General Opening Costs

Business By salokin Updated 8 Jul 2009 , 3:04pm by Shirlcantuck

salokin Posted 9 Jan 2009 , 4:06pm
post #1 of 19

I am thinking about opening my on cake shop and wanted to know what is the general costs of opening one?

18 replies
cakesdivine Posted 9 Jan 2009 , 4:31pm
post #2 of 19

This is a very broad spectrum question.

What kind of cake shop do you want to offer? Will you be open by appointment only, offering highend custom cakes, or do you want to be a walk in bakery that people can grab a cake & go or make a special order?

Each is set up very differently and has different needs. You need to decide this first. From that point you then need to determine how much space you will need, then start pricing rental space in your area that you want to open. Then you have to consider your kitchen equipment, plumbing, electrical, and business equipment needs. Licensing issues in your area, business and food management class costs, furniture, and depending on the type of cake business you decide possible refrigerated display cases...the list goes on. It is a big undertaking. It is less expensive to be a highend custom cake biz than a walkin cake biz, but the walkin biz usually do more volume of business (but not necessarily more $$$) as the overhead on a walkin biz is higher (ie: employees to run front of house, additional kitchen staff to handle the volume, more electricity, water, gas being used due to more open hours)

CakeForte Posted 9 Jan 2009 , 5:54pm
post #3 of 19

It need to be more specific on what you want.

I'm at about 20k right now and I'm not even open. That's mainly because most of that is the rent I'm paying on the place alone. I could have done it cheaper with loans...but I refuse to do that.
I think total will be around 35k with all of my appliances. I already own about 5k in baking supplies/equipment (pans/hand mixers/ spatulas/ cookie cutters. etc). so that's 40k. I have done some advertising over the past several years.

At the time I'm completely open...I think It will be at least a $50k investment.... And I'm being very conservative.

littlecake Posted 9 Jan 2009 , 5:58pm
post #4 of 19

in 2002 i opened with 28 K...i'm sure it would be more now.

cylstrial Posted 9 Jan 2009 , 6:11pm
post #5 of 19

Littlecake -- What kind of cake business do you have? Highend custom? Or a walkin? And you rent in a space? And have employees? Or just yourself?


indydebi Posted 9 Jan 2009 , 7:40pm
post #6 of 19

This is going to be long......

My "$12-$15,000, we can do it in 10 days" construction quote ended up being over 8 weeks and $28,000.

In my state, floor plans needs to be approved and signed off by an architect before going to the state for final approval. Here's an add'l $600 and 6 weeks delay.

My landlord asked me to move from space "B" in the strip mall to space "E" so they could accommodate a large tenant's expansion. This delayed me about 6 months in opening. (They did give me some rent concessions 'n other stuff, though ... they did me right by it. It was just frustrating to wait).

I used a kitchen designer, who charged me zero for her time and talent, and who found me some great equipment buys (10x10 walk in refrigerator for only $1200. I paid less for the refrigerator than I did for my mixer!). I have more equipment than you will need, since I cater ... such as a 6 burner stove, a deep fryer, and $8000 for a commercial dishwasher with a $1000 heat booster, an 8ft exhaust hood that cost $8000 ..... and my equipment costs were $45,000.

Then there's the stuff that always gets lost in the cracks. Grease trap? Gosh, darn, she forgot to put that in the specs. Add another $1000. Fire extinguishers ... those were included in the quote, right? Oh of course not!! Add another $300. Mop buckets ... they cost fifty freakin' dollars, are you kidding me?????

Going along with commercial insurance is all the stuff the insurance company requires. Hood cleaning every six months; fire extinguishers inspection every six months ... and they don't do this stuff for free, either. (For the first hood cleaning, I told my agent, "It's still shiny!! I'm a caterer, not a restaurant! I cook on Friday ... and not even every Friday!" So they conceeded that if I had someone come in and document that it didn't need cleaned, the insurance company would accept that. It cost me $75 for some guy to walk in, look at the hood and say, "Yep. It's clean. $75 please.")

I started out thinking I would wash my own kitchen towels ... I bought a bunch of the white bar towels at sam's. First, I just don't have time for that. Second, I can't get them as clean as a commercial laundry so they look like crap if I took them on a catering, so I ended up with a laundry service. Well worth the money, but it's another bill at the end of the month.

Commercial soaps for handwashing, dishwasher, dish sink, mop sink; sanitizer for dishwasher and for dish sink. Floor cleaners, degreasers, window cleaners, etc. My order via Sysco for all of this stuff was $700. now it lasted a good long time ... it was 6 months before I had to order more dishwasher soap, which is the one I go thru the fastest. but I didn't like laying out $700 all at once, and you can't buy this stuff at the grocery!

I owned 3 of the commercial stainless steel shelving units and figured that would be plenty. Since then, I've purchased 3 more and wish I had room for more.

FIguring the equipment and construction costs are pretty easy. It's those "little things" that just kill ya.

