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Do you love baked goods? Are you a baker yourself or do you simply consider bakeries a haven to satisfy all your cravings? Whether you’re someone looking to start a bakery of your own -or you are simply a connoisseur of baked goods who wants to keep yourself informed of the multitude of options you have to satiate your sweet tooth- this article has everything you need.
There are many different types of bakeries in the world selling different types of baked goods. Bakeries come in all shapes and sizes, and its unsurprisingly competitive market, where you can succeed only if you are able stand-out and create a niche for yourself. Your ideal bakery could be anything from a themed Kitty café, a delicate shop selling tiny tea cakes and pastries or a classic cookie or pie shop. Now that you have your sight set on your dream bakery it’s time to understand the technical aspects of these different types of bakeries.
Retail Bakeries or Wholesale Bakeries :
The first thing you need to decide before you delve into the specifics of your bakery, is whether you want a retail or wholesale bakery. This is a vital choice that forms the basis of your following decisions such as the type of building or equipment you will be using, the amount of financial investment you will etc.
Retail Bakery : These are bakeries that baked goods directly to customers instead of selling through other businesses or distributors. You will be the owner of the business with at least one member of staff in charge of running the cash register and helping customers, these bakeries need both front- and back-of-house space.
In simpler terms, these are the picturesque café-style bakeries with a cute and creative interior design ; a window or counter space displaying all freshly baked desserts, with an option for special orders if you please. Retail bakeries can either be sit-down cafes or walk-in counter services depending on your budget and preference.
Pros of Opening a Retail Bakery
- More personal interaction with customers and communities
- Easier to find more visible locations that drive in traffic
- Allows creative signage and front-of-house design
- Usually less expensive to get up and running
Cons of Opening a Retail Bakery
- Highest overhead costs of all bakery options
- Reliance on smaller, less steady orders for income
- Need to hire employees to run front-of-house area
- Legal trouble to obtain licenses and permits
- If you go out of business you will still need to pay your rent until you can find another tenant.
Wholesale Bakery : If you prefer doing business with large-scale clients instead of individual customers, then consider opening a wholesale bakery. These bakeries sell their products to other businesses, like restaurants, grocery stores, specialty shops, and even cafes. Because you can choose to work from home, a commissary kitchen, or out of a leased commercial kitchen, these types of bakeries offer more flexibility. You would still own the business and need a licensed kitchen location and production equipment.
Pros of Opening a Wholesale Bakery
- Regular stream of clients and orders offer steadier source of income
- No front-of-house space, serving space or costly displays needed. All you need is functional commercial kitchen equipment.
- More flexibility in terms of location and work schedule
Cons of Opening a Wholesale Bakery
- Capital investment needed upfront.
- High-volume production may require additional staff, which means more overhead costs
- Reliance on big businesses and long-term clients with large orders.
- Bulk buying means charge per item and clients will have to be reduced.
2) Home Bakery ( Cottage Food Operation) :
This is the perfect choice for entrepreneurs who are just starting out, as baking at home means you don’t have to invest much capital into the new business. All you need to start a home bakery is proper equipment, adequate space, and the necessary permits. Another thing to consider is how you will get your products to your customers. Will it be done online? If that’s the case, then how will you ensure the orders remain fresh? If you are planning to sell only locally, then can you afford a delivery truck or van with refrigerated storage? By answering these questions, the day-to-day running of your home bakery will take shape.
With this kind of bakery, you can work from your home, serving customers according to the cottage food laws in your country and you will responsible for all parts of your business. This choice is particularly great for a baker who might be keen to use their skills as a side gig.
Pros of a Home Bakery:
- Flexible scheduling and work from home allows you to schedule around family obligations.
- You have complete control over your products and time
- Extremely low capital start-up costs
- You can increase your equipment and capacity as you increase your income.
Cons of a Home Bakery:
- Limited earning potential
- Legality of running a bakery from your home is an important consideration
- Your home becomes a place of business which can change the dynamic of your home
- Your home becomes a place of business which can change the dynamic of your home
- It can be hard to quit working when your work is at home
- Your standards will be having to be exceptionally high to compete with retail bakeries.
