I've been contimplating w/ my husband for at least the last year about starting a bakery supply store. There's only one store near me (besides Michaels) that sells all the supplies I need at pretty reasonable prices, but the downfall is its not in the nicest area of the city (if you know what I mean) so I try to get as much as I can when I go, but if any of you are like me ..we always forget one thing. so I need to go back. Anyway, its basically the convience thing....so if I don't go there where will I go?? If I order online I usually pay a bit more... then you have the shipping on top of it. UUUGGGHH!!! I'm trying to figure out if anyone has any insite on starting a supply store...as far as profit margin & how to get started?? Will it be worth it? Sorry its such a long post, but would really appreciate all your comments & advise. Thanks!
Retail is a very tough business to be in, especially for small businesses. You can get a general idea of how much your profit margin would be by contacting Wilton and other manufacturers to get wholesale pricing information and researching how much you would pay to rent a retail storefront.
Don't forget that you will need to keep inventory so you'll need a significant up-front investment in the business.
don't you have to have a tax id# to get wholesale pricing information? I don't think they will just give that info to you ...will they?
don't you have to have a tax id# to get wholesale pricing information? I don't think they will just give that info to you ...will they?
Can't hurt to try. You should probably also contact local baking supply distributors in addition to the manufacturers.
Ive been thinking the same thing. Even talked it over with a cpa friend and the cost was just way too much to open a business like that.
I was shocked at the long list. It takes so much that I could no way afford unless I won a lottery of some sort. Off the top of my head this is a few things I can remember from the list.
Rent - here it runs 10-25 dollars a square foot.
renters insurance, fire, flood all seperate
credit card machine
paint, awning, window and door upgrades, plumbing here are not done by the landlord
employee insurance, taxes etc
business license yearly renewal
you deal with the public daily or on occasion cause the store will not be packed 24/7
you have to deal with rats from walmart scoping the competition then they will start carrying the same stuff you do. Then put you out of business.
So I have decided to just to place that dream on hold...
Im not trying to stop you from doing it, its just not feasable for me.
CNCS: to be fair, just about everything on your list is also necessary for a retail bakery. The difference is that the markup on baked goods is MUCH higher than specialty baking supplies, and retail bakeries make most of their money on wholesale baked goods. Specialty baking supply retailers have no wholesale business to speak of, so it is very difficult to make a profit.
I've been contimplating w/ my husband for at least the last year about starting a bakery supply store. . Thanks!
I am in MA too and hate driving to JoAnns or Michaels just to see the same stuff over priced over and over.
I use to drive into Cambrige to Verona's (spelling?) but she closed. What I do know is that if you include teaching seminars/workshops and other interesting cake/baked good related items it keeps people coming in.
Are you thinking of a retail store that only lets in licensed bakers? or is this for the public? I would be interested going off line to discuss how far into this idea you are. I have a few good thoughts regarding a store front.
Where are you located? If you're anywhere close to me, I'll be a customer!
How is your research going?
to be honest I really haven't done much research as far as technical details. I'm just trying to get some feedback maybe from some people that might know if it would be something really worth looking into. I don't want to invest a ton of time & $ if its not worth it, ya know. Its a scary step to think about opening up your own business, so I was hoping to get some thoughts from here since there is such a huge group of people willing to help out with your questions. This site is great!!
I wish I could help you, but I have no knowledge of the subject. And there is no cake supply store around here either. I would have to go into NYC, and that's such a nuisance.
Depending on where you ar I too would be a customer. I am in South shore area and go to a specialty store in RI when needed to avoide the fees of shipping from purchasing things online. We could definitely use a good supply store bu please steer clear of having the same inventory that Michaels and Joanns carries. The one I go to has Satin Ice and they must make a killing because it's the only place for hours that carries it. Good Luck!!
Thanks for all your input.....keep it coming
I know there really isn't many supply shops around & it does get frustrating when you need something last minute & you don't have time for shipping. I hear ya on Michaels & Joanns..........they are ok for basic things but they really don't carry the specialty items. I would definitely carry all the good stuff. Any suggestions on what you'd like to see in a store?
We often use powdered food coloring, which is difficult to find in mainstream retail. A few specialty extracts are also not stocked in local stores.
Everything else we use is available at Michaels, Whole Foods, the local grocery store, or the local restaurant supply store. And the two items I mentioned above are much cheaper when purchased online in larger quantities.
