Starting your own bakery could sound like a dream come true! But without some thoughtful planning, the financial reality of opening a bakery could hinder your dream before it starts.
The good news: since bakeries are often smaller than restaurants and usually don’t offer table service, they can be less expensive to start and operate.
Find out how much it could cost to open a bakery with this helpful guide.
How Much Can It Cost to Open a Bakery?
Costs will vary based on the type of bakery, the size of the space, and the market, among other factors. But here is a breakdown of what some of the cost estimates are for opening a bakery.
- Leased bakery space: $900 – $6,000 per month for a 1,500 square foot bakery, plus deposits and fees (assuming 3x the monthly rent)
Purchased bakery space: average of $178 per square foot
- Permitting, licensing, and legal fees: $1,500 – $3,500
- Remodeling and renovations: $10,000 – $70,000
- Bakery equipment: $25,000+
- Cooking tools and supplies: $1,000+
- Bakery furniture and supplies: $4,000 – $15,000
- Opening inventory & training: $10,000+ for inventory and labor
- Marketing costs: $100 – $10,000
- Total Estimated Potential Cost to Start a Bakery: $54,300 – $152,500*
Selecting a Bakery Space
Bakery owners have the option to either lease or purchase their retail space. Renting is more common, since it requires a much smaller initial investment.
If You Plan to Lease Your Bakery Space:
Rental rates for retail space will vary widely depending on your local market and the neighborhood you choose. The average cost of retail space in the United States in 2020 was $18.09 per square foot per year. For a 1,500-square-foot bakery, that would equal $27,135 per year, or $2,261.25 per month.
While these numbers can be a starting point, your actual bakery rent could vary dramatically based on the size of your space, your market, and the general economic conditions. In Amarillo, Texas, one of the least expensive cities in the U.S., we found retail space for as little as $7.20 per square foot per year, or just $900 per month for 1,500 square feet. But in pricey New York City, retail rents average around $45.04 per square foot per year, or $5,625 per month1. So do a quick search of retail rentals in the area you plan to open to get a more accurate estimate.
There may also be additional charges in your lease agreement, like common area maintenance fees, property taxes, utilities, and insurance costs. This could add several hundred dollars to your monthly lease costs. And you may need to pay the first month’s rent, last month’s rent, and a security deposit for your space. For a $2,000 per month lease, that could be around $6,000 in up-front expenses.
If You Plan to Buy Your Bakery Space:
Estimated cost: Average $178 per square foot
Purchasing a space for your bakery is also an option, but it will require a much larger outlay of cash before your business gets off the ground. So leasing may be smarter if you need to keep costs under control.
If you do have the funds, owning your retail space lets you build equity in the land and building over time, and keep your monthly payments steady—unlike rent which may fluctuate in the future.
On average, purchasers can expect to pay around $178 per square foot for their restaurant-type space. Looking at the same two markets as before, we can find retail space for sale in Amarillo at just $71 per square foot. A similar-sized property in Brooklyn could cost over $500 per square foot to purchase!1
Permits and Legal Fees for Your Bakery
Estimated Cost: $1,500 – $3,500
Before you can start a bakery, you’ll need to get the legal side of the business in order. This means selecting your entity type, like a sole proprietorship, partnership, or limited liability company, and filing the proper paperwork with your secretary of state.
Depending on the state where your bakery is located, you may also need a business license, which can start as low as $25. You will certainly need some kind of health inspection and permit from your local government authority, to ensure that your bakery meets health code. And you will need a certificate of occupancy or similar permit to verify that your building is safe for staff and guests.
You may need a food handler’s permit for each staff member who comes in contact with food, which usually costs less than $25. And you may also need some kind of retail seller’s permit or sales tax permit, which is free in many states, but may cost up to $100 in others.
Finally, you may need to secure a music license if you plan to play music in your bakery. Don’t skip this—the penalties for playing unlicensed music could be as much as $150,000!
A lawyer can help you set up your entity and answer any legal questions. Lawyers can charge $200+ per hour, so use their time efficiently!
Getting the Space Ready
Estimated Cost: $10,000 – $70,000
Unless you’re taking over an existing bakery space that has a very similar business model to yours, your space is likely to need some renovations.
Is there an existing kitchen? If so, is it the right size for your needs?
In the customer-facing areas, is there a service counter? Storage? Are the light fixtures to your liking? Does it need new flooring and fresh paint?
Depending on the space’s prior use, you may also need to make plumbing upgrades for hand sinks and 3-compartment sinks, add gas lines for ovens, and do other infrastructure changes to make it bakery-ready. You can mitigate some of these costs by looking for a rental space that already has some of this infrastructure built in.
Fitting out the Bakery Kitchen
Your new bakery will need specialty baking equipment, cooking tools, and baking supplies to make all the delicious breads, cakes, and pastries that you’ll serve to your customers.
