How to Start Bakery Business in India – Investments, Profits, ROI

How to Start Bakery Business in India

Everyone loves to have sweets and cakes. Cakes are almost synonym with the word ‘Birthdays’, it is a symbol to celebrate not just birthdays but also on special occasions. Be it cakes, pies, donuts, cookies, or sweets, the demand generated by the customers is enough to give you an idea of the amounts of profits that are generated by businesses that deal with a bakery. The numbers are also huge if a business deal with different types of Bakery items for sale.

Overview

With so many items to be explored in the bakery business, the market potential and the amount of net value that this industry generates is on a very large scale. If we take into account the various reports related to the profits by Bakery business in India, it would explain things much better.

According to a report by the IMARC Group, the Bakery Market in India had reached an estimated value of 8 billion in the year of 2019. These numbers are just an estimate of all the profits that are made from the various types of Bakery items that are in the market. Even if we count a single line of product, the turnover that would be generated is a good amount.

From Cakes to donuts to various sweets, you can select one or multiple products for your business start-up. Depending on your vision, and the level to which you plan to take your business, you can make a choice for the same. For medium scale business, selecting multiple types of bakery products would be more beneficial.

Let us have a look at a few of the numbers and details related to the Bakery business.

License Required for Bakery Business

Before putting your business into practice, you would require various licenses that are necessary to obtain. The various licenses that are required for the Bakery business are as follows.

A. FBA License
B. FSSAI License
C. Health License
D. Bakery Permit
E. Current Bank Account
F. Trade Mark
G. GST Registration
H. Trade License
I. Business Pan Card

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Raw Materials required

Just like any other business, you’d require some raw materials, that would act as a base for your product quality. The following are the various types of raw materials that are required for the Bakery business.

A. Baking Powder
B. Salt
C. Sugar
D. All-Purpose flour
E. Ghee
F. Milk
G. Eggs
H. Assorted fruits
I. Caramel Colour
J. Yeast
K. Buttercream
L. Jam

Equipment Required

Along with raw materials, you would also require various equipment that would help you to process the Baking items further at each stage. The Equipment ranges from various start to end processes.

A. Ovens, or
B. Microwave
C. Deep Freeze
D. Milk Pots
E. Weighing scale
F. Planetary Mixers
G. Mixing Bowls
H. Baking Trays
I. Working table
J. Gas Cylinders
K. Utensils

Manpower Required

Manpower is another important aspect of your business, you need to hire staff or the laborers according to the requirement. The number of manpower required would vary for small, medium, and large-scale businesses, and also on the number of bakery items that you plan to deal with.

For setting up a small scale-based Bakery business, the necessary manpower that you should go for would be around; 2 to 4 people, who have some basic bakery knowledge.

And if we talk about a business that is on a medium-scale or a large-scale level, again depending on the number of baking items that you go for, the required manpower would be; 6 to 10 workers.

Investment required

After having a glance at the various equipment, raw materials, and the labour, or the manpower that would be necessary, we can take an estimate of investment that is required for operating your baking business on a small and medium scale basis.

CONTENT	AMOUNT
Small Scale	80000 to 3 lakhs
Medium or Large Scale	5 to 15 lakhs

Expected Profits from Baking Business

Right after analyzing our investment in the Bakery business, the next area to explore and analyze is the profits that can be made through the Bakery business each month. Profits are necessary to run a business on a regular basis and also for marketing and expansion purposes. The average profit that can be earned from a baking Business running on a small-scale could be around 60,000 to 1.2 Lakhs, per month.
The profit earned would depend on the number of bakery items that you deal into, if your product dealing is multiple, then you can even earn more than 2 lakhs a month.

Targets for Bakery Business

Local shops: Bakery items are such which is used by a lot of people. You can start to pitch your product to the local shops that are near your own house. This would help you to reach the audience that resides in your area.

Retailers: Retailers have a variety of products that they would display in their store. Bakery items are one of the fast-moving products for their store and hence with a good enough profit and price, they would be willing to have a tie-up with few of your items

Supermarkets: Supermarkets have many products in stock that are related to the bakery, be it sweets, donuts, bread, and so on. If you are dealing with multiple bakery products then this is the best stop of business for you, as supermarkets would order products in huge stocks.

Sweet shops and Cake shops: Aside from supermarkets, you can also target various sweet shops that are situated inside or outside your locality and sell your bakery products in huge stocks with such shops. Cake shops can be targeted for cakes and pastries as well.

Cafes and Decent Tea stalls: As we already know that cookies, biscuits, and various bakery items are used by people as a complementary item to have tea with. You can approach cafes and good tea stalls to sell your bakery products as a complementary product along with their offerings.

Profit Margin

We already discussed about the expected profits that we can earn through the Bakery business, however, let us also take into account the profit margin that can be earned through this business. With a well-settled business, you can expect to earn around 20% to 40%.