the following costs.
- Commercial oven: $1,000-$5,000
- Proofing cabinet: $500-$2,500
- Bakery display case: $1,000-$3,000
- Mixer: $600- $-4,000
- Sheeter: $500-$2,500
- Baking pans and utensils: $200-$1,000
Of course, you may need other specialized equipment depending on the type of baked goods you plan, you may also be able to save money by purchasing used items from an existing bakery.
Bakery Industry Business License and Permits
Another cost to factor into your budget is the fees associated with obtaining the necessary licenses and permits to operate your bakery. The cost of these will vary depending on your location, but you can expect to spend a few hundred dollars at a minimum.
Licenses and permits that most new bakeries must obtain and their costs are:
- Business license: $50-$200
- Food handler’s permit: $10-$100
- Health permit: $100-$500
- Building permit: $200-$1,000
- Signage permit: $50-$200
- Seller’s permit: $0- $100
Insurance Costs for New Bakery Business
It’s also important to factor in insurance costs for your new business, including property insurance, liability insurance, and product liability insurance. The cost of these policies will vary depending on the size and location of your bakery, but you can expect to spend several thousand dollars per year on insurance.
Budget for the following policies.
- Property insurance: $500-$5,000 per year
- Liability insurance: $500-$5,000 per year
- Product liability insurance: $500-$5,000 per year
Pastry Chefs and Staffing
If you plan to hire pastry chefs or other staff for your bakery, you will need to factor in the cost of their salaries. The average salary for a pastry chef is $45,000 per year.
Common positions in a bakery and their average salaries are:
- Baker: $25,000-$35,000 annually
- Barista: $20,000-$30,000 annually
- Cake decorator: $25,000-$35,000 annually
- Front of house staff: $20,0000$-30,000 annually
Location and Rent
Of course, you will also need to factor in the cost of rent for your bakery space. The average cost of commercial rent is $1,500 – $3,000 per month. But, of course, this will vary depending on the size and location of your bakery. Consult with a local commercial real estate agent to ensure you have a great location and reasonable rent.
You must also budget for marketing expenses when launching your new bakery business. The cost of marketing can range from a few hundred dollars to several thousand dollars per month, depending on the type and scope of your marketing efforts.
Some marketing channels to consider using include:
- Social media — images and videos
- Social media — user-generated content
- Recipe blogs
- Local partnerships & PR
- Sponsored events
Grand Opening Costs
Last but not least, you will need to factor in the cost of your grand opening. Hosting a grand opening requires renting a space for the event, hiring entertainment, publicity, and more.
The cost of a grand opening can range from a few hundred dollars to several thousand dollars. Budget for the following:
- Rental space: $500-$5,000
- Entertainment: $1,000-$10,000
- Food and drink: $500-$5,000
- Invitations and publicity: $500-$5,000
In addition to the startup costs outlined above, you will also need to budget for ongoing operating expenses for your bakery. These include rent, utilities, supplies, marketing, and payroll.
The price of these items will vary depending on the size and location of your bakery, but you can expect to spend several thousand dollars per month on operating expenses.
Operating costs to prepare for include:
- Rent: $1,500-$3,000 per month
- Utilities: $200-$500 per month
- Supplies: $500-$1,000 per month
- Marketing: $500-$5,000 per month
- Payroll: $2,000-$10,000 per month
Manage New Bakery Initial Startup Costs
Create a budget and track your expenses carefully to manage your new bakery’s initial startup costs. In addition, you may want to consider seeking funding from investors or loans from financial institutions.
Now that you know some of the initial costs of starting a bakery, you can begin to develop a budget and a bakery business plan. First, consider all the costs outlined above to estimate the expense of launching your new bakery accurately. Then, consider if there are any unique aspects of your business you need to budget for, like specialty equipment, sales channels, bakers, or a specific retail location.
You can lease instead of buying some of your bakery equipment, look for used equipment instead of new, and get creative with your financing to keep costs down as you start your business. And, of course, be sure to price your products competitively so that you can generate enough sales to cover your costs and turn a profit. Understanding your bakery’s revenue potential is important when setting out your budget and business plan.
Remember to shop around for the best prices on equipment and supplies. Also, hire experienced staff who can help you keep costs under control. Finally, consider building an apprenticeship program where you engage students who can train with your more-experienced bakers while supporting your business.
Try Our Bakery Starting Costs Calculator
Enter your expected startup costs below and then click the “Calculate My Startup Costs” button. We have included estimated/typical startup costs for each category, but feel free to modify our figures to reflect your specific business needs.
Open Your Bakery
Following these tips, you can manage the initial costs of your new bakery food truck or bakery business and ensure your tasty treats company is off to a successful start.