As mentioned above, the type of shop you have will impact your square footage requirement and some costs. Open to the public with eat-in space? Then you're likely to be required to have a public, handicap accessible restroom in addition to the private one for your employees. Sometimes you can have one public one that employees can use, but check your state requirements.

Also ... eat-in space or front retail space takes up square footage and you are paying for every square foot. I know a restaurant that has a banquet room (type) space but it's usually unused. She's paying over $6000 a month for that space and it's dead space. Be careful when planning your space and it's usage. Make sure the space pays for itself.

Oh .... and once you slap that "open" sign on your door, be prepared that the first 100 people who walk thru your door will be people wanting to SELL you something .. mostly advertising people who all SWEAR they get the best results over anyone. icon_confused.gif

springlakecake Posted 9 Jan 2009 , 7:58pm
post #7 of 19

I am going the less expensive route and creating a separate kitchen in my basement. for me this was best because I still have small kids and would like a bit more flexiblity. Plus I didn't want all of the overhead associated with a storefront. I have been working on this for nearly a year. I have scoured craigslist, ebay, tent sales etc and bought some new and some used equipment. My dad and DH are doing most of the construction. We did hire out the electrician, plumber and an HVAC guy. I havent totaled up the final start up cost, but I think it will be in the neighborhood of 6K. The electrician ended up costing nearly half of that figure. It could have cost several thousand more had I not gotten some screaming deals.

Oh and I am not including cost for the stuff I already own. I have quite a few pans and other supplies.

indydebi Posted 9 Jan 2009 , 8:05pm
post #8 of 19
Originally Posted by merissa

Oh and I am not including cost for the stuff I already own. I have quite a few pans and other supplies.

oh yeah ... the smallwares! My $45K figure didn't include ANY of that stuff. I did an inventory once and already owned over $6000 worth of smallwares equipment.

By the way, don't buy measuring cups from Dollar General......the markings on the cups wash off! icon_lol.gificon_lol.gificon_lol.gificon_lol.gif

johnson6ofus Posted 9 Jan 2009 , 8:10pm
post #9 of 19

Don't forget good news/ bad news economy now too....

Good news- guys are desperate for work so they undercut each other to get the work. Think electricians, plumbers, contractots, suppliers, etc.

Bad news- economy is down so are people/ will people continue to spend more on parties/ cakes ?

We are building a house and have seen some real variance in the bids on work. Half price variance on similiar experience/ quality--- that makes a BIG difference.

Good luck!

indydebi Posted 9 Jan 2009 , 8:28pm
post #10 of 19
Originally Posted by johnson6ofus

Bad news- economy is down so are people/ will people continue to spend more on parties/ cakes ?

I was telling a couple of people just yesterday that the inquiries I'm getting (Eventective, Decidio, WeddingWire, etc) are in the 200-300 guest count range! These are WAY bigger than inquiries I got last year! (My avg wedding/catering headcount size in 2008 was 112 ... avg wedding cake size was 118. This covers a range from 30 to 250.)

What I saw happen as the 70's moved to the 80's ..... in the 70's, people were forced to scrape and scrimp. When the work came back, in the 80's, people were sick of anything that represented "conservation". Thus we moved from small cars and houses with little windows, to big cars and open floor plan houses. I think during this recession, as people have to scrape and scrimp on the everyday things, they "may" take the viewpoint of "This is my once-in-a-lifetime-wedding and I want to do it right". And based on the larger weddings I see being planned already, there may be some truth in it. A local venue that i'm in all the time, told me "don't suggest us for 2009 ... we're booked solid."

I may have to scrimp on my heat in the winter and my A/C in the summer, but I'm going to make sure my grandchildren have an awesome birthday cake! My daughter (who ISN'T getting married anytime soon!) will have the grandest wedding we can do for her. I think while people may forego the bouncy castle and trade in Chuckee Cheese for a backyard cookout, they will ALWAYS need a cake for little Sally's birthday.

Yeah ... I heard there was a recession. I refuse to participate. thumbs_up.gif

Hubby came up with the line for me a long time ago:
Client: We're tight on money ... can you discount?
Debi: I know what you mean. We're tight on money, too, that's why we don't discount.