There are two specialty cake shops in the San Jose area, but they both also cater to brides looking for accessories for their wedding cake as well as providing cake decorating lessons. I would be very surprised if retail sales to local bakeries and decorators were enough to sustain the business.
The one I go to has Satin Ice and they must make a killing because it's the only place for hours that carries it.
Satin Ice is an excellent example. From the GSA link we know that $30 (the current sale price) is below wholesale cost for a 10lb bucket of fondant. The regular GSA retail price for that product at $45. Let's say wholesale cost is $32, and shipping (as part of a bulk order from the distributor) is $8. If you match GSA's retail price of $45, you are only making $5 gross profit on that item, and that's before you take overhead into account.
And even at $45, you are still being undercut by Michaels, since they sell 5lb of fondant for $20.
I totally see what your saying.....I guess its really hard to compete w/ online distributors. Although I don't plan on becoming a millionare, it would be nice to make some money doing it.
I wonder what the difference in inventory volume is to really cut down on the price of the product?
I still think its convience for some people to have a local shop to go to & look around. I personally buy more when I see it in person.
If you're in Western Mass you could take a trip to Meridan CT to the cake store there and see what kinds of things they carry. I thnik it's called Cake Decorators. They have a website that's currently closed for construction.
I order alot online, but love the personal interaction with my local shop. The owner does classes and limits her cakes for her own sanity. She gives the local professionals a 20% discount. When I meet people who think they want to try their hand at decorating, I send them to her for classes.
We exchange ideas and refer customers to each other. All the decorators that stop in chat as if it is coffe hour. She has a small shop, but it is ultra friendly. It is 25 miles from me but worth it when I want a sanity break.
She has even loaned me certain items she found were awful before I purchased to let me see if I liked them prior to purchasing. (I didn't)
She is not competing on price, she is not a discount store. Foremost, we talk alot of industry talk but we never.. ever.. talk bad about any other person or business. I feel that is a major key to her sucess.
justducky- thanks for your input... I totally agree with you about not bad talking anyone else. I just think that's awful. (I wouldn't want anyone doing that to me).
If I was to ever go that route I would have done the supply store with classes over a bakery. Because in my area there isn't anything besides craft stores and I thing it would go over well.
There are alot of things to consider when looking into it though.
You say you don't have alot of money to invest, but when you are talking about a retail store front that is what you have to do. You have to invest in product and hope it sales.
If you purchase things wholesale, do they have a min amount of purchase? If so, which companies have what?
I never realized, until I started working for my dad, what all was involved in a business. I certainly didn't think it was easy at all but still! The amount of money that goes out every month to pay bills is crazy. And I'm just talking the basic bills of running the place: Rent, utilities, phones, internet, charges from the CC companies when someone uses their CC, basic every day supplies (paper, pens, staplers), ins.... Then you have to think about a computer system, cash register system and up keep on them and everything else, when the AC quits working that, with the computer crashes Then you have the bills from your suppliers and so on.
Lets not forget about things like paying sales tax and the taxes you pay on your employees.
The best thing to do, would to really do the research and write up a business plan. You may find that while you and a handful of others may love to have nicely priced cake items in easy reach, it may just not be what is in the cards. It is easy to say some other place is over priced but when it comes to making more money than you spend every month you may find that you cant sell things at a the low price that you want to.
I just meant that I wanted to get peoples input that might have knowledge in this type of business before I invest a ton of money. I also thought about hosting classes @ the store but then your competing against Michaels...which is where everyone goes around here. How do you compete against them??
I guess I need to find out the actual numbers as far as inventory (wholesale info), local taxes, fees & insurance....all the nitty gritty to really see what's what. it seems like from everyone that's posted that it might not be the easiest business to be in or start up.
First off you don't look at it like you are competing with Michaels or Hobby Lobby.
You look at it the same way that you look at having a bakery vs grocery store cakes, you aren't competing, you are offering a totally different product. You have a bigger variety of supplies and you offer classes they can't get at Michaels.
Also cake supply stores can teach Wilton classes, you just go through Wilton to do it. So you could offer the same classes, and then add more on top of that.
In any business you enter you are going to invest alot of money. That is why a business plan and research are very important. You need to know exactly what you have to invest, what is required and if you can in fact make a profit after you take care of all the bills.
