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Starting a bakery Business in India is a profitable venture with a little bit of innovation and creativity you could build a successful bakery business.
INTRODUCTION
Starting a bakery Business in India is a profitable venture with a little bit of innovation and creativity you could build a successful bakery business. Over the years food Industry has shown massive growth potential with equal penetration in both of rural and urban India, consumption of Bakery products like Cakes, Pastries, cookies, Bread etc are on the rise.
With the rise in demand from the middle class and the Rich class craving for Gourmet products the stage is set for those aspiring entrepreneurs who have the zeal to meet the demand the market for this Niche food Industry. Read till end of the article to get a quick glance the Bakery Industry also the article has some useful information gathered from Bakery owners and food industry experts which will definitely help you to make an informed decision.
1) Size of Bakery Business Industry in India?
India’s Bakery Industry has churned a turnover of Approx. 7.5 Billion USD in 2020 at robust growth rate of 8.9% per annum by a recent report by Government of India. The Bakery Industry is estimated to grow to almost 11.85 Billion USD till 2025-26 such estimation is due to growing demand of bakery products in urban and semi-urban cities of India.
Biscuits and Cookies form almost 2/3rd of the total market of bakery products currently sold. But other Bakery items are slowly catching up with rise in new innovative gourmet Products. Currently the organized sector is around 60% and rest are unorganized small scale local Bakeries.
Britannia, Parle, ITC, are among the biggest bakery products manufacturers in India, these businesses are not just limited to making Biscuits and cookies anymore but have gradually entered in to manufacturing of other bakery items which were traditionally dominated by local bakery businesses. the demand for bakery products have increased many fold both in urban and rural populations
As a bakery Business one should be flexible enough to understand the target customer needs entirely as urban and rural population may have different needs altogether and demand different type of products depending on various factors.
2) Analyze Competition and write a good Bakery Business plan
The key to running a profitable business is to deeply analyse the competition in your locality whether it’s a grocery store, supermarkets or other Bakeries. Having hands-on information about your competitions helps to better strategize and formulate your Bakery Business Plan. (click here for Complete Bakery Business Plan)
Understanding the competitor’s strength and weakness its market share and Brand value will help you to better position your Retail Bakery Store in market. Always do a SWOT analysis of your business with rival business to get the right perspective of where you stand if front of your competitors.
Profitable Bakeries have profitable Bakery Products! Yes, quality products and services are what makes a business stand out from the crowd. Simply don’t rely on Breads and Cakes add an assortment of items to menu like bagel, Desserts, Rolls, biscuits, cookies to even offering sandwiches, coffees and more. Analyse products line of your competitors see what and where they lack and refine your products respectively.
Understand your customers pain point whether its taste, quality, quantity or delivery and adjust your products and services accordingly. Always promote your start-up bakery business to customers as a suitable and reliable Brand against already established Bakeries and supermarkets.
3) What is the Cost of opening a Bakery business in India?
The average cost of opening up a bakery business may vary considerably depending on various factors like location, production, business model, land, labour and other corresponding factors. However, starting even a low cost Bakery business in India with full scale production facility could cost you anywhere between ₹ 15 to 80 lakhs. Though this figure may vary greatly depending on your Bakery Business Model.
Starting a full scale manufacturing and wholesale Bakery product business in India in a tier-1 city could almost jump the cost of start-up to ₹ 1 crore + upwards. However, there are other low cost franchise bakery business which offers small business models to budget conscious clients like starting Kiosk, Mobile bakery Van, online bakery business etc. the average cost of such small scale bakery business models is around ₹ 5 to 20 lakhs
Bakery Franchise businesses offers great opportunities to new entrepreneur. Visit websites that provide franchise opportunities in Bakery sectors. There are number of local and international Bakery Brands which offer franchisees and provide full support in terms of Finance, Training, Marketing, Hiring etc and Brand building.
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4) How to open a Bakery Business in India?
4.1)Find right location for your Bakery retail store
Your location plays a major role in deciding the cost of your business. Rents for a 1000 sq. ft retail store front in major cities could be around ₹40,000 to ₹1,65,000 and upwards. And retail shop in tier 2 or tier 3 city could be rented around ₹ 15,000 to ₹ 60,000.
It is highly advisable to rent a retail space for first year than purchasing it as keep the overhead expenses low. Prices for outright purchase of a retail space starts from ₹ 50 lakhs to 5 Crore depending on locations.
4.2)Hiring Labour and Staff for your Bakery Business
Hiring trained staff and skilled and unskilled labour for bakery can also be fairly expensive. So, hire according to your necessity, on an average you would need anywhere between 5 to 20 staff initially depending on your scale of business.
Average pay scale for skilled labour is ₹ 15,000 to ₹40,000/month and unskilled labour is ₹ 8,000 to ₹ 12000/month. Front end staff like cashier, salesmen or store helper are also paid between ₹ 10,000 to ₹ 20,000/month accordingly or as per local rates.
4.3) Finding right equipment for your Bakery
Equipment’s are essential for a Bakery business setup. Basic equipment required for Bakery Business production line would be Commercial Ovens, Dough Makers, Storage Vessel, Deep freezers, Display Units, Cooling racks and other smaller equipment like spoons, spatula, Dish, scrapers etc.
Depending upon your business model you could buy new or semi-used equipment’s from online sites like quikr or olx etc. A complete bakery equipment setup could cost between ₹ 1,50,000 to ₹ 15,00,000 depending upon your production’s needs. Similar, equipment brought in semi-used condition could cost considerably less in the fraction of the cost of new one.