Estimated Cost: $25,000+
A retail bakery needs commercial-grade equipment. These items will come from specialty restaurant supply stores. They’re expensive, but they have to resist plenty of wear-and-tear!
Depending on your type of bakery (artisan bread, cakes, breakfast pastries, cupcakes, etc.), you may need any combination of the following:
- Commercial ovens. A bakery convection oven can cost between $2,000 and $50,000, depending on the size and functionality.
- Large floor mixers or countertop stand mixers. Floor mixers can range from $2,000 to $50,000+.
- Refrigerators and freezers. Expect to pay between $1,000 and $14,000 for reach-in refrigerators and freezers, and much more for walk-ins!
- Prep tables. Simple stainless steel work tables may cost between $120 and $7,000.
- A bread slicer. Small countertop models can range from $1,500 to around $9,000.
- A dough sheeter. Countertop dough sheeters may cost around $1,000, with larger floor models reaching $6,000 or more.
- A dough proofer. Full-size proofers start around $1,000 and can reach $18,000.
You may be able to save money by buying used equipment on resale sites or at auction.
Cooking Tools & Smallwares
Estimated cost: $1,000+
Beyond your equipment, your bakery will need to be fitted out with supplies and tools for day-to-day work. This could include:
- Sheet trays and tray racks
- Cupcake trays
- Bread pans
- Bread knives
- Measuring cups and spoons
- Kitchen scales
- Flour sifters
- Hand tools like whisks, mixing spoons piping bags and tips, icing spatulas
- Cutting boards
- First aid kit
- Plastic gloves
Most of these items aren’t too pricey on their own, but they can add up. You may be able to buy some of these items secondhand to save money.
Bakery Furniture and Service Supplies
Estimated Cost: $4,000 – $15,000
You’ll also need to-go bags and boxes for easy travel, since bakery goods are often taken off-premise.
In the service area, you’ll likely need a nice display case to show off your beautiful baked goods to their best advantage. You may want one room-temperature display case for shelf-stable items, and one refrigerated case for items that have to stay cool. A single display case could cost $1,400 to $14,000 for large floor models.
Will you serve coffee? If so, you’ll need a bean grinder and coffee maker, and possibly an espresso machine. A commercial espresso machine could cost $1,500 to $26,000+.
And to make those sales, you’ll need a point of sale system. Fortunately, most bakeries can get by with just one or two tablets, so you probably won’t need a complex system of computers and display screens in the kitchen. For a small bakery, expect a start-up investment of around $600, plus a small fee for each credit card transaction.
Opening Bakery Inventory and Training
You’ll need a well-stocked bakery in order to open your doors, which means you’ll need staff and food before you make a single sale. The costs of your opening inventory will depend on what you serve, how much you plan to sell each day, and the cost of ingredients in your market. For a bakery, you may need to invest $5,000 – $7,000 in inventory.
You also have to train your staff in advance of opening your doors. Assuming a team of four and two weeks of training/work before opening, your labor costs could be $5,000 or more before you open up shop (based on the Bureau of Labor Statistics average pay for bakers of $35,761 per year).
The Budgeting Basics
Creating a successful bakery will require both baking skills and financial education. In Escoffier’s Baking and Pastry programs, students can explore topics like menu price analysis and food and beverage cost control to promote better money management.
Bakery Marketing Costs
Estimated Cost: $100 – $10,000
Your bakery marketing efforts can be as simple or complex as you are willing to make them. At the least, you should create a website with your bakery location, standard menu offerings, and hours of operation. You can usually create a basic website, secure a site domain, and get web hosting for under $100.
Then, you can create social media accounts on platforms like Instagram, Facebook, and Twitter to attract followers. The profiles themselves are free, but you may wish to pay someone to run the accounts for you, which could cost a few hundred dollars per month and up.
You may also wish to work with food influencers to build hype. Local food bloggers and social media influencers may be willing to post about your new bakery in exchange for some free baked goods—a low-cost way to generate buzz.
And if you have a larger marketing budget, you could hire a professional PR firm to help spread the word about your bakery, or a marketing agency to create a logo or other branding materials. But when you’re just starting out, these are “nice to haves,” not “must-haves.”
Entrepreneurship Can Start with Education!
Careful planning could help the future bakery owner to run a successful business. In Escoffier’s online and on-campus baking and pastry programs, students can complete a course called Building Your Own Business, which includes business planning, pricing, and ethical topics. Part of the course includes starting a business plan, which could be a valuable tool for the future bakery owner!
Find out how a degree or diploma from Escoffier could provide the education you need to reach your entrepreneurial goals.
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*Figures included in this article are for informational purposes only and are estimates based on industry trends or a range of costs/expenses. Please research costs for your geographic location and individual situation.
1 Numbers reflect rental rates and purchase prices as of December 2022. Average rates and property availabilities will fluctuate.