Starting a Bakery or Bakeshop Business Guide
Bread is one of man’s earliest food. Today it is considered a staple food in most Western countries and is part of the diet of almost all people all over the world. Commercial baking and the other industries supporting it have become big business and constitutes a large slice of the food industry. There are several advantages that a bakery business offers a new entrant. One, he is free to choose his market. Two, it is not difficult to find a good location for a bakeshop. Since bakery products are considered as a daily consumable, any populated area is a good place for a bakeshop. Three, there are hundreds of bread varieties that can be adopted by a bakery to satisfy the taste of his consumers. Fourth, the industry enjoys continuous growth. One of the beauties of a home bakery is that you don’t need a heck of a lot of equipment to get you started. Just a stove, a few pans, some ingredients and that “special” recipe. If you want to get a little fancier, you’ll find a timer (to keep you from over or under cooking an oven full of goodies on those busy days when you’re preoccupied with more than you can remember) well worth its small investment. INDUSTRY NOTES
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Consumers perceive that small bakeries offer convenience, personal service, and fresher, better quality products. In general, bakery sales increase when consumers’ average incomes increase. The industry is highly competitive, making it very difficult to start a new bakery, especially in cities. An entrepreneur might consider buying an existing business or locating in a rural area. One of the fastest growing areas in the bakery business is the specialty franchise store, producing everything from donuts to complete product lines. For specific information on franchising, refer to Franchising PH guide. BEFORE STARTING
A bakery is one of the few businesses where manufacturing and retailing are performed by the same people. You have to be an exceptional baker and business person producing and selling distinctive goods. Get experience in both areas before starting, including areas such as managing and accounting.
If you buy an existing bakery, carefully evaluate the opportunity. Study the reasons for selling and assess potential profits, sales, expenses, assets and liabilities. Consult with an expert about the condition of the bakery equipment. Ask a lawyer to review any agreement.
If you start a new bakery, do the same kind of careful assessments and consult with an accountant and a lawyer. Refer to the Service Business Plan book. Expect early mornings, long days and hard physical work. Sales fluctuate during the year you will be busiest during special days and holidays. TYPES OF BAKERIES Small retail – Usually one-store operations with two or three staff who bake and sell the products on-site. Often specialize in fancy, baked goods. May grow into chain operations with the baking done in a central location. In-store - Operate out of large retail grocery chains. Growing in popularity. Some in-store bakeries do not make profits – they simply provide service and build traffic. Sometimes independent bakeries can operate in-store as separate businesses; in these cases, profits must be made. Wholesale plant – Large, mechanized operations which bake in large volumes. Deliver to independent grocery stores, chain stores and superstores. Medium – Often independently-owned and operated. Can specialize, selling through wholesale or retail outlets. Hot Bread/Buns – Often part of a franchise or operating alongside. An example is a bakery partnering with a deli, producing sandwich buns/croissants. Usually offer a large variety of bread and buns continually throughout operating hours. Cake – Specialties in wedding cakes, cheesecakes. Can be very profitable. Location and product quality are critical in determining success. Donut – Independently-owned or franchises, often operating 24 hours per day. As in hot bread/buns bakeries, many use basic premade mixes available from millers and bakery suppliers. Other – Bakeries growing in popularity, specializing in cookies/muffins/bagels. HUMAN RESOURCES
LOCATION Choosing a location is critical. do not attempt to offer lower prices. PRICING
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Prices should allow for sufficient gross profit to cover overhead expenses and a net profit. specialties and service.
ADVERTISING Advertising aims to inform and create interest. especially local community papers. Traffic – Aim for high volumes of pedestrian and vehicle traffic. but should be around 40-60% and cover expenses. Set up a ‘cost of recipes’ book listing the costs for producing specific items. The largest ingredient is usually flour. Instead. Consider these factors: Population – To sustain a bakery. evaluate and develop personnel policies (wages and benefits). ‘tea-room’ sitting area.
