The Fresh Loaf

News & Information for Amateur Bakers and Artisan Bread Enthusiasts

Hobby to Business

biuta's picture
biuta

Hobby to Business

I have baked more or less daily for the last year and started to have consistent results at this level.

I am now considering to push this to the next level and start an artisan bakery. 

I am fully aware that jumping from a few loaves a day to a few hundred loaves a day or more is not a walk in the park, but I am trying to figure out as much as I can from what is actually involved.

I am planning on volunteering to an artisan bakery in a town nearby to get first hand experience.

I know that there were other similar threads (for instance this one), but most of them seem to have run out of steam, so I thought of opening a new one, trying to accumulate the information I need and maybe help others that are having similar thoughts go through the process quicker.

I want to start small, by building a separate kitchen in my basement. (I am aware that I need to check with my local Health Department if I can do that)

I am thinking of starting with some specialty breads (whole wheat, rye and sour dough) and maybe some baguettes first and use the local Farmer's Market, that runs a couple days a week, to "get a feel of the market".

I am thinking of a 100-200 loaves/day capacity for starters.

Given the description of the problem above, I have a few questions that I would appreciate your input on at this time (I'll continue to post them as I am going through the process).

1. What would be the minimum size of the mixer I would need?

2. What would be the minimum size of the oven I would need?

3. Do I need a proofer or can I do without one in the beginning?

4. What would you say the minimum space requirements are for the kitchen? (I need to figure out if my basement is big enough)

5. How do you store your flour? Do you keep it in bags?

6. What is better? An electrical or a gas convection oven? (the local restaurant supplier suggested a Blodgett - any suggestions/feedback here are welcome).

7. How would I calculate the power consumption and/or gas consumption of the oven? (need it for the business plan)

8. Is there any reliable formula to calculate the actual cost of one loaf?

9. Is there any reliable formula to calculate the potential loaves/hour output of one's process?

10. What do you do for water? Where do you get it from?

Thanks,

Cristi

Kroha's picture
Kroha

Hi, I would be very interested in responses to this thread as I know someone who is thinking about producing bread, and who already had access to a large kitchen.  Kroha

nbicomputers's picture
nbicomputers

every time i see a thread like this i can't help of thinking of the drunk bunch of guys in a bowling aly and one drunk says ot the other  " you know if we buy this bowling aly we can bowl for free"

there is a lot involved in what you want to do and if you have the knowleg of production baking i do not know

but i do know this if a small oven can bake say 3 pans of bread with say 4 breads on each thats 12 breads and they take say 45 minutes to one hour thats max an 120 loves in a 10 our time period

you will need a steam injected oven or an oven that has the fittings to connect to a low pressure boiler.

so unless you want to be putting pans or peeling 12 breads in the oven every hour mixing every hour and proofing every hour

be ready to pay 20,000.00 to 30,000.00 for the deck oven or rotating oven you need. YES thats 5 zeros and thats only the oven there is still the mixer molders proffers sheters rounders ,ect.   if you pick the deck oven start practising with a 20 foot long peel

http://www.bestovens.com/

 

PeterPiper's picture
PeterPiper

I'm glad there are expert bakers on the boards here, and I know there are professionals as well.  I'm always curious about advice from folks without knowing their background though, and it might be helpful to the original poster if you give some of your background, nbicomputers. 

First off, though you may assume nobody has any idea about running a business or scaling up baking operations, you could tone down the 'brutal' part of 'brutal honesty'.  Second, this reply smells strongly of personal marketing for ovens and not so much of helpful advice.  Finally, I'd love to know the utility of a 20-foot peel in a small artisan baking business.  That's four feet longer than a Hummer, that's a gigantic oven for a small operation!

-Peter

biuta's picture
biuta

...everybody would do it, right? :-)

Peter, no worries, I am not going to get discouraged that easily.

Cristi

Arbyg's picture
Arbyg

Cristi,
Keep your dream alive! I will add however you can keep costs down by doing the work yourself. If you produce larger loaves and plenty of ciabatta and keep your variety down, that quantity is very easy to produce alone. As far as an oven a pre-owned deck 16 pan capacity would be ideal and it's only 7ft deep, or a double or triple deck pizza oven with steam injection. Mixer you will need is a small spiral 50# flour capacity, you can find pre-owned for 4-5k, oven will cost any where from 6-15k. You do not need a proofer but a retarder would help. You can build your own cool room to save money with dry wall to keep preferments and dough cooler. Anyways, it can be done but my suggestion is to lease a small space in another business and share coolers and just by small deck oven, (which I have personally done a while back). Hope this helps.

pmccool's picture
pmccool

but since he hasn't yet, I can tell you that he is a retired baker with 30-some years in the business.  He and the OP may be thinking on different scales, but the man knows whereof he speaks.

