With the Great British Bake Off phenomenon and the resurgence in demand for artisan breads, craft bakeries are making something of a comeback. Check out our practical guide for starting and running your own bakery.
- Research your bakery's target market
- Establish the customer profile of your bakery
- Decide what services your bakery will offer
- What should your bakery sell?
- Buy an existing bakery business
Research your bakery's target market
Estimating demand for your bakery goods
You will need to make an estimate of the number of people who might buy your products every day.
Bread, cakes, pastries and other bakery items are available from many different outlets such as:
- retail bakeries - these may be independent businesses or part of a large chain like Greggs
- supermarkets
- convenience stores
- petrol filling stations
- sandwich bars
- coffee shops
- health shops - often selling organic, gluten-free and/or dairy-free bread and cakes
- online retailers such as specialist bakers and cake makers, organic suppliers or fine food websites
So it's very important to find out whether there is room for another outlet selling bread and bakery goods in your area. First of all, it would be a good idea to check out the competition. Count how many outlets there are already in your area which sell bakery products and identify the range of goods they sell. If some of these are specialist bakers, note down whether they are independents or part of a chain.
To get some idea of the number of people who might use your bakery you could stand outside an existing local baker and make a head count of the number of people who shop there. Notice if some days are busier than others.
Why will customers choose your bakery?
You need to make sure that enough people will choose your business rather than buying bakery products from your competitors, some of which may be supermarkets offering bread for sale more cheaply than you will be able to make it.
Once you have completed your review of the range of products sold by your immediate competitors you will have a better idea of the sort of goods to sell to make your business particularly attractive. For example, you may decide that because local outlets already sell such a wide range of different types of bread it would be better to concentrate on patisserie and celebration cakes. Or you might decide to only offer artisan products like organic sourdough and slow fermented bread and rolls. It is important to establish a reputation for certain types of products - you can always add to your ranges once you are known to your customers.
What catchment area will your bakery serve?
If you plan to open a retail bakery, passing trade will be very important to you. Take some time to note down the different types of potential customer living and working in the area where your business will be. This will help you to determine the range of bakery and other items you might sell. For example, retired people might want cakes and pastries for afternoon tea while workers and school children might want sandwiches and pasties at lunchtime. Commuters might welcome the chance to buy bread and other products on their way home.
Think too about the location of your proposed bakery - remember that many High streets are becoming run-down as more people shop in out-of-town retail parks. Ideally your outlet will be located in an area where lots of independent shops are still thriving.
Find out what products your bakery should produce
It can be a good idea to talk to people in your area about your proposals. Ask as many people as possible:
- what sort of products they would like you to offer
- what opening hours would suit them best
- what their reaction is to the prices you propose to charge - bread in particular can be a very price-sensitive item
- would they use a café facility
- what they think of your bakery proposal in general terms
Will your bakery make trade sales?
You might be planning to sell bread and other bakery items to local shops such as small supermarkets or to businesses such as restaurants and cafés, sandwich bars, hotels, nursing homes and so on. You could consider approaching online-only businesses like organic or fine food suppliers and emphasising that you can provide a reliable service supplying them with quality products.
If you plan to target trade customers it would be a good idea to:
- count the number of suitable businesses in your area
- work out what product ranges you will offer them
- work out how much discount off the retail price you will offer them
- decide how frequently you will supply them. Most businesses will want a daily delivery service, so you will need someone to drive the delivery vehicle
- approach them to see if they would be interested - don't forget if they are already being supplied you will have to give them a good reason to change. This might be a wider product range, lower prices or a better service. Consider offering them some samples to taste
Research current bakery trends, plus legal and tax issues
- Sector trends for bakeries
- Legal issues for bakeries
- VAT rules for bakeries
Establish the customer profile of your bakery
Your market
You might have several different types of customer, depending on the nature of your business. For example:
- members of the public who call in at your bakery or who buy from your mobile shop. Many of these might be local workers looking for breakfast or lunch deals
- local businesses such as restaurants, hotels, care homes and children's nurseries
- trade customers such as retail outlets and online food specialists who sell your goods on
Estimating the average 'spend'
When estimating your income you will need to think about the number of customers who will buy from you and how much they are likely to spend each time they come in. Your market research will have helped you with your estimate of the number of customers you are likely to have.