3) Shared co-op kitchen :
These bakeries are where you can rent space in a commercially licensed kitchen for which you would pay for contracted amounts of hours per month or week ( with extra costs for storage and refrigerator space and country/city specific licensing needs). Co-op kitchens are a great business route to help you cut costs, because it allows you to maintain all your equipment and baking space without the actual cost of maintenance. In addition, co-ops allow you to test your business without committing to a large investment, also giving you a chance to network and build connections in the same field.
Pros of a Shared Kitchen:
- The Co-op maintains and handles all of the equipment
- You have all the sales opportunities of owning your own commercial kitchen without the steep investment in buying your own shop
- You can test and improve your business
- You build connections with other food entrepreneurs who are working in your community
Cons of a Shared Kitchen:
- A lot of people will be sharing the space and not all of them will be as clean or as considerate as you.
- People may run over their time allotments and not clean up or respect boundaries of the storage space
- A lot of time the kitchen is available 24/7 and if you’re new you might end up getting the time slots no one else wants ( i.e. the ghost shifts)
4) Small Business Incubators :
Similar to shared kitchens, these types of bakeries also provide support through mentorship and connection to sales opportunities, and therefore perfect for a baker at the beginning of their entrepreneurial journey. With the help of mentors and their network, you are able to grow your business faster.
Pros of a Small Business Incubator:
- You are given education in addition to experience through these incubators.
- Real mentors who are successful in your chosen field will be assigned to assist you with your business plan and loan package in case you need funding.
- Your incubator and mentor will be interested in promoting your business because your success is their success.
- It will be easier to grow your community network.
Cons of a Small Business Incubator:
- You may not be able to move as quickly as you would like because you will have to complete their requirements.
- These often come with conditions ; available only to certain demographic groups or require an application, interviews before being accepted into a business program.
- You may not have all the time required for the mandatory coursework and meetings.
- Similar to co-ops, you will also be sharing the space with other start-up food businesses and may face issues regarding their consideration.
5)Catering Kitchen :
These types of bakeries allow you to own or rent the space but it’s set up as a production bakery with very little customer service area. In this route you will have to focus more on your sales and marketing strategies as the lack of customer services limits walk-in customers. On the other hand, you can cut down on rent because you don’t have to spend on the front-of-house design or updating fixtures and decorations. This kind of bakery falls in the wholesale category with the space being meant solely for baking with all your sales made to other local businesses, deliveries, your kiosks or sales venues.
Pros of a Catering Kitchen:
- You get to have your own commercially licensed kitchen and complete creative control over the business
- The rent is usually cheaper on these types of spaces than regular storefronts.
- You also don’t have to spend on fixtures and interior design for customer comfort and appeal.
Cons of a Catering Kitchen :
- You will need to focus on sales and marketing since you will not be visible or have high amounts of walk-in customers
- You may not have any scenery or windows. Can be mundane and akin to working in a dungeon.
- Sometimes even the heating, air, and plumbing aren’t the best in these types of situations.
- You may have to allocate costs for considerable remodelling to ensure the space passes inspection.
6) Business Kitchen :
These are the kitchens attached to existing businesses – such as restaurants, churches, day-cares, nursing homes, hotels- with which you can partner to rent their commercially licensed kitchen space in their off hours. This option is perfect for a beginner- if you have established relationships with such business owners– because it enables you to avoid a steep investment and build a clientele with little risk. It will be even better if the place where you are renting the space is also interested in what you’re selling because that helps you negotiate a partnership that could be beneficial for all parties involved.
Pros of Using an Operating Business’s Kitchen:
- You can avoid a steep investment in your own equipment and build a client base
- You are the owner of the business and have all of the benefits but with very little risk if it doesn’t work out
Cons of Using an Operating Business’s Kitchen:
- The schedules can be inflexible as it will depend on the owner or management of the space
- Your business will never be a priority where things like storage space is concerned
- If the host changes their mind or you fall out with them, it could disrupt your business severely
- You might face the same type of storage and space issues as in a co-op kitchen
7) Bakery Food Truck :
These are quite an unconventional choice but are quite trendy these days as an alternative to a traditional store front. Not only do they give you flexibility to move to different locations they are also relatively inexpensive to procure. In addition, bakery food trucks enable to offer a range of delicious treats including sandwiches, snacks, cookies and cupcakes, among other choices in quite a convenient single set-up. But you need to keep in mind that you would need to have space or separate location to prepare the baked goods.