Paul

biuta's picture
biuta

nbicomputers, thank you for your feedback.

From what I've seen when reading through this forum, there are people that manage to do this with smaller equipment.

I guess what you suggest would work for bigger enterprises than what I am looking for, I would keep your advice in mind when I will have to expand.

Cristi

 

 

Elagins's picture
Elagins

i think it might help if you approach the bakery as a business that (a) needs to be profitable, and (b)needs to remunerate you at a fair rate for your time and effort.

quick calculation (cost of licenses and amortization of equipment aside for the moment). Assume (just to keep the math simple) that you're baking 27-oz loaves of 66% hydration bread, 1% yeast ($3.20/lb), 2% salt ($0.32/lb), using flour that costs you $0.40/lb. You sell your bread part wholesale part retail for an average price of $3.00/loaf.

Each loaf contains 1lb of flour ($0.40), 0.16oz of yeast ($0.03), and 0.33oz of salt ($0.01). So the ingredients cost $0.44, for a gross profit per loaf of $2.56.

Okay, so now figure in your rent, say, $1000 month, $300 a month for utilities, another $250/month for transportation, $50 or so for supplies. You also have a helper whom you pay an average of $12/hour or $720 a week.

Let's also assume that your small oven can produce 150 loaves during a 10-hour workday, giving you gross daily production of $450. Assume that you're very fortunate and sell out every day.

You work six days a week, 10 hours a day, for a 60-hour workweek.

In a month, you've produced 3,600 loaves, or $10,800 worth of bread, which cost you $1,585 for ingredients, leaving gross profit of $9,215. Now deduct another $1,600 for rent and operating expenses, leaving you with $7,615. Your helper eats up another $2,880, leaving $4,735. Now take off 13.5% for FICA/Medicare, another 15% (let's say) for income taxes, and you're left with aftertax monthly income of around $3,385, or about $14.10 an hour, aftertax, plus no social life, no personal time and no vacations.

Even if you don't hire a helper and set up with a partner, your aftertax hourly income only comes to about $15. Reducing your monthly rent by $500 adds about $1.43 an hour to your net take-home pay. And you still haven't paid off your oven, mixers, etc.

Do you want to work that hard for $15 an hour?

Obviously, numbers are going to vary from place to place, but it might make sense to think about your business in purely financial terms before you leap. If nothing else, it will give you an idea of the economics involved and insulate you against financial disappointment later.

Stan Ginsberg
www.nybakers.com

biuta's picture
biuta

Hi Stan,

Thank you for your suggestion. I will definitely do that before I jump into anything.

Cristi

nbicomputers's picture
nbicomputers

the thread started that you are looking to start at 100-200 breads a day.  a small oven woun't do unless you are willing to work 10-12 hours a day and bake 12 to 24 lofes a batch and make 8 diferent mixes a night. i can bet you wount last long.

you would need a oven that could bake at least 75 to 100 breads at a time and forgot about spraying water in the oven for steam you need a steam generator

as for the peel if the oven is 16 feet deep from door to back add another 18 inchs when the door is open that leafes you with 2 and a half feet of handle feft bleave me you will need every inch i have been on the back end of that peel and its not fun

unless of course you want to go for another 10 grand or so for an auto oven loader

if wou want to start right and make money get the right equipment right from the start.

what happens when you take your first 24 breads out for samples and get orders for 200 or 300 breads, how many customers do you think you will keep when you have to say i cant make that many.

are you going to do this all by your self so baking for 10-12 hours a night and making deleverys for another 3 or 4 hours and then haveing to set up for the next day.

you are going to need people and people cost

i do consulting for the baking industry since because of health issues i cant be on my feet as i like if you would like to use my services please PM me but i am good and that means not cheap

but if you have the money to invest i can get you up and running

biuta's picture
biuta

Hi Norm,

Now I understand your point better.

Maybe I simply was a bit over optimistic in terms of what I could and could not achieve in a basement kitchen.

Now, if I drop my output requirements to 50 - 75 loaves / day, does that make the problem a bit more realistic?

Cristi

nbicomputers's picture
nbicomputers

that sounds more likely but after the 50 loaf point it is a lot of work i know you saw the reply below.

there is money in bread but the money is in production and volume i along with one helper could turn out over 1000 bastones and bagettes in a night with the right equipment so if it takes a baker and a helper to make 1000 or 200 you can see the labor costs drop. and thats where the profit is.

