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How To Start Your Own Cake Business
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Baking and selling sweet treats may seem like an interesting business idea. But starting a bakery without the right knowledge and skills can be a complicated undertaking.
“It’s not as glamorous as a lot of people think it is,” said Mary Jayne Wilson, executive chef and operations manager at Amélie’s French Bakery in Charlotte, NC. and one in Atlanta that serves fresh-baked pastries, delicious sandwiches, soups and salads.
Despite the long hours and commitment required, business owners operate more than 11,500 bakery cafes in the United States. The industry is expanding, and bakery cafes have grown nearly 3% since 2014 and are expected to reach $11 billion in revenue this year. The total revenue for bakeries is likely to be even higher with more bakeries selling only pastries.
While cooking for others to enjoy can be rewarding and a passion for baking is essential, loving your craft will only get you so far, Wilson said.
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“There has to be a talent for it,” she said. “But it’s a really good balance between having the passion for it and understanding that it’s a business.”
Nicole Sullivan, owner of Sweet Boutique Bakery in Fayetteville, N.C, said a background in culinary arts is not necessary to start a successful bakery, but knowledge of the industry would be useful.
Sullivan opened her custom cake and pastry shop in 2007 after leaving a career as an Army communications officer. Although Sullivan later took courses at the New York Institute of Culinary Education, she began her baking with little knowledge beyond how to make cakes.
All retail bakeries sell baked goods directly to consumers, although some specialize in one type of pastry or service. You can choose from the following types of stores:
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In addition to made-to-order cakes, Sullivan also sells single-serve pastries at Sweet Boutique Bakery. You may want to consider diversifying your product offering to attract a variety of customers, especially if you typically sell something seasonal, such as wedding cakes for most summer ceremonies.
The type of bakery you want to operate will determine other aspects of the business, such as the amount of space, equipment and supplies you need, Wilson said. We will discuss these details later.
You can buy or rent a bakery depending on the financial resources you have, Sullivan said. Renting a space can be a cheaper option for new business owners but buying can be a better long-term investment.
Consider the amount of foot traffic around a potential location. Sweet Boutique Bakery is now located in a Belk store and is benefiting from the mall’s traffic, Sullivan said. But the bakery’s first location was in a retail location near several medical facilities. People stopped by the bakery on weekdays when they were in the area for work, but it was quiet on weekends, she said. It was difficult to attract new customers in that area.
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“It’s very important how you let people know you’re there, but what you do to get people to come,” Sullivan said.
Your city or state may provide resources for finding a business location. Some even offer incentives such as tax credits, so check with your local Small Business Administration office or Small Business Development Center.
Equipment is the second largest startup expense for bakery owners behind rent, Sullivan said. Whatever baked goods you sell, expect to buy a pastry case, a commercial oven, and a refrigerator. Those are the three essentials for any baker, Sullivan said.
Many bakery owners buy used equipment at first, but it may be worth buying some new stuff. A used oven or refrigerator may have lingering odors that can affect your pastries, Sullivan said. At the same time, the paste shell must be free from odors and damage, so the pastes look good.
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Large tables, called countertops, mixers and dishwashers are also important in an oven, Wilson said. Most cities have local dealers who sell new and used equipment for food establishments, she said. To fill Amélie’s many locations, Wilson and her team shopped at Recycled Restaurant Equipment in Charlotte. You can talk to the staff at a recycling equipment store or dealer in your area to find out what tools your bakery needs.
“I learned a lot about quality equipment — it’s worth spending more money on and buying what you can use,” Wilson said. “We have a good mix of both.”
When opening a new Amélie’s location, the average cost is $150,000, Wilson said. In addition to kitchen equipment, every Amélie bar requires coffee and espresso. Your costs will depend on what your bakery offers, as well as the size of the space, she said.
New bakery owners often think they can run the entire business on their own, but hiring a manager, especially someone with experience in the industry, can be a big help, Wilson said. A manager can take administrative tasks off your hands, like ordering inventory, and they can train any bakers you hire to make sure products stay consistent.
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To save training staff time and money, Sullivan hires pastry chefs and cake decorators. Finding skilled and talented decorators who can meet deadlines can be difficult, she said, but the right people can be invaluable. Sweet Boutique Bakery has five employees – a pastry chef, two decorators, a bakery assistant and Sullivan.
“I learned early not to hire someone who thinks it’s going to be fun and make dolls at home,” Sullivan said. “I try to find people who are at least trained in their craft.”
Rent and equipment are usually the biggest expenses for bakery owners, but other ongoing costs can add up, Sullivan said. Salary can be a major expense, depending on the hourly rate employees earn based on their skill level, she said.
Economic factors often cause ingredient prices to fluctuate and your bakery’s inventory costs to be difficult to predict, Sullivan said. Also, natural disasters or weather events in other parts of the country can affect the price of raw materials such as wheat and vanilla extract.
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“You’re very much held hostage, not just by the economy, but what’s happening in other areas,” she said. “How do you get that across to your customers without scaring them?”
Bakery owners should aim to spend 28% of sales on food costs, Wilson said. To use ingredients effectively at Amélie’s, Wilson tries to include the same items in as many recipes as possible. Buying basic materials in bulk also helps reduce inventory costs.
“If you have a variety of products that you offer, then your inventory costs can increase,” Wilson said. “The biggest things you have control over are your food costs and your labor costs, as far as operations.”
Baked goods prices often reflect the labor and ingredients needed to make them, Sullivan said. Many bakeries double or triple the cost of goods to determine prices, but custom work may require a different strategy, she said.
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To price a custom cake from Sweet Boutique Bakery, Sullivan estimates the amount of time it will take to complete the cake. Then she divides the cost per minute her highest-paid employee would spend on the cake by their hourly rate, and doubles or triples that total. If prices can handle the increase, Sullivan will also charge the cost of ingredients and the costs of keeping the bakery open, such as electricity and water costs, based on the time it takes to make the cake.
“I can’t really say it’s the perfect answer,” Sullivan said. “But I found early on that if you just focus on the cost of making things and strictly track what you pay for personally, it doesn’t really work.”
Promoting your bakery is an important step in getting customers in the door. Create social media accounts and a website for your bakery where you can post pictures of baked goods. Sullivan calls this strategy “smellovision,” because customers are more likely to visit your bakery after seeing appealing photos.
Engaging social media followers with giveaways and contests will encourage people to interact with your brand and become familiar with your flight, Wilson said.
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“Social media is great,” she said. “It’s great for a new business because it’s a cheap and easy way to get your name out there.”
However, ensure your social media productivity
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