I Want To Start My Own Bakery Business, Need Advice.

Business By Monelove Updated 19 Aug 2010 , 7:38pm by Monelove

Monelove Posted 19 Aug 2010 , 1:10pm
post #1 of 5

I would like to start my own bakery business but cannot bake from my home (I have pets) nor can I afford a store front. I REALLY want to do this and do it legally. I don't have enough business yet to justify renting a commercial kitchen nor do I even know where to find one in my city. I was thinking of maybe asking a local independent coffee shop if I could bake and sell from their location and pay them rent but not sure how to go about it. Does anyone have advice or experience with this situation?

My idea is the coffee shop does serve food but it is mainly breakfast quiches and muffins, etc. and it appears that they don't sell alot of thier food items. I was thinking of approaching them to see if I could co-op with them somehow without buying into the business, I would just pay them a monthly "rent" fee. I could use thier kitchen facilites and somewhat empty refrigerated bakery case to make and display my cupcakes and cookies for sale. There is not really a specialized bakery in the town I live in, everyone goes 1/2 hour into Memphis in order to get thier cupcake fix. I think it would bring thier coffee shop more business as they don't seem to do too much business. I'm just not sure how to approach this, how do you keep equipment and supplies separated, how do you keep separate what I sell vs. what she sells, etc, etc, etc. Just wondering if anyone has had a similar situation and how they handled it.



Thanks for any input!

4 replies
jason_kraft Posted 19 Aug 2010 , 3:23pm
post #2 of 5

The separation of equipment and supplies is easy, you would just have your own storage unit.

Regarding sales, this sounds like more of a wholesale situation, you would just need to work out the terms with the retailer (the coffee shop). Ideally you would "sell" your cupcakes and cookies to the coffee shop every day for a discounted price, and the coffee shop would resell your products to customers at a markup, but you may not be able to get them to agree to this, since the coffee shop would take the loss on any leftovers.

You may have to start out under a different type of deal, where the coffee shop would get your products "for free", and you would receive a percentage of the sales of your products. You could potentially build this piece of your business into a larger wholesale market selling to grocery stores, restaurants, and other coffee shops in the local area or even Memphis.

This probably won't be a large income stream, but you could supplement it with custom orders, which would be 100% your income (or at least a much higher percentage than your wholesale products).

cakesdivine Posted 19 Aug 2010 , 4:55pm
post #3 of 5

I disagree jason. She can coexist and pay a monthly rental fee like she suggested. Get full price for her product that has her name on it. Both businesses would be housed under the same roof.

It is very hard to make a profit selling at wholesale prices unless the volume is huge. A small coffee shop in rural TN that hardly sells the baked goods they already offer will be hard pressed to purchase more baked goods that they have no passion about to move them out the door.

Having the person whose biz name is also on the door and is passionate and motivated to move/market their product will have much more of an impact than the wholesale option with some counter clerk ringing up orders. Consignment is also a big risk, you leave your product they only pay you if something sells and they get a cut of the gross for allowing you to have your product there. Again, the clerk has no true motivation to move your product!

The cash registers now days have different departments so you can see at the end of the day the amount of money each individual business brought in.

Now you have to ask yourself Monelove, am I going to be at the coffee shop open to close, am I going to ask to use the current staff to market and service my clients? If so how much of their pay am I going to be responsible for. Or simply use the space to do custom cakes and market that aspect of my business and have basic cupcakes and cookies available for purchase along side a customers coffee order. In that case you might offer a percentage split on the profit margin (make sure it is the profit margin and NOT the gross sale) But if you do that then you must know exactly how much each item costs you to produce and what the profit margin is on each item.

The chances of you being able to build a successful wholesale line is very slim. And to even compete in grocery store markets you have to be a factory. The minute a product goes factory, the quality of the product diminishes and overhead goes WAY up as your product price must go way down, and you loose that custom aspect of your business.

I don't think you want to get away from the custom aspect, that is what makes a caker, a caker as opposed to a baker.

jason_kraft Posted 19 Aug 2010 , 5:09pm
post #4 of 5
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Originally Posted by cakesdivine

I disagree jason. She can coexist and pay a monthly rental fee like she suggested. Get full price for her product that has her name on it. Both businesses would be housed under the same roof.



That would be the best outcome, but unless the OP is willing to spend all day at the shop, it's doubtful the existing retailer would agree to a 0% cut of her sales. Of course the product would still be branded with her business name.

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A small coffee shop in rural TN that hardly sells the baked goods they already offer will be hard pressed to purchase more baked goods that they have no passion about to move them out the door.


And you think the coffee shop would be more motivated to sell her products when they get a cut of 0%?

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The cash registers now days have different departments so you can see at the end of the day the amount of money each individual business brought in.



Correct, that's how the retailer determines how much to pay the vendor.

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The chances of you being able to build a successful wholesale line is very slim. And to even compete in grocery store markets you have to be a factory.



Not true. More retailers these days are highlighting local vendors and are willing to accept volumes that do not require a factory.

Monelove Posted 19 Aug 2010 , 7:38pm
post #5 of 5

Thank you both Jason and Cakesdivine for the input.

My idea is to coexist with the coffee shop and pay a flat monthly rental fee to them (which is to include utility and equipment usage, space in thier display case for my product and if I am unable to be there all day then minimal labor). I want to be paid full price on my products and to definately have MY name on them as well. I will be in charge of my own marketing of my products. It is my dream to one day have my own store front and I want the clients that I develop through the coffee shop and private business to follow me.

The town I live in is not rural, it is a decent sized town with a lot of wealthy people and REALLY nice homes ($$$). I don't think the coffee shop does alot of advertising and although they are well liked and do get a fair amount of foot traffic I think that most people just go there for the atmosphere, free internet and just to hang out while having a coffee/drinks (the place has couches, easy chairs, a television and games). The shop mostly focuses on quick breakfast items such as quiche, bagels and croissants and light lunches such as soups and sandwiches so I think that homemade bakery items would be more of compliment to thier business than a competition. I think it would actually be a win/win situation for us both, I would get to make/market/sell my products legally and build my clientel and it would bring them more foot traffic and more business. Also, other than Walmart and Kroger, this town has no bakery that makes gourmet cupcakes/goodies. The nearest cupcake shop is 30-40 minutes away and they are ALWAYS packed, so I feel it would be profitable.
I just need to get all the details together, try and think of any and all situations that might come up and how to address them before I pitch the idea to the owners of the shop. If anyone comes up with ideas or situations (good or bad) that may come up please let me know.

Thanks so much for your input!

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