How to Start a Bakery Business in the UK

min read

How to Start a Bakery Business in the UK

Research and planning your bakery business

Just as you wouldn’t perform open heart surgery without going to medical school first, you need a solid plan in place to start a bakery business, to understand your market and your route to success.

Understanding your target market is crucial for business success - how else will you know what your potential customers prefer, or what baked goods are in high demand? Perhaps there’s a gap in the market in your local area that you could fill, such as specialising in gluten-free baked goods, or vegan options. Research bakeries near you to understand what they offer and how you can differentiate your own and fill a niche. It’s also worth keeping up with industry trends that you can jump on, such as being more environmentally conscious or trying out new recipes that are popular on social media.

Next, you’ll need to decide on your business model - your company’s purpose and strategy. You’ll need to think about the type of bakery you want to run and how you’ll provide value and remain profitable. For example, you may envision a traditional retail bakery that operates from a brick-and-mortar shop, specialising in plant-based cakes. Or maybe you’d prefer to operate online and bake your creations from home, where customers can click-and-collect their order or have it delivered. Your business model will influence a wide variety of factors, from location to marketing, so it’s important that you choose one that aligns with your business goals, budget and personal interests.

Finally, you need to write your business plan - your business roadmap that details your business objectives, marketing strategy and financial plan. It’s not just there to guide you, you’ll also need to show potential investors your business plan if you’re trying to secure funding or the bank if you’re looking to take out a business loan. There are several elements to a business plan, including the executive summary - a brief overview of your business idea and goals, and market analysis that summarises your research. Our guide on how to write a business plan explains the whole process in more detail.

Choosing a bakery niche and products

Finding your niche may sound tricky - especially if you’re a baking connoisseur who can turn a hand to endless types of baking. With so many choices, it can be difficult to decide on a particular specialism to focus on for your baking business.

Some potential bakery niches you could consider include:

Artisan bakery, offering hand-crafted bread and pastries, using traditional baking techniques
Catering to a specific dietary requirement, such as gluten-free, vegan, kosher or keto
Themed bakery that focuses on a particular style, era or occasion, such as wedding cakes or dessert buffets
Luxury bakery that specialises in high-end baked goods or bespoke cakes

You should also look to create a menu that caters to your specific niche, but also has variety such as seasonal or limited edition items, to keep your customers interested. Start with your core offerings - the items you’ll always sell that represent your bakery’s niche and theme. You could also introduce limited edition goods based on holidays to keep your menu feeling new and exciting.

Licensing and legal requirements in the UK

There are numerous legal requirements you need to adhere to when starting your bakery business. Failing to comply with these requirements could result in a hefty fine - the last thing you want when trying to get your business off the ground.

Here are just some of the legal requirements for starting a bakery business you should keep in mind:

Food business registration: As a food business, you’ll need to register with your local authority. If you plan to open bakeries in more than one location, you’ll need to register each site with the local authority applicable to that location.
Food hygiene standards: As a business that prepares and sells food, you must comply with food safety and hygiene standards, such as making sure the food is safe to eat, is the quality you say it is and you must display your food hygiene rating. You’ll also be responsible for staff hygiene training if you plan to hire employees.
Insurance: Business insurance can give you the peace of mind that if disaster strikes, your business will be protected. There are different types of business insurance, including public liability insurance and professional indemnity insurance - which are both optional. Whereas employer’s liability insurance is a legal requirement in the UK, to cover the cost of compensation and legal fees if an employee falls ill or is injured due to their work.

Finding a suitable location

Deciding where to set up your bakery is a major decision. You’ll want to choose a location with enough foot traffic to ensure new customers walk in, while also ensuring the space fits your budget. Choosing an area with plenty of pedestrians can help attract new customers, but you’re likely to pay higher rental costs when setting up your bakery in a high-foot-traffic area.

You’ll want to ensure your bakery is in the right location for your target market. Perhaps you’re looking to appeal to families or young professionals - make sure you’re visible to your target market and accessible. Is there a car park nearby? Is your bakery easy to reach by foot, car and public transport?

It’s important to consider the legal side of things too. Make sure you carefully review your rental contract and are clear on all the costs you’ll need to cover including any service charges. Will you be responsible for maintenance and repairs if something goes wrong, or will the landlord take care of it? You may benefit from working with a solicitor to review the contract, so you know exactly what you’re liable for and your rights.

Sourcing ingredients and suppliers

You can’t run a successful bakery with top-of-the-line baked goods without quality ingredients. While quality tends to cost more, your customers will be able to taste the difference which can encourage them to come back to you in the future and recommend you to their friends and family.