 

alabubba's picture
alabubba

Most of the equipment can be purchased for much less used. The only business that has a higher failure rate than bakeries are restaurants.Keep an eye on craigslist and watch for auctions of failing restaurants in your area.

I have toyed with the idea of opening a bakery for several years but I always remember "Just because you are a great cook, doesn't mean you know how to run a business"

LindyD's picture
LindyD

Cristi, Mark Sinclair of The Back Home Bakery has been there and done that.

Reading through the recent blogs on his internship program may be helpful to you.

Better yet, why not volunteer to spend a week with him at his bakery?

biuta's picture
biuta

Lindy,

That is a great suggestion and I would definitely apply for something like this.

Cristi

bassopotamus's picture
bassopotamus

And the economics just don't make sense, or at least not in a way we are confident about.

I think your farmer's market idea isn't a bad one, and may scratch the itch enough for you. We've been doing ours out of a home kitchen (we do a mix about like you propose: SD, baguettes, wheat, rye, and a mostly white artisan loaf). We found you can do it out of a home kitchen, but the workload is nasty. We can do about 80 loaves in a day if we're smart about it, but it is a ton of work, and some of the mixing happens the day before. A good mixer and adequate oven space are absolutely essential.

It is important to source ingredients cheaply to keep the margin decent.

 

In the end, for us, we're just not confident the market is there. People love our stuff, we have loyal customers, but even at an event where people aren't going out of their way to find us, the sales are pretty erratic, and locally, I don't think there is the market for us as a destination. Beyond that, doing it small, our costs are negligable, but when looking at how many loaves we'd have to sell to offset rent, it seems overly risky. You're market may vary

biuta's picture
biuta

I would like to find out more about your experience. I will contact you directly.

Cristi

bassopotamus's picture
bassopotamus

Sure thing

Muffin Man's picture
Muffin Man

I, too, have considered taking the plunge.  Here in Florida, governmental regulations make it exceedingly difficult to run a bakery from home.  I became an unpaid 'apprenti boulanger' for a couple of months at a local bakery and learned a lot of valuable information.  The most important lesson is that these sort of operations are called 'Mom and Pop' for a reason.  A small shop (bakery or other) simply does not generate enough revenue to pay for help and still provide for any profit.  The hours are long and hard and the rewards are few, but folks still do it.  The bakery in which I participated had passed through several absentee owners before finally closing its doors.  I cannot speak of other businesses, but most small bakeries are there because the proretor is passionate about fine bread.  Sadly, you soon determine that the money is in pastries and specially decorated cakes.  The equipment for a modest shop (mixer, oven, and various tools) represents a hefty investment.  If you are prepared to maintain your enthusiasm for bread, you might make a go of it, but remember that there is a reason that there is so much used equipment on the market.  Good luck to you.   I have decided to remain amateur and give away most of my breads to friends and fellow worshipers.  For what it's worth, the old barter system still works.  Forgive the ramble, it's what I do.

rainwater's picture
rainwater

One calculation that I noticed was off maybe was $2880 for a helper???? huh!  $18.00 an hour for a helper...that's calculating 160 hours a month/40 hour work week.  There are plenty of people who will work for $9.00/$10.00 an hour.  As difficult as the bakery sounds....a resteraunt can be even more daunting.  People who make it in the food business understand the food business.  They understand it is like a marriage.  ...a lot of commitment.  If i were going to start a home business, I would beg to apprentice at the "The Back Home Bakery" mentioned  on the website...You would realize immediately your equipment requirements, and  the commitment necessary to run a small business.  Then you would know if it was for you. 

nbicomputers's picture
nbicomputers

saving 8 an hour is not much

porters get 10 and all they do is clean and fill bins with flour.  it's not easy lifting 100 pound bags all day long.  where i worked a porter might moove as much as a ton of ingreadents a day.   helpers do that to but they also know how to work on the bench as well as scale ingreadents.   while i was doing bench work my helper could scale two mixes into the machines. while i needed to mix them and make adjustments because of shop conditions to make sure the mixes came out right. the helper did not know how to tell by feel how the mix should be he could start them and the time savings was worth the extra money.    the helper could also would finish mini pastries after i rolled out the dough and filled out while i whent on to other things  also could greas the pans and pan out the cake mixes while i would be doing other work.

a porter and a helper are two diferent things and it is a big diference. the helper has some training and experence and is on the way to becoming a full baker.  judging by the lack of expirence to production baking it is possable a good helper wold have more training than the OP

 

Elagins's picture
Elagins

my assumption is that the helper is going to work the same hours as the baker -- that is, 10-hour days, six days a week, for an average rate of $12 an hour. Or let's even assume that you can't find one helper willing to work that hard, but you're able to hire two. It's still going to be 60 hours a week, $12 and hour, or $720 a week x 4 weeks = 2,880 ... which is actually slightly off, since an average month = 4.3 weeks, but close enough.

