You are passionate about "traditional" baking, and you know that a bread outlet has the right to be called a bakery only if the bread has been kneaded there. But, do you understand by heart the precise list of cereals needed to manufacture a lumberjack bread?
Are you thinking of opening a bakery? Good news, to help you in this process, you will find in this article advice on the steps you will need to take to make your project a reality: market research, search for premises, business plan, search for financing, etc.
Carry out market research for a bakery
The first step to opening a bakery is conducting a market study to verify sufficient demand in the establishment area.
To do this, you will need to analyze in detail:
- The characteristics of your future clientele: is it a neighborhood clientele or people working nearby? Consequently, what are the peak times? The most requested products? The purchase frequency and the average ticket?
- Bakeries already established nearby: what types of bread do they offer? Do they also offer pastries or sandwiches? Are customers satisfied with the current offer?
- Industry trends: how are consumer habits changing? Is the trend towards independent bakeries or franchises? Are food superstores a danger for artisan bakeries?
The bakery market in France
The booming bakery sector is doing well.
In 2015, there were just over 32,000 bakeries and pastry shops in France. The bakery sector is doing well and seeing its turnover increase in value and volume.
Prices in the sector tend to increase, accompanied by a move in upmarket supply. Indeed, the consumer is ready to pay more for a quality product in the bakery sector, as in other food sectors.
According to the INBP Technical Supplement, The bakery and pastry trade, developments and benchmarks: "food is, even more so in times of crisis, a haven, a source of pleasure which the French do not wish to deprive themselves of."
Bread consumption also tends to increase. The "gluten-free" trend has no noticeable impact on this inexpensive food that accompanies the meal of the French. They are attached to tradition and fond of this product, which to stick to the trend of "better eating" is also available in organic form.
Result: "bakery-pastry making ranks first among food retail companies" underlines the National Confederation of French Bakery-Pastry making.
Competition from the industrial bakery
However, not everything is pleasant, and the traditional bakery is facing tough competition from the industrial bakery-pastry-pastry (BVP)
Indeed, the industrial BVP continues to grow to the detriment of the artisanal bakery by offering lower prices and surfing on the love of the French for these products which are part of everyday life: bread, baguette, croissant, etc.
To satisfy a demand for authenticity and craftsmanship, the industrial BVP takes care of its points of sale. Now, the large and medium-sized stores have a section fitted out with traditional decor reminiscent of the artisanal bakery.
The bakery sector is, therefore, a flourishing sector in which traditional bakeries and the industrial bakery sector compete. But the panorama would be incomplete if we did not mention the growing importance of under-brand networks, mainly in the form of cooking terminals.
Note: to be called a bakery, according to the decree of September 13, 1993, also called the "bread decree," the bread must be kneaded and baked on-site. However, franchises are generally only points of sale where the bread is delivered ready for sale or baking. Therefore, they cannot benefit from the appellation bakery.
Bakery Market Trends and Projections
The good health of the bakery sector should continue, driven in particular by a rise in prices due to a move upmarket in the products sold. However, competition from industrial bakeries and franchises should slightly reduce the number of independent artisan bakeries.
To face this competition, there is only one solution: to reinforce the identity of the traditional segment and to offer very high-quality products with a strong taste, possibly organic, and to bring up-to-date the know-how of the baker.
Open an independent or franchised bakery?
Following the completion of your market study, you will need to define the commercial positioning of your future bakery:
- What type of store do you want to open, for which target, and with which concept: traditional bakery, industrial bakery, or bakery specializing in organic?
- What products are you going to offer: only bread, with a range of pastries or pastries, or sandwiches in addition?
- And above all, do you plan to open an independent bakery or join a franchise?
The answer to these questions will, of course, depend on your know-how and your desires. But it is important to ask yourself them early in setting up the project because they will considerably influence the choice of the ideal location and the potential profitability of your business.
Note: opening a bakery as a franchise allows you to benefit from many advantages (creation assistance, supplier already found, and competitive prices thanks to economies of scale), but the franchise also means less freedom and autonomy. Therefore, it is not recommended if you want to set up an artisanal bakery with creativity as a differentiating factor.
Finding a location for your bakery
The choice of location for your bakery will largely depend on the number of people (or not) in your shop. The situation of your bakery is, therefore, a key element that will considerably influence turnover. Consequently, it is important to consider several criteria to choose the best location.
The first criterion to consider is the passage and frequentation of the place. Indeed, a shop located in a very busy place will ensure good visibility. A busy street in the city center seems ideal, but one can also consider setting up in a residential area, a shopping center, a train station, or an office district.