Estimating how much they will spend is more difficult. You may have noticed while you were in other bakeries how much people spend on bread and other products. Remember that the market is very competitive and customers are looking for good value for money.
Bakery trade sales
If you are planning to sell to trade customers it would be a good idea to approach some as part of your market research and establish:
- what items they would want, and how many of them
- how frequently they would want them
- whether they are happy with the prices you would charge (you'll be offering them a discount from the normal retail price)
This will help you to estimate your trade customers' average spend.
Special offers and discounts
If you produce sandwiches and bakery items for the breakfast or lunchtime trade you could consider offering customers a 'meal deal' at a special price. For example at lunchtime this might include a sandwich, crisps and drink for £3.00, where if each item were bought separately the total cost would be nearer £4.00.
You might decide to offer bread and other bakery lines at half price at the end of the day to reduce wastage. Don't forget to monitor this carefully - you don't want all your regular, local customers leaving their bread purchases until late in the day so that they never pay the full price!
Don't forget also to brief your staff on which, if any, customers are entitled to a discount and how much. Guard against staff offering unauthorised discounts to their friends and relatives. Work out how much discount you will allow to your staff and what, if anything, they can eat on the premises free of charge. Make sure they know your policy on giving away free bakery items - for example to children and toddlers.
Advertising your bakery business
Whoever your customers will be it is essential that they get to know about you.
There are a number of things you could do to promote your business:
- have a leaflet printed outlining the range of bakery items you will produce and distribute this door-to-door, including to local offices
- advertise in your local newspaper and any other local publications
- buy space in a local directory. This might be online
- set up your own website which includes pictures of your most tempting product ranges. Update the site frequently to display seasonal goods, special offers, 'free from' bakery items and so on
- make a feature of your window display to boost impulse customers
- place a sign on the pavement outside your shop
- leave publicity materials with a related outlet - for example a bridal wear outlet might display details of a local wedding cake business
- offer sample tastes of new product lines to your retail customers
- bake samples for potential trade customers to try
- take a stall at local food fairs or events
- make sure all your packaging carries your logo, which should indicate the type of bakery goods you offer. Include your website address too, if you have one
- use social media like Facebook and Instagram to let people know about new products or seasonal treats
Decide what services your bakery will offer
Organising the day
Each day you will prepare a baking list for the following morning, setting out which items must be baked and how many.
Some items, such as bread, sweet bakery items and savoury products, you will make every day, because customers only want freshly baked products and the demand for these items is fairly consistent throughout the week, although be prepared to bake more loaves on a Saturday. (It may be that demand for bakery goods varies depending on the time of year. For example, you might bake many more rolls and baps during the summer because people cook burgers on their barbecues.)
Other items, for example family fruit cakes, will keep well for a few days, so you would only make more when you had sold out. You may make some items only to order, or only on a Friday or Saturday, when demand is heaviest.
The early part of the morning is devoted to baking the items on your baking list. You might start with the bread and then get on with other bakery products. You would aim to have most of your goods baked and on the shelves by the time you open your doors at, say, 9 o'clock.
You might carry on baking some items during the morning. For example, some bakers aim to have pasties and savoury products ready at lunch time so that customers can buy them while they are still warm.
Trade deliveries
You will probably aim to deliver to any retail customers shortly after they open so that they can sell fresh bakery goods all day long. If you have restaurant customers which only open in the evening you may agree to deliver to them in the afternoon, when you are less busy.
Lunch time trade
If you plan to sell sandwiches the mornings will be used to prepare ingredients and make up the sandwiches. Don't forget that if you make them in advance you must comply with food safety legislation regarding the storage of perishable goods.
Discounts
You will want to keep your wastage to a minimum so you might consider discounting the price of bread and other products with a short shelf life during the last hour or so that you are open.
Prepare from scratch or bake-off?
If you prepare all your bakery products from scratch, you use your own recipes and you can establish a reputation for your own ranges. The downside is that you and your bakers will have to get up very early in the morning in order to prepare and bake all the goods. You will also need big enough premises in which to:
- store flour and other ingredients that you buy in bulk
- undertake all the preparation and baking processes
- accommodate all the different items of equipment you will need
Bake-off products have been prepared by another, specialist firm and are supplied to you either chilled or frozen. You then finish them off in your bakery.