P.S. I read recently that Tiffany's NEVER discounts and NEVER has a sale. Look at their reputation. I wouldn't mind becoming known as the "Tiffany's of Cakes"! Who's with me!!!!? icon_biggrin.gif

shorty56 Posted 9 Jan 2009 , 9:02pm
post #11 of 19

i'm just about done getting the new shop all set up. i'm done to last few things on my list to do finally!! i do wedding cakes almost exclusively, and am appointment only. i won't do a cake for less than 75 servings.

my space is about 550 square feet, my rent is $500 a month and i had to pay a deposit, so that was another $500. keep in mind that while you're doing construction you still have to pay rent even though you're not making any money.

i spent about $14,500 on large equipment (freezer, fridge, tables, mixer, oven, etc). i spent about $4500 on plumbing, $1900 on electrical work, $500 on licenses/permits, $400 on small equipment that i didn't already own (spatulas, bowls, measuring cups, sheet pans for the pan rack, cooling racks, cleaning supplies, plates/glasses/silverware for tastings etc). i spent $500 on decor/furniture (could have been a lot worse, i already owned an extra sofa that i'm using in the shop and we have an ikea where i got some sweet deals!), $800 on construction that we DIY'd (flooring, adhesive remover, adhesive, paint, etc). all told i'm just over $23,000 right now. i only have a little but left to do, i need a sign, a fire extinguisher, and some art work. I'm hoping to finish everything for under $24,000. looking back there were a couple areas i could have really saved in, but in exchange i would have paid a professional to do my floor (it was days of back breaking torture to do it myself!).

btrsktch Posted 9 Jan 2009 , 10:19pm
post #12 of 19

One day when my story ends, I'll write about my horrific experience in getting my doors open. Unfortunately, it's still an ongoing saga icon_cry.gif
It's a cupcake & coffee shop, and I'll be offering custom birthday and wedding cakes, but since I am in a high tourist area, I'll only do a very few cakes a week and focus mainly on cupcakes.

My story is very similar to Indydebi, but about 5x worse. What was supposed to take 60 days is now on month 6. I've given up on paying any bills at this point, and luckily, with the horrible economy and businesses closing around me left and right, my landlord isn't sweating me (yet!).

I started with a $150k budget and I am at $175 right about now... and counting. Things I underestimated:

* Permit fees ($2500 for water/sewage; $2000 for health inspection)
* $2000 wasted by getting ripped off by interior designer (things gone wrong #1)
* $15,000 for architect to do drawings (who I am currently suing for things gone wrong #2)
* Extra months of carrying costs (rent, utilities, paying back SBA)
* Cost for all the *extras*. Mind you, I had a good amount of stuff, but moving from a small home baker to a business, well, I need extra everything! I think I'm up to $2500 in extra pans (cupcake), spatulas, mixing bowls, storage containers, boxes, cupcake liners, clothing, etc.
* Cost for all types of signage (and permits for it), including measuring and installation. $2500
* $4000 extra to pay for a master plumber to come in and fix what the original plumbers jacked up

My store is 1400 sqft, and I purchased everything at auction or used, with the exception of the grease trap ($3300) and the Deluxe Ovens ($4500).

I can see the light at the end of the tunnel though. If my new plumber ever decides to show up (been waiting for him for almost a full week now, and going on week 3 since he started icon_rolleyes.gif ) , then I can get my final and health inspections done.

-K8memphis Posted 9 Jan 2009 , 10:40pm
post #13 of 19
Originally Posted by indydebi

P.S. I read recently that Tiffany's NEVER discounts and NEVER has a sale. Look at their reputation. I wouldn't mind becoming known as the "Tiffany's of Cakes"! Who's with me!!!!? icon_biggrin.gif

<Raising hand high> Me, Me-eee--mostly because there is no way I'm gonna
crank up my lethargic arse and work for anything less. icon_biggrin.gif

Unless I have to that is icon_lol.gificon_lol.gif

tracycakes Posted 10 Jan 2009 , 2:15am
post #14 of 19
Originally Posted by indydebi

P.S. I read recently that Tiffany's NEVER discounts and NEVER has a sale. Look at their reputation. I wouldn't mind becoming known as the "Tiffany's of Cakes"! Who's with me!!!!? icon_biggrin.gif

I DO! I DO! icon_lol.gif

cylstrial Posted 10 Jan 2009 , 1:34pm
post #15 of 19

Btrsktch -- oh my goodness! You poor thing!! I hope it works itself out and soon. That sounds so frustrating!

littlecake Posted 11 Jan 2009 , 1:55pm
post #16 of 19
Originally Posted by cylstrial

Littlecake -- What kind of cake business do you have? Highend custom? Or a walkin? And you rent in a space? And have employees? Or just yourself?


i'm a one man show, except for cleaning help.
i rent 1000 square ft...i do everything custom, i have cake cases i used when i first opened for walk i just have models in them.

i do all kinds of cakes, not just high end, i don't know if i could make a living around here with just high end cakes, maybe i'll give it a try someday. i gotta make a profit tho, i'm divorced, and this is my only income, it pays all my bills.

i was in the black 3 months after i opened, i couldn't have done it if i had to have waited years to make a profit.

cylstrial Posted 11 Jan 2009 , 6:13pm
post #17 of 19

I'm so glad that it worked out for you! And thanks for sharing your experience with us!

cakesweetiecake Posted 8 Jul 2009 , 2:44pm
post #18 of 19

Excellent thread!

Shirlcantuck Posted 8 Jul 2009 , 3:04pm
post #19 of 19

Excellent thread. I have learned so much just reading your experiences!

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