How to start a bakery in 2023


by Anthony · Updated Jun 28, 2023 · 16 min read

You probably typed in Google "how to start a bakery". It means you are passionate about baking, just like I am.

My name is Anthony. I'm the chef & owner at Pastreez, the #1 online French bakery in the US. We sell French macarons & crêpes, in-store and online.

I'm also a business coach that can help you start your own bakery business.

When I left all in France to launch Pastreez in the US, I had to overcome many challenges. I'll share with you my experience so you don't have to.

In this blog post, I share with you the steps to create your own bakery, whether online or in-store.

  • Table of contents

  1. How much does it cost to start a bakery?
  2. Test your idea with strangers
  3. Test the market
  4. Build your online presence
  5. Bakery business plan
  6. Find your bakery location
  7. Tenant improvements
  8. Getting your health permit
  9. From new bakery to sustainable business
  • How much does it cost to start a bakery?

How much does it cost to start a bakery

Before to start the step by step, I get this question a lot: How much money does it cost to start a bakery?

In summary, it costs about $500 to test your bakery idea, and $10,000 to $50,000 for tenant improvements.

You thought it was a bigger number, right? It actually depends on what step of the process you are.

$500 is the cost of the phase where you confront your products to real potential customers.

In this example, the $500 corresponds to a farmers market stand in your local city, including a canopy, where you can meet and test your bakery idea.

Then once you have your most valuable product (MVP), you can start thinking to open your bakery store, and think about next step costs.

For me, it was the macarons. For you, it can be anything that fits the market. As long as you bake with passion in a demanding market, you will make a difference.

Once you're ready to launch your bakery (after following all the steps below), you'll have to make tenant improvements to the shop you rent (or buy), so that your bakery looks like one.

My estimate of $10,000 to $50,000+ for tenant improvements includes aesthetic improvements and health permit required improvements. I detail these on step 6 and 7.

Is there a market?

To be honest, it's too early to talk about costs. At first, you should ask yourself: Is there a market?

Meaning, is anyone ready to buy what I have to sell?

In this full guide on how to start a bakery business, I'll guide you through each step and associated cost.

Remember, I was in your shoes. I will also detail what worked best (and what didn't) so you can overturn the challenges on this entrepreneur journey.

  • Step 1: Test your idea with strangers

How to test a business idea

I'm not a fan of the adage "go big or go home". You should not risk everything on something you haven't tested at a smaller scale yet.

Because we all make mistakes, that are actually learnings. Test your bakery business at a small scale first, so you can make small mistakes and learn / fix these fast along the way.

As opposed to "going big" too early, and make one big mistake.

Ok let's dig in. You're probably wondering, how to test a business idea? You test your business idea by confronting your product to strangers.

This first step is free. It is also crucial: I call it the feedback phase. Bake your product at home and test it with perfect strangers.

Is it macaron? Crêpes? Bagels? Cupcakes? Focus on a couple of your favorites, and give it away for free in exchange of a detailed feedback.

No need to ask for money at this point, you just need their feedbacks. Ask them questions like:

    • Was it good?
    • What did you like best, and why?
    • What did you dislike, and why?
    • What flavor variant would you like?
    • How much would you pay for it?
    • Would you gift it, or perhaps order for events?
    • ...

You get the idea. Gather a maximum informations at this step. Once you get enough feedbacks and you can see a "trend", it's time to take a moment to analyse your data.

Strangers feedback to start your bakery

The result of this preliminary market analysis is essential and will determine your business core baked goods.

Did I say strangers? Important to NOT get family members or friends, because they tend to give sugarcoated feedbacks.

They'll always support you, so they most likely won't tell you if anything is odd in your recipe.

When my wife and I arrived in the US back in 2017 to do this first step, we rented an Airbnb in Los Angeles, and baked out of the owner's oven!

Since we did not know anyone, we met people through Meetup. It's an app that connects you to strangers around specific topics.

So we went on few meetups, bringing free French pastries. We had no idea what was popular in the US.

Thanks to this first step, we were able to pinpoint that French macarons were a clear winner among our panel of products. to this date it's still our core product at Pastreez.

  • Step 2: Test the market

Test the market

Okay. Now you have your most valuable product (MVP) thanks to step 1. It's time to test the market.

In this phase, you will test the transaction aspect of your bakery. Of course, keep the feedback door open. It's always welcome.

Find a way to test a mini version of your bakery. For me with Pastreez, I used farmers markets in California.

For you it can be fairy, pop up store, farmers markets, or anything cost effective to be able to confront your product to customers.

And beware, this is truly where your bakery business starts, even though you have no shop yet!