4.4) Company registration and license needed to start a Bakery Business
Registration of the firm with Registrar of companies is important in India. You could form OPC, LLP, PVT. Ltd firms or Sole proprietorship depending upon your Business Models.
To enjoy full benefits offered by government under MSME Schemes registration is mandatory. GST registration, food industry license (FSSAI), Trade license, Shop establishment license, Fire department License etc. are some important licenses.
The cost incurred in obtaining all kind of registration and licencing is around ₹ 50,000 to ₹ 1,25,000 and takes around 45 – 90 days for procurement. Word of cautious please obtain all relevant permission form authorities before commencing any business please check local laws accordingly.
4.5) How to Advertising and Marketing of your new Bakery Business
Another major expense for Bakery business start-ups is advertising and marketing. It is highly advisable to create a Bakery business marketing plan. Most Bakery Business in India spend about 4.5% to 12.5% of their overall sales revenue towards marketing strategies.
As a rule of thumb, you could keep around 8% to 20% of your capital or ₹ 2,50,000 to ₹4,00,000 towards initial advertising of your Bakery business in India the more the budget the merrier the results.
Having an online presence like Social Media profiles, Blogs or Website for your Bakery business can greatly boost your sales and help build powerful Bakery Brand. The cost for running online campaigns and building website and contents can cost you around ₹ 1,50,000 to ₹ 2,50,000 annually.
4.6) Other miscellaneous expenses’ that are incurred in the Business
Depending upon your Bakery business requirement one could also buy POS (Point of Sale) systems, computers and printers for billing services. POS systems could cost around ₹ 10,000 to ₹ 25,000. Computer and printing hardware would cost around ₹ 45,000. Accounting ERP and Billing software can cost up to ₹ 45,000 to ₹ 1,00,000.
Furnitures, Storages and Display area for bakery items could cost around ₹1,50,000 to ₹ 2,80,000.
Other important expenses may include Firefighting systems, CCTV’s, Logistic handling, etc. all these could cost around ₹ 50,000 to ₹ 1,00,000 although it may vary greatly depending on your business needs.
Business Insurances for securing your business against fire, Damage in Transit, Theft etc. Business Insurance may cost you anywhere between₹50,000 – ₹ 2,50,000 depending on various factors and good insured.
5) Start a profitable online and offline Bakery business in India
Running a successful and profitable Bakery Business requires you to employ a host of marketing and operational strategies to gain market capitalization. Food Industry is highly contested market so to start your Bakery Business it is important to have an innovative, cost-efficient Bakery Marketing plan.
The most traditional way may include running advertising campaign in local newspaper, distributing brochures, discount coupons, promotional events, giving away freebies etc. You can also tie-up with local groceries, supermarkets and other Bakeries for selling your products and incentivise the resellers with big profit margins on your bakery products.
You could also sell your Bakery products online through ecommerce sites. Partner with local grocery stores, Cakes store and general stores etc. to sell your bakery products to your customers. You could also try to become a trusted suppliers with Big Super Markets like Big Bazar or Dmarts etc to meets their demands for Baked goods.
Partner with food delivery apps and other Food Apps based businesses to increase revenue and sales of your bakery business.
6) Technology and software to use for your Bakery Business?
The modern marketing methods are incomplete if it is devoid of technology. Tech in bakery business is not just limited to modern machinery but the use of tech in marketing and operation is unparalleled. Below is list of some uses of tech in Bakery business.
Building a website for your Bakery Business. List all your products online and start an online Bakery business offer discounts, coupon codes for repeat purchases and offer free deliveries on minimum order. Build a strong social media profile and keep engaging with your customers. Run Ad campaign, add photos of Products, organize contest online etc.
Partner with online food aggregators like Swiggy, Zomato and others to maximise your audience base these app-based business models can help you immensely to capture new customers base and increase overall revenue.
Use of Software’s like ERP management, Inventory management software, Billing Software etc. are some useful technologies necessary to run business operation smoothly and efficiently.
7) Build a strong Bakery Business Brand?
Building a strong Bakery Brand is very important for you to influence your customers to buy your products and services over your competitions. Remember that strong Brand can influence its customer base to make higher purchases per order and refrains them from buying from competitors.
Building a unique Bakery Brand requires innovation in products and a consistent marketing and advertising plan over a stretch of time to show positive results. Remember that Brands should have strong recall value among its base, quality and quantity should be matched, great packaging, easy tagline and other marketing efforts all help in building a great Brand.
Conclusions
Perhaps, you may have decided by now to start a bakery business in food Industry or maybe you are in the process of deciding to start one at the earliest. Either ways, starting a Bakery business is a profitable venture given the demands for baked goods. Although the bakery sector is highly competitive and requires a substantial investment having a Bakery Business Plan will definitely help you sail through.
Perhaps, you may have decided by now to start a bakery business in food Industry or maybe you are in the process of deciding to start one at the earliest. Either ways, starting a Bakery business is a profitable venture given the demands for baked goods. Although the bakery sector is highly competitive and requires a substantial investment having a Bakery Business Plan will definitely help you sail through.
Ravi Bhoir
Hello reader!
I, am Ravi Bhoir the founder and author and of this Blog Website. Had been freelancing as content writer for many years now my focus in writing had always been mainly on startups and entrepreneurship and currently my focus is theBusiness-Strides.com a blog website helping small businesses and Startups.
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