The second criterion is that your bakery's natural environment must be consistent with your commercial positioning. For example, if you choose to set up near a station or offices, you need to specialize in sandwiches. Similarly, a location close to a shopping center suggests that you will satisfy small appetites, with pastries, for example. In the city center, between the butcher and the market gardener, you will sell more bread and possibly cakes if you also offer pastries.
Also, remember that a bakery requires a large area since the bread must be made on-site. A simple point of sale (even if the bread is baked on-site) requires less space. However, the larger your premises, the higher the rent or the purchase price.
What legal structure to create a bakery?
Creating a bakery, like any business creation, requires choosing a legal status for the business.
Sole proprietorship, simplified joint-stock company (SAS), possibly single person (SASU), limited liability company (SARL), single-person limited liability company (EURL), ... The possibilities are numerous, and your choice must, above all, be ordered by your project.
Indeed, the legal status of your bakery must be consistent with what you imagine for your structure, particularly regarding the number of partners, the starting capital you have, and tax and social security.
You can consult our guide to legal status to help you choose the best legal status for your bakery.
The human and material needs to open a bakery
The next step in creating a bakery is to assess the human and material needs needed to run your business to include them in your projected budget.
The material needs necessary for opening a bakery.
Opening a bakery requires substantial purchases:
- equipment needed for kneading and baking
- necessary equipment for sale: cash register, payment terminal
- the layout of the room with counter, display cases, decorative elements, fire safety equipment
- initial stock of food raw materials
- marketing investments: neon sign, website
- etc
The recruitment needs of a bakery
Establishing an accurate provisional budget must also assess your staffing needs.
If you do not have it yourself, you will first need to hire a person with a professional qualification allowing you to legally exercise the activity of baker–pastry chef.
You will also need to hire sales staff, ideally of course, with a keen interest in the industry. Here the needs will strongly depend on the surface of your premises and the planned opening hours.
Additional services to consider when opening a bakery.
Setting up your bakery also requires that your provisional budget considers all the ancillary services essential to the smooth running of your establishment: insurance for your bakery, cleaning, and maintenance, administrative and accounting management, etc.
You can, of course, consider outsourcing some of these tasks. For example, you can turn to a cleaning company, a manager, or an accountant.
Whether for the purchase of equipment or the subscription of additional services, remember to ask for detailed quotes and compete to obtain the best services at the best prices.
Marketing plan for a bakery
Once you have assessed your equipment and staff needs, it will be time to look at the marketing actions to put in place to acquire and retain your customers.
Many marketing actions are possible, and it remains to define which are the most suitable for your project.
Street marketing is an effective communication tool well suited to local businesses: flyer distribution campaigns in the street or mailboxes will quickly introduce you to people who work or live in the neighborhood.
Also, remember to announce the opening of your bakery in the local press in the form of advertising inserts and to be referenced on Google Maps and in the directory of your city.
To retain your customers, a loyalty program and promotions remain sure values (1 croissant offered for ten purchased, for example). But you can also create virtual slates for your customers who fill it with their credit card - for instance, €20 - and who can spend this amount in several installments without having to pay you (and have changed) each time.
A bakery business plan
When you have completed all the previous steps, it will be time to compile and write the business plan for your bakery.
The business plan of a bakery is a document presenting your project in a quantified and argued way. It has the following objectives:
- To allow you to verify that your project is financially viable, at least on paper
- Convince your financial partners of the qualities and chances of success of your project to obtain funding
- To serve as a roadmap for the years to come
The business plan is the reference document the banks will ask you for to grant you financing. Therefore, it must be impeccable both in substance and form.
You can use online business plan software if you're new to writing business plans and aren't sure how to do it.
Using specialized software has several advantages:
- You are guided in writing by detailed instructions and examples for each part of the plan
- You can draw inspiration from business plan templates already written
- You easily make your financial forecast by letting the software take care of the accounting aspects for you
- You obtain a polished document formatted and prepared for delivery to your banker.
The search for financing to launch his bakery
Creating a bakery requires a substantial investment. For example, it takes between €250,000 and €400,000 to open a franchise bakery and a personal contribution of at least 30% ( Franchise Observatory ).
There are different ways to raise this amount.
First of all, you will have to build up a personal contribution: by drawing on your savings, looking for partners, or by calling on your relatives (for example, by launching a crowdfunding campaign).
Then, you can approach banks and other lending organizations to get a loan to help pay for some of the equipment purchases.
Also, think of the possibilities that exist in terms of assistance with business creation with devices that often offer financial aid, either via a credit at advantageous rates or in the form of a tax credit.
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