Years after I attended farmers markets with Pastreez, we still have core customers that were here since the beginning.

Take good care of these early customers along the way, because they give priceless feedbacks at every step of the journey.

At this point, the business part kicks in. You should answer questions like:

  •  Is this the good price tag?
  • Do people come back for more?
  • Should I sell by unit, or as a pack?
  • Should I bundle?
  • ... 

These answers will help you shape a robust business model, based on actual facts.

And every baked good, city, state, country makes your market unique. Perhaps your cupcakes have a special twist? Is your neighborhood missing a bagel place? Is vegan cakes a thing in your area?

Test your baking passion

It's also a good test for your passion. You're now immersed in the baking world almost daily. Do you like it?

Sometimes we picture something that is different in the end. There is no shame to it.

Since you're not too deep in the process yet, you can easily back up anytime without consequences. That's another advantage of using this roadmap.

But if you're still hungry for more, then you're ready for the next step.

  • Step 3: Bakery business plan

Bakery Business plan

According to Investopedia, a business plan is a "document that defines in detail a company's and how it plans to achieve its goals".

For a bakery, a classic business plan would include costs, description of your baked goods for sale, the location, lease terms, and everything related to how you plan on conducting your business.

99% of the time, you would need it for investors or loans, such as banks.

Investopedia also mention a bakery business plan is used to "attract investment before a company has established a proven track record".

In the real world, do you really need a business plan? Short answer is no, a business plan is BS. Here is why: Things NEVER happen as planned.

Simply because you'll pivot, adapt, change your baked goods, perhaps change location, update your pricing, etc.

A business plan is designed to path the unknown.

And this guide is far from a "leap in the unknown", since you base your actions on actual facts, feedbacks, and early customers.

Using this guide, the risk is very minimal, since every step is validated by real data.

All that being said, I know it might be important to you to get a bakery business plan template. So here you go!

After testing your products (step #2), that's when you'll probably need it.

You'll find a "fill-in-the-blanks" sample below. It will be sent to you by email within few minutes.

  • Step 4: Build your online presence

Gain revenue with online presence

Let's sum up, you:

    • Tested your idea with strangers
    • Tested your products with early customers
    • Know your product prices
    • Know your target audience (gender, age group, type of purchase ie gift, events, etc.)

A good way to keep spinning the "test wheel" is to start building your brand online, before to even look for a physical location.

These days, you can't build a sustainable business without a strong online presence.

Starting your brand online early will get people to know you and your brand before launch date.

You don't even need to ship your products. For example, you can enable only pick up orders from your home, pop up store or booth, if any.

This way, when you will open your bakery physical location, you'll already have customers from all the previous steps. You don't start from scratch.

I know you're not into having 100% online store. You are a baker, not a web marketer. I get that, I was in your shoes.

That's why I created My Coach Guy, to help you start a bakery business with a strong online presence.

Book a Free 30-min. consultation with me. We'll chat about your project, and see if you're eligible.

Once you started building your online presence, consider a pop up store, or a booth at your local shopping center.

They're usually way cheaper than an actual lease with tenant improvements. It's also another way to test again your commitment to it.

It's also great because you can still stay part-time with this. Having a booth on weekends, or farmers markets one day per week, is doable with another job.

Some of us prefer this as a "side hustle" rather than a sustainable business.

So if you'd like to stay part time, you can skip the next steps. If you want to build a sustainable bakery business, keep on reading. 

  • Step 5: Find your bakery location

Find your bakery location

For this step, you need to be full-time working on your bakery. You can not be part time on this if you want to take it to the next level.

Let's sum up one more time, to make sure we're on the same page. After completed the previous steps:

    • Your tested your products with early customers
    • You know your target audience
    • You know your pricing
    • You tested your passion for baking
    • You run a "small" version of your store at farmers markets or similar
    • You built a strong online presence to get you started

If you've done all that, you're ready to build your brick-and-mortar store.

But first, what's a good location for your bakery? It has to align with your goals.

Is your target audience retail, meaning you aim to sell for big box retail stores like Walmart or Target? Then you need to produce volume. Industrial areas would work, it is usually cheaper than busy commercial areas.

Is your target audience wholesale bakery items, meaning making goods for other bakeries to sell? Same, you don't need to be in a crowded area.

Is your target audience walk-ins customers? Then yes, you need to be in a "busy" area, as long as it fits with your budget.

Usually the best areas are within a shopping center. Simply because it will bring business and traffic to your door.

Negotiate bakery lease terms

Once you shopped around and found the ideal location, you will start to negotiate the lease terms.

