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Money saving tips for opening a bakery

6 Money-Saving Tips When Opening Your Bakery

Posted by | 15-09-2020

Opening a bakery is an exciting venture — but it’s no secret that it doesn’t come cheap. Like any business in the food industry, it requires investment in reliable kitchen equipment and maintaining a well-stocked inventory of many ingredients.

As a business owner, it’s important to remember that your job is a constant balancing act between keeping costs low and generating maximum revenue. For new bakery owners, it’s essential to be smart about startup costs, such as kitchen appliances. This includes opting for high-quality refurbished kitchen equipment, ensuring great taste, and investing in marketing.

How to Save on Bakery Startup Costs

1. Choose your business type before you choose a location

Where do you plan on opening your bakery? Proximity to your target market is vital — you will want an accessible, high-impact location that’s close enough to capture walk-in customers, as well as those within a small radius. Over time, your bakery may gain traction and attract customers outside your immediate location.

Alternatively, you may also consider a purely online business model, with pick-up and delivery options to serve local customers. You could also start by only selling your products to retailers such as coffee shops and restaurants who want to outsource baked goods.

Choosing a location is a significant financial consideration. Taking out rental costs may significantly lower your expenses in favour of smaller-scale online orders or retailer partnerships, at least until you can open your shop. Make sure you know what kind of bakery you want to operate before finding a location that suits it.

2. What type of bakery are you opening?

Neighbourhood bakeries typically welcome walk-ins for to-go orders of ready-to-eat pastries and made-to-order cakes. Others are branching out to provide the full cafe experience with drinks and other refreshments.

Assess how much capital you have, as well as the long-term survival of your bakery. Can you sustain a lease, furniture upkeep, refurbished kitchen equipment prices and maintenance, and the cost of supplies in the first year, or is there room to cut back on startup costs until your bakery grows and recoups the initial investment?

Figuring out the type of bakery you want to open informs what you will need to invest in, such as refurbished kitchen equipment and regular inventory quantities.

3. Be smart when investing in equipment

Baking is all about precision, and every baker needs the right tools for this. Once you know what type of bakery you’ll be opening and what exactly is on the menu, you can invest in the right equipment. But commercial kitchen equipment does not come cheap, so it’s important to strike a balance between affordability and function.

Rather than investing in all brand new models, you should consider refurbished kitchen equipment. This will help you save on startup costs while ensuring you get the best value for long-term use. Certified refurbished units undergo a rigorous repair and calibration process, so they’re good as new. They even come with a new warranty and recently replaced parts.

Purchasing refurbished kitchen equipment can help you cut costs significantly. You can even acquire other refurbished supplies like mixing paddles, sheets, and baking pans.

For recurring purchases like ingredients and small, fast-moving supplies, think about buying in bulk, and build a relationship with the retailer to score ongoing deals that eliminate middleman costs.

4. Make sure the price is right

How much do you plan on charging for a cookie, a loaf of bread, or a sheet cake? As a new bakery, your top priority should be to recoup startup costs through revenue. At the same time, you have to keep products affordable for your target market.

It’s basic instinct to price goods based on the cost of production, such as ingredients and supplies, the energy consumption of kitchen equipment, and time, but this formula isn’t enough.

There are other hidden costs that bakeries take up. The increased prep and clean-up time, packaging, that go into creating the perfect pastry often don’t get factored into their pricing.

If your first taste-testers are family and friends, it’s only natural for them to expect a discount — sometimes too steep or practically free. Earning maximum profit through proper pricing requires factoring in these hidden costs, as well as maintaining a standard family and friends discount.

5. Get creative with marketing

Who are your customers, and what do they like? Opening a bakery requires identifying your niche. If there are already five other bakeries on your block, think about what makes your bakery different and how you can communicate that to your target market.

While a traditional bakery offering staple pastries like donuts and bagels will often attract walk-ins through window displays, marketing novelty cakes may require a more substantial online presence to reach customers. Knowing what makes your bakery unique and how you can best cater to demand allows you to smartly allocate your marketing dollars.

Not all marketing has to be about direct advertising. Often, you will find value in creating partnerships with local influencers, as well as cross-promotions and joint offers with related businesses that are not direct competitors.

Don’t discount the value of a personal touch in providing a sales lift — a simple thank-you card can go a long way in building lasting customer relationships.

6. Simplify distribution

How are your products reaching customers? Most bakeries operate on a walk-in and pick-up basis, but larger orders require deliveries. As a new bakery, however, you need to be smart about distribution costs.

Once you land a steady stream of large or recurring orders, it may seem necessary to have an in-house delivery system. Still, outsourcing has always proven to be cost-efficient. For neighbourhood deliveries, consider signing up for local food courier apps, and leverage relationships with long-term suppliers into dropshipping partnerships to fulfill larger orders.

For more money-saving tips for starting a bakery, call Ancaster Food Equipment at 866-711-5486, or contact us here.

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