The advantages of this method include:
- much less preparation time, so baking can start later in the morning
- less wastage of ingredients during preparation
- smaller premises can be used
- less preparation equipment is needed
- good quality product ranges are available
However, because more and more retail outlets such as petrol filling station forecourt shops and convenience stores are installing these bake-off systems, there is a danger that your products will not be seen as sufficiently different or unique. You might consider having a mix of products baked from scratch plus some bake-off products and some pre-mixes (such as cake mixes). This might speed up your production but also ensure that customers come through your doors rather than the c-store down the road.
Quality standards
Whichever bakery methods you choose, remember that customers have grown used to the high standards set by the supermarkets and it is important that your premises are clean, smart and professionally fitted out. Don't forget that mandatory food hygiene rating systems operate in Wales and Northern Ireland - you must display the hygiene rating that your local authority gives you. Similar voluntary schemes operate in the rest of the UK.
What should your bakery sell?
You may decide that, despite the supermarkets' increasing dominance in the bread market, you will be able to produce loaves that are different enough to attract lots of customers. Alternatively, your business may be in an area that is sufficiently far enough away from a supermarket that customers will choose to buy their bread from you, particularly at weekends.
Well over half of all bread sold in the UK is white, with brown and wholemeal bread having a much smaller share of the market. So if you plan to produce traditional loaves it would be a good idea to bake greater quantities of white bread as this is the most popular.
Many smaller craft bakers have diversified into producing speciality, artisan and continental breads such as rye breads, fruit breads, cheese and seed breads, sour dough, soda and wheatmeal breads, ciabatta, focaccia and so on. One of the challenges facing the bakery industry is to persuade people to eat more bread - these speciality breads are popular for sandwiches and snacks or to accompany a main meal. The added bonus is that they are also more expensive than standard loaves. Think about whether these types of premium product would be popular with customers in your area.
Give some thought as well to producing a range of 'free-from' bakery items - for example dairy, gluten or wheat-free loaves. Don't forget that many customers are keen to cut down on their intake of sugar and salt - if you offer products with a lower salt and sugar content, make sure you highlight this.
Other bakery goods to consider include:
- teacakes, buns, scones and pikelets
- crumpets and muffins
- rolls and baps
- croissants, bagels and brioches
These are popular because they are 'impulse buys' that tempt customers at any time of the day. Also, rolls and baps continue to be popular for making sandwiches or having with burgers. At different times of the year you'll probably produce seasonal items like mince pies and hot cross buns. There might be regional specialities you could offer, like bara brith or ginger parkin.
You might decide to concentrate on confectionery items, like individual and family cakes, pastries and tarts. If you have the appropriate skills you could offer a range of bespoke celebration cakes for weddings, anniversaries and so on.
It's increasingly important to come up with new bakery products to tempt customers - you could see how popular new lines are likely to be by offering customers a small sample and asking them for their comments.
Breakfast trade
As demand for bread has declined, many bakeries have introduced new ranges in order to boost sales, and products for the breakfast trade have proved very successful. For example, breakfast baguettes and rolls, croissants, pains au chocolat and Danish pastries have become popular with people on their way to work. Many bakeries now team a breakfast item with a hot drink as part of a breakfast deal.
Lunchtime trade
Lots of workers buy something for their lunch rather than making sandwiches at home. You could offer a range of sandwiches, filled rolls, baguettes and baps as well as savoury products such as sausage rolls, pasties, quiches and similar items. Demand has also grown for individual cakes like cupcakes or fruit slices. If you have enough space you might offer jacket potatoes, hot drinks, soup and cold drinks as well. Think about offering low fat sandwiches or smaller portion sizes for those customers watching their weight. You could also offer a range of vegan or vegetarian products.
Trade sales
Bread, bakery products and sandwiches are sold by lots of different outlets, including online fine food specialists, and it might be worthwhile targeting these outlets as potential trade customers for your business.
You could offer them an exciting range of breads and rolls so that, in their turn, they can offer their own customers new products.
Don't forget that catering establishments of all sorts and sizes need to buy bread, rolls and other bakery products. Why not put together a sample pack for their buyers to taste? This may lead to regular orders.
Buy an existing bakery business
You might decide to buy an existing bakkery rather than start your own venture from scratch. Buying a going concern can mean that the products, customers, regular sales, staff, premises and equipment are already in place.