Stan Ginsberg
www.nybakers.com

turosdolci's picture
turosdolci

Hi,

We have a biscotti business and I have found a lot of sites with info for shelf life of goods to measuring tables.  I suggest you google them and save the most important ones. We started at home also and it took awhile, it was hard work and you have to have a lot of resolve. You also make sure that you fulfill all legal requirements such as a state license and health permit and insurance as many companies won't work with you without these things. Moving from hobby to business requires a very different mentality. Having passion for baking and running a business changes the way you approach this.  

I have removed my original post to this question because I was notified that it was considered spam.  If that is the case, I truly am sorry, that was not my intention.

Regards,

Patricia Turo

sicilianbaker's picture
sicilianbaker

100 - 200 loaves a day isnt that much, Addeo Bakers in the Bronx (they have been here since the early 1900s) makes about 1000 loaves a day of their signature bread and thats only one.

farina22's picture
farina22

You might consider renting a commercial kitchen space to try out some of your ideas. There are restaurants that are occasionally willing to rent out their space when they are closed for the night. Also there are often rental kitchens that rent by the hour or by the day. I've used them and it's a good way to try things out without making the giant investment yourself--before you know whether it's a realistic possibility for you.

I've used a by-the-hour kitchen for a couple of start-up clients and they were fine. These were licensed, approved by the health department and saved many headaches. Just start googling commercial kitchen rentals in your city. Good luck.

turosdolci's picture
turosdolci

Christi,

There are many really good suggestions here and worth considering as you build a business plan for your business. The business plan is where you start. This will make you think through what it is going to take to get your business started. There are many resourses available including getting a business plan format online. Many accounting companies have free business plans and you can get good advice at your local SBA. Getting some experience by working for free or a small salary is a very good idea. This will bring you some real world experience. Making your hobby a business is another reality. As others have said here running a business is not the same as doing it as a hobby. We started a home based biscotti business 6 years ago, but our family has been in the food and restaurant business since 1912, we were brought up in the industry and knew the downfalls. Having said that, make sure that you have sufficient finances to help you through the first 3 years+ if you pursue your dream. But make sure that your dream reamains really a good dream rather then a nightmare.

Research, get some hands on experiece and be prepared then go for it.  Good Luck! 

yoelgal's picture
yoelgal

WTG

LindyD's picture
LindyD

What with all these new responses to a question Cristi asked eight months ago, I wonder what decision she finally made about starting a bakery business.

hanseata's picture
hanseata

Hi,

Like you I was wondering whether I couldn't turn my baking hobby into a business. If I had come to the US 30 years ago, I might have tried to open up a German cafe.

Having a husband with quite a bit of experience in the restaurant business brought at once the bracing touch of reality to this dream. Would I really - near retirement age - want to work my butt off for considerably less than our daughters make waitressing during the summer holidays? Would I, who really loves trying out new recipes, enjoy making just a few best selling breads in assembly line - day in, day out?

So I decided to contact a local health food store and ask whether they would be interested in selling locally made breads. They were quite happy with the idea, supplied me with contact information for an organic wholesaler, and also helped me with pricing.

A Maine home processors' license was easy to get and inexpensive, and the state inspector only wanted to make sure that my kitchen sink had two bowls.

I bought my 20-quart mixer used, and lots of other tools very cheap at Marden's, Job Lot and Homegoods. My Jennair convection oven has a rack lined with unglazed quarry tiles, and I produce steam by pouring boiling water in a hot pan in the oven. For refrigerating pre-doughs and doughs I use an old refrigerator in the basement, where I also keep my flours.

This, of course, is only a way to broaden your hobby and enjoy other people's appreciation for your products (I have several faithful fans who buy my breads regularly). My little bakery alone would never sustain me, but it gives me a small additional income and, what is much more important to me, great pleasure.

 

 

 

 

hanseata's picture
hanseata

Of course you have to generate enough income if you want to live of it, and therefore need to have some regular staples, but it is great to be able to keep a niche for creativity! I'm lucky enough to work with a store that lets me do just that, as long as they get their baguettes and pitas they take whatever else I come up with, so I have always a special "baker's choice".

