I know you will love me for this one, but since I set up Bake Shops, Bakeries and Cupcakeries all the time here’s my gift to you folks writing your initial business plan and doing your diligent research. Sure you’ve got the batter down to a T, you know how to ice and decorate the cupcakes like no tomorrow, but do you have the cash to finance the operation? Here’s a rundown of what it’s gonna take if you work with your friends at One Fat Frog Restaurant Equipment. Remember this is a bare bones budget guideline. Of course we can build you a place for 10 times this budget… but you’re likely not going to get any cheaper than this.
The Small Business:
Bakery, Cupcakery, Bake Shop
costs est. 2012, Orlando FL
The Start-Up Costs:
Security deposit = $2,400
(based on rent of $1,200 a month for a 900- 1200 square foot facility. You may very well be able to negotiate better terms, lower deposit, or defer payments)
Typical security deposit on a commercial lease is one month’s rent. You will also typically pay your first month’s rent/ lease.
Construction = $3,000
I would budget this in for exhaust heat hoods for ovens, coat of paint , and installation of equipment- plumbing and electric. (You should look for a facility with existing flooring, walls, lighting)
Start-up inventory =$1,000
This is the cost of dry goods, refrigerated goods and other consummables.
Used Equipment= $6-8,000
Double stack convection ovens, bakery rack, countertop mixer, sinks, dry display case, chairs, tables, stainless tables (2), etc
Permits = $1,000
Total start-up costs = $13,200- 15,200
The Monthly Expenses:
Staffing = $3,200
2 full time employees at $10/hr / 40 hrs a week
Rent and utilities = $1,500
$1200 rent plus $300 in utilities
Inventory = $1,200
Insurance = $100
Rough monthly expenses = $ 6,000
Number of $2,99 cupcakes she must sell a day to break even: 83 just to cover over head this is not factoring in a ROI Return on Investment. It is based on cupcake only sales. You should work to increase the per ticket sales- ie: upselling coffee, beverages, to- go baked goods.
If your business is open 7:30 a.m. – 4:30 p.m. you will need to make at minimum $28/ hr it is open to cut even. This means if you have a bare bones ticket of 2.99 you would have to see about 9 and a half clients an hour. The easy answer here is to increase your per client ticket sales to right around 4.50 ($2.99 baked good and 1.50 coffee). You do the math… we haven’t added in an advertising budget at this rate.
For a small bakery to exist it makes a lot of sense to take on “private baking” or contract work. This means providing and maybe private labeling for restaurants, convenience stores or other establishments. It’s also great to build in a good layer of seasonal work (weddings, birthday parties, holiday themes) as a buffer and added stream of revenue. Or how about renting out your licensed kitchen facility when you are not using it? What about appearing at local farmer’s markets? Often this is great to increase impulse sales.