Business Overview

Baked treats are a specialty of cultural cuisine throughout the world. Who doesn’t love the smell of fresh-baked bread? A bakery business typically operates out of a storefront in the commercial section of a city or town. However, many entrepreneurs have successfully run bakeries out of their homes, attracting customers via word of mouth and small-scale advertising. Still others rent space in a commercial kitchen and distribute their baked goods wholesale to local cafes, restaurants, and convenience stores.

Retail bakeries prepare their items in-house and sell their baked goods directly to customers, with some locations offering seating for their clientele.

Commercial bakeries operate without a physical storefront, acting as suppliers for businesses that wish to sell baked goods, but don’t have the capacity to produce them in-house.

Who is this business right for?

A good baker has mastered the art of baking. It takes dedication over a long period of time to become successful in this business, as there is a lot of competition. As such, the baking business is ideal for people who love baking, who don’t mind working odd hours (for example, early mornings), and who have an artistic side. The best-selling bakeries not only have items that taste great, but also look so appealing that customers simply cannot resist buying them.

What happens during a typical day at a bakery?

As owner of the bakery, your time will likely be spent primarily in the kitchen. Regardless of your unique business model, the most time-consuming activity will be baking. This includes prepping your baking space, putting together the ingredients, watching the ovens to make sure everything cooks just right, and then cleaning up at the end of the day.

Depending on how big your store is and how much staff you have on board, you may also be interacting with customers, operating the cash register, keeping track of business expenses, and developing a marketing strategy to bring more people into your shop.

What is the target market?

A bakery can attract a wide variety of customers. Doughnut chains like Dunkin’ Donuts and Krispy Kreme succeed by offering tasty treats that are affordable for the general public. Doughnut Plant in New York City, on the other hand, offers eggless doughnuts made from fresh, organic ingredients, thus attracting the health-conscious and vegetarian crowd who can afford to pay a slightly higher price for a better quality product.

Depending on your personal interests, values, and skills, you may wish to similarly cater your bakery to a niche market. For example, a bakery specializing in custom cakes will do well advertising to weddings, birthdays, graduations, and retirement parties. Other items, like bagels or fresh bread, could appeal to those who simply want to include high quality baked goods as part of their regular diet.

How does a bakery make money?

Bakeries make a certain amount of profit per item sold. In many bakeries, the revenue from beverages, including coffee, tea, juice, and other specialty drinks, is even greater than the profit from baked goods themselves.

What is the growth potential for a bakery?

Total annual revenue for the retail bakery industry is approximately $3 billion, and in the small commercial bakery industry it is about $7.5 billion. As such, the bakery business is a competitive industry that offers a good chance of financial success to those who can consistently provide their customers with quality products, and who are able to develop their business in a smart way.

You could choose to start a small bakery operation out of your home, taking orders online from members of your local community, and choose to never expand beyond that. Or, if you are a bit more ambitious, you might invest in a storefront, hire a team of employees, and develop your own unique brand, eventually establishing your own franchise.