You’ll need to find and choose suppliers who can deliver fresh ingredients, such as dairy and eggs, to you regularly so you always have these high-quality but perishable items at hand. You may also find it cheaper to buy a lot of your ingredients in bulk through a wholesaler, but you’ll need to ensure you have enough storage space to store these larger items.

Hiring and training staff

Hiring the right people is essential for the success of your bakery. But to hire talented staff, you’ll first need to identify the needs of your business and the roles you’re looking to fill.

Common positions you’re likely to hire for as a bakery business owner include:

Kitchen assistants to support food preparation, stock management and cleaning
Bakers and pastry chefs responsible for preparing baked goods to the highest quality
Front-of-house staff who are customer facing, to serve your baked goods
Supervisor or manager roles to oversee the day-to-day operation

To hire the best talent, you’ll want to look for those with relevant experience (such as customer service experience, or former experience working in a food service environment) or qualifications such as City and Guilds’ baking qualifications.

As an employer, you must adhere to necessary legal requirements, such as ensuring your employees have the legal right to work in the UK. You’ll need to provide written employment contracts that outline their responsibilities, as well as their pay and working hours. You’ll also need to register as an employer with HMRC before the first payday.

Marketing your bakery business

Now for the creative side of things… It's time to start thinking about your marketing strategy and how you’ll get your business’ name out there. Marketing is the driving force behind your brand, and key to attracting customers and building a loyal customer base.

Here are our top tips for marketing your bakery business:

Build your brand identity: Your brand identity is the visual representation of your business - its colour scheme, logo and tagline. Consistency is key, so your customers recognise your brand and know what it stands for.
Promote your business on social media: Make sure you’re visible on all social channels, such as Instagram and TikTok. These channels are a great way to promote your brand and the quality of your baked goods. You could post behind-the-scenes content, your latest products and any promotions you’re running to get customers talking. Make sure you regularly engage with your customers by responding to comments and messages promptly, so they feel valued.
Don’t forget local marketing: While digital marketing is a powerful tool to grow your business, it’s easy to underestimate the value of local, offline marketing - especially as a local business! Distribute flyers to promote your new bakery, participate in community events and advertise in newspapers to boost your visibility.
Shout about your USPs: Remember to focus on your unique selling points - what makes your business stand out from the crowd? Whether you’re catering to specific dietary needs or focusing on sustainability, this can differentiate you from your competitors and appeal to your target market.

Managing finances and pricing your products

Financial management is a vital but often complicated task for a new business owner. By effectively managing your business’ finances, you’ll know your hard work is profitable and you have a good cash flow.

Creating a budget for your business will ensure you don’t overspend and you know exactly what costs you need to account for each month, including your ingredients, rental costs and utilities, employee salaries and marketing costs. Make sure to regularly review these expenses so you know exactly what you’re spending and if you can cut costs anywhere. Monitoring your cash flow can help you spot any issues early and also allows you to identify growth opportunities. You don’t need to be a maths whizz to successfully monitor your cash flow - accounting software can help you track your expenses, invoices and income effectively, or you could look to hire an accountant, especially as your business grows, to support you with tax and financial planning.

Tips for growing your business

So, your bakery is officially up and running and everything is going smoothly. When you’re ready, you may look to grow your business and boost your profitability. Here are some ways to drive growth as a bakery business.

Focus on customer loyalty: Loyal customers are more likely to become brand advocates and spread the word about your business to their network. So make sure you’re thanking them for their service. Make sure you consistently deliver quality they won’t find elsewhere, to retain their loyalty. You could introduce loyalty cards, with exclusive perks to encourage them to return to you regularly. The happier loyal customers are, the more likely they are to spread the word and become brand ambassadors.
Expand your menu: Look to introduce new products to attract new customers and keep things exciting for your regulars. Take customer feedback on board, look at trends in the baking community and add limited-edition items to your menu during holidays. Just make sure any new menus align with your niche, USPs and business values.
Scale your business: Once your business is performing well and is bringing in a consistent profit, you could look to grow your business with an additional location or set up an ecommerce platform to sell online. You could open a bakery in a nearby town, or even partner with a nearby coffee shop to supply your baked goods to a larger audience.

Ready to start your bakery business?

All it takes is a leap of faith to achieve your business dream. There’s no feeling quite like being your own boss and sharing your passion (and delicious sweet treats!) with the world. If you need some support to get you started, our professional company service could be the solution. You can form your limited company completely free of charge with SUAZ, with professional advice whenever you need it. Form your bakery business with SUAZ today.