Promotions: window/in-store displays. Train staff to conserve packaging and to open one unit at a time as needed. Obtain the lowest possible purchase price for an acceptable grade. Test order-taking. Design an efficient and inviting counter area. Locate near other businesses (strip malls) or close to schools and sporting facilities. for reaching specific markets such as neighborhood homes. Record incidents of spillage. stress convenience and specialties. Set up a cost book listing individual ingredients and their costs. Count your customers each hour to establish traffic patterns. signs. train. Permit staff to taste product as a training aid but do not allow constant nibbling. especially on impulse:
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Present the entire assortment of goods in an area that is as large as possible. Bakeries should stress convenience. Calculate the costs of each prepackage unit and the packaging itself. banners. Three methods can be effective:
Direct mail. from other independent bakeries to chain stores. motivate. superstores and specialty bakeries. Each month ask someone unknown to staff to place an order. screen. Select furnishings to properly display products under excellent lighting. Remove all products from shelves after expiry dates. Promote continuous training and upgrading through related courses and programs. PACKAGING AND PROCEDURES
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Monitor the use of all baking supplies and ingredients. Do your research. DESIGN AND LAYOUT Your bakery’s character and the sight and aroma of freshly baked goods can entice people to buy. PRODUCTS. Investigate all competitors to see if the local market can support another bakery. The markup depends on the pricing policy. based on costs.The ability to hire and keep excellent employees is essential. Educate yourself in all areas of human resources — how to recruit. between 1400 and 1800 families should live within your primary target area. Train staff to make products according to strict weight specifications: overweight products result in losses. Monitor stock rotation.
. Schedule staff accordingly and make sure they are on time. Competition – Comes in many sizes and types. Consult equipment manufacturers for their guidance and layout suggestions. Newspapers. Calculate how much to charge per 25 grams. interview.
Because small bakeries cannot buy in large volumes like superstores. Bakeries usually use a markup method. Also check area development plans and projected growth rates. spoilage and leakage during production.
Subtotal – P 145.50 Spatula – 61.50
Subtotal – P 2.38 kg) – 133.
.054.00 Working table – 15. Knead the dough. This includes recording monthly inventory and filling out purchase orders/receiving records.00 Dough cutter – 53. 8.50 Plancha – 64. Form each dough piece with approximate length of 30 inches per piece.
Starting a Business: Pandesal
Investment Requirements: (All price are in Php based on 2007 market price.75 Vegetable shortening (2.5 kg) Refined sugar (9 kg) – 383.50 Salt (0. Punch dough to remove air. 3. 5.853.00 Stainless bowl #32 (2 pcs) – 427.738. 10.5 grams per piece). Cut dough into 20 equal portions (about 27.00 Oven (8 planza-thermostat) – 45.00 Raw Materials/Ingredients:
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Bread flour (50 kg) – 1. 9. Roll in breadcrumbs and arrange on baking trays in cut side up manner. Preheat oven at 175°C (350°F) Mix all ingredients.
Establish procedures for managing all areas of the business. Proof until double in size in warm and moist proofing cabinet (about 32-34°C with 85% relative humidity). 4. Rest dough for 45 minutes.)
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Measuring cups/spoons (plastic or stainless steel) – 152.00 Dough kneader – 83.372.75 Procedure One of the methods in bread making is the straight-dough method.86 kg) – 9. 1.o o
Give each cashier a separate cash drawer and constant cash float.00 Instant yeast (0. place in bowl. 6. Divide the dough into 16 equal portions (about 550 grams per piece).246.25 Equipment:
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Weighing scale (for spices 0-1 kg) – 334. cover with damp cheesecloth and leave for two hours.5 kg) – 156.00 Water (27. Count the cash the end of each shift.75 Cheesecloth – 25. The procedures are simple and can be done in your own home. 2.171.50
Subtotal – P 784. 7.
If price per kg is lower compared with the existing market price.765. Direct Cost:
Raw materials (50kg flour) – 1.84 d. Indirect Cost:
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Labor cost (350. increase the markup to 30% or more.00 Note:
The higher the volume of production per day (i.e.260 pcs.oo/day) – 350. the lower the production cost.
Bake for 12-15 minutes or until golden brown.00 Contingency (10% of direct cost) – 205. thus increasing the markup to more than 50%. more than 3.75
Total: P 2.75 Add: Total indirect cost – 710.47 Total over the 3..22/3.75 b.
Product Costing (average produce of pandesal for 50 kg is 3.11.17
Selling price per piece – P0.372.260 pcs) a. Production Cost:
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Total direct cost – 2.98 Market price – P 1.).054.00 Water & electricity – 55.47 c.260.260 pcs yield – 2. Product Pricing:
Production cost per kg – 0.84 Add: 10-20% markup of the production cost – 0.47
Total – P 710.00
Production cost per piece – P 0.00 Ingredients used for 50 kg – 682.00 Transportation – 100.