You also make plans for how to bring people in, so that they can see what you have to sell.
You have classes so people have to purchase items to do them (this is why Michaels/Hobby Lobby offer classes) and so people come back and purchase additional things.
You consider offering demo's during peak business hours (or scheduled demos) so people can see the latest coolest toy umm I mean tool and see that they just have to have it. (How many times have you bought things because you saw it in use and thought it was just too cool?)
You take classes and learn all you can so you can answer questions when people come in.
You think about starting a local cake club or offer a place for Day's of Sharing to happen, so people talk cake, talk about the latest supplies (maybe see a demo) and want to shop while they are there.
Don't be discouraged. There are many thriving cake supply stores out there. If this is something you really want to do, then I would work towards that goal, but I would go into it with both eyes open and consider it from all angles and have back up plans in place.
What would your store hours be? If it was from 8am-8pm, would you be able to be there the whole 12 hours? How many days a week are you going to be open? 5, 6, 7? Is it realistic for you to work 98 hours a week (12 hours a day while open, plus an hour before and after to open and close the store/7 days a week)? Are you going to offer the classes or pay someone else to? Would you need to hire other people to man the store while you teach or when you can't be there, or so you don't have to work 14 hours a day?
Texas Sugar - Holy Cow, you have a ton of great ideas =) I'm going to sit down & do some serious thinking & figuring.
I talked w/ the guy from my local cake supply & he says they haven't showed a profit in years (the store has been there for more than 15yrs ....YIKES!! He also says they don't really make money because most people only buy a few things here & there ..pretty much small purchases....I wonder why & how they stay in business if they don't make much profit??? I think some of their issue is there location (not in the best neighborhood & the quality of the store (very run down & some items are very dated). They are super nice people that work there though.
Because the supply store in Meridan is kind of a hike for me, I always spend at least $75 each time I'm there. I do think, however, that I'd have a hard time resisting going more often and impulse buying if it were a little closer.
As long as you are making enough to pay the bills you can stay afloat. Staying in business and having a sucessful business are two different things.
I would look at and consider what they are doing and how it is working for them, because it could give you some insight.
Maybe this just isn't something that is really needed in the area. Is it a small town?
If you teach the Wilton classes then you do have to carry some of the Wilton supplies, but you can expand from this and carry things you aren't going to find at Walmart, Michaels and Hobby Lobby.
Carry a good brand a fondant that comes in colors. I personally have nothing against Wilton fondant but I know some do, and I haven't even talked myself into using a coupon on the Duff fondant because it is still more than I want to pay. But if you have another brand that you like and works in your area then that is something you could carry. You could also break it up into little sample bits so people can taste it, and see the colors it comes in. This is also where you could do a demo to show how easy it is to work with, and "Oh you've never covered a cake with fondant?...We well have a hands on class that will teach you just how to do it."
Chances are most people are going to walk into a store for the items they need. Think about when you go grocery shopping. Or course you go with your list, and unless you are one of those coupon using budget-ers you will end up buying things that are not on your list? Why? Because stores have done research on this. They stick those kid items at kids eye level so they just have to have it, and you give it cause it is easier than them throwing a fit. And wow at the end of that aisle is some new food item you haven't seen. Maybe I'll grab that to try out sometime.
This is why Michaels have the holiday and seasonal stuff down the center aisles and all the new stuff or items they grab your attention on the end caps. Sure those $1 items sound great, but if you buy 20 or them, it really adds up very fast. So while you are shopping around for what you came in there for, you will see other things and chances are you will buy them. Why does Michaels and Hobby Lobby do the 40% off coupon or sale items? To get you in the store. They figure chances are you aren't just going to buy that one item, but several.
Do you know how many times I have stopped at a Payless because of a BOGO sale vs how many times I have gone in there just to shop for shoes? Why? Unless I am specificly looking for a certain shoe chances are I'm not going to spend full price on them. And secondly, who doesn't want a great deal, even if it means spending money I probably wouldn't have in the first place.
So I'd think about specials, deals and coupons. Think about it, how many times have you picked up and item and you had a cashier tell you, on that's a two for one deal and you go back and pick out two more? You could do 10, 15, 20 or 25% off sales of certain items. You can do the little punch cards of spend this certain amount and get so much off the next time you come in.