Baking (or cooking) for existing shops as a subcontractor has the great advantage that you don't have to worry about the logistics and overhead costs of running your own place, including staff etc. You need very little start-up money - only your ingredients and your kitchen tools, and costlier appliances you can buy used.

There's also a substantial tax advantage, if you do the preparation in you own house, you really can deduct a lot from you income taxes!

 

Feelin Crumby's picture
Feelin Crumby

. . . which is basically what I made running my bakery.

I would never want to discourage someone from following their dream, and that isn't my intention now. I've done exactly what you are wanting to do, and here's how it went:

I was 38 yrs. old and had never worked a day in food service. In high-school I quit McDonalds the day they handed me my green polyester uniform . . . I just couldn't do it. Around 26 years of age, I got interested in home made bread . . . thinking the bread machine was the absolute s**t. Then I discovered Reinhart, Hammelman, Bernard Clayton, and others. I was born again. I was making breads better than anything you could buy locally. I was tired of nearly 20 years of ironworking and welding, so naturally, it was obvious I should open a bakery.

Thanks to the aforementioned bakers/authors, I was able to school myself on what it took to make a great loaf of bread. And thanks to them, I was able to understand and practice the baker's percentage, and to be consistant. I now knew I would soon join the ranks of great bakers. I was an idiot.

Instead of sticking to my original plan of building a 2-car garage size structure on my property, build an Alan Scott brick-oven, start small and slow, and "wholesale" breads, I found a commercial spot to lease and began turning it into a bakery. I did really well for someone not knowing a damn thing. My wife and I took out a second mortgage. I bought all used equipment . . . mostly on ebay . . . and did very well there also. Everything worked as advertised. Blodgett ovens, hobart 60 and 20 qt. mixers, tables, utensils, sheet pans, racks . . . and on and on. I became licensed and Serv-Safe certified. I had contractors converting my space to what I needed. Then, the Health Department informed me I was going to have to have a hood-system with fire prevention installed. I couldn't believe it. I THOUGHT I wouldn't need that since I was only doing breads. I thought wrong. At just over $1000 per foot, installed, I had to have 18 ft. of hood. I was so far into it already, I really didn't think I had any choice but to keep going. There went the remainder of my money. I opened the doors with nothing behind me. Nothing.

Less than a year later I was closing my doors for good. I couldn't afford advertising. I couldn't afford better "signage". I couldn't afford help. I hadn't thought about "slow days". I hadn't thought about losing power in the building, and therefore a "ton" of my supplies. I didn't think I wouldn't be able to keep up that schedule by myself, forever, so I changed my hours so many times people had no idea when I was going to be open. I didn't think that all of this would happen, and then the added pressures would come from not being able to pay those contractors that did all that work for me. I didn't think! I didn't plan! I was an idiot.

It eventually led to my wife and I separating, and me losing my house. A LOT to lose from not preparing better. I tell you all of this not to say it can't be done, but to tell you to PLEASE get as much education as you can, in the BUSINESS side of owning a bakery before you make the leap.

My little inside-joke with myself is my user-name, Feelin Crumby. I'm still getting along ok. And I still love to bake bread.

hanseata's picture
hanseata

My husband experienced something similiar, when he made a small cafe for his customers in his furniture store - he didn't know that he had to install a commercial high heat dishwasher for his few coffee cups and plates.

 

 

ardent's picture
ardent

I know you wrote this over five months ago, but thank you for taking the time to write this.  It was from the heart and written with love and honesty.   I hope things are turning up for you.

 

Aloha

LindyD's picture
LindyD

Wow.  Hopefully your honesty will make people think twice before they dive into a situation they are unprepared for.

Baking at home for friends and family is one thing.  Production baking is another.

I'm glad you're okay.

ronhol's picture
ronhol

Did you follow your dream, or change your mind?

A lot of good information, and speaking from the perspective of having run numerous one man small businesses, and having been self employed most of my life, I can verify that what most have written here, seems to ring true.

What shocked me most is the number of people who volunteer to work for free in order to learn how to run a bakery.

As an employer, I find myself wondering about the legal liabilities, of that type of arrangement.

I am not at all opposed to it, but lawyers have made conducting business in America a potential nightmare, and I am instantly struck by a half dozen 'what if's', when I think of it.

Speaking from the employers perspective, not the volunteer.

msbreadbaker's picture
msbreadbaker

Christi,

I hope you have been reading the recent posts to your original thread. I had not read it before and am dying to read what you actually did. All given was sound advice one way or the other, but knowledge is what you need to get what you want. Did you or did you not?!

Jean P. (VA)