Be confident, there is always room for negotiation. Whether for the monthly price, for the lease length, even for an extra year option.

At Pastreez, we pay $1,400 a month + electricity, gas and internet. But Phelan is a small city, and it can easily gets in the $4,000+ a month, depending of the area.

A very important tip, make sure to negotiate a couple of weeks free of charge to make your tenant improvements (improvements in the shop to make it a bakery).

  • Step 6: Tenant improvements

Tenant improvements for a bakery

Once you agreed on lease terms, the clock is ticking.

The picture above is from Pastreez location, back in 2021. Tenant improvements are updates made to your shop prior to launch.

These are the necessary (and mandatory) renovations to turn the empty place into a bakery.

I know it can be overwhelming. I've been there.

I can coach you to build a sustainable bakery business. Book a free call with me so I coach you through the process.

For Pastreez, I was able to get 8 weeks free of tenant improvements. That's a lot. But wait, is it?

I split tenant improvements into aesthetic updates & permit updates. The first one is the fun part: It's all about making your bakery your style!

The second, is everything that is mandatory with your local county guidelines. I'll get to it on step 7.

For now, let's focus on the fun part!

Aesthetic improvements for a bakery

For the outside, I went for something simple but efficient. A custom glass sticker with our Pastreez logo, French Bakery inscription, and a couple of wordings. There was also opening hours for the front door.

I also added the top panel stickers, the one that can be seen from afar. Usually, any shopping mall provide these. You'll just need to pay for the stickers.

That part cost me $400.

Then for the inside, it really depends of what you get. Hopefully the previous tenant was soft enough. you'll most likely have to paint it anyways, to match your brand colors.

At Pastreez, I bought the paint and did it myself. White background with red and blue details, to match the French flag.

For the paint, it was not more than $200.

You might also need room dividers, if you need an office area, or to separate front from kitchen.

I built two walls with an opening (no doors). I did it myself as well, because I was quoted $2000+ for this. The materials only are around $500 for both walls.

I won't go to deep into decoration, as it really depends on your style and budget.

Now let's dig into the less fun part: Health department required improvements.

  • Step 7: Getting your health permit

That's a tough one. Mandatory tenant improvements go from:

    • Flooring to be tiles or any non absorbant floor (easily cleanable)
    • Cove base tiles for the sides of the floor
    • Ceiling to be in a cleanable material
    • 3-compartment sink
    • Hot water (specific temperature needed)
    • Water heater to be sufficient size
    • Hand wash station (independent from 3-comp sink)
    • All equipments to be NSF certified
    • Dry storage area with commercial shelves
    • Self closing doors for the bathroom
    • ...

The list is long. It depends of your local jurisdiction. Contact your local health department and ask for tenant improvements guidelines for a bakery.

you might also need to do plumbing / electrical improvements. One of the requirements is to have a floor sink.

If the previous tenant was a restaurant, they'll have one on site already. So you're good.

But if not.. Then it gets expensive. For Pastreez, it was a hair salon prior. So no floor sink.

It was $5,000 to add a floor sink in our situation. These health permits improvements depends of your county guidelines and existing facility features.

All together, permit improvements can range from $10,000 to $50,000+.

My personal experience with the health department was good. In the end of the day, they are here to help you and your customers stay in good health.

Once you touch base with them, they will send you their guidelines, and they'll visit you 2 to 3 times.

The first visit is really to meet you, and make sure you're on the good path.

The second visit is to check how your improvements are going, and answer pending questions.

The last visit is the final one. It's usually pretty fast, because they already know you and your project. They will make sure you meet the guidelines.

Bakery health permit

On-site, they'll give you the precious health permit, which allows you to be finally open to the public.

Then, they usually visit once a year, to make sure you keep your bakery in good health standards.

  • Step 8: From new bakery to sustainable business

You made it. Be proud of yourself!

You are now the happy owner of your own bakery. And if you followed this step-by-step guide, you're on the right path!

But it's just the beginning. I want you to succeed. Now that you're in business, you need to focus on:

    • Customers acquisition (get more customers)
    • Average order value (AOV)
    • Frequency (how many times a customer buy from you)

If you focus only on walk-ins, you'll get popular in your area. Up to a certain point though. What about people searching Google for a bakery in your city? Google maps search? ...

You need to have a strong online presence to grow these days.

You are baker. Focus on baking. Let me do the rest. I will coach you to improve your online presence that bring you leads and sales.

Schedule your Free session so we can talk about your goals, and how I can help achieving them.

I hope you liked this guide! This is an amazing journey that you've started.

Leave your questions in the comment section below!

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