Pros of Bakery Food Truck :
- It’s inexpensive with low overheads and allows flexibility in terms of the choice of items you sell and the locations.
- High rates of walk-by customers who would be tempted to stop by and pick up something at their convenience while they pass by.
- You can prepare the baked goods at a separate location, using your truck to store and serve, thus cutting costs.
Cons of Bakery Food Truck :
- Can be expensive if you want to equip your truck with a fully-stocked, multi-purpose kitchen.
- Finding a place to prepare the food can add to costs and sometimes the spaces available to rent might lead to issues similar to co-op and shared kitchens.
8) Specialty Bakeries :
These bakeries focus on making one or a few specific types of baked goods. They offer flexibility, because although you’ll focus on a specific type of product, you can choose to produce it in either a retail or wholesale setting. These types of bakeries – including allergy-friendly and health-conscious choices- allow you to focus on quantity and high demand of a specific customer base at affordable pricesThe various types of specialty bakeries you can choose from are :
Traditional bakeries (Biscuits and bread)
Something sweet, something savoury? Who doesn’t like some warm biscuits or bread to start off their day? These bakeries offer customers the choice of whether they want to eat their baked goods plain, with jam or jelly or some eggs and sausage etc.
Cake bakeries (Cakes, cupcakes and pies)
These types of bakeries specialize in cakes and pies. Whether you’re looking for a classic apple pie ,a custom-made birthday cake, a dozen cupcakes or something else, the options are endless with this kind of bakery which specializes in offering mouth-watering treats of your preference.
Cookies and biscuits
These niche bakeries almost always have high returns. Trendy, easy to make and customise, with short bake times, they are quick to sell and very versatile.
Pastry shops (Pastries)
These bakeries offer delicacies that could be a good meal or a tasty snack. Whatever you’re craving, whether a cheesecake, croissant, éclair or Danish pastry, you can get it in these kinds of bakeries. Offering a multitude of options, these are perfect for a night in by yourself, a romantic gift or an office party.
Doughnut shops (Doughnuts)
Who doesn’t love a big box of doughnuts? Whether it’s your breakfast or you’re grabbing it as a treat for your entire office, these bakeries are great because they have signature offerings but also may offer specially made flavours that hits the spot.
Café bakeries (Sandwiches and snacks)
A specialty sandwich is always a hit. Not only are they filling as a meal, but they can be packed with flavour and made unique to your locality. A lot of these bakeries also offer calorie count in each item you order making it great for the health-conscious customers.
Bread shops (Bagel)
Another niche bakery alternative, bagels are a classic baked good perfect for any time of the day and can be a great alternative in areas with many workplaces and commuters who will bring high footfall.
The most popular specialist bakery choice, wedding bakeries focus specifically on products for wedding occasions. Highly specialist and definitely one of the most competitive bakery types, these offer custom made wedding cakes that suit your personality and budget, making your special day a little sweeter.
Pros of Specialist Bakeries :
- You get to be unique and experimental
- Endless options on the niche you choose to focus on.
- Possibility of gaining monopoly in your specialisation and getting ahead of competition.
- Allows for creative control and customisation
Cons of Specialist Bakeries :
- You need a lot of special equipment and appliances leading to more costs
- Difficult to break into a niche that already has well-established competitors.
- You might need to justify high prices or sell at low prices despite your efforts
The type of bakery you choose will impact the equipment you require as well as the number of staff you would have to hire or the facilities/space you need, among other things. While picking your ideal bakery type may seem daunting, all you need to consider are the following :
Are you looking to keep overhead and costs low?
Do you prefer a traditional storefront or something unconventional?
Do you want to sell all your types of baked items or focus on something specific?
Are you keen to delve straight into business or would you like to learn, build networks and test the waters before you jump in with an investment?
Combining your answers to these questions with your overall vision of the “dream bakery” will allow you to set up a bakery that’s unique to you and your tastes. Once you’ve picked which type of bakery you want to set up, all you really need is an oven, a few good recipes, and a way to deliver your products to mark the start of what could become your flourishing bakery business.