Does the other store have the same ole same ole all the time? I love July at Michaels because that is when the new Wilton products hit the shelf. That is when I get to physically see what new item they came out with and if I need it. The rest of the year? Well I am just restocking my decorator bags, MP, fondant, and little things. After you've built up your supplies you run out of must have and wants, until you see something new.
So while I would carry the basic supplies everyone loves to come in and grab, like colors, fondant, cake board and boxes you have to also carry other things you can get them to buy. Petal, Pearl, Luster dusts. Crystal colors - yeah I know they are a little costly, but the sales pitch for them is that they do not fade, can be used in all types of icing to color, you can dust with them, and they are completely edible. Cutters and veiners for popular flowers, then maybe have a place for seasonal flowers. Again this is where you demo and/or do classes, so they realise how bad they want to do these, how 'easy' it is, and then ask you what all they need to do them. Of course this is where you need the other tools. Rolling pins, ball tools, the dog bone, cel stickes, wires, floral tape, board to roll it out on, form for softening and shaping, gumpaste, oh and have you see all the colors of dusts we have to color your flowers?
Again consider it from all angels and work on getting all those ducks in a row.
I'd love to do the same thing in my area. We don't have any good supply stores in this area and I don't particularly like driving 3 hours to get to the one that has the stuff I need. In the long run it's cheaper to order it all online. I love making cakes, but I think I'd like dealing with a supply store better. I just don't have the funds at this point in my life to do any of that, let alone the time to invest in it. Best of luck to you though.
thank you guys, ....I'm going to push forward & at least see how the figures come out & write some sort of business plan so I can see how the numbers work.
Depending on where you ar I too would be a customer. I am in South shore area and go to a specialty store in RI when needed to avoide the fees of shipping from purchasing things online. We could definitely use a good supply store bu please steer clear of having the same inventory that Michaels and Joanns carries. The one I go to has and they must make a killing because it's the only place for hours that carries it. Good Luck!!
Not sure if you know about it, but Party Cake Party Cake in Taunton sells Satin Ice as well as a whole lot of other stuff for cake decorating. They are right on Bay Street. PM me if you want more info on where they are located!
I am in southeastern Mass also and usually go to Party Cake in Taunton or Lorraine's Cake Supply in Hanover when I need something. There are products that I buy that neither one sells (and I do shop online for those), but for most part they have what I need.
Its true...there are few cake supply places and I too thought of a startup. From what I have calculated, I would have needed $100K plus to be equal to my local competition (not counting Michales, Hobby Lobby, WalMart... Your biggest competition will still be internet.
Like the other poster said there is alot of overhead just in securing a locale. At least in our area, you now sign a personal guarantee on a lcommercial lease and landlords no longer want to do a build-out. Now, they want the tenant to build-out the space and credit rent monies at the end of the lease term.
If you carry stock, you will need shelving and if you do shipping, you need packing supplies. Granted, with the downturn in the economy, you can probably pick up shelving reasonably priced second-hand.
THen you need to select your manufacturers whose lines you would like to carry. Bear in mind, some have minimum order amounts which can be in the thousands. I heard one of our local stores complaining that CK products just raised their minimum order amount.
I'm fortunate. I am only about a 35 minute ride to two Cake Supply Shoppes here in Georgia with one being Nicholas Lodge's. Both carry many of the same items and relatively priced the same. Even though they are a relaitively short ride away, I still turn to the internet for my big purchases. I can find 20' of SatinIce for about 30% less than either of the retail stores. My cake pans (Fat Daddio or MagicLine) are almost 1/2 the price of Wilton pans and at least 20% less than the retail stores.
I look at it this way. I can order my supplies in my PJ's...no need to put gas in the car, battle metro-Atlanta traffic and spend 2 hours roaming in these stores looking at all the things I would like to have!
I may be wrong...but I believe many of the shops primary income is in classes and keep the retail side open for those clients and as a convenience for locals.
Chelle- yes I have been to that store too, mostly for my non edible supplies. haven't been to Lorraine's (its a little far) but their online site looks nice.
What is it that you can't find in those stores & you have to buy online? It seems like that the problem for a lot of people. I'm just curious if its similar items.
I suppose as long as your selling the supplies (online) then having the inventory cost will equal out & not be a burdon, the start up cost will be what is really going to be the big investment. I think with that its about the storage space to keep it all in. I'm sure you would need some sort of warehouse (depending on how much you need to keep on hand).